Judge rules against PokerStars in Atlantic Club dispute
We've all suffered big losses at the poker tables - but few have suffered losses as big as the one PokerStars recently suffered. PokerStars parent company Rational Group lost $11 million after a deal with online poker giant Atlantic City casino Atlantic Club fell through.
Last week, a judge issued a preliminary injunction preventing the owners of the Atlantic Club from selling the casino to another buyer after backing out of a deal with Rational Group. Rational blocked Atlantic Club on the grounds that its decision to withdraw from the deal while PokerStars' gaming license was pending violated New Jersey law.
Judge’s decision
But a later decision lifted the ban, allowing Club Atlantic to find a new buyer. According to the judge presiding over the case, it was clear that the contract was written in such a way that if Rational did not receive government approval by the end of April, both parties would have the opportunity to withdraw from the sale for any reason.
This is a major blow to Rational, which had already paid most of the purchase price for the troubled Atlantic City casino. To make matters worse, PokerStars won't get a penny back. The $11 million payment is intended to help the casino survive until the acquisition is completed.
"We saved their lives," a lawyer for the Rational Group told Supreme Court Justice Raymond Batten. "And then we lost."
The $11 million will be used to pay Atlantic Club's $15 million purchase price. While that's an extremely low price for an Atlantic City casino -- by far the lowest in the city's history of legalized gambling -- Rational Group also agreed to cover a $32 million shortfall in the casino's retirement accounts for its employees, and they It is likely that after purchasing the casino, up to $40 million will be spent renovating and upgrading the property.
A license to steal?
According to the Atlantic Club, they pulled out of the deal after realizing it would be difficult for Rational to obtain a gambling license in New Jersey due to previous litigation with the U.S. government and accusations against a handful of PokerStars executives. The American Gaming Association also publicly opposed the sale, marking the first time the association has intervened in a casino acquisition in this way.
PokerStars had hoped that acquiring Atlantic Club would give it access to New Jersey's recently regulated online gambling market. Atlantic Club still appears to be looking at online gambling as a potential future revenue stream, with chief operating officer Michael Frawley calling it a "huge opportunity."
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Source: www.casino.org
