Ilitch Holdings, the sole owner of Motor City Casino Hotel, has entered into an agreement with Luxor Capital Group, the owner of Ocean Casino Resort in Atlantic City, to acquire up to half of the ownership.
Other Business Interests of Ilitch Holdings
Ilitch Holdings is a Detroit-based international conglomerate founded in 1999 by the late Michael Ilitch and currently owned by his family. Over the years, Ilitch has become a household name way beyond the confines of Detroit.
Ilitch Holdings is the sole owner of the Motor City Casino Hotel in Detroit. It also owns the Detroit Tigers and Detroit Redwings.
The Ilitch family’s holdings extend to the food and entertainment industries. It owns Little Caesars Pizza, Champion Foods, and Olympia Entertainment, for example.
Up until now, the family’s casino interests only included Motor City. But that will change, assuming the deal with Ocean Casino Resort goes through, pending receiving final approval and licensing from the NJ Casino Control Commission.
Ocean Casino Resort’s Turbulent History
Ocean Casino Resort (formerly Ocean Resort Casino) first opened on June 27, 2018 on the site of the former Revel Atlantic City. The Revel, despite costing $2.4 billion to build, was a failure from the get-go. From the time it opened in 2012 to the time it permanently closed two years later, it had declared bankruptcy twice. The ill-fated resort never turned a profit.
Eventually, Revel sold the property to the controversial developer Glen Straub for a mere $82 million. Straub named the intended new casino “Ten.” Despite declaring grandiose plans for it, that casino never materialized.
In 2018, Straub sold the property to another developer, Bruce Deifik. He opened it a few months later as Ocean Resort Casino.
However, like its predecessor, the Revel, Ocean struggled to stay afloat during its first few months of existence. My article for NJ Gambling Websites, “Luxor Capital Has Been Approved To Continue Operating Ocean Casino Resort,” described the property’s tenuous financial shape during its first year, compared to the remarkable turnaround after Luxor Capital assumed ownership.
Ocean Resort Casino (as it was called before the name change) registered a first six months net loss of $28 million. At one point, the property registered losses of $1 million every week!
The struggling resort appeared to be headed for the same fate as its predecessor and doomed by what many people called “the Revel curse.”
What saved the resort from imminent closure, however, was that in January 2019, the NYC-based hedge fund firm, Luxor Capital Group, agreed to buy it and invest $70 million in debt repayment and property enhancements.
From Life Support to Thriving Casino Resort: Ocean’s Remarkable Turnaround
The new owner wasted no time in living up to its commitment to get the property back on its feet.
Besides changing the name to Ocean Casino Resort (to reflect the fact that it was first and foremost a casino), the new owner made many tangible improvements. The results showed up in the casino’s bottom line. Instead of losing money month after month, it started to make money. In January 2020, for the 7th month in a row, Ocean Casino Resort reported a profit of $10 million or more.
Accordingly, in August 2019, the Casino Control Commission and Division of Gaming Enforcement granted Luxor an interim license to continue in its existing capacity. Then, on May 6, 2020, the same two agencies were so impressed by all that Luxor Capital Group had accomplished, that they issued Luxor a permanent license.
Unfortunately, on March 16, 2020, the coronavirus forced the shutdown of all of the Atlantic City casinos, including Ocean Casino Resort. And it remained closed in May 2020, when Luxor Capital Group received its permanent license to own and operate it. However, after reopening on July 2, Ocean was one of the quickest properties to bounce back. In fact, according to the Division of Gaming Enforcement, Ocean Casino Resort was the only one of the nine Atlantic City casinos to report a profit during the third quarter of 2020.
Ocean Casino was also the only Atlantic City casino to register a year-to-year increase from 2019 to 2020. The casino’s gross operating profit for 2020 totaled $21.8, quadruple the $6.7 million it made in 2019.
Summary of improvements to Ocean Casino Resort to date
The following list summarizes the major improvements at Ocean Casino Resort since Luxor Capital Group took over.
- Additional signs on the casino floor to make navigation faster and easier
- New elevators between hotel rooms and the casino floor
- Safety panels installed on the escalator to the casino floor
- New restaurants and lounges
- Special money-saving deals at designated food, beverage, and retail shopping outlets
- Expanded entertainment offerings
- Frequently held prize drawings and giveaways
- A new WOW Player’s Rewards program, especially geared toward higher-end players
- The Cove, a luxurious salon on the casino floor for high-end slot players, and the Loft, a private suite (by invitation only) on the 44th floor for high-end table games players
How Ilitch Holdings fits into the picture going forward
It remains to be seen what kinds of additional enhancements Ilitch Holdings contemplates for Ocean Casino. At least, lack of money won’t be an issue. However, NJ gambling regulators still need to decide whether or not to grant Ilitch Holdings a license to operate in the state. Their final decision will rest not just on the applicant’s financial stability but on what they can do to benefit the casino, its players, and the surrounding community.
Ocean Online Casino
One area that clearly needs more attention is Ocean Online Casino. 2020 was a stellar year for online gambling, even after the land-based casinos reopened. But when compared to the revenue generated by other NJ gambling websites last year, Ocean Online Casino ranked dead last.
Another concern is the impact that the Ilitch Holdings part-ownership would have on sports betting options. Currently, sports bettors at Ocean Casino can place their bets at the William Hill Sportsbook on the premises in Atlantic City or online at WilliamHill.com or through the William Hill mobile app. However, Motor City Casino, which Ilitch also owns, has partnered with FanDuel Sportsbook. Does that mean that Ocean Casino Resort might replace William Hill Sportsbook with its competitor, FanDuel, too?
Complicating the picture further, NJ law prohibits its casinos from offering betting on sports teams with the same ownership as the casino. Since the owner of Golden Nugget Atlantic City, Tilman Fertitta, also owns the Houston Rockets, the casino’s sportsbook cannot post betting lines on the Rockets. Ilitch owns the Detroit Tigers and Redwings, so presumably, sports bettors at Ocean Casino Resort (and its online/mobile affiliates) would not be able to bet on the Tigers or Redwings.
Players will also want to know what changes, if any, will occur with the rewards program. Will Motor City Casino and Ocean Casino Resort become part of the same network? Can players earning rewards and comps at one casino redeem them at the other?
Meanwhile, the Luxor Capital – Ilitch Holdings partnership remains in the planning stage waiting for state regulators to approve it
In due time, the important questions regarding the logistics of how the proposed dual ownership would work should be answered. But first, the two parties will need the official go-ahead from state regulators to proceed. Ilitch Holdings has already applied for an interim license. Here at Michigan Online Casino, we will keep you posted on further developments.
Assuming the proposed partnership goes through, here is what the two parties have to say about it.
Luxor Capital Group:
“We are extremely excited about the proposed investment by the Ilitch organization, which, if approved, will give Ocean access to growth capital and provide a strategic partner to Luxor. We look forward to continuing to grow Ocean in partnership with the Ilitch organization for years to come.”
Ilitch Holdings acknowledged that it ‘recognizes the success the success that the team at Ocean has achieved over the past two years.” It “looks forward to working with the Ocean team and building on their accomplishments through continued investment in both the property and the customer experience.”