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NJ Court Cancels Sale of Atlantic Club to PokerStars

An Atlantic County Superior Court judge has overturned the injunction that allowed PokerStars to resume its purchase of the Atlantic Club Casino in New Jersey.

Atlantic Club owners, Colony Capital LLC, successfully appealed a ruling from an Atlantic County judge that upheld the purchase agreement made in December. The judge ruled that the deal included a specific provision that allowed the casino owners to terminate the agreement before a certain date. The successful appeal will allow the investment firm to entertain offers for the historic casino and entrance into the New Jersey online gambling market.

The Atlantic Club – PokerStars deal has been a controversial deal since its inception in December of 2012. PokerStars and Colony Capital LLC agreed to a purchase agreement that would provide exclusive negotiation rights with the investment firm in exchange for a $15 million investment to the struggling casino. The Atlantic Club had been struggling to maintain operations and had nearly $30 million in unpaid pension liabilities.

The controversy of this purchase agreement increased as the American Gambling Association lobbied to terminate the contract given PokerStars’ unlawful past. Although PokerStars had admitted no wrongdoing in its case with the Department of Justice, gambling lobbyists and casinos have decried its operation in the United States in face of the Unlawful Internet Gambling Enforcement Act.

The purchase agreement eventually expired on April 30th and allowed Colony Capital LLC to pursue other buyers despite the $11 million investment from Stars. Furthermore, the investment firm announced that it demanded the remaining $4 million investment that was included in the original purchase agreement.

These actions led PokerStars to file a restraining order on Colony Capital LLC to prevent other buyers from making bids on the casino. The Rational Group claimed that Colony Capital terminated the agreement in order to sell it for a higher price following gambling legislation in February. Furthermore, it claimed that the investment group took the $11 million investment to look more attractive to other buyers. An Atlantic County judge ruled in favor of this injunction and it remained until the successful appeal from the Colony Group.

Rational Group representatives have stated that the company plans to review the details of the lawsuit and to continue its fight to enter the New Jersey market. Despite these strong claims, PokerStars has taken a major setback in its bid to enter the United States market. New Jersey provides the perfect platform for this entrance given a lack of a bad actor clause and potential jurisdiction compacts in its legislation. PokerStars also plans to explore the option of making a stronger bid for the casino, although this route would be an unlikely way to enter the New Jersey online gambling market.

 

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