PokerStars Parent and Atlantic Club Agree to Sale Terms

John Mehaffey January 16, 2013 737 Reads

PokerStars and Full Tilt Poker’s parent company Rational Group has come to terms with Resorts International to purchase the Atlantic Club casino in Atlantic City, NJ.  This news comes after rumors that were floating last month that the Rational Group was in talks to purchase the ailing property formerly known as the Atlantic City Hilton.

Atlantic Club rebranded itself as the first Atlantic City to cater to locals.  While this approach has improved gaming revenue, the casino still lags the Atlantic City market.  The casino has continued to rank around 10th in terms of gaming revenue in New Jersey’s only location with legalized casino gambling.

In a joint statement, Resorts COO Michael Frawley and Rational Group stated:

The acquisition of the Atlantic Club Casino Hotel will secure up to 2,000 jobs and maintain the economic benefits the casino brings to New Jersey.

The Rational Group applied for an interim casino authorization from the Division of Gaming Enforcement.  If this step is approved, the next step would be for Rational Group to receive full approval from the New Jersey Casino Control Commission.  While the terms of the sale have not been released to the public, the sale is contingent upon Rational Group receiving a gaming license from the state.

PokerStars Obstacles to Receiving License in New Jersey

This sale is far from a sure thing.  New Jersey has a history of not allowing individuals and companies with a questionable past from operating an Atlantic City casino.  MGM Resorts was forced to sell their stake in the Borgata in 2010 due to its ties in Macau to Pansy Ho, the daughter of an alleged organized crime leader.  Steve Wynn was pushed out of Atlantic City for a similar relationship with alleged mobsters.

Rational Group has two things working their way.  The company settled its Black Friday action with the Department of Justice in 2012 by paying a fine of $547 million and agreeing to accept the player debt of Full Tilt Poker, which had gone out of business after its questionable accounting practices were exposed be federal authorities.  Rational Group did not admit any guilt settling this claim.

Receiving a brick and mortar gaming license is the first step in receiving an interactive license in New Jersey.  Current online gambling legislation would permit a company with a history of accepting bets from U.S. players to receive an interactive gaming license.  New Jersey’s legislation omits a bad actor clause, something most other states that have considered similar legislation have included in their laws.  This in no way guarantees Rational Group will receive a license, but it does give them one fewer hurdle in the regulatory process.    While this legislation has passed both New Jersey houses, Governor Christie has yet to sign the bill into law.  The governor vetoed a similar law two years ago.

There are many reasons that PokerStars may receive a license, but one major issue may be the market’s competing casino companies.  While the state may want to license Rational Group, Atlantic City competitors such as Caesars Entertainment and Boyd Gaming may not support the licensing.  These companies refused to enter the US online gaming markets due to its questionable legality.  Any company that refused to go this route may take exception to PokerStars’ parent company entering the Atlantic City market after their past of accepting U.S. online poker players.

 

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