Last year in August, Borgata filed a lawsuit against one of its most ferocious competitors, Ocean Casino as we’ve discussed here. In the lawsuit, Borgata claims that Oceans Casino raided Borgata’s marketing department in a bid to steal its biggest spenders, also commonly referred to as whales.
The lawsuit filed by Borgata Casino claimed that Oceans hired 6 marketing executives from Borgata. Oceans hired these staff members despite having non-compete agreements in place that prohibit 2 of the highest-ranking employees from working for a competitor for a year after exiting Borgata.
Even though both the feuding casinos are Atlantic City casinos, the lawsuit was filed in Nevada. This is because Borgata, which initiated the legal process, has its parent company, MGM Resorts International, based in Sin City. In New Jersey, the poaching of executives in this manner also violated state law regarding unfair competition.
What are the specifics of the Borgata & Ocean Casino lawsuit?
It appears that the two casinos are still feuding months later as we’ve covered here. None have as yet been able to reach an agreement regarding a forensic test that needs to be performed on a former employee’s phone. The phone in question belongs to William Callahan, one of the Borgata executives that were reportedly poached by Oceans.
Borgata claims that William left with a cellphone containing priceless details of Borgata’s top customers. The information contained on the phone is sensitive as it holds details such as the whales’ personal mobile contacts, their gambling penchants, what they prefer to eat and drinks, how much Borgata might be willing to discount their losses, and instances where the rules might be altered for these whales.
Borgata Casino states that if this information is manipulated by Oceans to work in their favor, it could effectively cripple its operations. As you can imagine, Borgata like many other retail casinos is relying on every cent to keep their heads above water during this tough period. As such, having their biggest and best customers poached from them is something that the casino cannot have.
William Calahan, who is at the center of this legal action, was overseeing Borgata’s whales, who typically spend between $1.5 million and $4 million for every visit before he moved to Oceans. Collectively, Borgata claims that the whales under Callahan’s mantle bring in an estimated $25 million. These whales are so valuable that Borgata has even been known to use the casino’s corporate jet to fly them to events while at the casino.
Because a federal judge has refused to intervene on the matter, Borgata has been forced to file several motions. This will see the legal process hopefully move further along than it already has. U.S. Magistrate Judge Brenda Weksler last commented on this issue in September when she denied motions presented by both sides.
This high stakes battle continues even as the Atlantic City markets continue to welcome new players into its thriving market. Borgata is still at the top of the table in the 9 casino market, a position it is not interested in letting go of.
Oceans Casino has also had quite an outstanding rise over the last couple of years. Oceans used to be Revel Casino before it was shut down in 2014 after only 2 years of being in business with no recorded profits. However, things turned around when it was re-opened in 2018 under the current Oceans brand.
Oceans casino, under the leadership of owner and NY hedge fund Luxor Capital, has managed to dramatically turn things around. Oceans’ position at the revenue table has improved year after year.
Through the first couple of months last year, Oceans was ranked 6th out of the city’s 9 casinos in regards to total revenue. Of course, this is barely a dent in Borgata’s purse, which reportedly records thrice as much revenue as Oceans.
Atlantic City casinos continue struggling
Even as Borgata and Oceans continue this long battle, the other 7 brick and mortar casinos continue to fight for survival. Things simply haven’t been the same ever since casinos were forced to shut down all operations in March. Even after returning to state-sanctioned restrictions and social distancing guidelines, things are still looking very murky.
Thankfully, mobile sports betting has helped to considerably allow the city’s casinos to stay in business, despite the lower revenue numbers. Online gambling is also fairing much better than its counterparts during the pandemic, which is great news for NJ casinos as the state is one of the few in the country that allows online gambling.
The good news is that even though it will be some time before people can enjoy retail casinos again like they used to pre-pandemic days, there is reason to smile. The vaccine is already making its way to frontline workers and at-risk senior populations.
Even though AC’s 9 casinos, like most hospitality, leisure, and entertainment businesses, have taken quite the hit in 2020, this new year promises to be better. Land-based gaming still has some ways to go before it can thrive again but continued growth in sports and online gaming has provided a much-needed source of revenue for brick and mortar operators.
By the time Q2 2021 is rolling around, it is expected that retail casinos should have seen some improvement as it’s expected that the vaccine will have made its way to the general population by then. Until it does, AC casinos will have to rely on online gambling as its financial bread and butter.
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