Rational to New Jersey: Ignore AGA

Rational to New Jersey: Ignore AGA

New JerseyRational Group, the parent company of PokerStars and Full Tilt Poker, filed a letter brief with the New Jersey Division of Gaming Enforcement today. The letter, first reported by the Bergen Record’s John Brennan on his Meadowlands Matters blog,  is in response to the brief filed last week by the American Gaming Association opposing Rational Group’s petition for an Interim Casino Authorization to buy the Atlantic Club casino.

The fifteen-page letter sets out three legal theories why the AGA’s brief should be rejected by the DGE. Rational argues that the AGA has no standing to intervene in the licensing petition, that their intervention would not add anything of value to the proceeding, and that to allow the AGA to do so would be “destructively anti-competitive.”

On that last point, Rational takes pains throughout its letter to paint the AGA as “a self-appointed group of Rational’s competitors” that are trying to “exclude Rational from the U.S. market.”

The filing of the AGA brief last week was peculiar. The AGA noted that it had never intervened in an ICA petition in its 18-year history, as if to highlight the gravity of its action. Yet its brief was short on meaningful insight and was based almost exclusively on publicly available court filings from the federal Black Friday cases – documents Rational would likely be required to disclose to the DGE anyway.

The brief also opened the door to exposing the naked self-interest of the AGA and the alleged hypocrisy of some of its members, notably Caesars Entertainment Corp. Rational issued a statement last week, repeated in today’s letter brief, that on February 8, Caesars offered to sell the Rio Casino in Las Vegas to Rational. According to Rational, “Caesars suggested that this acquisition would give us a better relationship with Caesars and would help PokerStars gain a license in Nevada.”

Rational executives were said to be “almost literally high-fiving each other” when the AGA filed its brief last week, according to sources with knowledge of the matter.

The AGA now finds itself in an awkward situation. If the AGA backs down from its brief and refuses to defend it, the lobbying organization will look incredibly foolish for submitting it in the first place. On the other hand, an executive with IGT claimed that the original vote of AGA members as to whether to submit the brief wasn’t unanimous. No doubt once Rational put forth its allegation about Caesars’ sale offer, the internal dissension at the AGA relating to the brief ratcheted up in volume.

The ultimate decision rests with the DGE. That body is charged with reviewing Rational’s petition and making a preliminary recommendation on it to the New Jersey Casino Control Commission, which would then conduct a public hearing and make a final decision. Due to some open items in Rational’s application, that final decision is not expected before August.

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