6th May 2013, 10:20 PM
PokerStars Files Suit Against Atlantic Club
According to Diamond Flush, failed purchase of the Atlantic Club in Atlantic City (pictured). The deal reportedly died last week after certain deadlines were not met, but the lawsuit could resurrect the purchase. Read the Diamond Flush article (http://www.diamondflushpoker.com).
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According to Diamond Flush, PokerStars has been granted a temporary restraining order that would "restrict the Atlantic Club from selling, offering to sell, etc., the Atlantic Club to anyone other than Rational." It would also "reinstate the Purchase Agreement according to present terms until expiration of the review period the Division of Gaming Enforcement and the Casino Control Commission in New Jersey." New Jersey officials, who have not commented on the sale, had not yet approved the ownership transfer. A judge approved the restraining order on Monday.
Diamond Flush added that on April 27, PokerStars received a letter from the Atlantic Club terminating its agreement. Moreover, money had already been exchanged between the two parties: "Upon termination, PokerStars would be required to pay an additional sum of $4 million [according to the contract] within 2 days of the termination to the seller and that the seller would be able to retain all advances made to the company prior to that time. Documents say that PokerStars has already paid to the Atlantic Club a sum of $11 million since it entered the agreement."
PokerStars reportedly received a letter on April 11 saying that its license application had been submitted in full. Twelve days later, according to the same news source, "PokerStars requested a formal extension of the contract terms and at the same time, offered to place an additional $7 million into an escrow account to cover all Atlantic Club's past and current worker compensation claims, a provision that was not part of the original contract." The Atlantic Club declined the offer.
Of note in Diamond Flush's article was a $225,000 payment from PokerStars earmarked for a new poker room at the Atlantic Club, which lacked one in the first place.
PokerStars Head of Corporate Communications Eric Hollreiser told PokerNews, "It was the Rational Group's expectation and understanding, based on the ongoing dealings between the parties, that the closing date would be extended to allow the transaction to be completed." He added that despite the misstep, "The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey."
The Garden State is open to full internet gambling, not just online poker, but each operator must have a physical presence in the state. Therefore, some have seen PokerStars' purchase of the Atlantic Club as a stepping-stone toward returning to the United States under its current brand name.
Amidst the drama is the American Gaming Association, whose membership includes the likes of Caesars and MGM. The AGA filed a brief with New Jersey gaming officials in March saying that PokerStars' entry into the market would "send a damaging message to the world of gaming, and to the world beyond gaming, that companies that engage in chronic lawbreaking are welcome in the licensed gaming business."
Copyright: Pocket Fives
Writer: Dan Cypra