PokerStars deal to acquire Atlantic Club declared DOA

TAGs: Atlantic City, atlantic club casino hotel, New Jersey Online Gambling, Playtech, PokerStars

pokerstars-atlantic-club-deal-deadThe deal to sell Atlantic City casino the Atlantic Club to the parent company of online poker giant PokerStars has been declared officially dead. On Tuesday, unconfirmed reports said the deal to sell the casino to Isle Of Man-based company the Rational Group was in trouble, but Atlantic Club COO Michael Frawley issued a statement on Wednesday saying the deal “has been terminated in accordance with its terms.” PokerStars has yet to issue any comment on the matter.

Following rumors of a deal in December, Rational confirmed its intentions to purchase the Atlantic Club from its Colony Capital LLC owners in early January, after which it applied to the New Jersey Division of Gaming Enforcement for an interim casino license. Delays in getting Rational’s paperwork in order meant the 120-day timeline for license approval didn’t begin until April 10, while the original casino sale agreement reportedly put an April 26 deadline for Rational receiving license approval.

Champagne corks are likely popping at Caesars Entertainment, whose execs had embarked on a ‘take no prisoners’ campaign – on their own and also under the guise of the American Gaming Association – to stave off PokerStars’ potential participation in New Jersey’s online gambling market. News of the deal’s demise is also being celebrated by state Assemblyman and former casino exec Ralph Caputo, who said New Jersey would be in trouble if it was to issue a casino license to a company with PokerStars’ “sordid history of criminal accusations.”

On the flip side, the deal’s death is being mourned by New Jersey state Sen. Ray Lesniak, who had addressed Tuesday’s rumors by saying PokerStars’ opponents “are out there in full force trying to prevent them from operating in New Jersey.” Following Wednesday’s confirmation, quoted Lesniak reflecting on how the Atlantic Club had warned state legislators that a couple thousand employees would be out of work unless Rational’s license was approved and the sale went through. As such, Lesniak questioned the decision to scuttle the deal unless the Atlantic Club “can find a white knight to invest in its operations … I hope there’s a Plan B.”

Frawley certainly appears to believe he has options. His statement said the casino “remains committed to the aggressive pursuit of the opportunities presented by online gambling … The Atlantic Club is absolutely going to be a part of that future.” Yes, but how, exactly? Colony Capital have likely bought into overenthusiastic projections of the state’s online gambling revenue potential, which made the Atlantic Club’s purchase price appear to be small change. So who might be stepping up with a sweeter offer?

For what it’s worth, online gambling software outfit Playtech has something of a history of complicating deals involving two other parties. And it was just last week that CEO Mor Weizer told analysts the company was in “certain discussions with various groups with regards to different types of partnerships in the US.” In March, Weizer stated that the company would be “disappointed if we didn’t get something signed” in New Jersey, where it already has a toehold thanks to its 9.9% stake in horseracing outfit Sportech. Playtech is currently sitting on a mountain of cash via the buyout of its stake in the William Hill Online joint venture, so financing an Atlantic City casino purchase would be a simple matter of writing a check.

Playtech may have also been emboldened by the (generally) warm welcome PokerStars’ casino bid received from New Jersey authorities, despite the lingering taint of the Black Friday indictments. Playtech has already stated its intention not to apply for an interactive gambling license in Nevada, where ‘bad actors’ are judged far more harshly. Given Playtech majority shareholder Teddy Sagi’s mid-1990s fraud conviction in Israel, such considerations must be taken into account. But like Stars’ owner Isai Scheinberg, Playtech execs insist Sagi has no role in the company’s day-to-day operations.


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