Future Uncertain for PokerStars Atlantic City Casino Deal
This week news broke that a purchase contract between the parent company of mammoth online poker room PokerStars, the Rational Group, and a land-based casino in New Jersey called the Atlantic Club Casino Hotel, had expired, effectively ending PokerStars’ campaign to take over the struggling property.
After days of silence from PokerStars, in which poker news outlets and the mainstream media alike declared the deal dead, on Thursday the company finally spoke up about the status of the deal – which might not be quite ready for burial yet.
“The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey,” PokerStars spokesperson Eric Hollreiser said on Thursday night via Twitter.
Of the twelve casinos in Atlantic City, the Atlantic Club is one of the least successful; in 2012 it is reported to have lost $43 million. It has been on a long path of decline since its original construction thirty years ago – by Steve Wynn, no less – when it was actually the most profitable property in the city. PokerStars was said to have bid less than $50 million to buy the place, which it had promised to renovate and restore, preserving Atlantic City jobs in the process.
On Wednesday, the COO of the Atlantic Club, Michael Frawley, put out a statement declaring the purchase deal “terminated in accordance with its terms.”
The negotiations between Isle of Man based PokerStars and the Atlantic Club originated last fall, however there have been delays in PokerStars’ application for an interim license to operate the casino. Back in March, it was reported that the company had finalized and submitted its application to New Jersey regulatory officials, however in reality the application was not completed and filed until April. Reasons for the delay and the misinformation remain unclear.
Apparently PokerStars requested more time to complete the deal, though according to Hollreiser, PokerStars was notified of the deal’s termination earlier this week, when the company received a “purported notice of termination” from the Atlantic Club.
“It was the Rational Group’s expectation and understanding, based on the ongoing dealings between the parties, that the closing date would be extended to allow the transaction to be completed,” Hollreiser said.
In February, New Jersey became the third state to legalize some form of online wagering when Governor Chris Christie signed into law a new Internet gambling measure, following in the path of Nevada and Delaware. Should PokerStars take over the Atlantic Club, it will be a rebirth of sorts for the company in the United States gambling market.
PokerStars once offered US-facing real money online poker games, however it was shut down in April of 2011 after a crackdown on illegal gambling by US authorities, who also shuttered former PokerStars rival Full Tilt Poker at the same time. Last summer, PokerStars reached a deal with the US government to settle its case as well as to purchase the assets and settle the debts of Full Tilt. PokerStars re-launched Full Tilt Poker in regulated markets outside the United States last fall, making available the funds that were frozen in player accounts at that time. US-based players have yet to see the return of their accounts after more than two years, however earlier this year the Justice Department did appoint a company to oversee the remittance process.
While PokerStars admitted no wrongdoing when striking its deal with the feds, there are some who believe that the company’s continued participation in the US online poker market after the 2006 passage of the UIGEA should bar the company from re-entering the now-regulated market.
New Jersey State Assemblyman Ralph Caputo is of the opinion that PokerStars should be kept out of New Jersey. He cheered the news that the Atlantic Club deal may be off, saying, “PokerStars is a firm with a sordid history of criminal accusations of illegal gambling, money laundering, bank fraud, wire fraud. The firm’s way of conducting business threatened to undermine the integrity and public confidence that Atlantic City has worked diligently to build since the enactment of the New Jersey Casino Control Act enacted in 1977.”
“To become involved with a company like this one would have been an insult to everyone who has gone under scrutiny to work or do business in the casino industry over the last 30 years,” Caputo added.
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