Pokerstars Bid for Atlantic Club Casino Fails in Court
18th May 2013
Pokerstars $15 million offer for the Atlantic Club Casino Hotel in Atlantic City has been denied by a court, leaving the hotel looking for another buyer.
Yesterday an Atlantic County Superior Court judge ruled against PokerStars in their bid to purchase the Atlantic Club Casino Hotel. That purchase, had it succeeded would have given the owners of the world's biggest poker site the foothold they have been seeking in the US gambling market in preparation for a hoped for change in the gambling laws.
It was back in December last year that the poker giants agreed to purchase what was the former Atlantic City Hilton in order to fulfil the requirements of the proposed gambling bill which meant operators must maintain a physical presence within the state. That bill was enacted on 26th February this year.
Extension Declined
Colony Capital LLC is the owner of the property and according to a court filing, it was their decision to decline an extension of the contract with PokerStars, a division of Isle of Man-based Rational Group Ltd, after it expired last month. Colony was having difficulties selling the casino. This was due to there being $30 million worth of liabilities in unfunded pension. Being declined gambling in Atlantic City was another major factor, according to a PokerStars lawsuit.
The buyer had agreed to the funding of the operating shortfalls to the tune of $750,000 per week right up until the deal was closed. According to the complaint, Rational had paid $11 million until the owners terminated the deal on 26th April, when they were asked for a further $4 million as a termination fee.
Deal Soured
Rational believes the deal was terminated by Colony Capital so it would be free to sell at a higher price following the enactment of the state's gambling legislation. Eric Hollreiser, a PokerStars spokesman is reported as saying, "We are reviewing today's ruling. We remain committed to New Jersey and to contributing to its economy."
There is much opposition from the casino industry in the United States to PokerStars buying the property in Atlantic City, mainly due to last year's prosecution for bank fraud and money laundering handed down to the poker company. The charges were settled when an agreement was reached in July 2012 with the U.S. Justice Department.
According to Michael Frawley Chief Operating Officer for Atlantic Club, "We are pleased that the New Jersey court has dissolved the restraints it entered on May 6. We are now free to build on the tremendous opportunity provided by online gaming."
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