The Atlantic Club Casino Hotel in Atlantic City N.J., shown here on April 16, 2013, announced on May 1, 2013 that a deal for it to be sold to the parent company of the PokerStars online gambling web site has fallen through. The casino says it will remain open and look for other online gambling options. (AP Photo/Wayne Parry)
The PokerStars website entered into a contract to buy an Atlantic City casino with “their eyes wide open,” and now has to live with the consequences of the failed deal, the casino said in court papers.
The Rational Group, the Isle of Man-based parent company of PokerStars, struck a deal in December to buy The Atlantic Club Casino Hotel.
But the agreement stated that either side could cancel the transaction if The Rational Group did not get preliminary ownership approval from New Jersey casino regulators by a certain date. When that April 26 date passed, the casino scrapped the deal, and a state Superior Court judge upheld their action.
The Rational Group is appealing the ruling and wants to have its purchase deal revived, noting it has already given The Atlantic Club $11 million to help the once-struggling casino get through the slow winter months.
In its response to that request, The Atlantic Club said PokerStars knew what it was doing when it signed the contract.
“The trial court recognized that (PokerStars) should live with the bargain they willingly struck, even if the risk they assumed proved unfavorable for them,” the casino's lawyers wrote. They said the dispute involved a straightforward contract negotiated by experienced attorneys on both sides who knew what they were signing and agreeing to.
The matter now goes before a panel of appeals court judges, who could take several weeks to issue a ruling.
The parties signed a contract Dec. 24 for The Rational Group to buy The Atlantic Club for $15 million, by far the lowest price ever paid for a casino in New Jersey. But it also promised to fund a $32 million shortfall in the casino's employee pension account, and had discussed investing an additional $20 million to $40 million into the property once the deal was completed.
Atlantic Club lawyers said it became clear this year that Rational would have a difficult time getting a casino license in New Jersey.
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. Rational admitted no wrongdoing and said it is in good standing with governments around the world. Still, its recent history was expected to pose a hurdle to the company's efforts to win a New Jersey casino license.