Judge: PokerStars can't buy Atlantic Club casino
By
on May 18, 2013
PokerStars was denied its request to keep alive a $15 million offer to purchase the Atlantic Club Casino Hotel in Atlantic City, New Jersey.
A judge ruled yesterday in Atlantic County Superior Court against PokerStars, the world’s largest online poker site. PokerStars had agreed in December to buy the former Atlantic City Hilton as a foothold into the U.S. online gambling market. A New Jersey online gambling bill enacted on Feb. 26 requires operators to have a physical presence in the state.
Colony Capital LLC, which controls the property, declined to extend the contract with PokerStars when it expired last month, according to a court filing. PokerStars, the largest online poker site in the world, is a division of Isle of Man- based Rational Group Ltd.
Eric Hollreiser, a spokesman for PokerStars, and Cathleen Kiernan, a spokeswoman for the Atlantic Club, confirmed the judge’s decision. Rational attorney Wayne Positan didn’t immediately return a call seeking comment.
Colony had difficulty selling the casino because of $30 million in unfunded pension liabilities and declining gambling in Atlantic City, according to a PokerStars lawsuit. The buyer agreed to fund operating shortfalls of as much as $750,000 a week until the deal closed.
Deal Terminated
Through those payments, Rational had put out $11 million, according to the complaint. Owners, led by Colony, terminated the deal on April 26, and have asked for the remaining $4 million of the purchase price as a termination fee, according to the complaint.
Rational said it believes Colony Capital terminated the agreement so it could sell the property for a higher price after New Jersey enacted its gambling legislation in February.
“We are reviewing today’s ruling,” Hollreiser said in an e-mailed statement yesterday. “We remain committed to New Jersey and to contributing to its economy.”
The U.S. casino industry opposes the PokerStars effort to buy the Atlantic City property. The American Gaming Association’s protest to state regulators focuses on PokerStars’ prosecution last year for bank fraud and money laundering.
“We are pleased that the New Jersey court has dissolved the restraints it entered on May 6,” Atlantic Club Chief Operating Officer Michael Frawley said in an e-mailed statement. “We are now free to build on the tremendous opportunity provided by online gaming.”
PokerStars reached an agreement with the U.S. Justice Department in July 2012, settling charges related to the company’s offering of online poker in this country.
The case is Rational Group US Holdings Inc. v. Resorts International Holdings, ATL-C-43-13, Superior Court of New Jersey, Atlantic County (Mays Landing).
http://www.nj.com/business/index.ssf/2013/05/pokerstars_bid_to_buy_atlantic.html
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