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GAMBLING MAN

Inside the world of gambling’s most colorful (and controversial) modern day casino boss

by Gary Green

 

Advice, lessons, history, and wisdom for casino players, operators, vendors analysts, and investors

 

SECOND EDITION this edition © 2012 Penny Arcades Press

 

© 2009, 2012 Gary Green ISBN: 978-0-615-26697-8

For several years, people have been saying “you should write a book about your casino experiences.” As a former award-winning journalist, and never-quite-famous recording artist, the encouragement was not a stretch for my already sizable ego. The problem was that I really had four casino books to write: one about my personal adventures, anecdotes, and experiences as a “gambling man”/ casino operator; a second that provided a behind-the-scenes look at casino operations and how casinos SHOULD be managed; a third that would provide a more accurate recent history than a lot of pop culture and cable television has proffered; and a fourth one that answers typical player questions about “beating the house,” cheating, and winning streaks. Instead, I decided to write one book based on years of marketing, operational, management, and finance experience. The challenge was to make it readable to all of those constituencies. In advance, I ask the reader’s indulgence as I try to tie all of those aspects together; such is the nature of working in the “casino industry.” This is not, in any way, an autobiography. Nonetheless, I have elected to write much of this book as anecdotal narrative. At the same time, it is my hope that the breadth of the things I have learned about this business can in fact give insight, advice, lessons, history, and wisdom for casino players, operators, vendors, analysts, and investors. Even before it went to press, parts of this book had been subpoenaed in civil and criminal court cases involving the definition of Class II slot machines and sweepstakes slot machines and a Superior Court judge appointed me to operate a court-seized casino in his state. Portions of another chapter were published by Amazon’s Kindle division under the almost pretentious sounding title “Marketing Donald Trump.” Between those two pre-publication uses, it would appear to me that there is at least some perceived value here from someone. A close friend, himself a leading casino-industry figure who agreed to suffer through reading an early draft, commented “You have forgotten more about this business than most operators will ever know; you just wrote the greatest resume ever.” While I am not willing to go that far, I will assert to you that this book is filled with a lot of information, some pretty strange adventures, and life as a “Gambling Man.” —Gary Green Boca Raton Florida

 

Chapter One.

Just a roving gambler “God help us, this is the life we have chosen.”  — Lee Strasberg as Hyman Roth, the Meyer Lansky character in “The Godfather Part II” (via Mario Puzo and Francis Ford Cappola)

I t was one more late night in a smoke-filled coughing-corner of one of Atlantic City’s first glitter-monster casinos; one of the 60,000 square feet of one-armed bandits, Big 6 wheels, and the table pits. Back then, the late 70s or early 80s, THAT was a huge casino; and this was the biggest of all of them: Resorts International where people were standing in line three and four deep behind every slot machine waiting for an empty seat. By comparison, thirty years later, those 60,000 square feet cowered in the shadow of the 167,000 sq. ft. casino now next door at the Taj Mahal or the 344,000 sq. ft. casino four hours away at Foxwoods in Connecticut. In 1980 I could have never predicted that in just a few months I would be working for or with a cast of somewhat dubious characters that the New Jersey Gaming Control Commission would recommend as unsuitable for a gaming licenses…or a few decades later I would be close friends with the chief investigator for that very Commission —who by then owned Resorts International… or that I would be part of a team working to buy one of those iconic Boardwalk casinos. Damn. What a strange world. But at the time, I was a long-haired, oddly-dressed gambler sitting at a green-cheque ($25-chip) blackjack table’s third base (last seat) trying to keep a true count as straight as my running count out of an eight-deck shoe. There were no famous M.I.T. count teams back then, no Dustin Hoffman “Rain Man,” and certainly no Kevin Spacey movies glorifying card counting; hell, Sixty Minutes had just done a cutting-edge piece “exposing” the mythological practice as being real. As I was trying to focus, an old man sat down beside me, slid the ashtray aside, and began to give me the once over. I knew it was about time for me to leave. His eyes started with the cowboy Stetson on top of my head, and at first I thought he was trying to read the hatpins — I used to stick dozens of them in my hat like travel decals on an old steamer trunk. Rather than stop at my hat, his eyes followed the cut of my knee-length and waist-seamed frock coat, the bib of my custom-made Victorian shirt, the strings of my tie and on downward to the toe covers of my pointy-toed cowboy boots. Then his eyes darted back up to my long brown hair with its Bill-Hickok-style ringlets falling on my shoulders. Maybe he just hated hippies dressed like 1880s cowboys. “Who the hell would double-down on 16?” he growled at me in the tone of a disgruntled looser missing the third session of a boring convention a few doors down the boardwalk. “Probably just a guy that knew there were no tens in a shoe that is rich in fives and low cards,” I smirked with my southern accent, trying to sound more like a suave Rhett Butler than a trailer-park Jeff Foxworthy. I had not lived in a trailer park in almost seven years, thank you very much. Already I had realized that he was just an obnoxious old punter and not a spy from the “eye-in-the-sky”, but I also knew I actually had been made when the sweep of my hand brought a five from the dealer’s shoe and he called “shuffle” after that hand. “Son, there is no Maverick Doc Holliday gamblers no more. Don’t you know you living outta your time,” the old man told me. I rolled my eyes and pushed back from the table, thinking that apparently there were no more English teachers either. But he was right; I was theatrically costumed for the role I had chosen in life. Absurd as it was, it was a fun role and a profitable one, too. I briefly made eye contact with the dealer, Vince, a short, tough Italian street kid from Philly, a few years younger than me. I was pretty certain that he knew what I was doing and rather than rat me out, he simply called for a shuffle of those eight decks. I had tried to familiarize myself with all the dealers to memorize their eccentricities and weaknesses, hoping I could exploit their failures into maybe seeing a hole card or another slipup. This kid, Vince, was good and I had never been able to spot his hole card, even when he slid it to the little mirror to check it himself. I gave him a “thanks-a-lot-motherfucker” look for calling shuffle, not even able to imagine that someday he would be a top executive at one of America’s best-known casino empires and I would be a Vice-President answering directly to him. I tossed him a red-cheque (five-dollar) tip and pushed back from the table to leave; I had no intention of starting over again on another eight-deck shoe. That was too mind-taxing. “Where you going, cowboy?” a shill asked me as she put a cigarette in her lips and leaned toward me for a light. In Jersey, in those days, shills were actually required to wear a badge that read “shill.” I didn’t even bother to color-up. I just pocketed the stack of porcelain greens along with the others I’d been hording, ignored her too-powdered face and casino-paid smile, and walked past Vince and the old man toward the cashier cages. I saw the arrogant smirk on Vince’s face as if he had triumphed over some threat to “his” casino and I watched him look back toward the floor man — the “pit boss”. The “floor” was a way-too-slick looking guy in a black suit and an over-confident swagger that I instantly disliked when I had first spotted him months before. Unlike the dealers, he didn’t wear a readily-visible name tag so I only knew him as “Brownie”, the name Vince and the other dealers seemed to familiarly refer to him; and, fortunately, he did not seem to know me at all. None of us could have known that one day he would be CEO of the most high-profile casino in the country and later a Macau institution. Just short of the cage, I shrugged and rather than cash-out, I walked toward a side door leading to the street (instead of the tourist-infested boardwalk). Outside, I took a long drink of crisp air and started to walk. I was thinking that I’d been on the road so long — since the day I was provoked to hit the road when a dissident student in a class I was teaching had said it couldn’t be done in the second half of the 20th century — that I probably could never come back in. Again, I could have had no clue that one day not only would I be back “in” but that I would be running (and owning) glitter-place casinos twice the size of this one. As I stepped along in the darkness, for one loses track of light and dark when one travels in the glitter jungle, it happened. I’m not really sure where he came from. I know he was young, Hispanic, and New Jersey tough. My stooped, already small, five-foot and nine-inch frame with its then-only-150 pounds probably looked like an easy target for him, for in stature I am not the least bit imposing. I begged him not to do it…at least I wanted to. But he left no time for that. It is much easier now to look back at what happened, to retrace the events and the thoughts, than to examine them in the midst of the action…of the violence…of the near tragedy of this man/boy’s foolishness. My natural paranoia made me certain that he had given it some thought; there must have been some plan. He couldn’t have just chosen his target at random; he could not be that foolish. Why can’t people just THINK of the possible consequences before they do something stupid? He called to me and I ignored him. Perhaps I was in a daze from the glitter, perhaps that’s what he wanted, or maybe I chose to ignore him. But he crossed my path in darkness, blocked my way and made his demand. He pointed something at me. He might have had a knife and he might have had a gun; and he had no idea that at this point in my life, it really did not matter. And when it was over he had no idea why he had been spared. My mind halted its racing with eight-deck card-counting fixes and I felt my body recoil from the inertia of the braking. My reflexes snapped with the energy that had allowed me to survive all sorts of adversity. I certainly knew what was going to happen before it came to pass and if he had just looked at my eyes he would have seen the hungry gleam spark there; I knew it was there, damnit. I hated it when that happened; it was like the Incredible Hulk — I was going to lose control (without becoming huge, strong, nor green). In my stomach I felt a burning acid roll around and start to climb my esophagus to my throat. I felt the muscles in my back flex and my spine stretch me to my full height from my normal half-stooped stand. And I felt my feet lock into the pavement and dig deeper for a firm hold. I knew the rage was coming; that damned temper of mine. The first second had still not passed. Had any people stepped from the casino and had there been street lighting, they would have seen the blur of speed whip from my eyes and guide my body, but HE wouldn’t have seen it. For by the time that first second had passed, he had been frozen by that gleam. But by then the scrounge of human technology, the implement of no purpose but to take another human life; that which I had often donned during those years — my gun — was drawn from the seeming-nowhere behind my vest and was leveled directly at his head. Still he couldn’t see that the miles had indeed taken their toll and that neither his life nor my own meant anything to me; he had no idea how many murders I had been around, how many hacked, shot, stabbed, and mangled bodies were in my history. He looked at my eyes and broke only to look at the gun. Seconds passed that seemed like hours to me. Then he spoke. “You’re not the police,” he demanded more in a scold for daring to stop his robbery than in question or from fear. “Face your God, child,” I warned in Victorian melodrama, breaking my own hard-learned survival law of never slowing to allow even motor actions, much less speech. (Years earlier, when I had been riding in police cars at all hours of the night as a newspaper reporter covering all of those murders, Sergeant Andy Strain had warned me, “never pull a gun without pulling the trigger; never point it and never take the time to talk –just shoot and then announce that you were in fear for your life!”) Yet, I could see that he was stunned enough that I could continue and possibly not take his life. Besides, I had slowed now and perhaps 30 seconds had elapsed; maybe we were now on even terms. He was still alive and I had not used my advantage. “Your god forgives; I take revenge; CHOOSE,” I offered. I tried to echo-chamber my voice as Lamont Cranston might have done before slouch-hatting himself to his The Shadow persona. It probably sounded more insane than threatening, but in either case, it served the purpose. (At least I didn’t mock-laugh “who knows what evil lurks in the heart of men”.) He backed away, slowly, but backing. His own weapon dropped from sight, back into its hidden pouch or pocket or wherever. “Who the hell are you?” he asked. He backed some more, turned, and then he was gone into the same shadows that had borne him. He had asked…”Who the hell are you?” Me? Hell, I am just a roving gambler.

•

I am just a roving gambler, I gamble all around Whenever I meet with a deck of cards I lay my money down. I’ve gambled down in Washington, I’ve gambled over in Spain I’m goin’ down to Georgia to gamble my last game.  ―Traditional Folk Song

 

Chapter Two. Casino Management Philosophy

“I have made more than $10 million in my life. Part of it I spent on gambling, part on booze, and part on women. The rest I spent foolishly.” ― Actor, George Raft

R egardless of my personal flamboyance or standing in the middle of Las Vegas Boulevard holding a steel cutter while my pants are on fire; regardless of tic-tac-toe playing chickens, flying Elvis, and Donald Trump’s apprentices; regardless of the dubious historical origins of the gambling industry; this is a VERY formulaic business. What makes one casino more successful than another? What makes my joint successful and the one down the street suck? Think about. At the end of the day we all have the same slot machines. Within the regulated parameters, the payout is the same; hell, in “Class II casinos” the payouts are identical. The table games are the same and the odds of winning are the same. We all have buffets, a gourmet room, cocktail waitresses, entertainment. We even have basically the same ugly-ass carpet on our floors. We all have players clubs. Christ, as incestuous as this industry is, even our employees are interchangeable. So why is it that in Vegas, the Monte Carlo Casino’s 2011 EBITDA was $57.4-million and the casino literally next door, New York-New York, earned $87.2-million while the City Center on the other side next door lost $56-million ? Why is it that in Atlantic City in August 2012 the Borgata Casino’s gaming revenue was $55.5-million and 2½-miles away the Trump Plaza’s revenue was $10.7-million for the same month? Why, in June of 2012, did the Isle of Capri in Pompano Florida make $10.3-million and Gulfstream Casino, 21 miles away, only made $4.5-million? It cannot possibly be so simple that at one property they followed a set of rules and formulas and at the next property they did not. Can it? And if it IS that simple, why hasn’t every operator, manager, investor, and analyst insisted that their casino(s) follow the rules? Why doesn’t the University of Nevada teach this stuff? From the get-go I will tell you again: this is a formulaic business. And unlike Coca-Cola, Bush’s Baked Beans, Dr. Pepper, McDonald’s Special Sauce, Famous Amos Cookies, or the Colonel’s KFC recipe these formulas are not top secret. Yes, they do teach them at the University of Nevada, and at scores of seminars and workshops at every major casino industry trade show, and at dozens of industry conferences and trainings held every year. Then what-the-hell…Why the discrepancies in revenue from one casino to the next? I have heard every imaginable answer coming from general managers, marketers, operators, owners, and financial advisors. I have heard the blame leveled at the economy, too much competition, increased amenities at competing casinos, internal theft, inability to get quality incentives, changes in the restaurant menus, lack of adequate parking, too much debt to service, poor quality of the facility itself, marketing saturation, under capitalization and not enough cash in the cage, and (at one point) even sabotage. I have heard the blame pointed to location-location-location (hard to justify in the example of the Monte Carlo in Vegas). All of these things are (or can be) problems; they can be contributing factors to these discrepancies, to under-performance, or even failure. When I was a mid-level casino employee, I have even suffered through some of these problems myself.  But these are all symptoms. I often use the analogy of someone getting hit in the head with a hammer. Every 30 minutes a guy walks up, smacks you in the head with a hammer, and then walks away. You keep taking aspirin, acetaminophen, ibuprofen, or the other headache cure of the day. That IS one way to deal with the pain, albeit temporary and pretty much avoiding the problem —a problem destined to come back worse and worse as long as that joker keeps showing up with the hammer. In my universe, we address the problem a little differently. We take the hammer away from that guy, make certain he is not going to ever come back with another hammer, and then treat the symptoms. Get it? All of those “excuses” for the disparity are just that: excuses. They are all symptoms rather than causes. Okay, now it is time (this early in the book) to start pissing people off. The real issue is: Bad Management. And I am not talking about the departmental manager, the shift manager, the vice president of so-and-so, and in very many cases not even the general manager. I am talking about where “the buck stops”; I am talking about the operator, the owner, whoever the top policymaker(s) is (or are). At that level, it is mandatory to stop masking the headaches with a few analgesics and shoot that hammer-wielding bastard through the heart. At that level, there really is no place of these lame excuses; yet it is at that level from which most of them emanate. What about casinos in with the same ownership in the same proximity? The example of the Monte Carlo versus New York-New York is an example of next-door casinos owned by the same company with a $30-million difference. There must be some logical explanation of why the same operating company can have a successful property and a failing property within a block of each other. There is. It is: Bad Management. In the same-ownership examples, the “bad” part is much more subtle because it does not involve operational management as much as philosophical management. In such cases, there is “bad management”, even with the most structured management practices in which executives in multiple casinos are interchangeable and as faceless as IBM blue-suiters, Ridley Scott’s rows of marching minions in Apple’s TV spot introducing the MAC, or in some sort of Orwellian mind-controlled dystopia. In these cases, almost universally, there is a fundamental failure to understand the business that we have chosen. Application of business systems and methodologies from the “hospitality industry,” from former Big-Eight-cum-Big-Six-cum-Big-Five-cum-Big-Four accounting / “professional services” firms, business school academics, and the lot, are a far cry from the gambling joints created by Benny Binion, Jackie Gaughan, Sam Boyd, or Tony Cornero, and Moe Dalitz. The gambling racket (or whatever euphemistic “gaming industry” pallet-washing term is chosen to hide our true business) is about gambling. Moreover, it is about the public perception, fantasy, and experience of being a gambler; all of the mystery, naughtiness, and even latent evil of Las Vegas that popularized “what happens in Vegas stays in Vegas”, all of those movies and television shows, and the very term Sin City. The perception of gambling (in Vegas, Atlantic City, Mississippi, or your local Indian casino) is some version of that Sin City fantasy of Elvis singing “Well, there’s black jack and poker and the roulette wheel; A fortune won and lost on every deal; All you needs a strong heart and a nerve of steel; Viva Las Vegas.” The perception of gambling is about a fortune waiting around the corner, flashy gangster-esque shows and showgirls, and mythical high rollers being treated like kings with everything “comped” by a nod to casino host. Regardless of how little it resembles the accountant’s tracking of revenue, players, and costs, it is the movie version of Las Vegas that people fantasize when they walk into the casino. Regardless of the reality behind the curtain, the perception of the gambling experience is what matters and my predecessors in the racket…er, business… understood that. One lesson that we all should have learned from national politics during the past 30 years is that perception is a lot more important than reality; that form does count more than content.  My old friend Bob Stupak knew this and exploited it better than anyone ever had. He took the fantasy of the “high roller” and extended it to almost everyone. Every single player could live that casino fantasy life, albeit through Stupak’s very carefully created version of that fantasy. Every year, from 1979 until early 1995, Stupak mailed millions of letters offering the Las Vegas high roller experience to regular people. In just one of those years he dropped more than 20-million pieces of direct mail, mostly to non-high rollers and many to people who had never been into a casino. In his letters he offered $1,200 in “cash and casino action” plus a free “fabulous” room at his Vegas World hotel on the Las Vegas Strip. The letters had some bullshit explanation of why that person was chosen, and they read like the recipient had already hit the jackpot just by being on “the list”—a very special “preferred” list. I got one of the letters; as did a uniformed patrol beat-cop named David Cook, in Oklahoma City; as did a friend of mine who was then a salesman for Eastman Kodak in Rochester New York; as did another friend who as a steelworker in Baltimore; as did millions of other people who were not even remotely casino high rollers or even particularly gamblers. Stupak had calculated how much money he made from a typical casino visit from these low-roller, grind, or no-roller gamblers. He calculated how much of their own money they would drop into his slot machines if they were first seeded with some of his money. He calculated his costs for the mailing, the list purchases, the “free” food, and even the cost of that “free” hotel room. He then weighed those costs against the amount he would make per player and the perceived value of what he offered. It was from those calculations combined with that perception that he sent out the letters. It was all customer perception and perceived value. The beauty of it was that his “offer” was not even free; it required hitting the customer’s credit card for $398. Did it work? Hell yes! It was all about the perception of value and the perception of perks. Perception has amazing power as a motivator. For several years I flew more than 150 flights annually on Delta Airlines, which qualified me as a “Platinum” frequent flyer. That meant: I always received a free upgrade to First Class; I always boarded before everyone else; if no seats were available on a flight that I needed, another (non-Platinum) passenger would be bumped to guarantee a seat for me; and if my flight was late for a connection, they would hold the next flight (within the legal gate-time limit) for my arrival and meet me at the arrival gate. Hell, if the connection was going to be really tight they would send a gate agent to ferry me to my next flight across the tarmac in a Porsche Cayenne. Additionally, everyone in first class everyone gets better meals, but I got SPECIAL amenities with my meals; and the gifts sent to me quarterly were amazing (one year they sent me a $500 Tiffany gift card). One day I had to fly a route that Delta did not serve; I had to switch airlines. On the other airline I was just another customer; just another number. Compared to the kid-glove Platinum treatment, it was like the Greyhound bus of airlines, No, actually, it was just a typical airline — but it really felt like a Greyhound Bus compared to Platinum. Changing airlines was a painful experience; a genuine pain-in-the-ass. Delta was MY airline and no other airline could do for me what Delta did. Now, let’s think about that rationally. I was paying an average of $300 per flight; times 150 flights a year. I was paying Delta airlines about $45,000 a year. If I had used discount carriers and ticket-bidding web sites, I probably could have flown for half that. So I was paying Delta a premium of probably $22,000 a year; and who knows what their actual cost would have been to fly that seat empty —certainly nothing near the $300 that I was paying. Delta flies more than 160-million customers every year and there are 81-million members of their frequent flyers club. On a personal level, Delta Airlines has no idea who I am; but on a personal level, Delta is MY airline. They are the not only my preferred airline but they are the only airline that gives me all those perks. What a magnificent marketing coup! They created a personal relationship with me. It is all perception. Bob Stupak’s business model was all about that kind of perception. Even when he sprang the fact that the player owed him $398 (the $199 each for two people), he made it so palatable that the player felt like thanking him for taking the money; exactly the same way I felt like thanking Delta for customer service.  I am not suggesting, in any way, that a modern casino be run Stupak-style. Still, there is no denying that he knew how to make a low-end player feel like VIPs; and he nickel-and-dimed his way into a fortune that way. He made potential players feel like special high-roller type Vegas guests; and they paid him for that feeling. The technique was quite brilliant. First he promised $1,200 cash and “casino action”; only then did he talk about the fee of $199 (per person). The genius (and the bait) came in his breakdown of what he offered for the $398. First there would be $200 in actual cash; with that rebate, the “cost” was down to $198 for two people. Then he would give another $200 in one-dollar cheques (chips good for play at table games but not available for cashing). Then he threw in $400 in slot machine playable (non-cashable) credits, making the player $402 ahead just for accepting the offer. To sweeten the package, he added four $100 entries to his slot tournaments (apparently non-invited guests actually paid that occasionally) and two free $5-entries to a million-dollar-jackpot contest. He added to that, five free Keno entries and topped it all off with a free hotel room for “three days and two nights.” Then, because this was for a “favored guest”, he would give four show tickets (good for two people to see two shows in the “fabulous Galaxy Showroom”). Finally, he threw in a promise of a guaranteed win of one of five “expensive gifts”: a camcorder, a genuine $500 bill, a color television, a working slot machine with $300 cash, or a “bonus vacation” to Hawaii, Mexico, Arizona, or Florida. (I will let you guess which “gift” most people “won”; based on his costs.) Just for icing on the cake, he tossed in a deck of cards and a pair of dice. Then as a “bonus”, he offered a fourth day and third night plus another $50 in casino play if the offer was accepted midweek rather than on a weekend (the casino’s slowest time). A copy of one of his letters is in the Endnotes to this book . When customers arrived, they were given a level of customer service and personal attention that most of the recipients had never experienced and would never again see in their lives.  For their two or three nights in Vegas these players were able to taste the other side; or at least their perception of how the other half lives. Bob Stupak understood that it was all about perception; he delivered the fantasy. Again, I am not advocating the Stupak methodology but I am, very specifically, advocating that kind of focus on the players. In recent years casino operators have been all about the hard numbers with little regard for the player’s perception. At many properties there has been a flagrant disregard for the individual player and her or his experience as a gambler. That is a dangerous, and foolish, way to do business. Yet it is pervasive throughout the “gaming industry.” In early 2011, I visited a supposedly-high-end Vegas strip hotel and stayed in a 1,600 sq. ft. suite with a rack-rate of close to $350 per night. Customer service was non-existent and the condition of the hotel itself abysmally showed a scandalous disregard for the customer experience. When I later had a candid conversation with the property’s general manager I was told that his hands were embarrassingly tied by massive budget cuts to housekeeping and maintenance accompanied by an unofficial corporate philosophy that for every complaining customer there were two waiting in line for the room (apparently despite an average daily occupancy of only 74%).

