Atlantic Club Owners Expect to Close Sale Next Spring
Earlier this month when the Atlantic Club Casino Hotel in Atlantic City went bankrupt, it was immediately announced that the move was in anticipation of a sale of the property at auction.
Sure enough, the long-struggling Atlantic Club, which in recent years has been branded as a downmarket locals casino, is set to hit the auction block, with sealed bids being accepted up until December 16, says the Press of Atlantic City.
The owners of the Atlantic Club, investment group RIH Acquisitions NJ LLC, will make a speedy decision, with the Press’s report noting that a final bid would be accepted only one day later on December 17. The deal is expected to be finalized in the spring of 2014.
PokerStars was interested in buying the ailing property
The Atlantic Club, which is one of the worst-performing of the dozen land-based casinos in Atlantic City, itself strained under the pressure of years-long financial woes, made headlines earlier this year when it put the brakes on a deal it struck in late 2012 with online poker behemoth PokerStars.
In December 2012, the parent company of PokerStars, Isle of Man-based the Rational Group, reached an agreement to buy the Atlantic Club, with news of the buyout breaking some weeks later in the early part of 2013. The final purchase price of $15 million was well below early reports that had put the figure in the $50 million range, and a far cry from the $513 million value it was assigned back in 2005 when it was sold to Colony Capital LLC.
This past spring, the Atlantic Club moved to abruptly halt the deal, despite the fact that PokerStars had already paid the cash-strapped Atlantic Club $11 million toward the $15 million price, money that was used to help the Atlantic Club meet payroll and other operating costs.
PokerStars, which said it was left blindsided by the sudden cancelation of the deal, sued to keep the purchase on track. A New Jersey judge ultimately ruled in favor of the Atlantic Club, allowing the casino to keep the $11 million.
Hotel purchase can bring entrée into New Jersey iGaming market
New Jersey became the third state in the nation to pass a law regulating some form of Internet wagering when it did so back in February. Being that New Jersey online gambling law requires that all real money online betting operations be tied to a land-based casino in the state’s gambling capitol of Atlantic City, gaining ownership of a casino provides a path to the state’s potentially very lucrative iGaming market.
For PokerStars, a deal with the Atlantic Club would have meant a re-entrance into the United States online poker market, in which it has not operated since 2011 when it, and its now subsidiary, Full Tilt Poker, were shuttered by the federal government amid a sweeping crackdown on offshore betting companies offering real money online poker to U.S. residents after the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), a law that doesn’t make such games outright illegal, but does restrict financial transactions relating to Internet wagering.
PokerStars didn’t take long to lick its wounds after the failed Atlantic Club bid, swiftly announcing a partnership with the oldest casino property in Atlantic City, Resorts Inc.
It should be noted, however, that the Resorts deal hasn’t yet provided the New Jersey foothold the company so desperately wants, as PokerStars has yet to be green-lighted by the New Jersey Division of Gaming Enforcement with only one week remaining before the market there launches to the public. New Jersey, which will allow a comprehensive array of online betting options when the real money sites go live next week, will launch its nascent online betting industry on November 26.