After months of fighting in court, the parent company of online global gambling giant PokerStars has abandoned its attempts to buy the Atlantic Club Casino Hotel.
A lawyer representing the Rational Group has sent a letter notifying New Jersey casino regulators that the company is withdrawing its petition to take over the Atlantic Club. A copy of the July 17 letter was released Friday by the New Jersey Division of Gaming Enforcement to The Press of Atlantic City.
“We are no longer pursuing an acquisition of the Atlantic Club,” Rational Group spokesman Eric Hollreiser confirmed in an email Friday.
Spurned by the Atlantic Club, the Rational Group and its PokerStars affiliate have since linked up with Resorts Casino Hotel for Internet gambling. Atlantic City casinos are lining up partnerships with Web companies to offer online bets on slot machines and table games when Internet gambling begins in New Jersey on Nov. 26.
The Rational Group originally hoped to buy the financially troubled Atlantic Club for the steeply discounted price of $15 million, giving it a platform to enter Atlantic City’s casino market and grab a piece of the Internet gambling action.
However, the deal disintegrated when Atlantic Club pulled out in May. Rational Group responded with a lawsuit to uphold the sale, but the courts have ruled in Atlantic Club’s favor, giving it the right to seek a new buyer.
Hollreiser said the litigation continues but is now limited to monetary damages. Rational Group is no longer seeking a court ruling allowing it to buy the Atlantic Club. Instead, the company wants the courts to order Atlantic Club to return the $11 million that was spent toward the $15 million purchase price.
As a first step toward acquiring the Atlantic Club, the Rational Group had filed a petition in December seeking regulatory approval for “interim casino authorization.” The July 17 letter notes that the petition is being withdrawn as well as Rational Group’s plans to form an independent audit committee overseeing the Atlantic Club’s finances.
The Atlantic Club did not immediately comment Friday on Rational Group’s pullout.
In New Jersey’s regulatory process, interim casino authorization essentially is a temporary license allowing a company to take control of a casino hotel. Following that, New Jersey gambling regulators begin the exhaustive investigative procedures leading up to a full license.
A delay in Rational Group’s plan to secure preliminary licensing approval led to Atlantic Club killing the deal. Atlantic Club maintained that Rational Group agreed to contract language allowing either party to back out of the sale after April 26 if interim casino authorization had not been issued by then.
Now, Rational Group is seeking regulatory approval to operate as a “casino service industry enterprise,” which would allow PokerStars to partner with Resorts for Internet gambling. Web companies will need licensing approval from the Division of Gaming Enforcement to operate as online gambling providers.
“Rational Group’s application for Casino Service Industry Enterprise licensure will be reviewed as any other provider for Internet gaming,” division spokeswoman Lisa Spengler said in a statement.
PokerStars is expected to face intense regulatory scrutiny because of its past legal troubles. Last year, the company agreed to pay $731 million to settle a U.S. Justice Department lawsuit alleging money laundering, illegal gambling and bank fraud stemming from its poker website. The company admitted no guilt or wrongdoing in the settlement, which cleared the way for PokerStars to seek a license in U.S. markets where Internet gambling is legal.
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