From Wall Street Journal
A deal that would have given online-gambling giant PokerStars a chance to re-enter the U.S. market turned into a legal battle Monday as a judge agreed to temporarily block investment firm Colony Capital LLC’s attempt to terminate a casino-sale agreement with PokerStars.
A New Jersey Superior Court judge issued a temporary restraining order that prevents Colony from negotiating with other parties to sell its Atlantic Club casino in Atlantic City, N.J., for 10 days. A hearing is set for May 17, when the judge will consider a lengthier restraining order.
PokerStars had agreed last fall to purchase the struggling Atlantic Club casino, hoping to use the casino to create an online poker site in the state, and eventually beyond New Jersey as new states open up to online gambling.
The purchase has been among the most closely watched online-gambling developments so far as states begin to develop regulations for online gambling. That’s because PokerStars, based in the U.K.’s Isle of Man, would likely be a major online-gambling brand if allowed to operate in the U.S. But the company has had significant legal problems in the U.S, where online gambling had been considered illegal by federal authorities, making its approval by gambling regulators no sure bet.
The agreed-upon purchase price was $15 million, according to a lawsuit PokerStars filed Monday in New Jersey Superior Court in Atlantic City, reflecting the decline in valuation of casinos in Atlantic City over many years.
The price included $11 million in advances that PokerStars has already paid to Colony to continue operating the Atlantic Club while PokerStars waited for approval from New Jersey regulators for an interim casino license, according to the lawsuit. In addition, PokerStars was to take on the casino’s liabilities, including $30 million in pension funds, PokerStars said in the complaint.
But the deal between PokerStars and Colony stipulated that PokerStars must have received that interim license by April 26, 2013. When regulators extended their timeframe for considering PokerStars’ application by three months beyond April, that threw the deal between Colony and PokerStars into question.