$285 a night: Typical lack of customer care in a “premier” Vegas hotel; symptomatic of a philosophy of an unending customer supply. Far left top: torn wallpaper in bathroom; Left: chipped doorframe between bedroom and sitting room; Bottom far left: Corroded-green shower knob; Bottom center: three-foot long string of green mildew on ceiling above the bed; Below: chipped paint along baseboard.

Casino management should revolve around the player experience. When I step into the operation of an existing casino to make the decision about which staff to keep or let go, the first thing I do is enter “under cover” to observe. I want to know if the general manager (and all of the managers) is on the casino floor during peak customer hours or if they are comfortably ensconced in their offices from nine to five on weekdays. British intelligence officer David John Moore Cornwell (writing under the pen-name John LeCaré) famously noted, “A desk is a dangerous place from which to view the world.” If my managers are not on the floor at least some of that time, how on earth can they possibly know anything about the player experience? In the “back of the house,” away from players, is where the surgically-intense accounting and ulcer-giving analyses should be at work. A management philosophy is indeed about customer service and marketing, but it is also about understanding uncountable nuances unique to the gambling racket. It is about our history, our behind-the-curtain secrets, how our machines operate, how regulation works, and in what business we actually operate. What makes one casino more successful than another? Good management. The shocking discrepancies that I discussed are absolutely the byproduct of bad management; either bad operational management or bad policy-making management…either bad management in the trenches or in the corporate offices… or a combination of both. Fortunately, players can learn to easily identify bad properties and either take advantage of them or ignore them. Likewise, operators, vendors analysts, and investors also can learn to easily identify bad properties and can take appropriate action. However, I need to make it very clear that this is not a book about the gaming business; it is a book about the gambling business.

•

Chapter Three. Another typical day in the casino BUSINESS (and what IS the casino business anyway?) “There’s a hold up in the Bronx, Brooklyn’s broken out in fights. There’s a traffic jam in Harlem That’s backed up to Jackson Heights. There’s a scout troop short a child, Kruschev’s due at Idlewild…  — Nat Hiken, theme from “Car 54 Where Are You?” (and a typical slow day for a casino executive)

O n any given day there are a lot of things…a whole lot of stuff… that is constantly juggled through the brain of a casino executive. No day is a typical day; and every day is typical. On this one, we had rented one of those big black stretch limos for Donald Trump’s arrival (with his then soon-to-be wife Melania Knauss —damn she is tall; 5’11” without those huge heels!). Season One of NBC’s The Apprentice had just ended and Donald Trump was a bigger “star” than he had been even in the 1980s with his Art of the Deal fame. Even I was riding some of the show’s fame because, for the final episode in April, KNBC in Los Angeles did a live-remote from the Trump Casino in Palm Springs with me as their featured color commentator and one of my staff as an in-house master of ceremonies — there I was in a celebrity-for-15-minutes adventure (ok, an hour) that had also landed me the gig as the guy who did the countdown for the west coast New Year’s clock on December 31st. (By the way, I had a childhood Times Square illusion shattered by that countdown: there is no “official clock”; the “celebrity” counter just starts counting whenever. There is not even a teleprompter or a big second-hand or a director. I just made up the numbers and if you set your clock by me, then your life may be a few seconds out of kilter.) Trump’s gaming CEO, Mark Brown, had flown into Palm Springs with the celebrity couple to be met by his Operational Vice President (and my immediate boss) former Atlantic City dealer Vince Mascio, who had gone to the airport to brief Trump (and “Brownie”) on the activities my staff had scheduled for the casino arrival. Meanwhile, I was pacing back and forth (in my usual style) in front of the red carpet and the elephant-trunk velvet stanchions leading from the porte-cochere to the casino entrance. Out of the corner of my eye, I could see the roadie trucks for Charlie Daniels unloading for an unrelated concert that night in the casino showroom (which I called “my auditorium”). At the same time, I glanced back inside the casino toward my high-roller room to make certain that my man Larry from Iowa was still obliviously playing those $25-slots at $75 a spin. Ostensibly (and for the press), “The Donald” was arriving to challenge Ginger, my tic-tac-toe playing chicken, to a $10,000 game for charity; but in reality, he was making a token appearance to appease the thirteen-member Indian tribe that actually owned the casino. Trump Hotels and Casinos had a management contract with the tribe. (That management contract is really important in the big-picture of how Indian Casinos work and the direction I decided to go; and for that reason I have included it in the Endnotes to this book; it is public record  . But at the time, that contract was of very little interest to me.) When I arrived at the casino, a few months earlier, it was averaging “only” $45-million-a-month in slot machine play (“coin in”), but now that the property was pulling in $100-million in slot machine “coin-in” every month. The Tribe had tired of Donald Trump’s expensive monthly fees for management, for use of the Trump name on the front of the building, for various consultants from the Trump organization, and who-knows what else; the Tribe depended on the Trump group to account for the fees being syphoned by the Trump group. But, as I said, I was not particularly concerned about all of that now; I had a casino event to operate and was much more focused on maintaining that $55-million change in fortune that I had brought the Tribe and Mister Trump. Since the success of The Apprentice, the press (and especially the paparazzi) followed Trump everywhere ― and I recognized the fame-wave as the ideal circumstance to stage a “media event.” After all, I had a long history of staging bullshit media events. Twenty-one years earlier Time®, Newsweek®, the Washington Post and the Baltimore Sun had all lambasted me on the same day for setting up a photo-op non-event of Presidential Candidate Gary Hart’s daughter making peanut butter and jelly sandwiches for campaign workers. (Although it is most notable that no criticism was ever made of the media legion that showed up to film the sandwich making and eat the free food.) At any rate, I was psyched for a media event to draw hordes of gamblers to our casino. Publicity are us. And whether he actually ever said it or not, “all press is good press” is often attributed to Donald Trump. I rechecked all of the Trump arrival details: the showgirls were lined up along the entrance; the press was kept behind the ropes; Television celebrity Carson Daly’s mother, Pattie Daly Caruso (a noted breast-cancer activist and Southern California television personality) was in front of the ropes for her promised “exclusive” with Don; my lead-showgirl/spokes-model, Kimmie, was waiting on the red carpet in her sequined gown to escort the VIPs; and my then-protégé, Will Wimmer (a former U.S. Border Patrol Agent), was ready to lead the security squadron through the packed crowd and to the chicken cage. I scanned the crowd looking for Tanya, my assistant, to be nearby in case anything went wrong and needed immediate action; she was in the private dining room of the casino’s gourmet restaurant putting finishing touches on the table where Trump was to sit with the Tribe to discuss their issues. Yes, you have the scenario: Donald Trump, a tic-tac-toe playing chicken, a couple of thousand gamblers, and a few hundred members of the national and local press corps. Juggled against a Charlie Daniels concert, an angry 13-member Indian Tribe, and a high-roller slot player’s $45,000 winning spree. You get the picture so far; just another day in paradise. There was no way I could have peered into the future and seen that less than ten years later I would have be leading the casino due diligence to purchase one of the gems of the Trump empire and heading another group with hopes of financing a second casino for this Tribe (and step in as a replacement for Trump with my own management company for this very casino). Yet that is exactly where this day’s little adventures would lead me. In 2009, with the second or third collapse of his casino empire, Donald Trump resigned from Trump Entertainment Resorts (the successor company to my employer, Trump Hotels & Casino Resorts), leaving it in the hands of his creditors’ holding company headed by Avenue Capital Group, one of the largest hedge funds focusing on distressed securities and private equity. A bankruptcy court ruled that Trump would receive 5% stock in the reorganized company and another 5% in exchange for the use of his name and likeness in perpetuity but Avenue would own the assets. “I have nothing to do with it. I’m not in it; I’m not on the board. “It’s a disaster and I see what’s happened with so many others, and I don’t want to be a part of it,” Trump told Blumberg’s reporter. What an understatement! But that is getting way ahead of the story. Meanwhile, true to their modus operandi, Avenue started selling off the three casino assets (The Marina, The Plaza, and The Taj Mahal). In February of 2011, after an interesting shuffle of assets and liabilities of the three properties, Avenue’s Trump Entertainment Resorts unit sold the Trump Marina to Texas-based Landry’s Restaurants which quickly rebranded that property as The Atlantic City Golden Nugget. By January of 2012, Avenue began the process of selling The Plaza and beefing up the Taj. And that is where I re-entered the Trump world. The Trump Plaza was once operated by Donald Trump’s wife, Ivana, and often the casino of ridicule amongst Trump staffers (primarily because of a perception of  Ivana’s lavish over-spending and the out-of-touch-with-reality management decisions that she made). Located in the center-position of the Boardwalk in Atlantic City, The property was a former Holiday Inn that became part of the Harrah’s portfolio when the hotel giant morphed into a casino company. Harrah’s had purportedly planned to partner with Bob Guccione and build the Penthouse Hotel and Casino, but when that deal fell apart, Trump stepped in. Donald Trump rebranded the property and purchased the adjacent Playboy Hotel and Casino (which he renamed the Trump Regency and later The World’s Fair at Trump Plaza Hotel and Casino). Operating as Trump Plaza, The Donald had tapped Holiday Inn and Harrah’s marketing guru Gary Border to position the property as the ultimate luxury destination in Atlantic City. After leaving Trump, Border had gone on to create the legend of Jack Binion and Horseshoe Gaming, and then created his own highly advanced marketing company. The same day that I was doing a final edit of this chapter, I was doing a first-edit of the marketing plan for the to-be-rebranded Trump Plaza. Such deal-streams are typical in the casino world…as we will see. Armed with a proof-of-funds letter from Wells Fargo Bank and my due diligence agreement that assured me an operational contract for the casino, I found myself plowing through the bowels of The Trump Plaza less than a decade after the events of this “typical” day. But back at my typical day and Trump and Brownie’s arrival, Trump’s limo arrived about twenty minutes late. I subsequently learned they had been driving in circles while Mark Brown and Vince Mascio outlined the Tribe’s issues for Trump. After all, that was the real purpose of the visit anyway; my chicken promotion was pure subterfuge. As the limo finally pulled up, someone cued the recorded music of the O’Jays singing their 1974 hit “For The Love of Money”, which had been used as the theme song for The Apprentice on NBC. The limousine stopped on its pre-arranged mark in front of the red carpet, my lead showgirl, Kimmie, opened the door and Donald Trump stepped out with Mark Brown immediately behind him. Vince and Melania followed, along with Trump’s personal security team to work with the one provided by the casino. My aide, Will, stood with the security detail to hold the reporters behind the stanchions. I ran around the circumference to make sure every aspect was in place and ready for the media to pass the next point.   The Press, Trump, Kimmie and Will at Gary’s Trump29 Event

As soon as the two lead men stepped onto the red carpet with Kimmie leading the way, I could see the very tall Donald Trump lean over and whisper something to shorter Mark Brown as the two of them looked at the spectacle that I had created. “Oh great,” I thought, “He has already found something wrong.” As they stepped into the casino and the press began asking Trump questions about a recently-reported financial down-turn in his casino empire, I pulled Mark Brown aside to ask what had gone wrong. He looked at me puzzled and asked what I was talking about. I told him that I had seen Donald whisper to him as they walked along the red carpet. Brown laughed and said, “Oh that. He looked at your model and told me, ‘no panties’. I told him, ‘no shit.’  I stared at him for a second, almost in disbelief before he re-assured me, “You did good.” That disaster averted, I ushered Mark to Tanya who took him to the private dining room while I rushed back to the crowd where Trump was taking questions. Eager to get my chicken promotion on the air, I slowly began guiding the Trump entourage through the crowd and toward the chicken booth. Amidst all the fluff questions about The Apprentice series, a reporter for the local CBS affiliate asked a tough question citing recently-released Wall Street numbers showing that the Trump casinos were losing money. The question pointedly asked if he was in California because the Tribe was concerned about losing money at this casino. I had not expected the question but had years of “spin” experience, so I quickly fed an answer that include specific performance numbers to Will, who was still at Trump’s side. He passed the numbers on to Trump who proudly announced that this casino was highly successful, the most successful in California and the most successful in the Trump empire. Another disaster averted. Television fans and the press packed themselves against the stanchions as Trump approached the Chicken booth. Photographers climbed on top of slot machines to get a good shot of the game play. Our internal security team at the “eye-in-the-sky” surveillance was going crazy trying to watch the festivities as well as keep protective watch over the casino assets. Despite a prohibition and pre-event warnings, portable television lights and electronic flashes exploded in waves of strobes toward Trump and the group. The crowd was pressing so tightly toward Trump that as soon as he got to the chicken booth we had to stretch more stanchions behind him and form a line of security guards just to give us enough room to breathe and turn around. I stepped into the little stanchion-made cage with him and triggered the tic-tac-toe game to begin. Joel inched around behind me to slide the loser tee-shirt into my hand. Outside of a few bizarre misadventures, the tic-tac-toe chicken promotion ran pretty smoothly on a day-to-day basis. Nonetheless, I was always on alert for something to go wrong; I just did not need it to happen on the day that the national press and Donald Trump were huddled around my chicken booth.

