Selling the Atlantic Club Casino Hotel to the parent company of PokerStars would net the city additional capital investments of $30 million this year and a total of $80 million over the next five, said a casino executive who has been lobbying the governor to sign a bill authorizing Internet gambling.
“When people are questioning if this is good for Atlantic City, I think they are being a little short-sighted,” Michael Frawley, a chief operating officer for the casino, said of Internet gambling. “This is again a defining moment for Atlantic City. ... Are we going to let it pass by?”
Knowing the state Legislature was poised to authorize the activity, Frawley said he and Eric Matejevich, a co-chief operating officer at the casino, approached several companies specializing in online gambling four or five months ago. Two weeks later, Atlantic Club casino executives were on a plane to the Isle of Man — where the Internet gambling company and its parent, Rational Group, is based — to talk about a possible deal, Frawley said.
Since then, representatives announced they have reached a deal, though it isn’t final and would be subject to other factors, including regulatory approval. Representatives for Rational also haven’t commented on whether they would be interested in buying the casino if Gov. Chris Christie were to scuttle the Internet gambling bill. Only Nevada and Delaware have authorized the activity.
Frawley, who has lobbied legislators and Christie’s office to enact the legislation, said he doesn’t want to consider the possibility of a veto.
“I don’t know PokerStars’ position on if the bill doesn’t get passed, and it’s certainly something I don’t want to contemplate,” he said. “I have full confidence that the governor will recognize the opportunity.”
Atlantic Club, which struck a deal with its lenders in 2011 to allow the financially strapped casino to operate for one more year, had been shopping for a new owner for some time. PokerStars would not only purchase the casino but the company has committed to investing in the property, including refurbishing the hotel and constructing a poker room that “would be fitting of their status in the Internet world,” Frawley said.
The company also would commit to opening up a U.S. corporate office and data center in Atlantic City as well as a call center elsewhere in New Jersey, Frawley said.
Authorizing Internet gambling has broad support, including lawmakers from both political parties who approved the legislation, analysts who called the measure a “lifeline” for Atlantic City casinos, officials of the Casino Association of New Jersey as well union representatives who called on Christie to sign the bill last week.
But some other industry observers said they are unconvinced. Internet gambling may net Atlantic City some immediate capital investment, but it eventually will erode the city’s customer base, said Wayne Schaffel, a public relations consultant and former Atlantic City casino executive
“There’s no doubt this bill has a potential to make money,” he said. “My argument is at what price.”
People are already making fewer trips to Atlantic City, Schaffel said. By providing a way for people to conveniently play every casino game available in Atlantic City on the Internet, gamblers will be even less inclined to visit the city in person, he said.
“When convenience wins, convenience wins absolutely,” Schaffel said.
While Internet gambling would appear to immediately benefit Atlantic Club, Frawley said he believed other companies would make similar investments in the city that would bring in additional investment and jobs. Atlantic City is facing mounting pressure from nearby casino markets, and needs a way to lure more visitors, Frawley said.
Internet gambling would offer a venue to cross-market the resort to millions more people, and eventually lure them to visit Atlantic City. That is because gambling is a social activity and people will want to visit a casino in person, said Frawley, citing a PokerStars-sponsored tournament that he attended in the Bahamas attended by 1,500 people playing for five days.
“There’s always going to be a social component of this,” he said. “You can eat dinner by yourself or you can go out to dinner ... there’s always going to be a social opportunity.”
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