New Jersey Clock Starts Ticking for Rational Group

PokerStarsThe Press of Atlantic City is reporting this morning that Rational Group’s application to New Jersey regulators for permission to purchase an Atlantic City casino finally was completed last week, triggering the start of a 90-day review period.

Rational Group, the parent company of PokerStars and Full Tilt Poker, announced in January that it had come to terms with Colony Capital LLC to purchase the troubled Atlantic Club casino for $50 million. As part of that announcement, the company filed an application with the New Jersey Division of Gaming Enforcement for an Interim Casino Authorization, a regulatory approval needed to close the transaction.

Under state gaming regulations, the DGE is given 90 days to review the application before making a preliminary recommendation to the Casino Control Commission. The CCC then must make a final decision within 30 days.

However, in early March the Bergen Record’s John Brennan reported that Rational Group’s application was not yet complete and thus had not triggered the 90-day review period. The application was finally deemed complete on April 10. That means the DGE will have until July 9 to review the application, with a final decision by the CCC coming no later than August 8.

The stakes are high for Rational Group in New Jersey. The state represents the first litmus test on whether the company will be allowed to re-enter the U.S. market. Rational’s two poker brands, PokerStars and Full Tilt Poker, exited the market in 2011 after the U.S. Department of Justice announced civil and criminal charges against both sites and executives of each as part of a crackdown against the world’s largest online poker sites, a day known in poker circles as Black Friday.

The American Gaming Association, a lobbying arm of the land-based gaming industry, made waves in early March when it filed a brief opposing Rational Group’s application, calling the organization a “criminal enterprise”. Rational fired back in the press by revealing to Forbes that one of the AGA’s biggest donors, Caesars Entertainment Corp., offered in early February to sell the Rio Casino in Las Vegas and the World Series of Poker to Rational Group in order to “help PokerStars gain a license in Nevada”. Rational also filed a reply brief, dismissing the AGA’s arguments as without merit.

Although the CCC scheduled a public hearing last month on whether the AGA should be allowed to intervene in the application process, it subsequently cancelled the hearing and has decided, for now at least, to wait and see how things shake out.

Whether or not the AGA is allowed to intervene, Caesars is unlikely to back down from this fight at public hearings on Rational Group’s application in July. The company’s online gaming division, Caesars Interactive Entertainment, filed its own application for a New Jersey casino license in order to offer online gaming in New Jersey, even though final online gaming regulations have yet to be announced by state regulators.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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