•   Chapter Four. Meanwhile, Back At The Chicken Ranch… …and slot machine random numbers

“Never work with animals or children; though anyone who hates animals and kids can’t be all bad” ― William Claude Dunkenfield, better-known known as W.C. Fields

A t the chicken booth, I had told Joel, the “chicken wrangler” to set the payouts at one in ten-million so that we could be assured that Trump would lose and fire the Apprentice chicken. Joel was even standing beside the booth, just out of camera range, to hand me a tee-shirt that said “I got beat by a chicken at Trump 29 casino.” And I was ready to hand the shirt to Trump once he fired the chicken. Another Gary-made photo ploy guaranteed to garner headlines and airtime; but, alas, despite my own showmanship, I failed to heed the oft-quoted advice of W.C. Fields. Enter my friend Bunky Boger and his chickens. From Lowell Arkansas, the man with the I-couldn’t-make-it-up-fiction name made an entire life of working with and wrangling all sorts of animals. After a Warhol-esque 15 minutes of fame through a mid-1980s appearance on David Letterman’s show with his lifelong friend Cody the Buffalo (whom he allowed Dave to ride during the show), Bunky’s twenty-first century wrangling was focused on a heard of chickens. No, really; I am serious. Actually, it was a very cool gimmick designed for state fairs and the traveling carnival circuit. Despite initial trepidation from animal rights activists and assorted vegetarians (like myself), it made for a humane, clean, and fun promotion; and as Bunky likes to say “these chickens retire with me in Arkansas which beats the heck out of their cousins that work for Tyson or Purdue and end up in the Colonel’s bucket.” Though Bunky had performed with Cody at hundreds of state fairs and arenas, his first career had been as a “bullfighter”—which I later learned was colloquial for rodeo clown (as opposed to a matador). Rodeo clowns, while dressed to entertain, are the heroes (or fools) who attract a charging bull’s attention once it has bounced a rider in less than the eight-seconds to qualify for a rodeo ride. Bunky spent more than 30 years getting bones broken, skin gored, and saving the lives of dozens of bull riders.

 

Bunky Boger Rodeo Clown Sept. 30, 1985 Television Listing Showing Bunky as guest on David Letterman Show

Incidentally, I had no idea how long that eight-second bull ride could actually feel until a few years later I was asked to ride a bull for a casino promotion. I was operating an Oklahoma Indian casino that had sponsored the finals for the PBR (that would be the “Professional Bull Riders”; and yes there IS such an organization). As part of the promotion to award the $10,000 check, I was decked out in a full tuxedo and escorted by two statuesque showgirls to a waiting bull. Although the poor Taurus-creature had been well-sedated and was long past his prime in life, it was still a harrowing experience to ride the bovine monster. Every time the damned thing took a step, I let out a little-girl-sounding yelp in anticipation of being bucked off his back and crushed under his past-his-prime weight. God bless those dudes that ride non-drugged bulls for their eight seconds! Unlike my bull, Bunky Boger, though in his seventies, was not past HIS prime in life when he undertook chicken wrangling. First, he built a gilded box about 10-feet tall with a glass-front birdcage embedded in the left side of the box. Inside the cage, he built a feeding tray (where food would be sent once the chicken performed correctly) and a metal shield hiding a small light bulb from view outside the cage. Bunky painted, on the side of the shield that faced the glass front, the words “THINKING BOOTH” (with a tic-tac-toe board drawn beneath). Just to right of the cage, also embedded in the box, he placed a computer touch-screen with a tic-tac-toe board. A player would walk up to the screen, touch a spot where their “X” or “O” would be placed and it would appear on the screen. Touching the screen would also turn on a light inside the chicken cage. Bunky, his wife Connie, and their son Kelly trained the chicken(s) so that when the light came on the bird should look out the window at the computer screen then go behind the “thinking booth” and tap with its beak on a metal switch. When the switch was tapped, it would release a few pellets of food down a tube that led to the feeding tray. The bird would then get to eat. More interestingly for the player, the bird’s tap on the switch would trigger the computer to calculate the next move in the tic-tac-toe game. For the player, the illusion was that the chicken had looked at the screen, recognized the player’s move and entered the thinking both to determine its own counter move. Once the computer…ah, the chicken…made the counter move, it would be the player’s turn to make another move. This would continue until the chicken (computer) beat the player, or the game was tied, or the player beat the chicken. Though the player saw one chicken at a time, there were actually 14 or 15 chickens with each bird working a three-hour shift before being replaced with a hungry bird. Still, the promotion was booked as “beat the chicken” as if it were one chicken named Ginger. Who amongst us can tell one chicken from another, and who would know there were multiple “Gingers”? As a variation of a less PETA-friendly sideshow from the 1940s, Bunky took this tic-tac-toe chicken on the road with him for the state fair circuit in the 1980s. Unfortunately, at a fair near Philadelphia (in the town of Bensalem) someone stole the entire coup of chickens. Apparently the city of brotherly love was also a city of chickenly love. The Philadelphia Inquirer had a field day with the story and turned it into a wire-service cutesy feed; and poor Bunky was out of business until he could train a new flock. Meanwhile legendary casino regulator-turned operator Dennis Gomes spotted the story and wondered how the chickens would work as a casino promotion. Along with outside marketing gurus Frank Palmieri and Jan Talamo, he tested it and, for years, Bunky’s chickens dominated the boardwalk at The Trop as the hottest promotion in Atlantic City. “I thought it would be phenomenal. I told it to our people, our marketing people and (Trop President) Pam Popielarski and they all went crazy. There was a big laugh but they thought it would be big,” Gomes said. Linda Kassekert, the chair of the New Jersey Casino Control Commission, recalled Gomes’ response when she asked him whether the chicken stunt would stir controversy among animal-rights advocates. “He told me, ‘Listen, that chicken is living better than you and me.” In October of 2008 Gomes told Bunky that he considered his discovery of the chickens to be the high point of his career. Despite my own trepidation over a side-show chicken playing Tic-Tac-Toe, I took a gamble, based on Gomes’ endorsement and the tip, recommendation, and insistence, of Trump General Manager Mark Lefever. Mark is one of those unsung earth-movers of the gaming industry and insistence from him is generally a really good bet. I booked Bunky’s birds as the “$10,000 Chicken Challenge,” promising the huge prize to anyone that could beat “Ginger” heads up at tic-tac-toe. It would be free to play, but the caveats were that (1) you could only play once a day and (2) you were required to be a member of my players’ club in order to challenge the chicken. The gamble paid off as Ginger became an instant hit with the chicken booth open 10 hours a day and a constant line (for the entire 10 hours) stretching through the casino and to the front door. With one play taking approximately one minute, we had about 600 people a day challenging the chicken. I set up all the typical P.R. promotions with the local television news anchors playing against the chicken (and losing) as well as many of the celebrities that I would book into that 2,100 seat showroom. More importantly, this particular promotion solved one of the biggest issues that face casino marketers in general. In order to target offers…to segment good customers from average customers from bad ones…the casino needs to monitor play. This is done by players inserting a club card into a slot machine while they play (or handing it to a dealer at a table game). The incentive to the player is that use of the card earns “points” that are traded for gifts, comps, cash, offers, and so on. The problem is that many players don’t use the cards: they forget them; they are superstitious that the casino can somehow manipulate the payouts based on the cards; they don’t want to bother standing in line to join the club; or the value proposition is not enough to motivate them. When I first arrived at Trump29 Casino, less than 17% of the players in the casino were using tracking cards; only 17 out of every 100 people on the casino floor were using a player’s card. That meant that at any given time, we had no idea who 83% of our players were. Not only did we not know their names, we didn’t know how much each one was betting, how often they came in, how long they stayed, or what towns or neighborhoods they came from. How the hell can you run a business if you have no idea who 83% of your customers are; or worse yet, you have no idea how much money 83% of your customers are individually spending? As a direct result of the tic-tac-toe chicken promotion, the number of players using their cards jumped from 17% to 44% the first month and rocketed to 74% by the end of the promotion; a truly amazing phenomenon. Equally impressive, our incremental slot revenue increased by 13%. This slot machine increase was directly traceable to so many people coming in at least once a week to challenge Ginger; once a week more frequently than they typically came by to play. The promotion was a phenomenal success for us; no wonder Dennis Gomes had dreamed it up! I should have sent him a thank you card. As a consolation prize for the thousands of players who did not beat the chicken, I awarded them a tee-shirt with the words “I got beat by the chicken at Trump29 Casino” above a cartoon drawing of a muscular Ginger winning at tic-tac-toe. The tee shirts were being worn all over Southern California; I saw one in a fish house at Venice Beach one night and one at Magic Mountain all the way up in Valencia. In the process, I became close friends with Bunky, his wife Connie, their children, and their chicken wrangler. I used the promotion over and over at casinos to such a degree that it became associated with me and one Tribal leader even argued that I owned the promotion. I do own Bunky’s website (casinoChicken.com), but that is simply a favor to my good friends the Bogers. At Trump29 it was a great promotion that was seen all over the state, thanks to the P.R. and a lot of paid television spots. The arrival of “Ginger” was promoted on television with the famous male strippers, The Chippendales, clad in shirtless tuxedos carrying the chicken into the casino inside a gilded emperor’s carrying chair. (You can see these TV spots on YouTube as well as at www.GaryGreenGaming.com). It was my plan that Donald Trump’s arrival on the heels of The Apprentice would catapult the promotion to national attention and draw even more players into the casino. And I had scripted everything perfectly…so I thought. Neither Ginger Number One nor any of the 14 surrogate chickens actually played tic-tac-toe. As I explained earlier, the chickens were trained to tap a button that triggered the computer play. Customers were actually playing against computer software. Since it was computer controlled, I could also control how frequently (if at all) I paid out the prize ― the $10,000, in this particular promotion. I would simply tell the chicken wrangler how to set the payout, and he would adjust the computer. To avoid giving away $10,000 every day, I had him set the computer at 1 in 1,000,000. This did not mean that the game would have to be played 999,999 times before there was a payout, but it did mean that on the average one win would happen in every one million plays. That one winner could be player number one or it could happen anywhere between one and a million plays; it was random…within those set parameters. That would seem simple enough, but the world of random numbers is a complicated maze for non-mathematicians; and I am certainly a non-mathematician. I had already learned the hard way about the randomness of such formulas, with the first $10,000 winner of the tic-tac-toe promotion. The “chicken wrangler” that Bunky had chosen for the Trump casino was a thirty-something year old Oklahoma native named Joel Faulk. Joel had worked for Bunky for years in various capacities and was himself a seasoned rodeo performer and trick roper. In fact, Joel’s rope tricks were so outstanding that after seeing one of his performances, Will Rogers Jr. presented Joel with one of the original ropes used by Will Rogers Senior. Joel had also gone on to work with the Royal Hannaford Circus as both a trick roper and as a ring master. Shaved bald a lá Yul Brynner, Telly Savalas, Stone Cold Steve Austin, or Vin Diesel (depending on your generation) and with a deep radio-esque voice, Joel was ideal for several radio voiceovers and for announcing various promotions and player-participation stage events at the casino. I also hired him, some years later, to use his show-biz tent-filling expertise to craft a bus program for an Indian casino in Montana (similar to the one he had worked with in Southern California). Somewhere out on the web there is a great video of a younger Joel standing up on a galloping horse and jumping back and forth (with full knee-bend jumps) through a lasso loop. Apparently, at one time the young rodeo-champion Joel was all the rage. But, by this time in his life we was, at least temporarily, chicken wrangling for his old mentor, Bunky Boger. Ginger had been on my casino floor for about 45 days and more than 25,000 games had been played. There was no sign of the promotion losing steam; but to keep interest high we decided to give away $10,000…to allow someone to beat the chicken. The strategic problem was that we were 30 to 45 minutes away from the nearest television stations and I wanted to have evening news coverage of the win to get as much mileage as I could from spending $10,000. Why give away ten-large if I am not buying maximum player awareness? So I developed a bogus news event and a press conference on some unrelated subject; a non-story to bring the television stations, radio news, and the newspapers to the casino. My plan was that just as the spurious event ended, someone would beat the chicken and the win ten thousand dollars. The attending press was sure to be disappointed from the non-news event and convinced they had spent all of this time and distance for a non-story with nothing in the film can. The “wild coincidence” that someone beat the chicken while they were packing up would just save the day for them. As I said, we had been having about 600 people a day play against the chicken. I set the press conference for midday, so I instructed Joel to set the computer to pay out 1 in 300 rather than the one-in-a-million setting. My hope was that someone would win about midday. The press would be packing up and just about ready to walk by the chicken promotion when someone would win. At least that was the plan. Five minutes before the end of the press conference, I rushed to the promotional booth to check with the chicken wrangler, Joel. Everything was set. I estimated that the press would begin walking by in about five minutes and would linger in the casino for no longer than 20 minutes. At the rate of one player every 60 seconds, I told Joel to reset the payout to 1 in 20. I ran back to the press conference to watch it end on time, and then calmly walked back to the general vicinity of the tic-tac-toe chicken. Joel signaled me that five people had played so I began counting the players as the press members walked my direction. Fifteen ― fourteen ― thirteen ― twelve ― eleven ― ten … getting close now… nine ― eight ― seven ― six ― five ― four ― three ― two … still no winner… ― one ― zero… what? No winner? +1 ― +2 ― +3. I rushed to the promotion booth, pulled Joel aside and frantically demanded that he reset the payout to 1 in 5. He did and I began the countdown as I watched the press mill through the casino and toward the door.  Five ― four ― three ― two ― one ― zero ― +1 ― +2… still no winner! Again I grabbed Joel, “reset it again. 1 in 3” I counted again: one ― two ― three ― four. Still no winner. Random number generators are truly random and NOT predictable. One-in-three actually meant that on the average there would be one winner in every three players; which, of course, means that theoretically 200,000 people could play before there is a winner then there would be 100,000 winners in a row. And, there were an infinite number of mathematical possibilities of getting to that first winner. Almost a half hour had passed and press members were packing to leave. I sent Tanya over to offer them free lunch in our buffet, knowing that most would not accept it but hoping to stall. I turned to Joel and pleaded “set it at 1 in every 2”. Again I counted ― 1 ― 2 ―3. Damnit. I took a deep breath and told Joel, “See that woman, second in line? When she gets to the booth, she wins; make it pay 1 in 1; every player is a winner.” Joel went behind the booth and inside the little closet where the computer was housed. Not so amazingly, the woman won $10,000 by “beating” the chicken. As soon as she won the lights flashed, a siren sounded, and speakers began to blare Werner Thomas’s classic German accordion melody “The Chicken Dance” song. An “explosion” on top of the booth launched a shower of brightly–colored confetti across the casino floor. Excited members of the press rushed toward the winner and I very dramatically feigned shock. God, I love show biz! Unfortunately for my press purposes, the winner was not a “local”; she was a traveling nurse who was in the area for a six-month gig and had come to the casino on a dare to play against the chicken on her last day in California. There went the scores of her friends and neighbors rushing to my casino to play. More importantly, there went the follow-up stories, damnit. Still, the winning was a huge success, the media coverage of the winner re-energized the whole promotion, and I learned a lot about the whole random-number process and how unpredictable it can be. No wonder slot machines seem to be such an enigma (more on that later).

ABOVE:  Gary Green, the losing chicken and the first $10,000 winner; BELOW: Gary and the chicken are interviewed by a local television reporter shortly after the win.   Meanwhile, to take advantage of the media-generated excitement over a $10,000 winner and the success of Trump’s hit television show, my staff and I created a new tic-tac-toe chicken promotion called “The Apprentice Chicken.” We filmed a very elaborate (and hilariously funny) television commercial in which a newscaster announced that Ginger the tic-tac-toe playing chicken had been beaten and had cost Donald Trump $10,000 at his casino. From outside a door marked “Boardroom”, you could hear Donald Trump’s voice uttering his by-then famous tagline, “You’re fired.” A second later, I came out of the boardroom, my tie loosened and my hair mussed. Looking at the reporter I frantically gasped, “He just fired Ginger. This is a total disaster.” The next scene showed me in another boardroom saying, “I know you are wondering why I called this meeting.” The camera pulled back to reveal the boardroom table was covered with live chickens, looking at me, clucking and doing whatever it is that chickens do. My dialogue continued, “I know you are just Apprentice chickens, but you have to step up to the plate and fill the vacancy left by Ginger.”

 

 

 

 

 

 

 

 

Gary & Trump’s Apprentice Chickens preparing for TV spot A voiceover then explained that Ginger had been replaced by Apprentices. Players could challenge the apprentice chickens and each time one of the apprentices was defeated, that bird would be eliminated until there was only one winning chicken left. Each time a chicken was defeated, the winning player would be awarded $250; a much smaller prize because these were “just Apprentice chickens who were not tic-tac-toe masters like Ginger had been”. In conjunction with the new commercial (which you can see on YouTube), I provided free Buffalo wings at happy hour, reporting that players would be eating the late Ginger. I cut the hours back to eight hours a day (about 480 players a day) and had Joel set the payouts to 1 in 250 so that we would have an average of at least one winner every day. To further mimic Trump’s successful television show, I adopted the colors of the show and the background outline of New York City in all of my billboards and print ads.

My thought was to stretch the Apprentice program out for a month, until Trump arrived, have him beat an apprentice and utter live his now-famous tag line, “You’re fired”, to the losing chicken. At that point, I would find a “winning” chicken and start the $10,000 chicken challenge all over again. In addition to the billboards and television, we exploited The Apprentice television show, the $10,000 chicken prize, and Trump firing Ginger in every way I could possibly imagine. My March 2004 newsletter, mailed to all players’ club members announced the hiring of the 15 apprentice chickens and I bombarded the Coachella Valley, Southern California and the national casino-player press with as many stories, pictures, and videos as I could create. Hence the stage was set to create a promotional front (and really good excuse) for Donald Trump’s arrival in Palm Springs to meet with the members of the Twenty-Nine Palms Band of Mission Indians of Coachella California. Along the way, it solved my problem of not enough players using their cards and it increased revenue even before the targeted mailings. The TV and print ads hit and we were on our way.

Casino Newsletter Reports Ginger Fired Print Ad For Apprentice Chickens

At my prompting, Trump made the first move, putting and “X” in the center square. The chicken/computer responded by putting an “O” in the upper right corner of the tic-tac-toe board. Trump, in turn, placed an “X” in the top center square, giving him two in a row. As soon as I saw the computer respond to Trump’s move by picking the top right square I could feel myself tense up. I had watched Joel set the damned thing to pay out only one in ten-million; but this move did not look like the typical patterns I had seen the computer play. Still, there was one blocking move for the computer to make, the bottom center square. Instead, the computer picked the bottom right square. Unless Donald Trump was an absolute idiot it would be impossible for him to lose (except for the unlikelihood that he would throw the game). One in ten-million and that damned random number generator was going to get me again. In my mind I could already hear “You’re fired” being aimed at ME. I could also imagine people, not understanding the random number generators, scratching their heads in naïve dismay, and sincerely thinking “That Donald Trump; no wonder he is so rich. He is just the luckiest man in America; he beat those chickens. He must be really smart too.” Donald Trump is no idiot, and as soon as he realized what happened, he played off of it like a showbiz pro. He leaned slightly toward me and almost without moving his mouth, he muttered, “what now?” I patted him on the back and said “You fucking won; be happy. Smile.” He turned toward the crowd, raised a power fist of victory, and gave a big smile. With only a slight hesitation, I began leading the crowd in cheering applause as we opened the stanchions and led Trump toward the private meeting with the Tribe.

