New PokerStars Blog Post Addresses Atlantic Club Shutdown
In a new blog post released Tuesday, the world’s largest online poker room PokerStars says that it is “saddened” by the impending closure of the Atlantic Club Casino Hotel, a property it attempted – and failed – to purchase earlier this year.
The Atlantic Club, which filed for bankruptcy protection last month, is scheduled to cease operations in less than two weeks.
The casino will close its doors – and lay off its 1,600 staff members – on January 13.
Atlantic Club pulled the rug out from under PokerStars deal months ago
PokerStars and the Atlantic Club entered into a purchase contract in December of 2012 that would have seen the parent company of the online poker giant, Isle of Man-based the Rational Group, buy out the long-struggling land-based casino for $15 million.
Last spring, the Atlantic Club abruptly terminated the deal, citing the failure of PokerStars to gain an interim casino operating license prior to a drop-dead date stipulated in the purchase agreement as the reason for putting the brakes on the sale.
PokerStars claimed at the time that it was blindsided by the Atlantic Club’s move, and filed a law suit in an attempt to preserve the deal. The case was quickly decided in a New Jersey court in favor of the Atlantic Club, once a Hilton property that was originally developed back in the early 1980’s by Steve Wynn. The Atlantic Club was permitted to pocket $11 million that PokerStars had already fronted toward the $15 million purchase price.
The property had been re-branded in recent years as a more downmarket locals casino, adopting the rather depressing slogan of “a casino for the rest of us” at one point. Within a few months of the big fallout with PokerStars, the Atlantic Club found itself bankrupt and on the auction block.
It sold earlier this month to a partnership of Tropicana Entertainment and Caesars Entertainment for $23.4 million. The two companies plan to divide the assets of the property, with Tropicana getting the table games and slot machines and Caesars getting the hotel and real estate, and shutter it forever.
PokerStars sees closure as having been preventable
For its part, PokerStars believes that the closure of the casino and the loss of all the jobs it provided could have been avoided.
Company spokesperson Eric Hollreiser, the author of this week’s post on the corporate blog, wrote, “It’s always sad when hard-working people lose their jobs, especially during the holiday season. This is particularly sad, though, because it simply didn’t have to happen. At this time last year, PokerStars reached an agreement that would secure a new future for the casino, save the jobs of 1,800 employees and inject new blood, new technology and new finances into the Atlantic City casino economy.”
“It was a leap of faith and commitment of significant investment for PokerStars to do this considering there was not yet an online bill in New Jersey and we faced a challenging regulatory approval process,” the post continues.
Addressing specifically the Atlantic Club’s decision to halt the deal, Hollreiser wrote, “the casino’s then-owners gambled with their employees’ future. In hopes that the improved economic picture could lead to more rewards for them they walked away from our contract rather than wait another few months for the regulatory approval process to be completed.”
In the wake of the discontinued deal, PokerStars went on to form a partnership with the oldest casino property in Atlantic City, Resorts.
Resorts has since been approved to operate an online betting site in New Jersey, however PokerStars’ application has essentially been put on hold, with New Jersey gaming regulators taking issue with some of the company’s personnel. The DGE is open to revisiting the application should the company demonstrate “significant” changes within the 24-month hold period.
Founder Isai Scheinberg was indicted in New York federal court on charges of violating the Unlawful Internet Gambling Enforcement Act (UIGEA), amongst other infractions, charges to which he has yet to answer despite rumors that he may be working with the United States Justice Department to settle the charges.