Christian Leone founded Luxor Capital Group in 2013. By 2016, Luxor’s hedge fund controlled $3.8 billion in capital.
Luxor Capital Group, a New York hedge fund, is the new owner of Ocean Resort Casino (formerly Revel Casino). Luxor Capital is the mystery group which bought the Atlantic City casino from Bruce Deifik.
Bruce Deifik, a Denver-based hotel and real estate developer with properties in 5 states, announced the sale of Ocean Resort Casino earlier in January. The casino had been open only since June 28, 2018, so the sale was a surprise to many followers of east coast gambling.
To close observers, Bruce Deifik’s sell of the casino made sense. In December, Deifik had been sued by a former partner in HQ2, a nightclub in Ocean Resort Casino. Documents from that lawsuit claimed Bruce Deifik was facing cashflow problems.
The sell to Luxor Capital Group opens another chapter in the short and troubled history of the former Revel Casino. This is the fourth ownership group since the casino’s grand opening in April 2012.
Bruce Deifik’s Ocean Resort Casino
Bruce Deifik bought Revel Casino in January 2018 for $229 million. JP Morgan-Chase and Luxor Capital were the two main financiers. JP Morgan-Chase made a bridge loan of $110 million, while Luxor made a bridge loan of $122.5 million.
Last June, the loan to JP Morgan was paid, though the country’s largest bank made a second loan of $175 million to Bruce Deifik. Frank Leone, the chief executive of Ocean Resort Casino, said in a press release on the announcement of the sale: “We are incredibly proud of the progress our team members have made in establishing Ocean Resort Casino as one of the premier gaming and leisure destinations in the United States.”
“We opened up the property even more effectively to the Boardwalk, and activated retail spaces and food and beverage options that have been extremely well-received by our guests.”
Revel Entertainment’s Failure
Ocean Resort Casino continues to have the same issues which plagued Revel Entertainment, the original ownership group. The Revel Building cost $2.4 billion to build. It was envisioned as a Las Vegas-style integrated casino resort.
The building has been described as the most beautiful skyscraper in the US east coast. The problem is Atlantic City is a working class town which attracts working class gamblers. Casino goers complain that it is difficult to get to the casino part of the building, while the building itself is located on the wrong part of the Boardwalk.
The Revel Building also is immense, which makes energy costs high. Originally, exorbitant building costs, $3 million a month energy bills, and a lackluster customer base led to two bankruptcies in 29 months. The second bankruptcy, in September 2014, led to the sale of Revel to Glenn Straub, a Florida real estate developer.
Polo North Era
Glenn Straub never received a casino license or alcohol license from New Jersey regulators. Instead, Straub’s Polo North became embroiled in lawsuits with ACR Energy Partners and a bevy of previous tenants at the Revel Building. Polo North also sued two New Jersey regulatory agencies over the licensing situation.
When it became apparent that Glenn Straub would never receive a casino license — or perhaps because Straub always planned to flip the Revel Casino — Polo North sold the property to Bruce Deifik. At the time (just one year ago), Deifik’s purchase looked like it would usher in a new era of success.
Ocean Resort Casino Associations
Ocean Resort Casino made a deal with Hyatt to manager the hotel, while it made a deal with DraftKings to operate the land-based sportsbook and live in-play sports betting app. Joey Morrissey, a notable New York City nightclub guru, was brought in as partner on the HQ2 nightclub on the site.
Though some wondered if Atlantic City could support a 9th casino, Bruce Deifik made several changes that were thought to have improved on Revel Casino. Over the months, Atlantic City media members and industry experts whispered that Ocean Resort was in trouble. Joey Morrissey’s lawsuit, which alleged Deifik owned Morrissey $10 million, signalled real trouble for the property.
Luxor Capital’s Purchase
The new deal gives Ocean Resort Casino a fresh start. Luxor Capital announced it would invest $70 million to make improvements on the casino, including large suites and hotel rooms, commitments to bring entertainment acts and player events to the casino, and a massive buffet.
Ocean Walk Resort Inc., Bruce Deifik’s property development company, remains the license owner for the casino. Deifik remains a minority partner in the Ocean Resort Casino. Joey Morrissey’s lawsuit continues.