 

ABOVE: Donald Trump ponders the Tic-Tac-Toe screen as Gary worriedly watches

To this day, most of the Tribal members as well as a majority of my staff are convinced that I had rigged the game for Trump to win. I think, at the end of the whole chicken ordeal, Trump took it in stride as just another promotional event; and he has had so many, I doubt if he even remembers this more than “just another day”. I, on the other hand, immediately put staff to work publicizing the Donald Trump vs. the chicken event. Think about it: I had taken an icon of New York serious business —such an icon that he had the number one rated TV show about people wanting to work for him— and reduced him to playing with chickens. What a story! The press was already there for his celebrity appearance, and so many pictures and videos were taken, we had created a massive national publicity event by “humiliating” the ever-so-serious business icon into a tic-tac-toe match with a chicken. Besides the local news, NBC’s Nightly News picked up the story along with CNN, and even the business-stalwart CNBC. (Of course it helped that his Apprentice television show was on NBC). The wire services and hundreds of daily newspapers across the country picked up the story:

Beyond the legitimate news media, Entertainment Tonight, Extra, along with that whole National Enquirer genre of television “entertainment news” shows) used the video footage provided by my staff.   Donald Trump’s chicken skit on Saturday Night Live Indeed, at the height of the “serious business” reality show, Donald Trump was challenging a chicken to a duel of tic-tac-toe!  This was before “Celebrity Apprentice”, before Trump made a public spectacle out of jumping onto the silliness of “where is Obama’s birth certificate”, and when The Apprentice was considered to be semi-serious reality television. In this light, the marvelously self-deprecating gimmick (and Trump was a pro about playing along) was beautifully crowned a week later when Trump hosted Saturday Night Live, dressed in a white suite, yellow shirt with a yellow tie, and surrounded by cast members dressed as chickens popping out of eggs. Though ostensibly the SNL appearance and skit had nothing to do with the tic-tac-toe adventure, in reality the national publicity gener-

Above: Donald Trump, Gary Green, and The Press react to Trump’s unexpectedly beating the Tic-Tac-Toe playing chicken. Below: SNL script for Trump’s chicken appearance.   ated by the chicken-challenge at Trump29 had for that particular 15-minutes identified the casino real estate mogul with… chickens. Following the publicity massive, I quickly eliminated the rest of the “apprentice chickens” through daily cash giveaways and a mark-off on an oversized score card that mimicked the one on the NBC Apprentice web site. Utilizing the first chicken arrival Chippendale footage along with the news footage of Trump’s win, and the follow-up commercial of my hiring the apprentice chickens, we created a third television spot to reintroduce a $10,000 giveaway and a replacement for “the late” Ginger by a new winning chicken apprentice who we called “Ruby”. You can view all three of the television spots on YouTube. One might expect that after so much press exposure the excitement would die down and the glitter would wear off of the promotion. Instead, it became even bigger. Millions of people wanted to be like Donald Trump; almost no one could be. Millions more wanted to be on The Apprentice; very VERY few could be. But thousands and thousands could imitate Trump and play tic-tac-toe against the famous chicken in the very spot where they had seen Donald do it. Plus they could “connect” to The Apprentice by playing against Apprentice Chickens —all, seemingly, with Donald Trump’s seal of approval. Despite all of our successes with Bunky’s promotion, we had been through some real harrowing times with the chickens; times that made the random number generator incidences seem minor. From the onset, we had the issue of where the chickens would sleep. The Trump29 Casino was located in the middle of desert about 20 miles east of Palm Springs in the town of Coachella, east of Palm Desert, La Quinta, and Indio. Some days the temperature would be well over 110˚. If we had kept their cages outside, we would have had roasted chickens available for the buffet. Besides, Bunky’s contract required that we keep the chickens indoors in an air conditioned, clean, safe environment where the wrangler could have feeding, cleaning, and lighting access. Have you ever smelled 15 caged chickens? (I am from the rural South and I HAVE!) There is clearly a reason that farmers keep their chicken coops far away from the house, over a hill, and down wind. To further complicate the smell issue, we were running a buffet/café, a gourmet restaurant, snack nooks, three bars, banquet rooms, a showroom, an employee dining room, and a five-restaurant food court that included a McDonalds. We could not put the chickens anywhere that their smell would reach customers or food services. After literally days of consternation we finally found a back-of-the-house room near the showroom and away from busy areas of the casino. The only problem was that the little room was one of the very few spots in the casino that was not covered by the eye-in-the-sky security system. Surveillance could not watch the chickens. Truly, finding a place to house 15 chickens inside an upscale casino almost caused us to cancel the whole damned contract. Chicken housing was a huge issue; and therein would be two additional problems. The staff at this particular casino came, for the most part, from the nearby communities of Coachella and Indio. A large part of the staff was fluent in neither English nor Spanish, with “Spanglish”/“pochismo” being their actual language. Though a high school education was a requirement for a “key” license, many employees, especially in the housekeeping and maintenance departments, had not graduated from high school…or, sadly, even elementary school. Many who had graduated were not exactly at the top of their classes. That is not to imply they were not smart, that they were not great employees, or not great people; generally, they were all of those things. It simply means that that they formally were not well educated. Additionally, many of the employees were deeply steeped in border culture; a world unto itself. Late one night a maintenance man stumbled across the secret room filled with chicken cages. He walked in, saw the chickens, and as an animal lover with chickens of his own, he determined that the birds were hungry. He rushed to the employee dining room and filled a tray with mashed potatoes, corn, and other veggies. He brought the tray back to the out-of-camera-sight chicken room and proceeded to feed all 15 of the birds. Unfortunately, he was not aware that the way the tic-tac-toe game worked was that the birds needed to be just hungry enough to want to tap the button to release pellets of food. Fattened well-fed birds were not apt to play the game; in fact, they were more likely to sleep in the booth. That is not to say Joel-the-wrangler starved the birds; they were well fed in their cages, but the timing of the meals as well as the amount of food was carefully calculated so that they would be hungry enough to participate in the game. The day following the maintenance man’s feeding of the birds, we had to close the promotion because none of the birds would perform. It took us more than 24 hours to figure out what had happened; and then we only understood after the same guy stopped by that night to check on the hungry birds. Fortunately, Joel was sitting with the birds all night, thinking they might be ill; he really was a nursemaid to Bunky’s birds. Once I explained how the promotion worked, the maintenance guy was completely cool with it and, of course, there were no consequences to him for his friend-of-animals gesture. He did offer us the “tip” that we should feed the birds more often and that he would be happy to care for them on Joel’s days off (which he had none). The most bizarre of the many chicken near-disasters came when another employee was found…ah…with …one of the chickens. After the feeding incident we had asked the surveillance department to train a camera on the hallway that led to the chicken room; the last position where cameras could record at least anyone entering that hallway toward the room. That way they could see if anyone approached the room to feed the birds and surveillance could notify Joel if any unauthorized person did so. On one particular afternoon, the sharp-eyes of surveillance spotted an employee headed toward the chicken room. They called Joel, who was, unfortunately, off property at the time. When they finally located someone to check on the chickens, the employee was in the chicken room with his pants down around his ankles as he tightly held one of the chickens while he was apparently attempting to have sex with it. Poor Ginger! At another casino where I employed Bunky and Ginger, Bunky called to tell me that Joel would not be available so he was sending another chicken wrangler who went by the name of “The Oklahoma Kid.” No problem. As Bunky described the Kid’s expertise he pitched, “he was a bullfighter (rodeo clown) at Madison Square Garden for 30 years.” I was silent as I considered how old “The Kid” must be to have worked anywhere for 30 years. Noticing my silence and thinking it was disappointment over not getting Joel, Bunky added, “Since he left New York, he has spent the last 25 years handling animals at state fairs and rodeos.” Finally I asked, “Bunky, just how old is The Kid?” Without missing beat, Bunky responded, “82 years young.” At my next casino, the 13 “Gingers” were wrangled by “The Kid.”

•

Chapter Five. Behind the scenes of the stage… (more of the “typical” day) “All the world’s a stage, And all the men and women merely players: They have their exits and their entrances” ― Shakespeare’s As You Like It, spoken by Jaques in Act II Scene VII.

O n this day, Donald Trump had much more to be concerned about than Gary’s little casino publicity tic-tac-toe chicken gimmick. The rest of that trip, for him, was all about the situation with the Tribe ―which eventually resulted in the Tribe being released from their contract with Trump management. But MY day was still young; that “typical day” was far from over. That night, unrelated and totally coincidental to the Trump visit, we had booked southern-rock/country legend Charlie Daniels to play in the 2,100-seat Spotlight Showroom. It was a different kind of show than our normal bookings; as a property so closely tied to the Trump image, we usually leaned toward the Rickles / Tony Bennett / Paul Anka set of Vegas acts or 1970s-80s rock bands (Peter Frampton, Doobie Brothers, Earth Wind and Fire) or (then) newer standup comics (George Lopez, Howie Mandel, Carrot Top). As with all things casino and many things native, there had been some few minor awkward moments as the normal “Vegas” lineup of stars had made our showroom widely recognized as the premier concert venue in the Palm Springs area and added to the glitz and glamour of the Trump image. Though a well-known venue within Southern California, among many of the show business celebrities it was just another stop on the “Indian Casino” circuit to others. And, with Donald Trump’s name gilded on the front of the building, few even knew that the reason the casino was called Trump 29 because it was a partnership between the thirteen-member 29 Palms Band of Mission Indians (who owned the casino) and Trump Hotels and Casinos, which had the management contract. Outside of the industry, few people understood that intricacy. One notable exception was Howie Mandel, one of the smartest and most well-informed performers. Mandel opened his standup routine by saying “I am happy to be here at Trump 29 Casino. It is not my favorite. Trump 28 is good. Trump 31 is better.” No one laughed. And some of the Tribal members were, apparently, offended that Trump 29 was NOT his favorite. No one got Mandel’s joke; he was way too smart for the audience we had provided to him; and that was my fault for booking him to that audience. On another night at a “meet and greet” backstage reception with Tribal members, Don Rickles, completely inadvertently, offended Tribal sensitivities just by being the wonderful Don Rickles. Coming from his dressing room, already dressed in his tuxedo shirt and black tie, but without his pants on, Rickles had put on a smoking jacket/bathrobe before entering the “green room”. Pretending to be dazed, he turned to his staff member and joked, “What the hell are these people doing in my dressing room.” Rolling with the master’s humor, the staffer said, “These are the Tribal leaders.” After shaking hands with each of the attending members, Rickles was introduced to the Chairman (chief) of the Tribe; he quipped, “All this is yours? That’s great. Now get the hell out of my dressing room.” Instantly noting the surprise on the leader’s face, Rickles quickly followed up, “No, no, I mean no offense. You know how I am; now get the hell out of my dressing room. Really.” As part of the shtick, Rickles then turned to me, “You. You are the guy that hired me right?” I responded, “Yes Sir.” He looked back at the Tribal leaders trying to make them understand the joke, and continued to address me “Good. You have my check. You stay. The rest of you go.”   LEFT: Don Rickles with Gary Green backstage in the “green room” for a “meet and greet” at the Trump 29 Spotlight Showroom before one of Rickles appearances there. It was classic Rickles and brilliantly delivered with perfect timing; but Tribal sensitivities being what they were at the time, this old white man blowing off the Natives to talk to another white man (supposedly with a check) was just symptomatic of a greater issue. Don Rickles, of course, meant no offense, never would mean offense, and was not even aware that anyone would seriously take offense. In fact, so far into his well-known career, and having reached legend status, it is almost amazing that it would still be necessary to have this discussion to explain what he does for a living. After all, in advertising the coming of his concert, I had taken out a series of full page newspaper “teaser” ads that where totally blank except for a hockey puck in the bottom corner of the page and the caption “Guess Who Is Coming To Trump29.” “You hockey puck” was one of Rickles’ signature lines. Yet two Tribal members seriously asked me if we were putting in an ice rink. Fortunately, the concert was a sellout, of course, and Rickles was brilliant and certainly never offensive. Nonetheless, such minor little hiccups in smooth operation were typical crisis-du-jour and were (or should have been) little cause for further thought. The same was true for the Charlie Daniels issue to come…I thought. There was a big country/rock following in the Coachella Valley and we had booked this concert several months before knowing of Trump’s visit. We had missed the country music set altogether and I was hoping to bring in a different segment of after-show gamblers. At the time we booked the show, we had no idea that Trump and the New Jersey execs would be in town at the same time. So goes the typical day in the casino business. It was a packed house and it even impressed the very east-coast-minded New Jersey Trump officials who had remained in town after Donald flew out that afternoon. Brown, Mascio, and the Jersey Trump group lined the back of the standing-room-only auditorium and cheered with the rest of the crowd as The Charlie Daniels Band went through their classic hits: “The Devil Went Down To Georgia”, “Long Haired Country Boy”, “The South’s Gonna Do It”, and the others. Then it happened. Midway through the rollicking show, Charlie Daniels dismissed his band. He pulled one solitary wooden bar stool mid-stage, picked up an acoustic guitar and took off his trademark Hoss-Cartwright-style hat, revealing his balding head. “Ladies and Gentlemen, several years ago I gave my soul to the Lord Jesus Christ and I would like to share some of my favorite gospel songs with you,” he announced from the stage. The auditorium fell dead silent. Unsure if he was serious or not, the entire crowd did not even breath, waiting for him to either begin playing guitar or tell them it was a joke. It was so quiet you could hear the gurgle of the ice machine in the snack bar at the back of the auditorium. The longer the pause the more obvious it became that he was serious. At best, it was not an appropriate set list for a casino that positioned itself as a Vegas-like “sin city” / Trump-glitter gambling center. Finally, the deathly silence was broken by one of the New Jersey Trump officials who boomed his voice through the entire auditorium in a heavy-Jersey accent, “Get da fuck outta here. Dis is a casino not a fuckin’ church.” Shades of Tony Soprano! The auditorium erupted with laughter, including from Charlie on the stage. Unfortunately, Charlie was serious about his musical selection, and apparently about his religious conversion as well. Though he gave us one of the best renditions of Precious Memories that I have ever heard, the foul-mouthed Trump executive was correct and we were ordered never to book Daniels again…as much as I personally loved him. Meanwhile my cell phone was vibrating with a text-message; there was a problem in the high-roller room. After this fucked-up day, if someone had pissed off Larry-the-high-roller I was not going to be a happy boy. I hoped that it was something simple like the buffet girl in the Platinum Lounge didn’t come in for the late shift, again. Hopefully it was one of those minor details. When I arrived at Platinum after getting the alarmed text at the Charlie Daniels concert, I was immediately corralled by one of my senior Casino Hosts who told me there had been a complaint from one of our quasi-high rollers, Eva. She was complaining that one of the Hostesses had been ignoring her and soliciting money from two other Platinum Members: Mr. Gimhae-Kim and my guy Larry. Fuck; Not Larry. Eva was an interesting and typical, albeit sad, story. She and her husband had owned a small Midwestern chain of pharmacies and at retirement age had very fortunately sold out before the Walgreens and CVS’s of the world drove the small owners out of business. With a very comfortable nest egg the couple retired to Palm Springs and settled into the life of the desert gentry. When her husband died, a few years later, Eva became quite the “woman-about-town” hobnobbing with the Palm Springs social registrants (Barbara Sinatra, President and Betty Ford, etc.). In her spare time, between social outings, she began gambling ― high roller gambling ― at Trump, Spa, Agua Caliente, and other upscale Southern California casinos; she was a premier member of my Platinum room for a long time. Then, like many gamblers’ stories, she went bust; she lost most of her fortune. To pay her bills and living expenses, Eva took a job selling upscale real estate and living off of balloon commissions that would come with each multi-million-dollar sale. Soon her gambling habit ate up even that money, and she began to cut back. Her coin-in dropped from six-figures weekly to a few hundred dollars. She no longer qualified for Platinum membership, but we didn’t have the heart to throw her out. The only down-side was that she was a constantly complaining busy-body and treated all casino employees as “the help” there to serve her. On this particular day, Eva was just being a busy-body and telling-on the Hostess for what she observed as “neglect”. Gimhae-Kim was a very wealthy Korean gambler who spoke very little English but gambled tens of thousands of dollars every week. He was actually assigned to and generally managed (because of the language issue) by my right-hand, Steve Sohng, a native Korean himself.  Larry was a very-high roller gambler whose weekly play could easily alter the casino’s winning numbers. Normally a whining complaint of neglect from Eva would have meant very little, but the very fact that this complaint involved some kind of problem with Gimhae-Kim and Larry was more than enough reason to call me. I immediately called Steve to candidly talk with Mr. Gimhae-Kim. After a few moments of intense Korean discussion, Steve returned to brief me. Despite his less-than-fluent command of English, it seemed that the hostess had been talking with Gimhae-Kim about the fact that she lives alone. Regardless of the implication of that conversation, Gimhae-Kim had suggested that she buy a dog for companionship. When she complained that she did not make enough to afford a puppy, he offered to give her the cash to buy one. Apparently encouraged by his offer, and oblivious to my policy of hosts and hostesses not being allowed to toke out (take tips), she whined to him that she could not afford to feed a growing puppy. Whether to dismiss her or to encourage her, Gimhae-Kim offered to give her cash for a year’s worth of dog food. She thanked him, but turned down the offer and thus preserved her job (though ultimately she did buy a dog). Larry had no complaint with the girl. In fact, he had no opinion one way or another; he was totally oblivious to her. All he wanted was to spin those slot machine reels. So there was no infraction there from Eva’s complaint. Then there was Larry. For weeks we had been trying to find something to comp to Larry. Those earned “players’ club points” accrue on casino books and, since they can be traded in for food and gifts, they have a cash-equivalent value. Larry never took a comp so he had tens of thousands of dollars of cash equivalent on the books; that is a true nightmare for those CPA types…not to mention casino bosses. We had tried to give him showroom tickets, meals, trips, hotel rooms… he didn’t want anything. We had been driving ourselves crazy pitching offers to Larry, though it was not like we were trying to buy his Platinum loyalty; we had that. We just wanted to keep him happy and get some of those damned points off the books. This same hostess, well aware of management’s problem, decided to take it on herself to find Larry’s weakness. No one but she knows if the plan was for one of those weaknesses to be a roll in the hay with her; but the fact is she did spend more time with him than with busy-body non-revenue-generating Eva. Eva, in fact, had been neglected in that sense. However the hostess was successful where none of us had been. It seems that Larry had at least one vice other than slot machines: a particular type of cigars. He had affection for something called Cohiba Behike, which we discovered sold for $440 a stogie (though I doubt it was actually a cheroot) or $17,600 a box. Apparently Larry did not subscribe to Mark Twain’s observation, “if it costs above 5 cents, I know it to be either foreign or half foreign and unsmokable.” The hostess had in fact done what she was supposed to do, even in her neglect of Eva; she found a motivator for an important customer. Good job. Fortunately, (for those of us with short anti-office attention spans) there are no “typical” days at casinos. If I had to be a Japanese salaryman or even a Midwestern CPA, I would be a total failure. I thrive in the constantly changing adventure, volatility, and intensity of the casino world. I love the universe of history, methodologies, and think-on-your-feet decisions that are part of every single day of casino life. Hell, I even enjoy the instability and volatility of the seeming-lunatic characters that make up the casino universe of owners, board members, tribal officials, investors, and CEOs. Once in the late 1990s IBM spent a lot of money flying me from Florida to San Francisco several times, courting me for a position in the Global Services Practice. Many times I have been reminded what a miserable and short-lived career that would have been; me in an IBM “uniform” and behavior pattern? I often tell new hires, at orientations, that everything they have seen in movies about casinos is not true AND is true at the same time. There are dozens of operational issues that “civilians” don’t ever know or even think about: • Employees dying. Happens all the time. Once at an Indian casino I had a short order cook die in my kitchen (from an overdose of cocaine). The Tribal Chief ordered the body moved out of the casino and off of Indian land before the cook could be pronounced dead. The Chief didn’t want people to think the casino was haunted by evil spirits from having someone die there; he was afraid tribal members would not gamble in a place unlucky enough to have a death. I am serious; and this was in the 21st century. • Customers refusing to leave seat. At one casino I had to keep an ever-changing supply of slot machine chairs because so many customers refused to leave their machines when they were on a “winning-streak”. So when it was time for them to go to the bathroom, they would just urinate or defecate in their clothes and hence soil my chairs. My warehouse had a collection of seriously smelly chairs. And, there are those absurd Vegas stories of customers refusing to leave slot machines during the deadly MGM fire that killed 85 people in Las Vegas. • Casino running out of cash. In January of 2004 one of Las Vegas’ most recognized landmark casinos, Binion’s Horseshoe was closed by regulators for not having enough cash. The Nevada Gaming Control Commission’s Regulation 6.150 very specifically sets formulas for how much cash a casino must have on hand. On a very busy day at a casino, unless the property is just obscenely cash flush, it is nearly impossible to keep up with the payout demand ―especially if the machines are “loose” (i.e. there are lots of payouts). The only way to survive in this situation is to do multiple “drops” during the day; take cash out of the machines and recycle it for payouts at the cage. However that emergency-behavior does not meet the minimum legal guidelines for Nevada (and a number of well-regulated jurisdictions). Some gaming jurisdictions, such as New Jersey, allow properties to dictate the actual cash on hand based on the property’s experience. New Jersey regulations (N.J.A.C. 19:43-4.1) define the casino bankroll as daily average cash maintained in the casino, excluding any funds necessary for the normal operation of the casino, such as change banks, slot hopper fills, slot booths, cashier imprest funds and redemption area funds. Comparisons are made with the prior year’s monthly daily average. If there are any significant reductions in cash, the property is required to provide an explanation. Negative trends in cash alert gaming authorities to watch for possible cash-flow problems. When I opened a casino in rural Montana, the Tribal business committee had not budgeted for a full size casino’s cash needs; they didn’t have a clue and didn’t ask anyone. The Tribal regulatory authority (the gaming commission) was kept in the dark by the business committee (not that they would have known any better anyway). And the bank syndicator that had funded the casino was deliberately lied to and misled. For 600 slot machines, eight table games, and bingo, we opened with less than $5,000 in cash. If the grand opening was a total failure, then we could possibly get away with as little $30,000 to $45,000. If the grand opening was a success; we totally were screwed. Either way, having only five-thousand-dollars was a sick and painful joke. Casinos (especially smaller poorly-regulated casinos, usually in Indian Country) run out of money all the time. The Nevada formula was designed to be a minimum operational figure to protect the public from a casino default. Even as a minimum, with those guidelines a small casino (500 machines and 8 table games) should figure their cage bankroll as follows: GAME DESCRIPTION NUMBER MULTIPLIER BANKROLL Non-progressive slot machines 500 $50 $25,000 Total of all progressive jackpots $10,000 1 $10,000 Table Games: number of games (8) times table limit ($300) $2,400 100 $240,000 Bingo or Keno: number of games (12) times game top prize ($250) 12 $250 $3000 TOTAL MINIMUM BANKROLL REQUIRED: $278,000 So, at least, my little Montana casino needed more than a quarter-of-a-million dollars in the cage. Even if we did not open the table games, and if we turned off the progressive jackpots, we would have needed a little more than $28,000 (that number is for 500 machines not 600). We had an insane $5,000. I had already walked on water and raised $600,000 for the Tribal business committee to make up for their budget short falls which were keeping them from opening (more on that later). But the cage bankroll was another issue; they either hid the cash shortfall from me or they didn’t understand it. Their plan was to use cash from their existing (and closing) mini-casino to bankroll the cage. I was not privy to that cash number, but I had hoped it would be at very least mathematically sound; after all, the banking syndicator that had approved this deal was well-experienced in such matters. Mathematically, by comparison, my Lil Vegas Arcade Casino in Florida was approximately the same size as their small casino: 100 machines. In that case the math was: GAME DESCRIPTION NUMBER MULTIPLIER BANKROLL Non-progressive slot machines 108 $50 $5,400 At unregulated Lil Vegas, I did it with $2,000 and a series of emergency (mini) drops. In Montana, they actually were mathematically close in the old facility. Unfortunately, they had not taken into account cash for six-times that number of slots in the new casino ($32,400), for bingo (another $3,000), their new slot progressives ($10,000), nor their table games ($240,000). In fairness, the bank syndicator had only approved 300 slot machines and was not aware of (and certainly had not approved) progressive slots nor table games; this was part of the deceptive stratagem the business committee was playing with the syndicator. Also, in fairness, the Tribe’s business committee had planned on a locals-only casino but had hired me to go after an off-reservation tourism market (a strategy which failed miserably). Nonetheless, even by the syndicator’s machine count, the cash-on-hand would mathematically have to be a minimum of $15,000 plus another $3,000 for the approved-bingo. Rather than opening with the $285,400 I needed (or even the non-table game and non-progressives a minimum of $45,400) I was given $5,000. So for that opening, there were two possibilities: I could have taken the regulatorily sane hardline and simply said “no, it cannot be done without more cash, have a nice life”; or I could find a way to open regardless of having no payout money. That way, I found, was to do a partial drop every hour for eight hours. Exactly like Lil Vegas, I did emergency drops; only instead of one a day, I did one an hour for eight hours. David Cook, the well-known Oklahoma casino regulator who I had brought to Montana, was beside himself with outrage over the Tribal business committee’s duplicity and/or ignorance. Retired from the Oklahoma City Police Department as the most decorated living officer in their history, Cook had become Executive Director of the gaming commission for that state’s largest casino, moved on to a major casino accounting firm, and eventually settled into a consulting role to multiple Tribal casinos. His reluctance to come to Montana, where there were no state regulations and a totally unaware Tribal regulatory authority, was only reinforced by this multiple-drop strategy. While he recognized that my scheme was the only way to keep the doors open through a successful grand opening, he was outraged that these drops would be performed by brand new teams that had never been tested under fire. Moreover, he correctly forewarned that members of the Business Committee would not understand the issue and would be angry at long lines at the cashier cage windows; long lines that were destined to continue for months until cash flow could be stabilized. To further complicate the issue, those bankroll figures are really not even minimum-on-hand cash under Nevada law. Though this was far from Nevada, regardless of the actual State, I have always tried to adhere to the Nevada minimums. Regulation 6.150 also requires a casino to have a bankroll for two weeks of accounts payable, two weeks of payroll, and one month of debt service. In short, casinos really do often run out of money…even in Nevada, as the Bunion’s’ incident showed. • Customers dying. This one, at least, is an industry hazard that hotel operators are familiar with; people die in hotel rooms all the time. On the casino floor, I am not talking about the rare newsworthy incidents like the horrific shootouts at Harrah’s in Laughlin or Soboba in California or MGM Grand in Vegas or even nationally known slut-symbol Anna Nicole Smith dying in a casino hotel room at the Hard Rock Seminole in Florida. Rather I am talking about customers keeling over at a slot machine or choking to death in the restaurant, or just dropping dead while walking across the floor. Happens all the time; get used to it. • Customer disguises. For uncountable reasons, customers sometimes find it necessary (in their minds, anyway) to change identities during the course of a visit. At Trump29, where we paid an average $35-per-visit bounty to bus riders, it was common for a bus rider to claim the thirty-five-bucks, step into the bathroom, put on a wig and change of clothes, and attempt to claim another $35. We caught one woman who had five changes-of-costume and wigs in her bag…along with five homeland security approved ID’s in five different names. That bizarre behavior combines with card counters, banned persons, and the sometimes notorious or famous, to make for an interesting array of disguised customers on a regular basis. I used to have really famous one pop-star-diva (and purported sex symbol, though I could never understand why) who loved to play my penny slot machines at 4 a.m. several nights a week. Her disguises were so absurd that they looked like someone pretending to wear a disguise; the only thing she lacked was a plastic “Groucho” nose, glasses, and mustache. Though I have yet to have an official black-book banned player show up at one of my properties (though the late Frank “Lefty” Rosenthal used to claim that he did it all the time), I have many times caught persons I had banned or the property had banned, attempting to sneak back in under disguise. Like I said, there are no “slow days” at the casino…even if revenue and traffic are slow. There are no typical days; there is no routine. And the mind of a casino boss is constantly filled with history, adventure, problems, solutions, numbers, formulas, cheats, hookers, tourists, winners…and losers. The true irony of the entire “Trump29” adventure was that, again less than ten years later, through another series of contacts I was approached by a third-party broker to help the Tribe find financing for a new casino on Tribal land near the 29 Palms U.S. Marine Corps base. Part of the package I proposed along with the funding and development for the new property was that I be given a federally-submitted management contract for the new casino as well as for the older once-upon a time Trump casino. Like most wanna-be development deals in the casino world, this one too was just another pipe-dream for adventurers who think there is nothing to making money at a casino other than opening the doors and turning on the slot machines. Other funding was located before the broker could follow-up on my offer.   TYPICAL DAYS:

