The new owner’s name is not public, but since the New Jersey Division of Gaming Enforcement (DGE) must give its approval, we will soon know.
Per the press release, the new owner will invest $70 million in upgrading the facilities. While that might sound like a lot of money, the 47-story property originally cost $2.4 billion.
Then known as the Revel, the casino was a financial flop and it was sold to Glenn Straub. Straub failed to make it pay and entrepreneur Bruce Deifik bought it a year ago for $200 million.
Since opening in June, 2018, the casino has sat at the bottom of the revenue list issued monthly by the DGE.
Upon the sale announcement, Deifik said:
“My family and I want to thank the 3,000-plus employees at Ocean for their tireless work to bring our property to life and put it on track to become the best gaming property in New Jersey. If approved and closed, this next round of investment into Ocean will put this property on an exciting path to growth.”
The problem is that Ocean Resort clearly isn’t the “best gaming property in New Jersey.” Someone needs to add something to get the casino into profitability.
What will happen to Ocean Resort online gaming?
Ocean is in the online gambling space, but it is not one of the top contenders. PlayUSA’s review doesn’t recommend the site as one of the better online gambling options and we have good reason for that opinion.
“the online casino needs to expand its game and banking method selections before it can enter the top tier.”
“With 40-plus years of experience as an internationally known brand and its own unique style and a big budget behind them, players have come to expect nothing less than excellence from the Hard Rock team.”
Online is an essential part of the Atlantic City casino offering. Contrary to fears before online gambling launched, brick and mortar casinos have achieved great synergies with their online operations.
The online business helps drive customers to the casino property. And the more successful the virtual offering, the bigger the benefit to the physical casino.
If the new owners understand the market, not only will the online offer continue, it should get a major makeover.
What will happen with sports betting?
The sportsbook at Ocean Resort opened in the sweet spot, just two weeks after New Jersey took its first legal sports bet.
That first bet was laid at Monmouth Park, where the sportsbook is run by global sports betting operator William Hill. Since then the sports betting business has been one of the most successful in New Jersey.
Ocean Resort has the same sports betting operator, so its live sports betting should already be top quality. What Ocean doesn’t yet have is any online NJ sports betting.
That’s a major weakness because the majority of sports wagers are now made online or using mobile devices. Without online sports betting, Ocean is missing out on the synergies available as well as a valuable extra income stream.
Why is Ocean Resort struggling in the first place?
Deifik invested $175 million in upgrading the casino and hotel, and the new sportsbook is right in the middle of the casino floor. That’s a temporary location, but nevertheless a prime position.
The bigger problem may be that there are just not enough customers to support nine casinos in Atlantic City. In which case, customers are able to pick and choose the best environment for their entertainment and betting.
Whatever the Ocean Resort is offering, it isn’t resonating with enough casino patrons. Ideally, a new casino should grow the market rather than cannibalize the existing customer base. But that’s not happening in this case.
The changes the new owners make must appeal not only to local customers, they must appeal to the wider catchment area, including New York. Ocean Resort needs to rediscover the magic that makes it a “destination.”
Is the New Jersey casino market saturated?
When the Hard Rock and Ocean Resort opened, the number of AC casinos increased from seven to nine. A 28 percent increase in the number of casinos is only sustainable in a growing market otherwise something has to give.
New Jersey is a growing market, thanks to sports betting and online gambling, but that growth may not be enough to support nine casinos. Especially when those casinos are located to close to each other.
Concentrating the casinos in Atlantic City brings benefits. It is one of the things that makes AC a destination. But concentration does make for intense competition.
Visitors can easily try out all the casinos, together with all their restaurants and entertainment events. An alternative is only a short stroll away on the Boardwalk.
Will the new owners bring success to Ocean Resort?
The low hanging fruit can easily be gathered within the $70 million that the new owners plan to invest. Better online options and an online sportsbook will help, but they won’t provide the x-factor.
What makes a casino succeed is something ineffable. It is a combination of ingredients that create the harmony that makes guests feel comfortable.
At PlayUSA, we know it when we feel it, but we couldn’t explain how to do it. Let’s hope the new owner gets it right.