PokerStars Appeals Judge’s Atlantic Club Decision

Posted on June 14th, 2013 by Todd Wilkins

PokerStars Appeals Judge's Atlantic Club DecisionCiting errors in a New Jersey judge’s ruling that terminated an agreement to acquire the Atlantic Club, PokerStars has filed an appeal.

After doling out $750,000 per week since signing a contract to purchase the casino several months ago that resulted in $11 million going to the Atlantic Club owners, Judge Raymond Batten ruled last month that PokerStars neglected to honor the agreement by failing to meet a stipulated date in which to secure a casino license.

In its newly-filed appeal brief spanning 34 pages, PokerStars claims that the April 26 date agreed to for approval of casino licensure was not set in stone and that the parties were in agreement that the vetting process by New Jersey regulators would possibly extend beyond that date. The legal battle now promises to drag on, as PokerStars is intent on staking a claim to the U.S. online poker marketplace.

That right to offer online poker to U.S. customers is in jeopardy after PokerStars virtually ignored the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006 and continued catering to American customers. Many are in agreement that partly due to its alleged flouting of that law, PokerStars was able to achieve an overwhelming dominance in the worldwide marketplace.

A number of industry insiders and poker players alike believe that PokerStars should be punished for their alleged deceitful practices. The American Gaming Association is chief among those who are opposed to PokerStars’ attempt to buy the Atlantic Club casino. On the other hand, the site has established a loyal following of players who would rejoice at the idea of including U.S. players into the mix once again, increasing liquidity and tournament prize pools in the process.

Whether or not the purchase will be allowed to continue will now be considered by a New Jersey appellate court. That court will also scrutinize other claims of judicial errors that PokerStars accuses Judge Batten of commiting. Among the errors cited include the judge allowing certain evidence to factor into his decision without said evidence being formally admitted as part of the court record.

PokerStars’s suitability to secure casino licensing is a matter to be decided by New Jersey gaming officials, who began investigations into the matter on April 10. But Judge Batten’s May 17 ruling that terminated the sales agreement between the parties likely ended the investigative process since the deal was off.

Unless the appellate court overturns Judge Batten’s decision, PokerStars will lose the $11 million already paid to the Atlantic Club. Another $4 million is due and owed to the casino pursuant to termination language included in the contract. While the $15 million is a mere drop in the bucket to the online poker behemoth, there is considerably more at stake in the lucrative U.S. online gambling market.

The Atlantic Club has been hemorrhaging money for years and sought to sell the casino prior to online gaming legislation being approved by Governor Chris Christie in February. Since Christie signed the bill, the casino’s value has certainly increased. This fact has not been lost on the Atlantic Club owners, who now hope to unload the casino to somebody else at a much higher price than the paltry $15 million that was agreed to with PokerStars.

Part of PokerStars’ argument is that it saved the casino from bankruptcy by keeping it afloat the past few months with those weekly $750,000 payments. That apparently is true, as the Atlantic Club posted gains of nearly 27% in 2013 thus far. That percentage far outpaced the other 11 boardwalk casinos, with most continuing to report declining numbers.

But those declining numbers may be a thing of the past once online gambling in New Jersey will launch in November. New Jersey is banking on revenue increases all over Atlantic City as a result of its newly-created online gambling regime. Most industry observers are in agreement that a revenue spike is undoubtedly on the horizon, with the only discrepancies being how much of an upswing will be realized. Several independent studies have projected exceedingly different revenue totals.

Whatever the New Jersey appellate court decides, PokerStars has made it be known that they won’t simply just go away. If the Atlantic Club deal falls through, there reportedly are other New Jersey casinos on the shopping block. The real question is whether or not PokerStars will be found to be a suitable casino license holder considering its past UIGEA transgressions.

But since New Jersey chose not to include any “bad actor” provisions in its Internet gaming regulations, the Garden State seems the most likely entryway for PokerStars to establish a presence in the U.S. market. Whether or not they have a right to be there is a matter of individual opinion, with many both for and against their inclusion. But the only opinion that will really matter in the issue is that of New Jersey gaming regulators.

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