LEFT: Gary Green (left) with Trump CEO Mark Brown (center) and Operations Vice President Vince Mascio (right) at a farewell ceremony for Mascio near Palm Springs.

ABOVE LEFT: Max (TV’s Jethro Bodine) Baer Jr., a television reporter and Gary Green at the Tic-Tac-Toe Chicken booth at Trump29 Casino. (The chicken beat Max handily.) ABOVE RIGHT: Gary gets some last-minute staging instructions from the camera crew and director of one of a series of casino television spots. BELOW: Gary’s assistant Tanya Beecroft with Gary Green and Vince Mascio at Trump29’s celebration of Gary’s 50th birthday.

•    Chapter Six. A Little Casino History: …NOT the movie version “History repeats itself, first as tragedy, second as farce” ― Karl Marx, The Eighteenth Brumaire of Louis Bonaparte (1852)

T his racket (the casino gaming industry) is full of colorful personalities that have not shown up in movies (yet) and are far more colorful than some of those movie recreations of real life characters. Keep in mind that this is a very young “industry” with a very sordid history. It was illegal for a corporation to own a casino until 1968 when Howard Hughes bought out Cleveland mob figure turned Vegas philanthropist, Moe Dalitz (through a seemingly questionable deal with then-governor Paul Laxalt (later Ronald Reagan’s “first friend”) and often thought to be the model for Mario Puzo’s fictional Senator Pat Geary portrayed by G. D. Spradlin in the films). Today’s most-famous casino event, Harrah’s World Series of Poker was founded by Texas mob boss (and twice-convicted killer) Lester “Benny” Binion. Until 1979 when Atlantic City’s first casino opened, Nevada was the only state with legal casinos. In 1983 Major League Baseball threatened to kick Mickey Mantle out of the Baseball Hall of Fame if he did not sever ties with Atlantic City’s Claridge Casino where he an advertising spokesman; they didn’t want baseball’s best known living legend associated with gambling. Native American (Indian) casinos were not “legal” until 1988. The first Mississippi casino opened in 1992, the same year that the Mashantucket Pequot Tribe opened Foxwoods in Connecticut (funded by Malaysian billionaire Lim Goh Tong after their bingo hall had been funded by United Arab-American Bank; when they discovered no American financing was available to them). By July of 1999 the congressionally-created National Gambling Impact Study Commission determined there was no longer any significant presence of organized crime in legal gambling. And as of this writing, every American lives within a two-hour drive of at least one casino. Pennsylvania just legalized slot machines in 2004. Florida in 2006 (in Ft. Lauderdale only and 2007 in Miami). Maryland legalized in 2010, and many riverboat and state-by-state laws are still being debated into law in local jurisdictions. It only stands to reason that there would be scores of colorful characters in such a young and fast-grown industry. I like to call them the true mad-men of gambling. I am not talking about the tip-of-your-tongue names like Steve Wynn, Donald Trump, Bugsy Siegel, Lefty Rosenthal, Benny Binion, or even the lesser-known but corporate important names like Kirk Kerkorian, Phil Satre or my old friend Bob Stupak. Instead, I am talking about characters like Dennis Gomes, Frank Haas, Steve Sohng, Mark Lefever, Tony Cornero, Billy Wilkerson, Billy Maizer Chief James Billie, Bill Bennett, and a roster of other insanely colorful madmen (and women) that shaped casino gambling in America. Wherever possible, I will introduce you to some of these madman geniuses who created the current casino world; some have been friends or colleagues others just industry-shapers. As the Trump Vice President of Marketing, I initially vehemently opposed the tic-tac-toe chicken promotion as being campy and too “east coast” for Southern California. My favorite CPA-turned-casino-boss, Mark Lefever, was sitting in that General Manager chair at Trump29 and he had decided to bring the chicken promotion to California. Our friendly and often-joking debate over the chickens went on for months, delaying the signing of a contract with Bunky. Finally, near or shortly after the end of Mark’s tenure with Trump, I relented and Bunky’s troupe arrived at the Trump29 Casino. (Commenting on my endorsement of the promotion on Bunky’s website, Mark emailed me “stop lying; you hated it.”) He was right…at first. Lefever is one of those great gaming characters that I am talking about. As notoriously low-key as I am flamboyant, the New Jersey native began his career as a CPA working for Arthur Anderson (long before the Enron scandal destroyed that firm). At the time Mark Lefever began working for Arthur Anderson, gaming’s aforementioned corporate infancy was just beginning to find its way into Generally Accepted Accounting Principles, traditional business patterns, organized marketing plans, and EBITDA-focused management models. The concept of an “investment grade” casino company was a total non sequitur. Though there is a strong argument that the Teamsters Central States Pension Fund and other “golden age” Vegas investment interests were extremely business minded; there was, without a doubt, comparatively little (if any) true regulatory monitoring of these enterprises. Law enforcement in these newly regulated jurisdictions had no clue what to look for in controlling LEGAL gambling and legitimate business people knew only the tenets of their respective businesses. Drop, hold, cage, and the universe of casino policies and procedures were foreign language terms to them. The newly-flexing industry was hungry for business expertise and several large accounting firms developed Casino/Hospitality practices to answer the call. Most were as adept at it as a typical hotel companies would be, though some few lucked out with good talent on staff. One of the youngest, brightest, and most ambitious of the number crunchers for a (then) Big 8 accounting firm, Mark Lefever was assigned to audit casino operations all over the country, including presiding over the ITT-Sheraton property in Tunica Mississippi. Sheraton Hotels, like the Holiday Inn, Ramada, and Hilton, oh-so-had tried to jump into the casino racket and found themselves out of their neat little corporate league. In a typical overkill backlash to years of casino companies neglecting even basic business-practices (and Sheraton’s not having a clue about gaming), ITT for all practical purposes turned the operation of their casino acquisitions ―and the casino floor― over to the accounting firm of Arthur Anderson. As absurd as that sounds to us in the post-Enron universe, at the time it seemed like a prudent (if not cutting-edge) business decision. In 1913, Arthur Andersen and Clarence Delaney, both juniors at Price Waterhouse, bought The Audit Company of Illinois to form Andersen, Delaney & Company which five years later became Arthur Andersen & Co. For the next 71 years, the Anderson motto “Think Straight; Talk Straight” helped make the company a leader in accounting standards. Despite the corporate arrogance that bred the Enron and other scandals, as of this writing Arthur Andersen has neither dissolved nor filed bankruptcy. From a onetime army of 85,000 employees, Anderson today has about 200 Chicago-based employees focused on the scores of lawsuits against the company (and what will most likely be the dissolution). The company currently is a general partnership shaped by four LLC’s called “Omega Management One” through “Omega Management Four.” Omega, of course, is the last letter of the Greek alphabet and in Christian iconography means the end at Armageddon; someone at least had a sense of the derisively mockery for the fiasco…a sense of humor that is even more appropriate in the context Anderson’s involvement in gaming. The parent of Sheraton, ITT (International Telephone and Telegraph) was one of the “legitimate corporations” that entered the casino business following the Dennis Gomes-era legal putsch. Founded in 1920 by a US Army Lieutenant Colonel named Sosthenes Behn to operate telephone service in Puerto Rico, the company began buying Bell-neglected phone companies throughout Latin America and Europe.  As a legitimate business, ITT’s record made the mafia look like little leaguers…or at best Irish pikeys. While future Vegas Strip founders Meyer Lansky, Benny Siegel, Frank Costello, Tony Cornero and other “organized criminals” were serving their apprenticeships running rinky-dink grey-market casinos in Covington Kentucky, Louisiana, Saratoga Springs, and off-shore, legitimate ITT was making large cash payments to Heinrich Himmler and becoming the first American business received by Hitler after he took power. While Vegas financier Charles “Lucky” Luciano was using his influence from prison to stop Nazi sabotage on the New York docks, legitimate ITT (through its Focke-Wulf, subsidiary) was building the Nazi Luftwaffe’s most successful fighter planes used to shoot down American and British airmen. ITT also owned Huth, a company that supplied radar and radio parts to the Nazi military. I am sorry; perhaps I just have a warped sense of legitimacy, but I find that much more distasteful than operating an unlicensed gambling hall. By the 1970s, a few years before Dennis Gomes began chasing Lefty Rosenthal’s skims at the Stardust, legitimate ITT (according to declassified CIA documents) financially backed opponents of Salvador Allende’s legally elected Chilean government prepare a military coup and the assassination of Allende. And, in 1972 newspaper columnist Jack Anderson printed a memo from ITT’s Washington lobbyist, which revealed a relationship between ITT’s providing funds for the Republican National Convention and a republican Justice Department settlement of an antitrust suit favorable to ITT. You know, Meyer Lansky looked at Cuba and suggested that what his business needed was the co-operation of a government. And Honoré de Balzac’s Father Goriot proclaimed of his daughter’s fiancée, Rastignac, “Le secret des grandes fortunes sans cause apparente est un crime oubli, parce qu’ il a t proprement fait” paraphrased in The Godfather as “behind every great fortune is a great crime.” Apparently legitimate ITT was, from the onset, way more libertine than Lansky or the French playwright-turned-novelist. In 1968, ITT purchased the Sheraton Hotel chain, which it owned for thirty years until it sold off all of its non-hotel businesses (including all the communications and manufacturing companies) and merged with Starwood Resorts. Starwood, a well-respected hotel operator was originally a Westchester County REIT (more recently in the news after their CEO Steven J. Heyer was ousted by the hotel company’s board amid allegations that he had sent inappropriate and suggestive e-mails and text messages to a female employee). Against this backdrop, and probably oblivious to it, Mark Lefever of Arthur Anderson was anointed acting general manager of the Tunica Sheraton Hotel and Casino, as ITT quiet appropriately allowed the auditors to run the whole show. Mark was making all the decisions, from finance to gaming to marketing to food & beverage. Apparently, he showed a remarkable aptitude for running a casino; Mark, at least since I have known him, seems to be a natural “casino guy.” From his Tunica successes, Lefever was sent by Anderson to Vegas to handle the audit for Sheraton’s hopeful unloading/sale of the famed Desert Inn. Representing ITT-Sheraton/Starwood as an Arthur Anderson operative, Mark was appointed Chief Operating Officer of the legendary hotel and tasked with both profitably operating it and negotiating a successful sale. During the next couple of years, he went through what must have been ulcer-giving negotiations and a near-sale to South African hotel operator, Sun International for $275-million. Ten months after that announced sale, Sun pulled out; however, the Sun agreement provided that if they withdrew their offer and ITT subsequently sold the property for less than $275-million, Sun would pay the difference up to $15-million. (Nice work, Mark!) By April of 2000, Lefever was escorting the already near-legendary Steve Wynn through the Desert Inn and dodging reporters’ questions about the meetings. Rumored to be a birthday present for his wife, Elaine, Wynn paid ITT $280-million for the DI; a mere 6½% of the $4.4-billion in proceeds from selling his Mirage resorts to MGM…and $5-million more than Sun had agreed to pay. The reportedly fragile ego of Steve Wynn had already been bruised by reports that Kirk Kerkorian had bested him in the purchase of the Mirage; young Mark Lefever had the good sense to keep his mouth shut that he too had out-negotiated the Vegas giant. Frankly, I am not certain that either Kerkorian or Lefever out foxed Wynn; Steve Wynn is the incarnation of “he who laughs last laughs best.” And, like Liberace, Wynn is laughing all the way to the bank. The man, who built his empire with Michael Milken’s junk bonds but avoided the tainted shadow when Milken went to prison, has the touch to outfox most. Still, there is no denying that Lefever’s negotiation was stroke of pure genius. Always one to recognize talent and ambition, Wynn offered Lefever the continuation as Chief Operating Officer of his newly-purchased Desert Inn; a position Lefever kept until he and Wynn closed the venerable old property. (Wynn’s two towering properties, Encore and The Wynn, sit on the old DI site today.) Hence, by his 35th birthday, Mark Lefever joined the ranks of the Las Vegas legends by taking the helm of the former residence of Howard Hughes and former domain of longtime Meyer Lansky friend Moe Dalitz. Now, for god sake, an accountant was running one of the Strip’s legendary casino hotels. And, he has some great stories about the transition from the “old” Desert Inn to one being run by a straight-as-an-arrow accountant. There is a great picture that Mark used to have on the wall just to the right of his desk at Trump29, featuring a 1950 Life Magazine® centerfold spread showing the opening-day staff of the Desert Inn framed by a craps table on the casino floor. In the same picture frame was a photo from the year 2000 of Mark’s closing-day staff posed fifty years later in the same positions. For his 40th birthday, I launched a massive archive search to find that original issue of Life® and presented it to Mark. The DI (as it was called, at least by the locals and Vegas regulars), was the fifth casino to open on the strip and was known for its 170-acre 18 hole golf course on the strip ―a professional course which not only did Mark often play, but kept open until the very end…even after the casino closed. Mark is a hell of a golfer; in Southern California, he lived inside PGA West at La Quinta. The DI story began in 1927 when a 19–year-old kid from Illinois named Wilbur Clark dropped out of high school and hitchhiked to San Diego to find his estranged father. He found his father and stayed in Southern California where he got a job as a bellhop and four years later drifted up to Reno where he learned to be a craps dealer at the Nevada Bank Club (in 1931 that was the largest casino in the United States). By 1939, Clark had returned to Southern California and was an investor in Tony Cornero’s notorious SS Rex cruise-to-nowhere gambling ship. For 25¢, a gambler could leave from Los Angeles’ Santa Monica Pier on a water taxi ride to the Rex, anchored three miles outside US territorial waters off the Santa Monica Pier. The Rex, unlike many of the modern cruises-to-nowhere off the coasts of Florida, South Carolina, and Texas, was not a run-down garbage scow with indoor/outdoor carpet glued to its desks and poop decks. The S.S. Rex was a luxury casino with thick carpet, rich mahogany rooms, and an opulence that far surpassed any casino in America at the time; even Reno’s famed Nevada Bank Club. It truly was the finest casino in America.

