Online gaming giant to buy Atlantic City casino
After being drummed out of the U.S. two years ago, the parent company of several of the internet's biggest online gaming sites is looking to reestablish itself with a brick-and-mortar toehold on the Jersey shore.
Even before New Jersey Gov. Chris Christie signed into law this week a bill that would let the state's casinos offer online gaming, the parent company of Pokerstars and recently acquired Full Tilt Poker had already sought initial approval to buy the floundering Atlantic Club Casino.
The proposed deal represents the first time a virtual casino company would join with a physical gambling location in the East Coast gaming capital of Atlantic City. But the prospective buyer will have to convince the state that previous run-ins with the U.S. Department of Justice are a thing of the past.
The Rational Group, which owns Pokerstars and Full Tilt, has already filed a petition with the state gaming commission for an Interim Casio Authorization. An ICA would allow the company to close on their deal and begin developing the Atlantic Club site on a preliminary basis while the State Division of Gaming Enforcement conducts a more thorough background investigation.
Once an ICA is issued, it's rare that final approval is not granted. A spokesman for the New Jersey Casino Control Commission said that has only happened once in the history of the ICA process. That's out of "scores" of gaming licenses that have been issued since the late 1970s.
But that doesn't necessarily mean smooth sailing for the Rational Group. The company has a checkered past with federal authorities. In July, Pokerstars agreed to pay $547 million to the U.S. Justice Department and $184 million to poker players overseas to settle a case that included charges of money laundering, bank fraud, and illegal gaming that stemmed from its online operations. Pokerstars admitted no guilt or wrongdoing in the settlement, but it could be an obstacle for the company as it seeks approval to set up legitimate operations within the U.S.
"They must show that the deal they have agreed to with the Department of Justice has given them a blank slate," casino analyst Israel Posner told the Press of Atlantic City. "Weather or not the CCC and DGE will approve them, that has to be looked at."
The conflict between the DOJ and the Rational Group stems from the continued operation of Pokerstars and Full Tilt after the implementation of the Unlawful Internet Gambling Enforcement Act of 2006. The law forbid U.S. banks from funnelling money into online casinos but has left open other avenues for online gaming through either individual state measures or Bitcoin gaming.
These alternative avenues are what has given New Jersey the authority to authorize a new plan for online gaming in the U.S. The bill signed by Christie this week is similar to legislation already signed in Delaware and Nevada that would allow those states to enter into compacts with other states to promote virtual gaming across state lines. The New Jersey bill also comes with the caveat that online gaming accounts be tied to a specific state casinos. Hence the move by the Rational Group to buy property in Atlantic City.
The Rational Group did not respond to the Daily Dot's request for an interview.
New Jersey residents are hoping deals like this one will lead to a revival of the state’s gaming fortunes. Although Atlantic City had seen steady growth since the inception of casino gaming in 1978, it's been much more difficult since the recession. According to the New York Times, New Jersey casino profits took a major 9.6 percent hit in 2007 and have yet to recover. Since then, casino profits in that state have lost about a quarter of their worth.
"I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole," Christie said this week.
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