Colony Capital Fights PokerStars on Atlantic Club Casino Deal

Posted By: Date: 05/16/2013 at 12:00 am Leave a comment

The Rational Group, owners of PokerStars, filed a civil suit last week against Colony Capital after the company cut off negotiations with the online poker operator regarding the acquisition of the Atlantic Club Casino. The suit included a restraining order that prevents Colony Capital from selling the land-based casino to anyone else, and now, just days before the hearing, Colony Capital is finally speaking out as to why they no longer wish to hand the Atlantic Club over to The Rational Group. 

According to the current owners of the New Jersey casino, PokerStars breached its purchasing contract, and thus Colony Capital is fully within its rights to break off the deal. Ostensibly, the expiration date that applied to PokerStars’ having to pass a multitude of checkpoints has come and gone. Colony Capital said that they requirements were not met, so the deal is off.

“After [PokerStars] made [its] initial filings with the Commission and the [New Jersey Division of Gaming Enforcement],” read a statement from Colony Capital on NorthJersey.com, “significant information emerged publicly that [PokerStars’] principals were associated with serious criminal activities more extensive and unresolved than previously disclosed.”

That statement is clearly a direct result of accusations from the casino industry’s leading lobbying group, American Gaming Association. Back in March, the AGA spoke out brashly against PokerStars, claiming that the operator was clearly in violation of US federal law by providing its services to American residents in the past. Such activity resulted in the PokerStars domain being seized, the online poker site effectively shut down, by the US Department of Justice in April of 2011 – the ominous Black Friday of online poker – along with other major poker sites like Full Tilt Poker and Absolute Poker.

In contrast to the AGA’s claims, the indictment of PokerStars did not end with the same result as many of the other companies involved in Black Friday. PokerStars settled their case, paying off their own debts, as well as the considerable debts of Full Tilt Poker (in acquisition of that online poker operation), claiming no wrong doing in the process. Since their case ended with no admission of wrong doing, PokerStars my still have full rights to operate on US soil. That is the exact stance The Rational Group is taking in regards to its intended procurement of the Atlantic Club Casino.

The only thing that really stands between PokerStars and its ability to eventually operate in the US is a gaming license from the state of New Jersey. NJ regulators have yet to approve the company’s dual applications for licensing; one for the right to operate a brick-and-mortar casino, and one to operate an online gaming site within the state.

A hearing is set for tomorrow, May 17. From there, it’s up to a judge to decide whether or not either PokerStars or Colony Capital has, in fact, breached the contract of sale. If PokerStars comes out on top, Colony Capital will be forced to complete the sale of the Atlantic Club to The Rational Group for $15 million. If, on the other hand, PokerStars is proven to be a law-breaking operation, thus legally unable to operate in the US, Colony Capital will be permitted to open negotiations to sell the New Jersey casino to other potentially interested buyers.

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