I am not sure how Clark got the opportunity to invest with Cornero; and I have not found anyone who could authoritatively tell me how that connection came to be. Some people say it was from connections Clark made while dealing in Reno. Clearly, by this time Clark had become pretty well known in gambling circles in California and Nevada and like today, perhaps even more so in those days, the “insider” casino world was a pretty incestuous clan. Even today, most of us know someone who knows someone who has worked with almost every top-name casino professional or hanger-on. In fact, talk to almost any casino executive in the early 21st century and we have all worked for Harrah’s, Trump, or Wynn at one time or another. Tony Cornero, himself a colorful character, was portrayed in a caricature by Cary Grant (as “Joe Adams”) in the 1943 film Mr. Lucky. He was the original builder of the Stardust on the Vegas Strip (the casino which launched my friend Dennis Gomes’ career direction). After an assassination attempt in 1948, his alleged assailant, a former casino host on the S.S. Rex, was identified by the Las Angeles Mirror as the lead suspect in the infamous Black Dahlia case. Tony survived the shooting.

Though the LA Times simply called him a “big time gambler,” when he is Googled in the 21st century Cornero comes up as a Las Vegas and Southern California organized crime figure. True or false, we do know that he was not a pal of law enforcement and politicians. California Governor Earl Warren (later Chief Justice of the US Supreme Court) promised “to call the Navy and Coast Guard if necessary” to shut down the gambling ships outside of California waters. A former State Prosecutor, Warren specifically cited the use of wood for the luxury interior of SS Rex owned by Tony Cornero proclaiming, “It’s an outrage that lumber should be used to build such a gambling ship, when veterans can’t get lumber with which to build their homes.”

A full-page ad for the SS Rex Cornero died in 1955 under, at best, “suspicious” circumstances while playing craps at the Desert Inn. Presumably, he had a heart attack, but he was pronounced dead by a pit boss (rather than a coroner or medical professional). His body was taken off the casino floor before the coroner or Sheriff’s Department was called and the glass from which he had been drinking was immediately taken away and scrubbed. There was never an autopsy. As the Las Vegas Review-Journal has pointed out, most of the Strip’s founding fathers had been involved in manufacturing or distributing illegal liquor in the 1920s. It is more than a coincidence that the early names in organized crime files are the same names that founded (at least portions of) the Las Vegas Strip: Meyer Lansky, Ben Siegel, Gus Greenbaum, Jake Friedman, Jack Entratter, Moe Dalitz, Milton Prell, Davie Berman, Milton Jaffe… and Tony Cornero. The great epiphany scene in Warren Beatty’s film Bugsy, (where Beatty looks out into the desert and dreams of magnificent resorts rising from the sand) was, in reality, more like a moment in Cornero’s life. Unlike movie mythologies, the fact is that Siegel simply found himself playing a role as part of a mob investment group’s involvement in the already-under-construction Flamingo; he did not create it. Cornero, on the other hand, actually had the vision, conceived, and began building what he called “The Meadows” resort Cornero’s gambling ships were already bigger and more luxurious than any casino in the country, and his vision was to create equal carpeted-luxury in the desert town full of sawdust-floor joints. Why the hell isn’t there a big budget Hollywood film about Tony? Wait; maybe I should write the treatment…or at least copyright the concept. (I think I just did.) “Bugsy” Siegel, by contrast, was merely a front man who had been sent to the West Coast by Meyer Lansky and Lucky Luciano to work with Gus Greenbaum and Moe Sedway in setting up a racing wire for the legal casinos in Nevada. In short order the trio (with Lansky calling the shots) legally bought (and held the license for) the El Cortez Casino in downtown Vegas. The El Cortez was what we would today call the “proof of concept” for their racing wire; and it provided a venue for glory-hog Siegel to play big shot casino boss as the more-polished front man of the group. I recently watched a cable television “mob exposé” of Las Vegas in which an “expert” asserted that after Siegel’s death, when Greenbaum showed up to run the Flamingo, no one knew who he was. What bullshit! Everyone knew who he was; he was an equal partner. Lansky, despite the clear mob role, was known even among the gangsters as a guy who ran very “business-like” casinos, fair games, and managed extremely professionally. The best portrait of Lansky management that I have ever read is in the very well footnoted book, Havana Nocturne: How the Mob Owned Cuba and Then Lost It to the Revolution by T. J. English . It really shows a true picture of what it meant for Lansky to run a casino; and it was his precision management and bookkeeping that would help obscure history and create Vegas legend for Cornero-like desert dreams. Tony Cornero was not the only dreamer to have an epiphany in the Nevada desert. Billy Wilkerson, publisher of the famed Hollywood Reporter and owner of the Ciro’s nightclub hot spot in Los Angeles, began building his dream of a luxury casino in Vegas. (Ciro’s, by the way, at 8433 Sunset Boulevard, is as of this writing the location of the famed Comedy Store.) Wilkerson envisioned an even more upscale version of his famous celebrity-attracting nightclub; this one with a European-style casino attached. His planning expanded to include a showroom, a bar-lounge, restaurant, cafe, luxury hotel, indoor shops, and a health club. Remember, at this time, a Vegas casino was what today we would call a motel with a really large lobby for games; 1,000 square feet for the “casino” would be large. Wilkerson was thinking about 50,000 square feet of casino space; 50 times the size of the average casino. All of these dreams of grandeur from the golden days are so much like the modern-day dreams that I hear from dozens of wanna-be casino impresarios every year that it is… scary.  I probably get a dozen or more “business plans” every year from people looking for money to finance casino projects; some know what they are doing, most do not. They all sound like these early dreamers…and THAT is exactly why I keep talking to them. The driving force behind many less-grandiose nightclub projects of that era, Wilkerson hired world-class architects to outline his dream. A prolific traveler, whenever Wilkerson would begin one of his numerous new projects he would give the design a project code name, usually taken from exotic birds he had seen during his vast travels. Sometimes the name would stick and remain the name of the business and sometimes it was there just for project identification; much in the same way that today Microsoft code-names its new versions of Windows before release (Windows Vista was called Longhorn, Windows 7 was called Vienna, XP was called Whistler, and so on.) Billy Wilkerson’s 1945 check for downpayment for the land for the flamingo project For this project, he chose the bird and the name Flamingo and liked it so much that he commissioned Hollywood graphic artist Bert Worth to design a logo. No, the Flamingo was definitely not named for the allegedly long legs of Bugsy Siegel’s nasal-whining (“I got money from lots of them fellers”) Alabama mistress/girlfriend, Virginia Hill. Though he got the construction started, Wilkerson soon ran out of money with his insistence on such luxuries as: an air-conditioned building (there were none in Nevada); custom-made gaming tables (with rounded corners like modern tables, instead of old-style sharp corners); cushioned stools at all tables (instead of standing up to play the games); and other “revolutionary” amenities that are today essentials of any casino. Meanwhile, Moe Sedway, at the El Cortez, heard some of the gamblers talking about the financial shortfall. Without even having met Wilkerson, Sedway took the project to Meyer Lansky who set about finding a manner to approach Wilkerson in some way that the developer would not feel “threatened by organized crime”. He sent an intermediary, Harry Rothberg, to propose an investment contract under which Wilkerson would retain one-third ownership of the project but would have 100% creative and managerial control. Though my telling of this radically differs from the pop culture version and the very slick Warren Beatty movie, the fact is that soon after Wilkerson signed with the New York investment group, Rothberg’s local associates Gus Greenbaum and Moe Sedway introduced Wilkerson to their “project liaison,” the well-dressed Ben Siegel. Siegel begin showing up on the construction site daily; and while Wilkerson was back in Los Angeles Siegel was making decisions without discussing them with Wilkerson. When the inevitable conflicts and arguments developed, Siegel suggested that Wilkerson sell out his 33% to a corporation owned by Siegel (not the rest of the mob group ― just Siegel and his girlfriend). It doesn’t take a genius to see why Luciano and company felt screwed by Siegel. THAT is the REAL story. Ben Siegel’s assassination was so sensational and created so much publicity that it did, ultimately, make him partially responsible for the success of Las Vegas; just not in the way the movies played it. The sensationalist attention that his death brought to Vegas, the mythology surrounding him as a character, his palling around with movie stars, all served to let the world know that there were casinos in Las Vegas and there was something luxuriously Hollywood-naughty about them. America does love Hollywood naughty and gangsters. Hence, modern Las Vegas was not even the dream of “Bugsy” Siegel; it might have been the dream of Billy Wilkerson but it was definitely the dream of Tony Cornero. The string of connections in Cornero’s life is at least industry-incestuously interesting. Cornero died inside the casino that belonged to his former investor Wilbur Clark (and Moe Dalitz). At the time of his death, Cornero was about 75% finished building what he called the largest and most plush casino in Nevada, the Stardust. Moe Dalitz took over that project, finished it and opened it. The Stardust Hotel and Casino  was the real-life model of the fictional Tangiers Casino in the Martin Scorsese film Casino…and was ultimately the real-life target of Dennis Gomes’ original investigation. (Though the movie actually was shot at the Riviera, across the street from the now-demolished Stardust.) In November of 2006, I walked the empty halls of the ghostly Stardust, a few days before the fixtures were auctioned off and about four months before it was imploded.

 

 

 

 

At left are advertisements from two different eras of the Stardust Hotel and Casino in Las Vegas    Beyond the hotel hallways, I wandered through the casino cage, into the count room (where Rosenthal’s legendary skims took place). I rambled through the surveillance room, backstage at the Wayne Newton showroom (where I had toked out many doormen over the years for great tables), into Lefty’s old office, the boardrooms, the hidden stairways, the marketing offices, and in every off-limits nook and cranny that I could find. Admittedly, I was looking for the ghosts of the past 48 years just as I had at the DI on its closing day a few years earlier; but this time I had unprecedented access to every square foot of the historic property. Thirty years earlier, I would have had to be juiced in through Lefty to have this kind of access; 25 years earlier, I would have had to be Dennis Gomes to have this kind of access. On this day, I was just the GM of an obscure Indian casino taking a handful of his staff members through a few pages of history that few of them could appreciate with the intensity that I carried for it. Fortunately, on this exploration and tour of the spirit-filled hallways, I had the forethought to take my camera with me…so a few weeks before implosions, I was able to take a few digital pictures of a fading part of Vegas legend from vantage points that few had been able to chronicle … or even visit.

The Stardust Boardroom in 2006: note the open door at the head of the table; it is a disappearing ‘secret’ exit door that folds seamlessly into a wall.  The Stardust’s old hard count room… where the infamous coin weight skim took place.   The Stardust “drop” room/vault and safe; small in size compared to most of the rooms I have had built in casinos I developed.

All that remained by 2006 of Frank “Lefty” Rosenthal’s old office at the Stardust; stained carpet and bleak walls. I thought of the scene from Casino where De Niro (as Rosenthal) gets up from behind his desk with his pants off and walks over to a wooden valet to put them on before taking a meeting.   The abandoned floor of the main casino walkway at the Stardust in 2006   The equally-abandoned blackjack pit at the Stardust in 2006

LEFT: A casino shift-manager’s cash-count book from the final days of The Stardust.

