UPDATE 7/1: A NJ Judge has rejected PokerStars’ application for interlocutory appeal.
The saga of PokerStars’ attempt to purchase the New Jersey-based Atlantic Club Casino continued this week with the Atlantic Club filing a response to PokerStars’ application for interlocutory appeal.
PokerStars filed their application on June 13th. Read an analysis of their position here.
Both sides cover a fair amount of ground in their briefs, but the central conflict boils down to the issue of the so-called outside date contained in the contract and its relationship to the closing date of the agreement.
PokerStars argues that the outside date functions as closing date for the purposes of the contract.
And therefore, the closing date of April 26th (the date stipulated as the outside date in the purchase agreement) is incompatible with New Jersey regulations that require a minimum 121 day period from the day a potential purchaser files an application for the license required to operate in New Jersey.
As such, that aspect of the contract, argues PokerStars, is invalid – making the ACC’s decision to terminate the agreement a breach.
For their part, the ACC argues that the closing date is an unambiguous condition of the contract, and that PokerStars gave ACC ample cause to terminate when it failed to acquire regulatory approval from the DGE by April 26th.
The purchase agreement between PokerStars and the ACC is a complex, dense document spanning 70+ pages.
It’s little surprise, therefore, that each side can find amongst those pages snippets that support their respective position.
For example, several aspects of the PA suggest that the closing date and the outside date are inextricably linked:
5.5 (c) “[…] each use its reasonable best efforts to avoid the entry of, or to have vacated or terminated, any decree, order, or judgment that would restrain, prevent or delay the Closing, on or before the Outside Date“
“[…]each use its reasonable best efforts to avoid or eliminate each and every impediment under any antitrust, competition or trade regulation Law that may be asserted by any Governmental Entity with respect to the Closing so as to enable the Closing to occur as soon as reasonably possible (and in any event no later than the Outside Date)”
5.10 “Prior to the Closing, Buyer shall not, and shall not permit any of its Affiliates to, take, or agree to commit to take, (i) any action that would … delay the Closing thereof beyond the Outside Date“
All emphasis mine. Basically, you could read the above as suggesting that the closing date can’t be later than the outside date, which ties the two together in a way potentially favorable for PokerStars’ position.
But other aspects of the contract clearly stipulate that a failure to acquire regulatory approval – and, in the larger sense, the failure to complete the deal itself – by the outside date give the ACC cause to terminate. Section 7.1 states that the contract can be terminated:
[…] by the Sellers’ Representative or Buyer, if the transactions contemplated hereby shall not have been consummated on or prior to the Outside Date.
The appellate court will rule on PokerStars’ application. There’s no firm timeline for that ruling, but I’d expect it sooner than later given the circumstances.
At least one veteran observer of New Jersey’s land-based gambling industry doesn’t have much hope for PokerStars’ chances following the latest response from the ACC.
As John Brennan put it in a post on NorthJersey.com:
Bottom line: PokerStars seems to me to have a rocky road ahead here.
Now, that they don’t have to sweat, since I’m not an attorney.
But Judge Batten is just as skeptical about their case, and that IS a problem. Further, this interlocutory attempt seems to have a high bar – and this amateur doesn’t see how they can clear it.
Other lawyers I’ve talked to on background offered mixed opinions, but the consensus seems to be that PokerStars is at least a small underdog in this case as it stands.