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Jerome García August 29, 2020 3 min read
Borgata Accuses Ocean of Unfair Competition, Stealing Trade Secrets
Borgata Hotel Casino & Spa in Atlantic City is accusing Ocean Casino Resort of trying to steal its most profitable clients by employing people who used to work as marketing executives for the MGM-owned property.
According to the lawsuit filed in Nevada Thursday, Borgata claims its smaller competitor hired six of its top marketing executives, in breach of the non-competition agreements which state that at least two of the highest ranking personnel cannot be employed by a competitor for a year after leaving.
Ocean Getting Access to Borgata’s High-End Customers
One of the two former executives in focus, William Callahan, was hired by Ocean in July, but on leaving from Borgata, he retained a corporate-owned phone containing priceless information regarding the MGM casino’s top customers, a phone he so far refused to return.
The phone contains info about the most valuable customers of Borgata ranging from their personal cellphone numbers, gambling preferences, favourite foods and beverages, to how much the casino would be willing to discount in losses for them, as well as in what instances the casino might change the rules of the games for these players.
Borgata lawyers claim in the lawsuit that William Callahan was in charge of overseeing the casino’s highest-level customers, who spend on average visit to the property between $1.5 million and $4 million, with their total value to the Borgata being estimated at $25 million per year. These are the customers Borgata uses its corporate jet to fly them from the casino to other events.
Besides Callahan, Ocean hired Kelly Ashman Burke and 4 other former marketing executives of Borgata, in an attempt to cripple its competitor’s operations by stealing its trade secrets, an allegation officials from Ocean Casino Resort declined to comment due to the ongoing litigation.
Can Ocean Casino Steal Borgata’s High-End Market?
The lawsuit filed by Borgata comes at a time when the casino industry in Atlantic City is scrambling for market share amid the uncertainty brought by the coronavirus outbreak. Borgata only resumed operations July 26, yet it remains the biggest player among the 9 casinos, and to claim that Ocean can compete for Borgata’s top customers is an overstatement that might raise a few eyebrows.
Ocean Casino Resort became profitable only after reopening in 2018, being the former Revel casino which shut down in 2014 having incurred losses for more than two years. New Luxor Capital hedge fund owner of Ocean managed to turn things around for the casino property and improve its standings in the Atlantic City market, yet, despite Ocean being 6th for the first 7 months of 2020 revenue-wise, Borgata generates 3 times more.
The lawsuit that was filed in Nevada due to Borgata’s parent company, MGM Resorts International, being based there, also claims Ocean is violating New Jersey state law regarding unfair competition.