There is no point in my taking the time to go through the sordid history of the Stardust, the infamy of Rosenthal, the legitimate management by Boyd Gaming in its latter years; several books have done that quite well. I probably could lecture on Boyd’s series of 21st century management misfires that culminated with the implosion of the Stardust, the planning (and delay) of the Echelon project, botched Dania Jai Alai project, under-utilization of the Borgata in Atlantic City and more. And I love to talk about the absurd arrogance of Boyd executive staff, as they scratch their heads and asses wondering what went wrong. During their ponderings over the legality of gaming in Broward County Florida in the early 21st century, the executives of Boyd somehow accidentally (I am now guessing it was accidental, though at the time I thought it was intentional) put me on their internal email list. They accidentally made me privy to their internal discussions of the legislative process, their thoughts on taxation, and operational issues of their Dania Florida project. Without revealing proprietary content, I am comfortable saying that the group in those “analyses” did not know their asses from a hole in the ground…as their eventual total failure revealed. I really wanted to buy the property from them. Nonetheless and despite all of these sidebars rolling around inside a casino exec’s head, they are all a far cry from the flurry of activity on the Strip a half-century earlier when the DI was conceived. Eleven years before the Stardust construction began and ten years before Tony Cornero’s death, when the SS Rex was sold, Wilbur Clark took his profits, moved to Vegas and became the second person to own a hotel called the El Rancho. Buying out founder Thomas Hull, Clark became the sole proprietor of the first resort casino on Highway 91 outside of Las Vegas ―the highway that eventually became known as “The Strip.” (As of this writing, there is a Hilton timeshare sitting on that location, about a stone’s throw from my old penthouse condo at The Turnberry.) Wilbur Clark also bought the lease to operate the Monte Carlo Club on Fremont Street and thus created another Vegas practice by installing the first flashing-lights sign in Vegas history. In 1946 he sold both properties for $1½-million and bought the Players Club Jungle Casino, further down U.S. Highway 91. Seeing the frantic work that Billy Wilkerson was doing to build the Flamingo even further down Highway 91 and having talked with Cornero about the vision in the desert, Clark immediately began remodeling the Jungle to create the equally-chic Wilbur Clark’s Desert Inn. His original vision was to mimic the famed (and posh) Desert Inn of Palm Springs, long time a haunt of the powerful and famous (both presidents Hoover and Roosevelt vacationed there, as well as scores of Hollywood stars). Clark began construction immediately but found himself competing for scarce building materials with Ben Siegel, as well as the under-construction Thunderbird; but the real materials shortage was caused by the post-war boom of home-building for returning GIs. The allegation and rumor has always been that the primary Las Vegas contractor in those days, The Del Webb Company, profiteered from the shortage by scamming the non-construction-savvy managers, like Siegel. Allegedly and according to the Vegas rumor-mill, Webb’s company would make a big production of delivering materials to the Flamingo (and other sites), assuring the owners that by paying a premium price they were bypassing the post-war shortages. The story goes that after a major production of unloading the truck, once the owner was significantly impressed with the “black market” materials, workers would reload the materials to another truck and drive out the back gate. Supposedly, the same material would be redelivered the next day or delivered to the next project down the street. There is, of course, no real evidence that this sort of thing happened, but if it did, that would certainly explain some of the mountainous cost over-runs Siegel suffered at the Flamingo and that might have ultimately contributed to his murder. That is certainly not to argue that Del Webb (in any way) would have been involved in such swindles or even unwitting complicity in Siegel’s death. After all, Del Webb owned the New York Yankees (from 1945 until 1964); and who doesn’t have a friend or relative that lives in a Del Webb “Sun City” retirement community somewhere in America? We have already seen that legitimate companies, like Webb (or ITT for example) would never be involved in questionable activities like common mobsters that ran Vegas gambling joints. (For those who miss the sarcasm, please forgive my poor writing for not making the point.) Shortage or scam, by 1948 Wilbur Clark had only $25,000 left in the bank and needed $90,000 to finish the rooms, another $750,000 to finish the casino/resort, $250,000 for FF&E (furniture, fixtures and equipment)… and all of that did not even include cage and operational cash that he would need. For help, he began floating proposals to raise $3½-million to finish his dream; one report had him applying to the Roosevelt New Deal Reconstruction Finance Corporation for a loan; another said that he offered a mortgage on the property to a Virginia insurance company. Apparently, neither came through. I can relate; I have been in the same boat, exactly, both on behalf of various Indian Tribes and for myself trying to finish projects. Running out of money in the midst of a project is gut-wrenching at the least. In 1949, he finally met Morris (“Moe”) Dalitz (allegedly of Cleveland’s Mayfield Road Gang), who in turn put together a group of investors from Cleveland (including Sam Tucker, Thomas McGinty, and Morris Kleinman) to guarantee a loan from the Teamsters Union’s Central States Pension Fund. In exchange, the Dalitz group bought 75% interest in the casino and agreed to keep Clark on as a figurehead and promoter for his share. It is a model I used myself a half-century later, sans the Teamsters and gangsters, for my own Gary Green’s Lil Vegas Redemption Casino when it fell short of my original investors’ purses. I ended up owning 12½% of a property that had my name on the sign. On the other hand, that is not a lot different from Trump, Wynn, and the big names that take their companies public and end up with 5% of their own stock. For a second casino, Gary Green’s Lil Vegas Two, I was ready to give up 40% to one investor, 30% to another, 10% each to two others, and 5% to management…ending up owning 5% of a second casino with my name on the sign. In 2008, I met a few times with Dalitz’s bookkeeper, who in his 80s was a frequent player in one of my properties. Despite the pop-culture and movie depiction of those days in Vegas being free-reign frolicking of wise guys skimming at every turn, this guy was a straight-as-an-arrow accounting machine, even in his ninth decade of life. He could calculate a fairly accurate picture of earnings by watching a casino floor, estimating hold, counting the number of players, and estimating operating costs; Definitely a casino guy that knew the BUSINESS of casinos (as opposed to a hotel accountant who thought it was all the same). There may not have been Arthur-Anderson-Big-Eight standards in place in the Dalitz days, but I can assure you that there were world class accounting procedures for every penny. The DI finally opened in 1950 with Edger Bergen (and, of course, Charlie McCarthy [Candace was only 4 years old]) as the first performers in the Painted Desert Room (soon-to-be rebranded as the Crystal Showroom). The two-day gala was the first production for legendary showman Donn Arden. The media-blitz (public relations) was handled by Hank Greenspun (who would resign a few months later to found the Las Vegas Sun); he pitched the opening to the national press as the biggest party in history. The Crystal Showroom eventually became one of the grandest showrooms in Vegas. Over the years, it hosted Don Rickles, Sinatra, Dean Martin, Liberace, Tony Bennett, Wayne Newton, Tina Turner, The Smothers Brothers, Paul Anka, Neil Sedaka, Dionne Warwick, Cher, Buddy Hackett, Bobby Darin, Bob Newhart, Barry Manilow, Roseanne Barr, Garry Shandling, and dozens of others. Like tens of thousands of gamblers and Las Vegas visitors, the first Vegas show I ever saw was in the Crystal Showroom; my first “proper dress required/two-drink minimum” show was Rich Little (with Petula (“Downtown”) Clark as his opening act). In the 1980s when most of the showrooms bucked the musician’s union and switched to taped music, the grand old Crystal Showroom stayed true to the image and kept a live orchestra in a pit in front of the stage. And in the ultimate twist of Vegas fortunes, Rich Little ended up four-walling my old venue of the Euro-Circus Casino in Myrtle Beach South Carolina for a year in the 1990s. In 1956, Wilbur Clark, suffering a stroke and unable to move freely, sold his remaining 25% interest to Moe Dalitz. Dalitz, by anyone’s history of Vegas, was one of the most colorful characters of the city in the desert. Personally, I have always liked his famous exchange with Estes Kefauver during the Senate’s hearings on organized crime and gambling: KEFAUVER: “As a matter of fact, you had been making a great deal of money in recent years, so I suppose from your profits from one investment you would then go ahead and make another investment. Now, to get your investments started off you did get yourself a pretty good little nest-egg out of rum running, didn’t you? ”  DALITZ: “Well, I didn’t inherit any money, Senator … If you people wouldn’t have drunk it, I wouldn’t have bootlegged it.”   Kefauver on the March 24, 1952 cover of Time Magazine  Kefauver, incidentally, a creation of my adopted home state of Tennessee, initially was not so interested in tackling organized crime. He was leading a crusade against the “social and moral decay” caused by comic books (no, I am not kidding). Even the publisher of the New York Times privately warned him that Kefauver-endorsed local government-sponsored book burning (even comic books) was probably not something a United States Senator should be supporting…given that pesky first amendment thing. Nevertheless, Kefauver was ambitious and wanted to lead something. Finally, the publisher told the Senator that the newspaper would support him for Vice President in the upcoming election if he would go after a more palatable target: some like organized crime, for example. Hence the Senator put aside his Davy Crockett coonskin cap (yes, he was actually known for wearing a coon skin cap at the United States Senate), turned his back on the post-war book burnings (albeit “only” comic books), and set his sights on Moe Dalitz rather than on Superman, Batman, and the Flash . My friend Howie Gold, the somewhat (but not nearly enough) celebrated Vegas lounge-lizard piano man, tells me that Dalitz used to drop him $100-bills as tips…in the early 70s. This would seem to be consistent with almost all of the Vegas histories that describe the generosity of the Moe Dalitz personality. The historically prolific Las Vegas Review-Journal reporter Jon L. Smith wrote, “The life of Moe Dalitz is perhaps the best example of a gambling man existing in sunshine and in shadow.”  I love it; perhaps I should have titled this book “in sunshine and in shadow.” By his own accounts, Dalitz began his career as a depression-era bootlegger running illegal casinos in Kentucky and Ohio. Smith quotes him as joking, “How was I to know those gambling joints were illegal? There were so many judges and politicians in them; I figured they had to be all right.” In Vegas, he was widely regarded as a respected patron of café society and near the end of his life, was named Humanitarian of the Year by the American Cancer Research Center and Hospital. In 1982, he received the Torch of Liberty Award from the Anti-Defamation League of B’nai B’rith. In 1979, he set up the Moe Dalitz Charitable Remainder Unitrust, a fund that allowed 14 nonprofit organizations to split $1.3 million when he died. Long reputed to be the Cleveland mob’s “man in Vegas,” he openly acknowledged that he was close to Jimmy Hoffa, Meyer Lansky, the Mayfield Road Gang, Jimmy “Blue Eyes” Alo, the Cellini brothers, and an encyclopedia of infamously alleged mobsters. Yet, announcing his death, the Las Vegas Sun called him “Las Vegas’ most distinguished citizen for four decades.” Indeed, in the sunshine and the shadows. Beside the DI and the Stardust, Dalitz was also the driving force behind the Las Vegas Convention Center, the Las Vegas Country Club, Sunrise Hospital, the Boulevard Mall, Commercial Center, Winterwood Golf Course, several UNLV buildings, Fitzgerald’s Hotel casino in downtown Vegas, the Nathan Adelson Hospice and entire residential neighborhoods of low-come housing. He also founded the Las Vegas Convention and Visitors Authority. One of the supposed “mob experts” on an A&E television “exposé” of Vegas recently claimed, without substantiation or documentation, that Dalitz used Teamsters’ money to build a Vegas hospital for the sole purpose of smuggling cash out of Las Vegas in ambulances and (apparently) have the ambulance drive the cash to Cleveland to distribute it amongst mafia bosses. WhatEVER ! Many who wrote about Dalitz have said that he was the quintessential example of Las Vegas’ reputation as a place where people can reinvent themselves. From Benny Binion to Steve Wynn and from Frank Sinatra to Moe Dalitz himself, it would seem that Vegas has been indeed just that. And that is probably the most important thing about Vegas for me as well. Clearly one who did not need a reinvention, Howard Hughes arrived in Vegas by private train on Thanksgiving Day 1966 and checked into the top two floors of Dalitz’s Desert Inn. Encamped there for more than a month, Hughes’ business manager and public face, Bob Maheu, recalled that they had been asked to vacate the hotel before New Year’s Eve to make room for high rollers. None of the Hughes party gambled and, in those days, hotel rooms and restaurants were not the huge revenue centers that they are today; back then casinos made their money from gamblers (what an outrageous concept!). If Dalitz had adopted modern-Vegas’ philosophy of property management, there would have been plenty of revenue from the hotel rooms, food, phone calls, and so on. (Of course there might have never been a Las Vegas in the first place if those early operators thought they were not in the gambling business.) The Hughes group refused to leave, according to Maheu, and by March, three months later, Dalitz’s attorneys were angrily threatening to evict the group. Perhaps surprisingly to the gullible reader of Vegas pseudo-history or A&E “exposés” (and to those wags that think millions are rolled out in ambulances), there were no gangsters or guys with silk suits showing up to threaten to bury Maheu in the desert. In a video interview recorded shortly before his death in 2008, Bob Maheu said that Dalitz’s attorneys were literally screaming at him and threatening both loss-of-income litigation and sheriff’s department eviction. I don’t know, to me, that seems to be a far cry from a mobster threatening to bury someone in the desert. Rather than face legal eviction, Hughes told Maheu to buy the hotel. Dalitz at first said the DI was not for sale; then he off-the-cuff demanded a (then-outrageous) price of $13-million, knowing that no one in their right mind would pay such an absurd price. Hughes ordered Maheu to pay the price. However, Hughes refused to be photographed, fingerprinted or even fill out financial disclosure papers required to own a Nevada casino. Nonetheless, the State of Nevada was eager to oust the mob and bring in “legitimate business,” so the State quickly passed the Corporate Gaming Act, to permit corporations to become casino license holders. Actually, there never had been a formal prohibition of corporate casino ownership; but until the Hughes issue arose, every shareholder of a company that owned a casino had to be licensed (and hence photographed, fingerprinted, and fill out financial disclosures). State legislation to remove that condition was considered as early as 1963, but never passed. However, the fear that gangsters would use a public company as a “front” disappeared with Howard Hughes’ involvement. (I won’t go into the litany of allegations about Hughes’ activities in the Second World War nor the battle with Juan Trippe and Pan Am, or the Nixon-connection through Don Nixon; there are endless volumes on those subjects.) And, of course, this Corporate Gaming Act allowed for and led to the current corporate control of the gaming industry. When Hughes died in 1976 his Summa Corporation imploded in a fight between the Maheu forces and the so-called “Mormon Mafia” caretakers of Hughes in his last days. The estate was finally settled in 1983 and the DI was sold off with other Summa assets in 1986. The new owner was Kirk Kerkorian, who a mile away had developed the largest hotel in the world (at the time) both in terms of number of room and its height, The International Hotel. (In fact, it was the tallest building in Vegas from 1969 until 1979 when Dalitz’s Fitzgerald’s Casino surpassed it.)

