The Rational Group, parent company of the world's biggest online poker site, took a beat on Friday when Superior Court Judge Raymond Batten gave the Atlantic Club casino the right to terminate the contract because the British parent company of PokerStars did not meet the deadline of April 26th for receiving New Jersey's preliminary approval to own a casino.
If Rational did not obtain state authorization by the April date, the judge's interpretation of the contract is that either party could end the deal. Along with the ruling, the judge dissolved the temporary restraining order that would keep the casino from selling to other interested parties. The Rational Group obtained the TRO when the Atlantic Club backed out of the deal after enjoying a big slice of Rational's payments to keep the casino afloat through last winter.
"We saved their butts," Wayne Positan, a lawyer for The Rational Group, told Batten. "And we got the short end of the stick." Positan said it was like the casino said: "Let's take that money and the heck with those guys. Ha, ha, ha."
According to testimony given in court, a provision in the contract specified a date for the deal to be completed and if the deal was not finalized, all money Rational advanced to the Atlantic Club could be kept by the casino in forfeiture. The advanced funds were credits against the $15 million purchase price.
The details of the deal were reached on December 24th, 2012, and the state Division of Gaming Enforcement began its evaluation process in early april when Rational's application was completed — the evaluation is known to be at least a three month process.
"They (Rational) took the risk they could get it done," Tariq Mundiya, a lawyer for the Atlantic Club lawyer, told the judge. "They couldn't get it done, and now they want to rewrite the contract. Once that date came and went, Your Honor, all bets were off."
The purchase price of $15 million for a casino is a small sum in today's market, especially when online gambling is a key factor in tomorrow's revenue plan, but The Rational Group also promised to cover a $32 million shortfall in the Atlantic Club's employee pension account along with the possibility of investing additional funds once the deal was completed of $20 million--$40 million in the property.
Rational is reviewing the decision and still has hopes of entering the New Jersey market according to a spokesman.
Michael Frawley, the Atlantic Club's chief operating officer, said after the ruling on Friday: "We are now free to build on the tremendous opportunity provided by online gaming."