The parent company of online global gambling giant PokerStars said it hopes to salvage its faltering deal to buy the Atlantic Club Casino Hotel.
In a statement Thursday night, the Rational Group insisted the deal was not dead, even though the Atlantic Club announced Wednesday it had called off the sale.
“The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey,” company spokesman Eric Hollreiser said.
Atlantic Club spokeswoman Cath-leen Kiernan declined to comment about the Rational Group’s statement. Michael Frawley, the Atlantic Club’s chief operating officer, could not be reached Thursday night.
Based on the Isle of Man in the United Kingdom, the Rational Group is trying to become the first online gambling company to buy a land-based U.S. casino. The Atlantic Club deal would allow the company’s PokerStars affiliate, the world’s largest poker website, to capitalize on New Jersey’s new Internet gambling law.
Atlantic Club and the Rational Group originally announced in January they had reached a deal for undisclosed terms. However, the sale unraveled amid the Rational Group’s delay in getting regulatory approval to take over the casino.
Frawley issued a statement Wednesday saying that the Atlantic Club’s purchase agreement with PokerStars “had been terminated in accordance with its terms.” Frawley did not elaborate.
Hollreiser said the Rational Group wanted to extend the negotiations, but received a “purported notice of termination” from the Atlantic Club breaking off the deal several days ago.
“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,” Hollreiser said.
The unfolding dispute adds even more turmoil to a deal that was controversial from the start. PokerStars has faced intense criticism from the casino industry’s national trade group, the American Gaming Association, for allegedly being a “criminal enterprise.”
State Assemblyman Ralph Caputo, D-Essex, made similarly harsh statements about PokerStars on Wednes-day, after it appeared the Atlantic Club sale had collapsed. He issued a statement headlined, “Good news, no PokerStars.” In the statement, Caputo went on to criticize PokerStars for what he called the company’s “sordid history.”
“New Jersey is known for its rigorous licensing practices. 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,” Caputo said of PokerStars.
Last year, PokerStars agreed to pay $731 million to settle a U.S. Department of Justice lawsuit accusing the company of money laundering, bank fraud and illegal gambling stemming from its poker website. The company admitted no guilt or wrongdoing in the settlement.
New Jersey’s Internet gambling law, however, opened the door for PokerStars to seek a casino license. PokerStars is allowed to apply for licenses in U.S. markets where online gambling is legal.
The American Gaming Association submitted a legal brief opposing PokerStars’ submission to operate in New Jersey. The AGA also applied to the New Jersey Casino Control Commission to participate in the PokerStars licensing hearing, arguing the company should not be involved in the Atlantic Club’s ownership.
Although the sale remains in jeopardy, Atlantic Club says it will remain open for business and is pursuing other opportunities to take advantage of New Jersey’s nascent Internet gambling operations. New Jersey has set Nov. 26 as the day Atlantic City’s 12 casinos may start online wagering for their slot machines and table games.
Internet wagering will allow New Jersey gamblers to place bets using their home computers or hand-held electronic devices. It is expected to provide a huge boost for the Atlantic City casinos, with revenue estimates ranging anywhere from $200 million to $2 billion annually.
The financially ailing Atlantic Club was regarded as one of the potential leaders of Internet gambling through its proposed sale to the Rational Group. The casino has struggled in recent years, posting a gross operating loss of $19.2 million in 2012 and a nearly $20 million loss in 2011.
However, the Atlantic Club has been showing signs of a recovery this year. Through the first three months of 2013, its gambling revenue has climbed a combined 24 percent. In March, it led the industry with a 33 percent increase in gambling revenue.
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