The state of New Jersey has suffered greatly in recent weeks after Hurricane Sandy swept in from the Atlantic Ocean, killing 24 of the state’s residents and causing $30 billion of damage.
As reported in recent days on iGaming Business, a new storm looks set to envelop the state’s gaming infrastructure with news that PokerStars, the world’s largest online poker brand, has filed for a land-based casino licence having agreed terms to acquire the Atlantic Club Casino in Atlantic City (pictured left).
The deal would see the controversial online poker giant assume control over the Atlantic Club’s retail assets in a move that is likely to be seen as a pre-emptive acquisition ahead of the state’s anticipated regulation of intra-state online gaming.
PokerStars recently completed the high-profile acquisition of its former rival Full Tilt Poker after reaching a settlement agreement with the US Department of Justice (Southern District of New York).
As part of the terms of the agreement, PokerStars acquired the assets of Full Tilt Poker and committed to reimburse the stricken company’s non-US players ($184 million) in deal worth $547 million that will be paid over a three-year period. Critics of the deal are said to be shocked at the potential for PokerStars to gain a presence in the US so soon after the settlement.
Although the settlement didn’t contain any admission of wrongdoing from PokerStars, it did contain permission for the company to apply to the relevant US authorities (for both PokerStars and the re-launched Full Tilt brands) to offer real money online gambling as and when specific state and/or federal regulatory frameworks are in place.
PokerStars’ acquisition of Atlantic Club Casino would appear to be a move to give the company a foothold in any future intra-state online poker market in New Jersey, with applicants for online casino licences likely to require a land-based presence.
The move comes at a critical time for Atlantic City casinos, which have been hit hard by falling revenues driven by the economy and by competition from casinos in neighbouring states that have impacted traffic at the iconic resort.
Senator Raymond Lesniak has long advocated that the introduction of online gaming will effectively save Atlantic City’s casino industry, a fresh lifeline that will enable businesses to remain profitable.
“I firmly believe that without Internet gaming, we will see one, two or even more of our casinos close. They’ve been hurting so badly for so long through declining revenues that this is a real lifeline for them,” Sen. Lesniak said.
“The jobs necessary just to get these sites operational will exceed a thousand, and then there will be the jobs that we’ll save by keeping the casinos open. We’re keeping Atlantic City alive; this will be a big boost to the industry and will help our tourism industry as well.”
Atlantic City’s troubles deepened just prior to the presidential elections when Hurricane Sandy battered America’s eastern seaboard.
According to Bloomberg, Keith Foley, co-author of Moody’s ‘Hurricane Sandy’s Credit Impact’ said that he expected Atlantic City casino earnings to “drop by at least 25 per cent, and they could decline as much as 50 per cent in the next two quarters.” Governor Chris Christie closed all 12 Atlantic City casinos on October 28 for a period of five days.
New Jersey is the second largest gaming market in the US behind Nevada, bringing in an estimated $3.3 billion in revenue in 2011.
However, the casino industry’s concern over its long-term future were highlighted when Senator Lesniak submitted the second iteration of his bill to regulate intra-state gaming, the first having been vetoed by Governor Christie at the tail-end of 2011.
“The distinction between now and when the Governor vetoed the previous bill is that this time, the casino industry is strongly behind it,” he told iGaming Business. “They realised that federal legislation just isn’t going to happen and that getting started in New Jersey will be beneficial to their land-based operations.”
The casinos that once lobbied against intra-state legislation in the hope that federal legislation would be enacted are now backing the cause, arguably appreciative that their survival now depends on it.