ATLANTIC CITY, N.J. (AP) - As a star-crossed Atlantic City casino changes hands yet again, only one owner has ever profited from it - the one who never had it open for even a day.
The Ocean Resort Casino, formerly known as Revel, is being taken over by a New York hedge fund, having run short of money yet again. Figures released Wednesday by state regulators show the property is in much worse financial condition that had previously been known publicly, losing money every month since September.
Luxor Capital is taking over from Colorado developer Bruce Deifik and his family, who owned the place for just over a year, and operated it for about six months.
Yet since the $2.4 billion casino hotel opened in 2012, only one owner has made any money from it.
That owner is the man who sold the property to Deifik last year, Florida developer Glenn Straub.
Straub, who says he specializes in acquiring distressed assets, bought the property out of bankruptcy court in 2015 for $82 million following its shutdown the year before. It had operated under Revel Entertainment for just over two years, and never came close to turning a profit, filing twice for bankruptcy during that brief time span.
He sparred with city and state officials over numerous issues, most significantly whether he needed to obtain a casino license for a property he planned to hire a third party to run.
Straub also waged court battles with former tenants and the property’s energy supplier, and ended up buying the power plant that he had accused of charging too much for service to the place.
The property remained closed throughout his three years as owner.
Yet Straub turned a profit when he sold to Deifik in January 2018 for $200 million.
Straub refused Wednesday to say how much of a profit he reaped by holding the casino during that time, but added, “They paid way more than $200 million.” Deifik said Wednesday he did indeed pay $200 million, plus unspecified carrying costs associated with the sale.
Straub said he derives no pleasure from “the bath that they took” on the deal.
He termed the transaction “small potatoes for us,” reiterating his interest in buying or leasing Atlantic City’s former Bader Field airport tract, a prime potential development site that remains empty.
On Wednesday, the New Jersey Casino Control Commission appointed Eric Matejevich, a veteran casino executive with a long history in the Atlantic City market, as a trustee for the casino while Luxor Capital seeks a casino license.
Luxor is assuming ownership of the casino from Deifik and his family, but the trust needs to remain in place while Luxor applies for and obtains a casino license.
Luxor, which lent him money for the purchase, plans to inject an additional $70 million into the casino, which is coming none too soon.
The state requires the casino to maintain at least $36 million on hand at all times, but it has recently fallen below $20 million, and has not met the minimum balance requirements since November, according to Sara Ben-David, a deputy attorney general.
Ocean Resort has been steadily losing money since summer ended, losing $3.2 million in September; $4.1 million in October; $5.5 million in November and $5.8 million in December. The casino responded by reducing its cash and reserves, and delaying payment on more of its bills, regulators said.
Its liquidity levels “are now a serious concern,” the Division of Gaming Enforcement wrote in a Jan. 29 report made public on Wednesday. The report said the property cannot currently meet its legal requirement to prove it can meet operating expenses and maintain continuous and stable casino operations.
New Jersey gambling regulators confirmed that Straub is the only owner of the property to have profited by owning it.
“The good news is that Ocean Resort is open for business and will remain open for business, and we’re excited about its future,” said David Rebuck, director of the state Division of Gaming Enforcement. “The bad news is that another investor lost their funds and did not succeed.”
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