Rational Group gets restraining order to keep alive bid to buy Atlantic Club

ATLANTIC CITY — The behind-the-scenes battle between an Internet poker giant and the struggling Atlantic City casino it wants to buy burst into the open Monday, with a court order, accusations of bad faith and the revelation of an eye-poppingly low sale price.

The Rational Group, which owns PokerStars, went to court in New Jersey on Monday and got a temporary restraining order barring The Atlantic Club from selling itself to anyone else. Last week, The Atlantic Club declared that the deal for PokerStars to buy the casino was dead, but it has declined to comment further.

In its court papers, PokerStars also revealed for the first time just how cheaply it plans to acquire the casino: $15 million. That is $5 million less than the previous low price that a California company had offered for Trump Plaza before that deal fell apart last month, and it would be — by far — the lowest price ever paid for a casino in Atlantic City.

In applying for the restraining order, PokerStars argued that it has given The Atlantic Club $11 million of the $15 million purchase price. But in return, PokerStars said, The Atlantic Club wants to kill the deal and receive an additional $4 million as a termination fee.

“Should Rational comply with this demand, Rational would have paid the entire purchase price and received exactly nothing in return,” the company wrote in its court papers.

Rational also said The Atlantic Club demanded an additional $6 million to extend the sale contract for 10 more days — during which it would be free to seek a better offer from someone else. Rational said that it offered to pay the remaining $4 million in return for extending the sale contract until approval could be obtained from New Jersey casino regulators, but that The Atlantic Club’s owners, Los Angeles-based Colony Capital LLC, declined.

Rational also said it paid more than $224,000 to start work on a poker club inside the casino and on upgrades elsewhere within it.

New Jersey legalized Internet gambling in February.

“It is likely that the defendants believe that in light of this development they can now sell The Atlantic Club to another buyer while keeping the $11 million paid to them by Rational, which made it possible for The Atlantic Club to continue operating throughout the tough winter season,” The Rational Group wrote in its court papers.

Officials from The Atlantic Club and Colony Capital declined to comment.

The transaction had been seen as mutually beneficial because the casino has struggled for years near the bottom of Atlantic City’s 12 casinos in terms of revenue and profitability. The deal would give PokerStars a much sought after onramp to the lucrative online gaming market expected to develop in New Jersey, one of three states with legalized Internet gambling, along with Nevada and Delaware.