Parent company of online poker games to buy casino

Rational Group files papers to buy Atlantic Club Casino Hotel

Financial trends and news by Steven Loeb
January 16, 2013
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(Updated to reflect comment from Rational Group)

For the first time ever, an Internet gambling company is attempting to purchase an Atlantic City casino.

Rational Group, the parent company of online poker games PokerStars and Full Tilt Poker, has confirmed to various media outlets that it has agreed to purchase Atlantic Club Casino Hotel in Atlantic City.  

The prosposed terms of the deal, including how much Rational Group would be paying to buy the casino, have not been disclosed to the media.

“The Rational Group, which operates PokerStars and other global gaming brands, has agreed to acquire The Atlantic Club Casino Hotel in Atlantic City, NJ from Resorts International Holdings pending the grant of an Interim Casino Authorization by the relevant New Jersey authorities. The acquisition of The Atlantic Club Casino Hotel will secure up to 2,000 jobs and maintain the economic benefits the casino brings to New Jersey.  During this interim period, the Atlantic Club Casino Hotel will operate as normal under current management, who will be retained following completion of the acquisition,"  Eric Hollreiser, Rational Group head of corporate communications, told VatorNews.

Papers seeking regulatory approval to buy the Atlantic Club from Resorts International Holdings have been filed with the New Jersey Division of Gaming Enforcement, which has up to 90 days to conduct its investigation and file a report with the Casino Control Commission. If Rational Group gets the approval, the company will then need to get the approval of the New Jersey Casino Control Commission, which would have 30 days to conduct its hearing, in order to complete the purchase.

Rational Group,  which is based on the Isle of Man in the British Isles, is attempting to buy the casino from Resorts International Holdings, an affiliate of Los Angeles-based hedge fund Colony Capital, which has owned the casino since 2005.

Colony Capital has good reason to want to sell. There are 12 casinos in Atlantic City, and the Atlantic Club ranks 10th. Through the first three quarters of 2012, the casino suffered a gross operating loss of $13.6 million. 

The deal is expected to be watched closely, given that PokerStars was forced to pay the U.S. government $547 million to settle money-laundering charges last year. As part of the settlement, the company was not forced to admit any wrongdoing and can re-enter the U.S. marketplace in jurisdictions where online gambling is legal.

Online gambling is not yet legal in the state of New Jersey, though  the New Jersey Legislature approved a bill that would legalize online gambling in December. The measure is still awaiting Governor Chris Christie’s signature that would make  it into law. Christie has not states whether or not he supports the measure, and he has until early February to sign or veto it.

The news was first reported by the Press of Altlantic City late Tuesday.

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