Ilitch family buying half of Atlantic City's Ocean Casino

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Ocean Casino Resort in Atlantic City, N.J. (Courtesy of Ocean Casino Resort)

ATLANTIC CITY, N.J. (AP) - A New York hedge fund said Tuesday it is selling as much as half its ownership of Atlantic City's Ocean Casino to the Ilitch family, which owns professional sports teams, a nationwide pizza chain and a casino in Detroit. 

Officials of Luxor Capital Group LP told The Associated Press they have reached a deal with the Ilitch organization to acquire, through an affiliate, up to half the ownership of the casino.

Ilitch, which owns the Detroit Tigers baseball and Red Wings hockey teams, the Little Caesars pizza chain, and Detroit's MotorCity Casino Hotel, has already applied to New Jersey regulators for interim approval to own part of the casino.

The deal would close after all regulatory approvals have been obtained.

The amount of the Ilitch family's investment was not disclosed.

"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," the hedge fund said in a statement. "We look forward to continuing to grow Ocean in partnership with the Ilitch organization for years to come."

The Ocean Casino Resort opened nine years ago as Revel, the $2.4 billion resort that immediately ran into financial trouble, leading to two bankruptcy filings and its closure after just over two years of operation.

Colorado developer Bruce Deifik bought it in January 2018 for $200 million, and reopened it that summer. But he quickly ran out of money. Luxor, which was one of his lenders, assumed ownership of the casino in January 2019 in return for canceling Deifik's debt. Deifik was killed in a car accident in April 2019.

In May 2020, New Jersey regulators gave Luxor final approval to own and operate the casino. At that hearing, Michael Conboy, a partner in the hedge fund, told regulators the company planned to own and operate the casino for at least the next 25 years.

Luxor said it would not discuss details of the partnership, including any impact on day-to-day operations of the casino-hotel, until it gets deeper into the regulatory process with New Jersey authorities.

For all of 2020, the casino's gambling revenue was over $214 million a decline of more than 10% from a year earlier. But Atlantic City's casinos were closed for 3 1/2 months last year because of the coronavirus pandemic and continue to operate under restricted capacity limits.

It ranked sixth out of Atlantic City's nine casinos in terms of total gambling revenue, but third in terms of revenue from in-person gambling at its physical facility.

For the first nine months of 2020, the most recent statistics available, Ocean posted a gross operating profit of more than $12 million, compared with a $2.5 million loss in the same period a year earlier. It was the only Atlantic City casino not to post an earnings decline in the first nine months of 2020.