PokerStars Dealt Setback in Quest to Purchase Atlantic City Casino

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Saturday, May 18th, 2013 | Written by Stephen Smith

PokerStars’ hopes of re-entering the United States online poker market were dealt a severe blow this week when a New Jersey judge ruled that the Atlantic Club Casino can pursue alternative buyers for their struggling Atlantic City commercial casino.

The ruling topped off several weeks of intrigue surrounding the deal – now presumed to be dead – between PokerStars and the ACC for PokerStars to purchase the New Jersey property.

After months of negotiations (the two parties first explored a deal in October of 2012), news emerged in late April that the Atlantic Club was terminating the purchase contract. PokerStars immediately sued to stop the ACC for terminating the contract, and in early May a judge granted a temporary restraining order that blocked the ACC from negotiating with any other parties.

That restraining order was the focus of yesterday’s hearing. After hearing arguments from both sides, the presiding judge decided to lift the TRO.

Does this mean the deal is off?

There remains a slight chance that all of this is part of of a negotiating ploy by the ACC to extract substantially more money from PokerStars than the original contract called for. But given the acrimony surrounding the process that both sides – especially the ACC – have displayed, such a possibility, while still plausible in theory, seems tremendously unlikely in actuality.

So, in short: yes, this appears to mean that PokerStars’ attempt to purchase the ACC has failed.

What did PokerStars do that allowed the ACC to break the contract?

We have yet to see a copy of the contract, so answering this question involves some speculation. What the Atlantic Club contends is that their contract with PokerStars called for Stars to be fully licensed by April 25th, 2013.

When that day came and went with no formal approval for PokerStars’ interim casino application, the ACC decided to terminate the contract on the grounds that PokerStars had failed to live up to this specific condition of the purchase agreement.

Is PokerStars done in New Jersey?

It’s not clear what other routes PokerStars might have to an online gambling license in New Jersey. Remember, New Jersey limits online gambling licenses to those who own land-based properties in the state.

Of the 12 casinos that meet that criteria, four are owned by Caesars. The ACC also seems out of the picture, leaving us with seven possible casinos. Several of those are owned or co-owned by entities that have voiced opposition to PokerStars in the past or are partnered with direct competitors of PokerStars.

What does this do to PokerStars’ larger chances in the U.S.?

PokerStars was already facing an uphill battle in any U.S. state, but failing to win this round in New Jersey can’t do much but make that hill even steeper still. A completed purchase and approval by New Jersey regulators would have gone a long way toward countering the argument that PokerStars is a “rogue” operator unfit for licensing in a regulated market.

Does this mean that PokerStars will never appear on a list of US-friendly online poker sites? Not necessarily – it just means the road to inclusion will now be more difficult and more costly than in a world where PokerStars successfully pulled off the purchase of the Atlantic Club Casino.