By Wayne Parry, Associated Press
ATLANTIC CITY, N.J. (AP) – Kevin DeSanctis, the man who guided Atlantic City’s Revel casino-hotel through its tortuous development, only to see it struggle in the cutthroat East Coast gambling market, is stepping down as head of the $2.4 billion resort.
The company announced Wednesday that DeSanctis and chief investment officer Michael Garrity will resign from their positions with Revel Atlantic City but retain their jobs with Revel Group, the holding company that developed the resort and licenses its brand. There, they will work on developing amenity projects for Revel.
Taking over the resort’s day-to-day operations is Jeffrey Hartmann, a 20-year veteran of the casino, hospitality and leisure industry. His duties will begin once he is approved by New Jersey casino regulators.
The moves come less than two weeks before Revel is expected to file a pre-packaged Chapter 11 bankruptcy filing that will wipe out about two-thirds of its $1.5 billion in debt and give lenders a greater equity stake in the resort in return.
DeSanctis said the decision for him to resign was a mutual one, shared by the company’s lenders and board. The anticipated pace of Revel’s recovery played a large part. “They had one time horizon; we had another,” DeSanctis said. “We believe the property over a long term can be extremely successful, but it’s going to take some time. Not everyone has the luxury of that time frame.”
DeSanctis said Revel has done well in terms of pleasing group and leisure travelers but added there is much work to be done on the gambling side of its operation, an observation he called “a blinding flash of the obvious.”
The casino took in $122 million from its April 2 opening through the end of last year. In February, Revel took in just over $9 million from gamblers, ranking it 10th out of the city’s 12 casinos.
Asked what decisions he would change in retrospect, DeSanctis said Revel needed more time to better integrate its 55 technology systems. And the resort’s non-smoking policy – it is the only one of Atlantic City’s casinos to go totally smoke-free – will be reviewed in coming months, Hartmann said.
“Probably we could have focused a little more on how to make the smoking guests feel as welcome as the non-smoking guest,” DeSanctis said. “Our intention was never to make the smoking guest feel uncomfortable.”
Hartmann said he plans to a large extent to follow the business plan set out by his predecessors. He spent the past nine weeks as a consultant to Revel, examining its operations and staff.
“We are all stewards of the culture built by Kevin,” he said. He added that Revel would not rush into any immediate changes of its gambling operations.
“We’re going to be thoughtful, mindful of profitability,” he said. “We’re not going to be impulsive in terms of how we look at our gaming revenues.”
Hartmann most recently was president of the Hartmann Group LLP, offering specialized experience in the casino, hospitality and leisure industries. Before that, he was president and CEO of Mohegan Sun in Connecticut from January 2011 until October 2012.
Earlier in his tenure at Mohegan Sun, he served as chief operating officer for the Mohegan Tribal Gaming Authority from 2004 to 2010, and as its chief financial officer from 1996 to 2004.
Hartmann also served as chief financial officer for the Connecticut Sun of the Women’s National Basketball Association, and also worked as vice president of finance for the Foxwoods casino resort, also in Connecticut.
Revel opened last April but has languished near the bottom of Atlantic City’s casinos in terms of gambling revenue. Many hoped that Revel would be the kind of game-changer that Atlantic City desperately needs to shake off a six-plus year stretch of plunging casino revenues and declining market share.
But it never really caught on. After reaching a high point of $20 million in revenue last August, Revel’s take from gamblers sank, reaching just $6.2 million in November, a month in which all 12 casinos were affected by the aftermath of Superstorm Sandy.
Bob McDevitt, president of Local 54 of the Unite-HERE union, has been one of Revel’s most vocal critics. The casino is largely non-union and has the only policy of its type in Atlantic City, under which most employees involved in customer service have to reapply for their jobs every four to six years.
“We believed the project was going to struggle from the beginning, and it did,” McDevitt said. He said DeSanctis’ biggest mistake was “overestimating the market.”
McDevitt also said Revel’s timing was particularly bad, getting under way just before the national economy cratered in 2007, when it was too far along to abandon. Initial investor Morgan Stanley pulled out and took a $1 billion loss on the project rather than see it through.
“At a time when other projects around the gambling industry were stalled, they marched forward,” McDevitt said. “They took a risk and they got burned by it.”
Joe Brennan, president of the Interactive Media Entertainment & Gaming Association, a trade association for online gambling, said DeSanctis did good work in getting Revel up and running.
“It’s a great resort that someone else will unfairly get to take credit for one day,” he said.