For the past few weeks, the Rational Group (PokerStars’ owner) and Colony Capital LLC (owns Atlantic Club Casino) have been at war over a business deal. The Rational Group was set to buy the Atlantic Club for $15 million, but they failed to obtain a New Jersey casino license by April 26th, 2013.
What’s significant about this date is that Rational needed to obtain a license by then or the original agreement was altered. Furthermore, the purchase contract stated that Colony Capital could back out of the deal if PokerStars failed to get a license by the 26th. Because Rational failed to meet this clause, a New Jersey Superior Court judge recently ruled that Atlantic Club could terminate their pending deal with PokerStars. Plus they can sell to any company they wish to now.
What made this situation particularly complicated is how Rational dumped $11 million into Atlantic Club to keep it operational. The casino was on the verge of bankruptcy when PokerStars entered the picture and needed money to continue operations. Because they spent so much on Atlantic Club, Rational argued that they’d already met most of the $15 million purchase agreement. But as unethical as it may seem, Colony Capital was able to back out simply because the contract stated they could.
Popular speculation is that Atlantic Club owners didn’t fully realize how much more valuable their property was until partway through the selling process. Because only casino operators can get an online gaming license in New Jersey, the Atlantic Club is probably worth far more than $15 million. So by getting out of a deal with Stars, Colony Club can now seek a more lucrative deal. Of course, this all hinges upon Atlantic Club’s ability to stay open until they find a new suitor.