ATLANTIC CITY, N.J. (AP) — With the announcement last week that Luxor Capital Group, a New York-based private investment firm, had assumed majority control of Ocean Resort Casino, many are wondering what the future holds for the struggling property.

But the company's intentions for Ocean Resort remain unclear.

"It's hard to say," said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada-Las Vegas. "It certainly doesn't signal that (Luxor) had a lot of confidence in what was going on if they took control, but you never know."

A public relations spokesperson for Luxor declined to comment on the company's plans last week when reached for comment. Luxor and JPMorgan Chase Bank were primary lenders to the property's former owner, Bruce Deifik, who purchased the former Revel Casino Hotel for $229 million in January 2018.

The term hedge fund often elicits negative connotations of vulture capitalists and corporate raiders stripping an acquired asset of every semi-profitable element before selling off the remains.

The reality of hedge funds, and their interest in casino gaming, is more complex than that.

Hedge funds are typically lenders that believe they are going to "outsmart the market by understanding better than the average investor the risk-reward relationship," said Robert Heller, co-founder and CEO of Spectrum Gaming Capital.

"Every investor wants to buy low and sell high, but hedge funds are much more opportunistic. They tend to be shorter-term focused," said Heller.

The original interest by high-yield investors (the precursor to hedge funds) in casino gaming was a result of perception of the industry as a "sin business" that was shunned by traditional investors, he said.

"Gaming developed a very good name in the high-yield market because the yields associated with gaming investments in the past exceeded the risk," said Heller.

The various bankruptcies in the casino gaming industry around 2008, particularly in the Atlantic City market, brought about a renewed interest by hedge-fund investors and private-equity firms.

For the Atlantic City casino industry, the involvement of hedge funds is not new and has yielded mixed results. In just the last decade, companies such as Avenue Capital purchased Trump Entertainment Resorts and Icahn Enterprises took ownership of Tropicana Entertainment.

Trump Entertainment is now a subsidiary of Icahn Enterprises, and Tropicana Entertainment was sold in 2018 to Eldorado Resorts as part of a $1.85 billion deal.

Even Revel, during its two-year stint between 2014 and 2016, saw a group called Chatham Asset Management assume a nearly 30 percent stake in the failed casino property.

Luxor has not made public any formal plans for Ocean Resort other than a $70 million investment, which will go toward a "world-class buffet, additional suite and room product, incremental investments on the casino floor and other exciting projects," according to a news release from the casino and the hedge fund.

On Feb. 6, the Casino Control Commission will consider approving a joint petition by Luxor and Deifik for a divestiture trust agreement, which will begin the process of the hedge fund being qualified to hold a casino license. A copy of the joint petition states that $50 million of Luxor's investment will go to pay down a principal balance of the JPMorgan loan made to Deifik to buy the property.

Even with a significant capital investment, there are fundamental flaws with the property, such as its unorthodox layout and location at the end of the Boardwalk, that even Luxor may not be able to rectify.

Heller said he believed the new team "needed to do more" before reopening the property June 27.

"They needed to make that property more special to make it work," he said.

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Information from: The Press of Atlantic City (N.J.), http://www.pressofatlanticcity.com