Ocean Resort Casino’s grand opening is June 28.
Ocean Resort Casino received its casino license from the State of New Jersey on Thursday. Ocean Resort’s executives, who plan to open the former Revel Casino under a different name, spoke before the Casino Control Commission on Thursday.
Bruce Deifik, the Colorado real estate developer who bought Revel Casino from Glenn Straub for $200 million in January, convinced the casino regulators to approve his casino’s license. Deifik said his operation has fixed the problems associated with Revel Casino’s disastrous 29 months as an Atlantic City casino operation.
Revel Casino declared bankruptcy twice during its 29 months of operation, from April 2012 to September 2014. The casino’s time in business exhibited a particular mixture of bad planning, bad execution, and bad luck.
For instance, the previous incarnation of Ocean Resort Casino catered to high roller customers. The $2.4 billion casino is opulence and impressive. It sought to draw customers to a Las Vegas-style resort.
Revel Casino’s Marketing Mistakes
That was part of the problem. Revel Casino tried appealing to Las Vegas-style customers in a working class city inside a largely working class state. Even the majestic entrance, which required transit up an grandiose escalator, offended many visitors.
According to Frank Leone, Ocean Resort Casino CEO, Revel Entertainment did not treat the bulk of its customers the right way. Leone said, “If you’re someone betting $5 or $10, how often does someone come up to you, shake your hand, ask how your day is coming and ask if there’s anything you need? We are going to ensure that customers who don’t get personal attention at other properties get personal attention here.”
Ocean Resort: Better Comps and Rewards
Frank Leone said that Revel Casino mismanaged its high rollers, too — in the form of “meager or non-existent comps and discount offers.” He said that players at a Caesars Entertainment property who lost $10,000 in a night might receive $4,000 of that cash back in comps and rewards. Not so at Revel Casino. Instead, the same player would be hit with a $1,000 bill for a hotel room, meals, and amenities.
The Ocean Resort CEO said, “It’s simple economics. Milk is $3 a gallon. You can’t sell it for $5.40 a gallon when everyone else is charging $3.”
Placing a $2.4 billion casino in Atlantic City was a summarily bad idea. Signing an electricity-supply contract with ACR Energy Partners for a $3 million-a-month in energy costs was also a liability — one which convinced Brookfield Asset Management to drop its bankruptcy auction bid (and their $10 million deposit). Eventually bankruptcy auction winner Glenn Straub eventually took ACR Energy Partners to court to get out of the contract, then paid $30 million to buy them out, because the energy costs were so onerous.
Global Recession Hurt Revel
Beyond poor business pratices, Revel Casino had bad luck. The casino was planned before the stock market crash of 2008 and the global recession of 2009 and beyond. By the time Revel Casino opened, high rollers were hoarding cash and mass market players had stopped playing altogether in many cases. The decline caused 3 other Atlantic City casino into bankruptcy, while forcing another casino into bankruptcy. Revel Entertainment was hardly the only casualty of the economic crash.
Bart Blatstein: “An Exciting Time for Us”
Bart Blatstein, president of Showboat owner Tower Investments, said the opening of Ocean Resort Casino and Hard Rock Atlantic City on the same date (June 28) presents opportunities for other local businesses. The rejuvenation in Atlantic City could have a cascade effect.
Blatstein, a Philadelphia developer, said, “This is an exciting time for us. [Bruce Deifik] has embraced the opportunity of investing in Atlantic City and we’ve expressed faith in the resort’s renaissance when other investors were running away.”
