PokerStars eyes up New Jersey casino
Online poker giant reportedly weighing up Atlantic City casino acquisition to facilitate return to US market.
PokerStars is lining up a bid to acquire an Atlantic City casino as a means of obtaining a licence in the soon-to-be regulated US market.
The move, news of which comes in the same week a new egaming bill progressed in the New Jersey legislature, could see PokerStars gain an unexpected foothold not only in the Garden State but also nationally should federal regulation pass in the future.
According to The Wall Street Journal, PokerStars is in talks to acquire the struggling Atlantic Club Casino Hotel from investment group Colony Capital for a fee thought to be less than $50m.
PokerStars shut down its US-facing operations in April last year following the Black Friday indictments and despite reaching a $731m settlement with the US Department of Justice in July without admitting any wrongdoing, was set to be blocked from applying for a licence in New Jersey under a ‘bad actor’ clause. However that particular provision was removed from the Senator Raymond Lesniak’s online gambling bill this week.
Lesniak’s online gambling bill could be passed before the end of the year after an amended version was approved in the state Assembly on Tuesday.
The removal of the ‘bad actor’ provision, relating to those operators which continued to accept US bets after the Unlawful Internet Gambling Enforcement Act (UIGEA) came into force in 2006, could allow PokerStars to effectively piggyback on the land-based casino’s licence and therefore gain entry into the market.
The bill would allow Atlantic City casinos to offer a full range of online gambling, including casino games. Lesniak had hoped it would be passed before the end of New Jersey’s previous legislative session which ended in July, however it was delayed until autumn amid uncertainty over whether state Governor Christie would put his name to the regulation. This follows Governor Christie’s 11th-hour veto of an earlier Lesniak bill in March 2011.
With Atlantic City’s casinos struggling to make a profit, some smaller casinos could be acquired for just a few million dollars.
Discussing the strategy of buying a casino in order to acquire a licence earlier this year, Jeff Ifrah, a founding partner at Washington DC firm Ifrah Law, said that pre-UIGEA this was “precisely the model that most EU operators were looking at” but has since been put on the back burner.
“After UIGEA issues become complicated. Most of the land-based casinos that had entered those discussions broke them off because they didn’t want to get involved in a European operator due to the alleged UIGEA violations.
“A year later I think this is the right time for those discussions to be continued, because regulators are recognising that those relationships may be OK. And as European operators which operated in the US continue to settle their outstanding claims with regulators, the casinos are more encouraged to do business with them.”
“New Jersey legislation, for example, assuming that it gets rid of the ‘tainted assets’ language, which I believe it will, could definitely open up the opportunity for casino buy-outs.”