Sobe seeks rehearing of the bankruptcy auction
New Jersey’s new online gambling industry and push for sports betting has been making a lot of waves throughout the United States. The state legalized online gambling last year and launched with over a dozen websites in late-November as result of partnerships between the land-based casino operators in Atlantic City and various other companies with more experience in the field.
The move to offer a new source of revenue for the struggling casinos in the state proved to be a good one, as a lot of players took to the virtual tables as soon as they became available. However, two of the 12 casinos in Atlantic City were already in big financial turmoil and couldn’t jumpstart their activity with the help of iGaming. The Atlantic Club casino filed for bankruptcy and was sold to Caesars Entertainment and Tropicana last year.
The two companies agreed to buy the casino, close it down and divide its assets. However, one of the losing bidders in the bankruptcy auction asked the judge to look at the case again. Sobe Holdings LLC had a bid of almost $1 million bigger than that offered by Caesars and Tropicana, but was rejected because it posed a higher risk. Sobe representatives asked the judge to vacate the proceedings and motivate the decision for selling to a lower bidder which would lead to the Atlantic Club shutting down in less than a month and leave thousands of people without a job.
As part of the deal, Tropicana will get all the gaming machines in the casino and Caesars will get the properties. Since Caesars already has four casinos in Atlantic City, it plans on shutting down the casino with no plans of re-opening it. All the employees have already been given their notice and will be without a job by the end of January.
Closing a casino less riskier than keeping open
Sobe argued that its bid was not riskier and that it plans to maintain the club open after making some improvements. This would mean that most of the employees would keep their job and after the casino gets a facelift, it might even offer new opportunities in the state. The company owns a casino in Miami Beach, Florida called Deauville Beach Resort and would probably change the name of the Atlantic Club to Deauville Casino Hotel.
The closing of a casino in Atlantic City would help the struggling sector as it would eliminate some of the supply and thus give more traffic to the remaining casinos. It was one of the main motivations for approving the Caesars/Tropicana purchase over the one made by Sobe.
However, the move to eliminate some of the competition in the city is opposite to the push for more casinos in other areas of New Jersey by Governor Chris Christie. He stated that he will consider offering licenses in other cities if Atlantic City won’t see a significant progress in 2014. This would increase the supply even more and with Pennsylvania already taking away a lot of traffic from Atlantic City, the casinos on the boardwalk could end up struggling even more.
PokerStars watches from the sideline
With the battle for Atlantic Club taking place, PokerStars can only watch from the sidelines. Rational Group, the parent company of PokerStars and Full Tilt Poker, wanted to buy the casino this time last year and planned to inject new technologies and finances in the Atlantic City economy while making sure that the 1,800 employees would keep their jobs. The New Jersey Division of Gaming did not grant PokerStars a license in time for it to buy Atlantic Club and the deal didn’t go through and the casino is now being stripped for parts.
