Atlantic Club Casino Hotel’s much-criticized sale to the parent company of online global gambling giant PokerStars has been scrapped.

Michael Frawley, Atlantic Club’s chief operating officer, issued a statement Wednesday saying, “Our purchase agreement with PokerStars has been terminated in accordance with its terms.”

Frawley did not elaborate. An Atlantic Club spokeswoman said the casino would not comment beyond Frawley’s statement.

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The Rational Group, the corporate parent of PokerStars, had proposed buying the financially ailing Atlantic Club to capitalize on New Jersey’s new Internet gambling law. However, the deal unraveled amid delays in the company getting regulatory approvals to take over the casino.

In the meantime, Frawley’s statement said the Atlantic Club will stay open and “remains committed to the aggressive pursuit of the opportunities presented by online gaming.”

“The advent of New Jersey’s online gaming legislation has changed Atlantic City’s future for the better, and the Atlantic Club is absolutely going to be a part of that future,” Frawley added.

David Rebuck, New Jersey’s top casino regulator, expressed confidence that the Atlantic Club will remain open, despite the sale falling through. He also raised the possibility that the Atlantic Club and the Rational Group could resurrect their negotiations or another would-be buyer could step in.

“It’s between the parties. They have to work out their agreement,” said Rebuck, the director of the state Division of Gaming Enforcement. “But I’m not worried about this casino or any other casino closing. Because of the Internet wagering law being passed, there are more interested buyers in Atlantic City than ever before. I’m feeling very good about 2013 and keeping all of the casinos open.”

The Rational Group, based on the Isle of Man in the United Kingdom, could not be immediately reached for comment.

The company announced plans in January to buy the Atlantic Club for undisclosed terms. Atlantic Club is owned by an affiliate of Colony Capital, a California-based private real estate investment group headed by billionaire Thomas Barrack.

PokerStars’ involvement in the deal ignited intense criticism from the American Gaming Association, the national trade group representing the casino industry. The AGA called PokerStars a “criminal enterprise” that should not be allowed to own an Atlantic City casino. Arguing against the sale, the AGA had applied to the New Jersey Casino Control Commission to participate in the Rational Group’s licensing hearing to buy the Atlantic Club.

The Rational Group has strongly denied the AGA’s allegation that PokerStars acted illegally. Last year, PokerStars agreed to pay $731 million to settle a U.S. Department of Justice lawsuit that included charges of money laundering, bank fraud and illegal gambling. The company admitted no guilt or wrongdoing in the settlement.

One New Jersey lawmaker, though, criticized PokerStars for its “sordid history.” Assemblyman Ralph Caputo, D-Essex, issued a statement Wednesday expressing relief that the Atlantic Club sale collapsed. He called PokerStars’ involvement “disconcerting, to say the least, for many New Jerseyans.”

“PokerStars is a firm with a sordid history of criminal accusations of illegal gambling, money laundering, bank fraud, wire fraud and its founder remains under federal indictment for these charges,” Caputo said. “The firm’s way of conducting business threatened to undermine the integrity and public confidence that Atlantic City has worked diligently to build since the enactment of the New Jersey Casino Control Act in 1977.”

The Atlantic Club deal would have been PokerStars’ first foray into the burgeoning U.S. Internet gambling market. New Jersey has joined Nevada and Delaware as the first states to legalize Internet gambling. In New Jersey’s case, gamblers will be able to play Atlantic City casino slot machines and table games using their home computers or hand-held electronic devices.

New Jersey has set Nov. 26 as the day casinos may start offering Internet gambling. In the meantime, Rebuck acknowledged that “we have a lot of work to do,” including completing the state regulations that will govern online wagers.

“Our goal is to get this operating as soon as possible,” Rebuck said. “I think everyone in the industry will tell you that we have been aggressive. We continue to be aggressive.”

PokerStars was planning to use the Atlantic Club as a platform for Internet gambling. It was also expected to invest in the Atlantic Club to help revitalize the struggling property, which suffered a $19.2 million gross operating loss in 2012. In 2011, it lost nearly $20 million.

However, the Atlantic Club is showing signs of a recovery this year. In March, it posted an industry-leading 33 percent increase in gambling revenue and is up 24 percent through the first three months of the year. Atlantic Club rebranded itself last year as “an affordable casino,” offering low-stakes gambling, free parking and inexpensive restaurant prices.

Frawley indicated that the Atlantic Club will continue to market itself as a low-cost casino now that the sale is off.

“In the interim, our intentions are to maintain our year-over-year market share gains through our unique brand positioning as ‘the best deal in Atlantic City,’’’ Frawley said in the statement. “The Atlantic Club’s 2013 revenue and net revenue trends are proof positive that customers are rediscovering us and our popularity is higher than ever.”

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