PokerStars will have to wait a bit longer to get back into the United States gambling market. On Wednesday it was revealed that the deal between its parent company, Rational Group, and The Atlantic Club Casino Hotel in Atlantic City has been scrapped.
NorthJersey.com’s John Brennan broke the news Wednesday morning on his “Meadowlands Matters” blog, reporting that the deal expired on Friday. Early reports were that the deal was for $50 million, though Brennan wrote that Rational Group would have purchased the gaming property from Colony Capital for just $11 million.
“…our purchase agreement with PokerStars has been terminated,” The Atlantic Club CEO Michael Frawley told Brennan. “The Atlantic Club remains committed to the aggressive pursuit of the opportunities presented by online gambling.”
The Atlantic Club is one of Atlantic City’s oldest casinos, built in 1980 by Steve Wynn’s Golden Nugget Companies and Michael Milken (it was originally named the Golden Nugget). After being sold multiple times, it was given its current name in 2012 when it was renovated and rebranded as a locals’ casino. It has been struggling mightily financially and the deal with Rational Group, agreed upon in January, was seen as a way to keep the property in business and save as many as 2,000 jobs.
One of the steps in the purchase process was for Rational Group to file an application for an Interim Casino Authorization (ICA). That application process was completed just a couple weeks ago, but not before the American Gaming Association (AGA) took the unprecedented step of filing a brief with both the New Jersey Casino Control Commission and Division of Gaming Enforcement, protesting the application. The AGA took exception to PokerStars’ presence in the United States after the UIGEA was passed in 2006, pointing to its willingness to skirt the law to continue to provide online poker games to U.S. customers.
In the brief, the AGA stated, “The ICA is designed to expedite conditional licensing of qualified licensees, not open the door into New Jersey’s gaming industry for applicants who cannot meet the law’s standards for integrity and honesty.”
New Jersey Assemblyman Ralph Caputo (D – Essex), sided with the AGA. Brennan quoted him as saying today, “PokerStars’ interest in Atlantic City casinos was disconcerting, to say the least, for many New Jerseyans. PokerStars is a firm with a sordid history of criminal accusations of illegal gambling, money laundering, bank fraud, wire fraud, and its founder remains under federal indictment for these charges.”
“New Jersey is known for its rigorous standard licensing practices. 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,” he added.
State Senator Raymond Lesniak (D – Union), one of online poker’s biggest supporters in the Garden State, was not too pleased, preferring to look at the bigger picture. “Unless the Atlantic Club can find a white knight to invest in its operations, they’re going to be a couple thousand people out of work, which will also have a broader impact on Atlantic City’s recovery,” he told Brennan. “I hope there’s a Plan B.”