Luxor Capital granted license to operate Ocean Casino Resort

During the hearing Wednesday, Luxor partner Michael Conboy and Ocean CEO Terry Glebocki painted a bright picture for the property, noting that Ocean has not needed money infusions from Luxor — a New York-based hedge fund — in three quarters and stressed expectations to rapidly grow, not only in its brick-and-mortar operations but also particularly in online gaming and sports betting.

“In 2019, our focus was brick and mortar,” Glebocki said. “There was so much we wanted to do from the brick-and-mortar side, and that’s what we did. Our plans for 2020 was a focus on iGaming. … There is a lot of growth opportunity there. We are working with our marketing department, which has been so successful with brick and mortar, and now let’s get them working on iGaming. In the pandemic, we have seen an increase in our iGaming revenue. … Granted it’s a small portion of what’s out there right now.”

Wednesday was the final step in the licensing process for Luxor, which was granted an interim casino license in August that allowed the company to control Ocean’s operation while the Division of Gaming Enforcement conducted a comprehensive investigation. As part of the licensing agreement, the commission lowered the amount of cash Ocean will be required to keep on hand, from $32 million to $25 million. Traditionally, when a property is sold, the new owner is granted a temporary license and then has to apply for the casino license.

In February 2019, Luxor pumped $70 million into the casino, including $50 million to pay down debt. It also assembled a new management team with experience in the Atlantic City market, and set out to correct many of the perceived flaws of the property, including a confusing layout of the casino floor. It also added safety panels to escalators that lifted patrons to the casino floor.

The DGE and CCC agreed that Ocean, led by Luxor, has been financially stable and has demonstrated integrity, leading to the unanimous decision.

For the period beginning July 2019 and ending February 2020 compared with the same period a year earlier, Ocean increased its slot revenue by $41.1 million, up 54%; table games revenue increased $6.4 million, up 17%; nongambling revenue increased by $14.6 million, up 19%, and expenses declined by $5.6 million, down 3%.

That’s a far cry from the property’s opening, when Ocean lost $28 million in the first six months and, at one point, $1 million a week, Glebocki said.

Conboy said Ocean’s success has exceeded expectations.

“Before coronavirus, it was self-sufficient,” he said. “And when we are back to operating normally, I would expect it to be self-sufficient. The trajectory was incredibly positive. I can’t say what a great job the team has done. The rapid nature of recovery surprised Luxor, surprised myself. So the trajectory was bright, but we have to be realistic (when reopening). We expect when we open it will be soft. So we have to focus on cash flow and profitability and tightening the belt straps and pushing off — for six or 12 months — the more grandiose capital plans … but that won’t change anything where Ocean will be five or 10 years from now.”

An Ocean representative said they are holding off on some capital improvement projects because of the virus, including high-end table and slot areas and a casino floor reconfiguration that was supposed to be done by summer.

“My hopes are we can resume once we have more certainty and get through the season,” Glebocki said.

Luxor and Ocean also vowed to continue major capital expenditures, including finishing 12 floors of its hotel tower that were never completed.

“We are working hard and ready to go with the renovation of the 12 floors currently unoccupied in our hotel,” Glebocki said. “We have designs and plans for the rooms. When the time is right, we will be very excited to introduce that new inventory.”

The Associated Press contributed to this report.