PokerStars Throws in the Towel on Atlantic Club Deal
The parent company of online poker giant PokerStars, Isle of Man-based the Rational Group, has abandoned its efforts to close a deal to purchase the embattled New Jersey casino the Atlantic Club Casino Hotel, reports local blog NorthJersey.com.
“We are no longer pursuing an acquisition of the Atlantic Club,” a spokesperson for the Rational Group, Eric Hollreiser, said late last week via email.
Deal timed out due to licensing delay
PokerStars had been in negotiations to take over the struggling land-based property since late last year.
New Jersey, which became the third state in the nation to regulate some form of online betting when its governor, first-term Republican and 2016 presidential hopeful Chris Christie, signed the state’s Internet gambling bill into law this past February, requires that online wagering operators be tied to a land-based property in the state to qualify for licensing.
The deal was closely watched by gambling industry observers, as PokerStars worked to re-enter the United States online gambling market after its site was shut down in April of 2011 amid a government crackdown on illegal offshore gaming companies that continued to offer U.S.-facing online poker games after the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), a law that did not outright ban online wagering but rather restricted certain financial transactions relating to Internet betting.
The Atlantic Club pulled the plug on the deal earlier this spring, after the Rational Group failed to secure an interim operating license prior to a drop-dead date stipulated in the purchase contract, which was signed by both parties in December of 2012.
PokerStars sued to continue the deal, however New Jersey courts sided with the Atlantic Club and upheld its termination of the contract.
Company now pursuing return of funds already invested
With word that PokerStars was giving up on its efforts to take over the ailing Atlantic Club, which ranks among the worst performing of Atlantic City’s twelve land-based casino properties and last year rebranded itself as a downmarket “locals only” casino, adopting the rather morose motto of “a casino for the rest of us,” came news that PokerStars will now seek to recover $11 million that it had already invested in the property prior to the halting of the deal.
The total purchase price, months ago rumored to be in the range of $50 million, was $15 million. PokerStars had fronted some of the cash to the Atlantic Club to pay employee wages and to help with other operating expenses.
PokerStars was able to secure another Atlantic City deal
Despite the setback surrounding its efforts to buy the Atlantic Club, things began to look up for PokerStars last month, when it announced that it had reached an agreement to operate an iGaming venture in the Garden State with Resorts, Inc., the oldest casino property in New Jersey’s gaming capitol.
PokerStars is the world’s largest online poker room, having earlier this year celebrated the playing of the one hundred billionth hand of online poker on its web site.
Both PokerStars and Resorts must be separately licensed before they can launch their real-money Internet wagering site. Games are scheduled to go live in New Jersey on November 26.
“Rational Group’s application for Casino Service Industry Enterprise licensure will be reviewed as any other provider for Internet gaming,” remarked Lisa Spengler, who serves as spokesperson for the New Jersey Division of Gaming Enforcement.
PokerStars may eventually expand beyond New Jersey
PokerStars is not content merely to conquer the New Jersey iGaming market. Earlier this summer, news broke that the company is also investigating the possibility of operating a real-money gambling web site in the state of California, which has not yet regulated online wagering but is looking into doing so.
Should California begin offering Internet betting, it would be by far the largest such market in the U.S., being that it is the most populous state in the nation.
