PokerStars bid to buy AC casino scrapped
May 1, 2013, 5:43 PM
ATLANTIC CITY, N.J. (AP) – A bid by the world’s largest online poker website to buy an Atlantic City casino has gone bust.
The Atlantic Club Casino Hotel announced Wednesday that a purchase agreement with the British parent company of PokerStars has been terminated. Had the deal gone through, The Atlantic Club would have been the first casino in the United States to be wholly owned by an Internet gambling company.
Chief Operating Officer Michael Frawley issued a brief statement Wednesday morning saying the deal is off, but would not say why. He and a spokeswoman for the casino hotel declined to answer questions, but said the struggling casino will remain open. The purchase by The Rational Group, PokerStars’ parent company, had widely been seen as perhaps the last chance to save The Atlantic Club.
New Jersey legalized Internet gambling this year so long as bets are taken within the state’s borders and do not involve sports betting; the state is fighting a separate legal battle to try to enact that.
“The advent of New Jersey’s online gaming legislation has changed Atlantic City’s future for the better and The Atlantic Club is absolutely going to be a part of that future,” Frawley said in the statement.
He said the casino’s 2013 revenue proves that customers are rediscovering it and it is more popular than ever.
Eric Hollreiser, a spokesman for The Rational Group, did not immediately return a message seeking comment.
On Tuesday, a poker site in Nevada run by Ultimate Gaming began taking bets, making it the first in the country to begin operating since the U.S. Justice Department declared two years ago it would allow states to approve online gambling.
New Jersey and Delaware also have approved such gambling and had hoped to begin taking bets by the end of this year. Those two states will offer the full range of games found at brick-and-mortar casinos, while Nevada’s law only legalized online poker.
PokerStars was one of three online companies whose operations were shut down by the U.S. Justice Department in 2011 in a crackdown on then-illegal Internet gambling that came to be known in the poker community as “Black Friday.”
The Rational Group agreed last year to pay $547 million to the U.S. Justice Department and $184 million to poker players overseas to settle a case alleging money laundering, bank fraud and illegal gambling. It admitted no wrongdoing, and says it is in good standing with governments around the world.
That situation was expected to pose a difficult hurdle to the company’s efforts to win licensing from New Jersey casino regulators, and the trade association representing the nation’s brick and mortar casinos strongly opposes the deal. The American Gaming Association applied to intervene in PokerStars’ licensing hearing, wanting to argue against the proposed purchase.
The Atlantic Club has ranked near the bottom of Atlantic City’s 12 casinos in terms of gambling revenue, and nearly closed several years ago. Recently, its decision to adopt a value-priced strategy with inexpensive food and drinks, free parking and low-roller casino tables, with gambling chips as low as 25 cents, has shown some success.
State Assemblyman Ralph Caputo, who supports extending casino gambling to northern New Jersey’s Meadowlands race track, hailed the demise of the PokerStars deal, calling the proposed purchase “disconcerting, to say the least.”
“PokerStars is a firm with a sordid history of criminal accusations of illegal gambling, money laundering, bank fraud, wire fraud,” he said. “”The firm’s way of conducting business threatened to undermine the integrity and public confidence that Atlantic City has worked diligently to build since the enactment of the New Jersey Casino Control Act enacted in 1977. 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.”
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Wayne Parry can be reached at
http://twitter.com/WayneParryAC
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