Gary Green in Elvis costume at Las Vegas Hilton In 1969 Kerkorian opened The International, a block off the Strip, (originally with 1,512 rooms and expanding to 3,174 rooms) with a four-week party featuring Elvis’ famous $100,000-a-week return to Vegas (the beginning of the white-jumpsuit fat-Elvis era). The 2,000-seat showroom (slightly smaller than my Trump29 showroom in Palm Springs) was considered a behemoth at that time; who BUT Elvis could sell-out that many seats in Vegas! Decades later, after the turn of the century, dressed in one of Elvis’s original white-polyester jumpsuits and white platform shoes that had belonged to Roy Horn (of Siegfried and Roy), I filmed an award-winning television commercial on that very stage. (Damn, Roy has tiny feet and the shoes about killed me to walk in.) Using Elvis’s actual dressing room, my feeling of an eerie trip of nostalgia, was heightened by the fact that celebrated Elvis impersonator Trent Carlini was headlining in the room at the time. There was just some Elvis-ghost overkill going on as I pranced around on the stage. By then the property had changed hands twice, and had suffered a murderous fire. In 1970 Kerkorian sold The International to Baron Hilton, who changed its name to The Las Vegas Hilton (where, incidentally, I lived for several months right after the turn of the century). Hilton operated it until 2004 then sold it for almost $300-million to Resorts International (which was then headed by Nick Ribis, Trump’s former attorney and marketing VP), an affiliate of Colony Capital ―the largest privately held gaming company until Harrah’s went private. As I began this writing, the Las Vegas Hilton name was franchised to Resorts and run for Ribis by Rudy Prieto, another top Trump alumna and a first class operator. By the time we were editing this book, Prieto was gone from the property; we are in an ever-changing industry. Though I don’t personally know Ribis, I do know his son who is a really top-notch casino marketer working for my friend Frank Palmieri; and though I do not know Prieto, I have observed his work for years. As I keep saying, we are in a very incestuously small business world. Since I began this book, the Las Vegas Hilton again changed names, losing the Hilton flag and rebranding as the LVH (“Las Vegas Hotel”). By 2012 the LVH had been remodeled multiple times and featured 2,956 rooms and suites along the 12 restaurants and 6 bars. It was the only hotel physically attached to the Las Vegas Convention Center; and the hotel itself had more than 200,000 sq. ft. in its own convention center. It also owned a nine-hole putting green as well as tennis courts. Above all else, this is THE hotel attached to the Las Vegas Convention Center―one of the largest and busiest convention centers in the world. And, unlike MY performance there, the property also will always be remembered as Elvis’ home in Vegas; the venue where he performed. A bronze statue of “the King” stands near the entrance to the hotel lobby. However, beyond the legacy of Elvis, the property has one of the last of the old Vegas grand showrooms and a rich history tied to it. Barbra Streisand was the opening-night performer, along with Peggy Lee performing afterwards in the hotel’s lounge. In 1969, right after Streisand’s engagement, Elvis performed for 58 consecutive sold out shows, breaking all Vegas attendance records, (130,157 paying (and ostensibly gambling) customers in the period of one month), with stellar reviews coming from both critics and the public. He broke his own attendance record in February 1970, and again in August 1970, and August 1972. When playing Las Vegas, he lived in the penthouse suite (room 3000), located on the 30th floor, until his last performance there in December of 1976. Elvis was due to perform there again in 1978, to celebrate the opening of the North tower, but the singer died in August 1977. His manager, Colonel Tom Parker, lived in the hotel on the 4th floor from the 1970s to mid-1980s. Liberace headlined in the showroom during the 1970s drawing sold-out crowds twice per night. When he signed his contract at the Hilton in 1972 he earned $300,000 per week, a record amount for individual entertainers in Las Vegas. It was the site in 1978 where Leon Spinks defeated Muhammad Ali for the World Heavyweight Championship. It was also the site in which Mike Tyson defeated Tony Tucker to become the Heavyweight Champion in 1986. Also, Donald Curry defeated Milton McCrory at the Las Vegas Hilton to become the Welterweight Champion in December 1985. Its physical attachment to the Convention Center has consistently kept occupancy above 80% year round. For the past few years, net room revenue consistently has hovered around $80-million with F&B revenue providing another $56-million. Colony Capital management operated the rooms at a 60.5% margin. The casino contributed another $60-million to the bottom line. On top of the almost $300-million purchase price, Colony spent more than $200-million on renovations and upgrades. In 2011, the casino alone earned approximately $56-million from its 74,000 square foot gaming space with 1,200 slot machines, 50 table games, and one of the last super-sized sports books in Las Vegas. Nonetheless, the property posted losses of $8.864 million in the second quarter of 2011 vs. a loss of $9.851 million in 2010’s second quarter. In their SEC filings, Colony attributed the losses to tough competition and an oversupply of hotel rooms in Las Vegas, driving their net revenue of $45.5 million was down from $47.5 million for the period. At the same time, casino revenue of $14.2 million declined 9.1 percent. The casino’s table games hurt for the quarter, with their win declining by $800,000, while slot play declined $1.2 million. Hotel room revenue was steady at about $19.3 million, while food and beverage revenue fell 8.6 percent to $14.4 million. In the face of these losses, colony defaulted on a $252 million loan in 2010 and used operational expenses to make payments during three months of 2011 while it tried to restructure debt. However, the combination of the debt service and apparent managerial incompetence/malfeasance were impossible to overcome under the existing Colony structure. The Wall Street Journal, which first reported the foreclosure filing against the property, noted investment banking giant Goldman Sachs was both a lender to and investor in the property. Goldman Sachs foreclosed in December of 2011 and took control of the facility except for the casino itself (because the gaming license belonged to Colony). Colony Resorts reported that it chose not to make monthly interest payments totaling $3.5 million for June, July and August of 2011 on its $252 million term loan “in order to conserve liquidity for operating and other needs.” The loan made up the bulk of the company’s $296 million in debt and liabilities. Public record confirms that the term loan lender was Goldman Sachs Commercial Mortgage Capital L.P. Another Goldman Sachs affiliate was an investor in Colony Resorts LVH and this was not the first time the term loan has been in default, with the last default resolved in July 2010. That affiliate Whitehall Street Real Estate Funds, was through Goldman’s purchase of American Casino & Entertainment (ACE) from Carl Icahn, which included the Stratosphere along with three other properties. Hence, Goldman had the ability and structure to operate the property should they choose to go that route. Clark County District Court Judge Elizabeth Gonzalez on December 14, 2011 approved the appointment of longtime gaming executive and ACE employee Ronald Johnson as receiver, but only for the nongaming operations of the LVH; that was after Tom Barack, the billionaire chief of Los Angeles-based Colony Capital, testified it would be untenable for him to have Johnson operate under his gaming license while he had no authority over Johnson’s actions. However, the Nevada Gaming Commission on December 22 2011 approved plans for Johnson to operate the casino under the existing gaming license. The Gaming Commission decision sent the issue back to Gonzalez’s courtroom, where Goldman Sachs and Colony announced they had agreed they would stop fighting the receivership effort. After enduring years of losses at the Hilton during the recession, Barrack testified that his company had lost all its equity in the property. The receivership order signed by Judge Gonzalez included protections for workers, requiring the receiver to seek court approval before initiating any mass layoffs. In July 2012, operating under trusteeship, the LVH lost $2.485 million on an EBITDA basis as net revenue was reported at $10.275 million. In September of 2012 the chief creditor and a partner announced plans to buy it out of foreclosure in November 2012 and continue operations. Privately, Goldman had indicated that they wanted to sell the asset, which at the time Colony purchased it, was valued at $800-million. Private word from Goldman was that they would sell the property (including the casino) for around $185-million. At the time it was my opinion that it would have taken another $10-million to $25-million to fund and license the casino. While no hotel renovation was immediately needed, there were branding and marketing costs associated with the property. I believed the “all in” cost for the property to be a little less than $250-million; however the $185-million figure was neither official nor firm and there was some indication from insiders that the number may be even less. It was at the Hilton on a Tuesday night in mid-February of 1981 when my friend and one-time coworker Ed Buchwald had his dinner interrupted by a fire alarm about 8pm. Flames burst from the 8th floor of the east wing of the three-wing hotel giant and quickly engulfed the building to the upper floors. Officials interrupted the showroom where Juliet Prowse was performing, telling the audience only “there is an emergency — please leave immediately.” Money was locked in boxes at the casino tables and gamblers were evacuated. Three bodies were found on the 8th floor face down in an open elevator; a man and woman were found smoke-inhalation suffocated in a bathroom on the 10th floor; other bodies were found in front of closed elevator doors. Enormous smoke clouds billowed from the hotel as onlookers rushed from the Strip over to Paradise Road to mill around the disaster. Ultimately, eight people died and 200 were injured. For starting the fire, and thus causing the deaths, a room service bus boy, apparently motivated by a desire to be a hero rescuing people, was eventually sentenced to eight life terms without the possibility of parole. Apparently, he set curtains on fire with a really large marijuana doobie. My friend Ed and his party escaped unharmed but were separated for a few hours in the outdoor panic. Besides building the International, Kirk Kerkorian is best known amongst Vegas watchers as the owner of three hotels that have been called MGM Grand (the first now carries the Bally’s brand and the second is still called MGM Grand). Today he owns the MGM/Mirage conglomerate of casino/hotels. He is the guy credited with besting Steve Wynn in the purchase of Wynn’s Mirage empire (but as previously noted, I am not certain how accurate that assessment actually is). Kerkorian renamed the DI as “MGM Desert Inn” and held onto it for seven years before selling it for $160-million to ITT Sheraton. For three years beginning in 1978, all of America peeked into the lobby, casino, pool, and grounds of the DI every Wednesday night, thanks to the ABC television series Vega$. The show starred Robert Urich as fictional private detective Dan Tanna, who worked for the DI, drove a red 1957 T-bird around Vegas, and lived in a DI-owned warehouse next door to Circus-Circus. Mission Impossible star Greg Morris played a Metro Police Lieutenant, and 1950s & 60s movie icon (and my friend) Tony Curtis played the silk-suited owner of the DI. I was in Vegas on August 28, 2000, spending the DI’s last open day in a blackjack pit with two employees who had been at the DI for decades. There were literally tears streaming down their faces as they talked about the “good ole days” under Dalitz and what bastards Steve Wynn and Mark Lefever were… as if Mark had somehow personally decided to close the DI. (Though in reality he DID close it almost a month before the previously announced closing date). As I have said, Mark is one of the greatest case studies of the transition of old Vegas to new Vegas; of mob Vegas to Wall Street Vegas; of “the boys” running things to accountant-bean-counters managing things. One of the best and most colorful Las Vegas transition stories I have ever heard is Mark Lefever’s description of the turmoil he caused when he first became GM at the DI. In one split-second, on his first day, he instantly changed Vegas employee culture forever by refusing (and ending) the traditional “envelope” (of kickback cash from everyone’s tokes) being brought to the General Manager. Mark tells the story as a humorous anecdote, seemingly without any thought of what a major positive impact he put into motion for the day-to-day lives of thousands of casino industry employees. And that makes the story all-the-better. Until that fateful day Mark took the helm of the DI, every toked out casino employee (employees whose income was dependent on tips), had to pay a portion of their daily tips to their immediate supervisor, to the department head, to the casino manager, and all the way up the ranks to the General Manager himself. So, basically, whatever a rank-and-file employee earned in tips, they had to discount it by about 50% (half of their pay) because of all the kickbacks they had to pay in order to keep their job. This was a lot of untaxed kickback money. My recollection of the story goes that Mark was sitting at his desk when one of the CM’s (casino mangers — i.e. shift manager) walked in and tossed an envelope onto his desk and turned to walk out. Mark looked up and asked “what is that?” “Your envelope for the day,” the CM answered. “What the fuck does that mean?” Mark pressed; I am sure in his best New Jersey tone. The CM explained to Mark that every employee paid a portion of their tips as “under the table” (i.e. unreported) cash to the General Manager. Straight-as-an-arrow Mark wanted no part of it. To further complicate matters, he ordered the CM to redistribute the funds to the employees and put out word to all managers and supervisors that anyone accepting an envelope would be fired. The poor casino manager …and all the supervisors… had to be thinking that the most inexperienced, naive, and YOUNG general manager in history had just arrived. They had no idea that Mark had just set a standard that would change the casino industry forever. But that is exactly what he did; and he tells the story as if it was just another day of adapting his style and integrity to casino culture…rather than bending casino culture to his style and integrity. Knowing Mark, I suspect he would argue with me that it was not that big of a deal; but it was. Think about it… the entire way of life for thousands of casino employees (and for an entire industry) was changed forever on that day. And Mark Lefever is never thought of or mentioned in even the most esoteric and obscure histories of Vegas. Mark hired me at Trump, I think against his own instincts and better judgment. It was certainly against the recommendations from part of his senior marketing staff, but perhaps caving to the insistence of his H.R. department (and my array of friends and references (not the least of which was my real estate tie back to Trump himself in New York) and my long history with Native American activism). Though I remained both friendly and loyal to Mark and visited his golf-course home several times at PGA West in La Quinta California, I never felt that Mark ever really liked me. I think he was uncomfortable with how unconventional, unstructured, un-accountant-like, I am (not to mention the fact that I don’t drink wine or play golf). He never said anything to indicate that, but it is not like we send Christmas cards either. I don’t think Mark, as the very best of 1990s-style accountants, was ever 100% comfortable with what Casino Journal called my “(PT) Barnum-like vigor” or what Indian Gaming Business called my “Las Vegas flamboyance.” Though, it is notable that Mark seemed to have no issues with the flamboyance surrounding his 40th birthday party. The Trump corporate VP of slots (a wild man named Lou, for whom on several occasions I had provided cab fare home for his various barroom pick-ups girls that he had eventually terrified with threatened supposedly debaucherous sex acts) arranged a party at a local hotel for Mark’s 40th birthday. I arrived late and the veranda around the pool more resembled an already-drunken bachelor party than a birthday party. The attendees were a handful of Trump’s Atlantic City Vice Presidents from various divisions, Mark Brown, and … Lou’s “special” invited guests. I have no idea where Lou had gotten all the girls. I do know that he had called some agency in either Palm Springs or LA and that the girls were all professional models and actresses some had actually appeared in Playboy. They had all brought along their portfolios and books of head shots, credits, and publicity material. Several of the girls brought screen shots of their websites which were, apparently, pay-to-view soft porn sites. Flamboyance? Hmmm. I think it is safe to say that the stereotypical Las Vegas style or Hollywood style “party” was certainly orchestrated by Lou that night. For the record, the wild portions of the party seemed to amuse Mark but true to his straight-as-an-arrow form, he did not participate in anything unacceptable or in the least bit questionable; he let the other guys do their thing, but he was a perfect gentleman. Gotta love this guy. Mark Lefever is a great guy and would make a superlative chief executive of any gaming resort operation. With Arthur Anderson, the DI, the Riviera, and even the restructuring of debt for the Trump-managed Palm Springs tribe, he has repeatedly proven his genius. But, having said that, I think Mark would be much more comfortable with a less risk-taking marketer whose pendulum swings closer to the conservative side of definitive projections than toward the more risky fine-line between “wow” and bullshit. I could be wrong, but at the end of the day, I don’t think he likes gamblers… at least ones that gamble away from the casino floor. Mark was one of the first of a long succession of accounting gurus to move into casino operations. Very few of have succeeded; Mark is a rare example. Of course it sounds a lot more compatible to the Vegas mythology if I call them “numbers guys” instead of accountants. Use that euphemism, I can cite Meyer Lansky and any number of bottom-line “guys” contrasted to the flamboyant “guys” like Siegel, Stupak, Bennett, Binion, and others. If the concept of a bookkeeper running a glitzy casino seems out of sync, then the notion of a hero-accountant running a glitter palace may be off the charts. You may remember that Dennis Gomes had told Bunk that the tic-tac-toe chicken was his personal high-point. If that is accurate, then it must rank pretty high in the big scheme of things. I note, too, that both of the big promoters of the chicken in my life were accounting guys running casinos: Mark and Dennis. Dennis Gomes, in his first career as a regulator, was the leader of the case that brought down Lefty Rosenthal and became the book and movie Casino. He also developed the casino internal control guidelines and investigative procedures that are still required both in New Jersey and Nevada …and have been the model for regulation and consumer protection in almost every state that has legal casinos. Gomes’ far-reaching impact on gaming began in 1971 when the 27-year-old CPA was hired as the chief of the audit division of the Nevada Gaming Control Board. Like most somewhat boring auditors, he easily could have been doomed to a stereotypical career of a green-visor nerd checking on tax payments (which is pretty much what the job description called for before he arrived –sans green visor and sleeve garters). But something in Denny apparently raised what I used to tell him was his “spider sense” to wonder what exactly was going on with the Argent Corporation’s hiring of some unsavory (to say the least) characters. (Argent was the parent of the Stardust, Fremont, and Hacienda casinos in Vegas.) Legend has it that on his own initiative, genius, or madness, he transformed his job and the mission of the division to an investigative / law enforcement role and in the process became one of principal architects of Nevada’s continuing drive to eliminate organized crime from casinos. He became known for an undisputed reputation for integrity; and as recently as August of 2007 he testified in the largest organized crime case in the history of the United States. I have to admit that I have never read his entire 700-page report that began an entire chapter of Nevada’s seemingly never-ending war against organized crime. (Though I have doubts about the entire nature of what they seem to call “organized crime. In my naïve youth, I once asked a very high ranking Trump official about “organized crime” in the New York City building trades where Trump was best known. He replied to me, deadpan “What, you asking if we worry about the Mafia? We ARE the fucking Mafia.” Little did I know how thin that line was, though I doubted then (and now) that he was doing little more than sounding tough). But there is no doubt that Denny Gomes made that 700-page report happen and changed the face of casino gaming forever. And THIS is the guy that turned Bunky’s tic-tac-toe playing chickens into a casino marketing promotion; go figure. I also have to admit that I am remiss in not having sought out Gomes to meet him and pick his brain until the end of 2010 and only two years before his death; though a number of my co-workers and employees had worked with or for him over the years and our paths continually crossed. When we finally did meet, he readily told me that he had heard my name for years and wondered why we never met; and I, of course, had heard of him since my early days in Atlantic City right after Resorts opened their doors. Dennis Gomes was one of the most unsung movers and shakers in the history of casino gaming. We should be seeing movies about Dennis Gomes rather than about Bugsy Siegel. Shortly before his death in 2012, he told me that his daughter, Danielle, was working on a book to correct that oversight. Riding the success of Gomes’ Nevada triumph and fame, he was lured to New Jersey to create gaming control (and some of the toughest licensing requirements in the industry) for the then-recently legalized casinos there. Officially he was hired as chief of special investigations for the New Jersey Division of Gaming Enforcement. Once again, he probably would have remained in that job forever had it not been for his unyielding integrity. Apparently tired of the political nonsense that then surrounded the licensing of the Mary Carter Paint Company as Resorts International (that is whole other story), by 1977 he had been quoted saying that enforcement in New Jersey was a sham (at least that is what Baron’s Financial quoted him as saying). This time, he headed back to Nevada…to try his hand as a casino operator rather than a regulator. It is one of the greatest ironic twists of our industry Dennis Gomes eventually owned Resorts International…far more ironic than my contract to operate the Trump Plaza property. Probably the first of the high-profile transition leaders from mob-management to CPA management, Gomes went on to operate at least 13 casinos in Nevada and New Jersey. The New York Times once called him the casino world’s “Mister Fixit.” He ran Hilton’s casino properties, answering directly to Baron Hilton; he was president of the famed Golden Nugget; worked for Trump (running the Taj Mahal); and became the president of the Atlantic City Tropicana…where he discovered my friend Bunky and the chickens. Industry rumor was always that Aztar, then the parent company of the Tropicana, had been grooming Gomes to become Chairman whenever top-boss Paul Rubeli retired… and that somehow Gomes had been screwed out of that position during board jockeying for spoils of a hostile takeover by the Columbia Sussex Corporation. Though Rubeli and I shared a stage as panel members several times, I have no clue what the real deal was; but I do know that historically speaking, Gomes was never stymied by others’ incompetence or misrepresentations. He moved forward and eventually created Gomes Gaming, ran a riverboat somewhere in the Midwest…and (as noted) owned Resorts International in Atlantic City. Several executives who have worked for Gomes, including the CFO I worked with at Trump29, talk about a requirement that they attended his karate, yoga and meditation classes every morning before reporting to work. Giant-of-a-man George Toth, who apparently worked alongside Gomes in the creation of Gomes Gaming (and himself the former GM of the Sands and a veteran of eccentric Carl Icon’s organization) never mentioned to me such a “requirement” — though I have never asked him specifically about it. Personally, I think it is a pretty good idea; but I would think so; Kwai Chang Caine was a role model for me and I thought Han Bong-Soo (Bong Soo Han) was much cooler than Billy Jack. The Atlantic City Sands, by the way, is where two very large goons threatened to break my legs in multiple places if I continued my earlier card-counting career at their casino. (More on that later.) What I DO know is that Dennis testified before the New Jersey Casino Control Commission “There’s something in the martial arts called chi, the life energy that guides you. I think I give energy. I think love is the most powerful force in the universe. If you do everything from love, you can tap into that energy; those Wall Street guys hate that.” And, he told the Wall Street Journal that he studied martial arts and had a tattoo of a fist on his arm, “to symbolize the idea of using power only “to maintain peace and harmony.” Denny’s reign at Aztar itself makes for an interesting story. As an absolute byproduct of the Gomes legacy of trying to chase organized crime out of gaming, several large hotel companies decided to jump into casino gaming with both feet. There was a sort-of logic to the thought: hotel casinos are like hotels in some way; doesn’t it follow that the best hotel operators would be the best legitimate casino operators? (By the way, the answer to that is NO it does NOT follow.) I began seriously talking with Dennis in February and March of 2011, about six months after he bought Resorts (more on that later). We were exploring a mutual vision for marketing resorts based on its history and the history of Atlantic City. Either then or now, the bizarre history of Resorts International is just an incredible hanamusubi of confusion. That story alone, regardless of the parts of it that have been litigated over and over, is soap-opera typical of exactly the kind of intrigue that keeps people so excited about casinos. If I had to write an elevator-pitch “treatment” for a fictionalized Hollywood movie of the Resorts story, I would pitch a crusading young Eliot-Ness-type casino regulator who single-handedly drove the mafia out of Las Vegas, launching a fight against the CIA, a corrupt US President, the last Mafia boss, and crooked government bureaucrats all controlled by an evil crime lord.  Here is the outline that I would pitch: Company founder sets up a front (from a hardware paint company) with ties to CIA covert operations, a leading mafia boss, and illegal finance of a Presidential campaign; Founder steals a private Caribbean resort from the heir to the largest grocery store chain on the planet, bribes third-world government officials, and sells a private toll-bridge to access their island; Founder manipulates law to legalize gambling near New York City so that only his casino qualifies as legal; Our hero begins fight against licensing of founder and accuses company of corruption; Our hero is defeated and driven out of the state into exile; Founder of company dies at 58 and company becomes part of a hostile takeover by country’s most famous real estate mogul; Dissident stockholders headed by legendary television producer fight mogul and win settlement; New company quickly sells to South African group that plans $500-million renovation but the fall of racist apartheid creates a financial crisis for buyer and forces him to sell to mogul’s former lawyer; Former mogul’s lawyer bankrupts company and sells it to… … our crusading young casino regulator.

The non-fiction version is a close parallel of the movie treatment. As I said, Dennis Gomes had been lured from his quasi-clerical role where he had brought down Lefty Rosenthal in Nevada to head New Jersey Gaming Control’s “special investigations.” In May of 1978, Resorts became the first legal casino outside of Nevada. Back then Resorts, their initial licensing, and their ownership (as well as control) were at very least “less than clear,” as Dennis later described it to me. Resorts International, under CEO James Crosby, had changed its name from the Mary Carter Paint Company after acquiring the Paradise Island Casino from A&P Grocery heir Huntington Hartford. Beyond that, as Dennis said it is unclear what is true and what is not. In 1977 Rolling Stone Magazine had run an “exposé” of Resorts, which they later had to retract; and Hartford himself filed and dropped a number of allegation-filled lawsuits against the casino company. True or false, over the years the company had been linked to: Thomas Dewey (as in “Dewey Wins” over Truman) the mob persecutor who supposedly put $2-million into the company; his nemesis Meyer Lansky, who supposedly controlled a Miami Bank that financed the company and used the paint company as a front; employees who were part of the Bay of Pigs Invasion; Watergate hard-ass G. Gordon Liddy; a partnership with Nixon friend and financier Charles Gregory “Bebe” Rebozo owning the only bridge to Paradise Island; Howard Hughes; and the CIA…and those are just the ones I have read about; there are probably more (not to mention the ones that have been whispered). We do know that resorts owned a private intelligence company called Intertel that was set up by former Justice Department lawyer Robert Peloquin. We know that Intertel did detective, security and surveillance work for Howard Hughes’ right hand man Bob Maheu as well as for ITT, Anastasio Somoza, and the Shah of Iran’s SAVAK organization. Beyond that, there have been, at worst, libelous allegations about mob ties and, at best, “Blackwater” like tales of mercenary black-bag jobs for the CIA. Almost fifty years after the fact who the hell knows or cares anymore. We do know that when I first stepped into Resorts in 1979, just a few days before the near-mugging outside the casino, there were people lined up behind every slot machine, waiting for a seat. Despite the unprecedented cash flow from that success (about $730,000 casino win per day), Resorts did nothing to upgrade their property and by the early 1980s (when I was working in Atlantic City casinos) there were nine casinos along the boardwalk. Resorts was a rundown 1920s building (formerly known as Haddon Hall Hotel and Rooming House) competing with Steve Wynn’s over-the-top glitter at his Golden Nugget Casino at the other end of the boardwalk and the new Aztar Vegas-style Tropicana. When I met Resorts CEO James Crosby over dinner in Resort’s gourmet room in 1981, he was deeply concerned about those other properties encroaching on what he considered his personal domain. Between chain-smoking coughs during the meal, Crosby lectured me (I was his 27-year-old non-smoking casino bus marketer) on how he had single-handedly brought casinos to New Jersey when Myer Lansky, Baron Hilton, Holiday Inns, and “every politician in the state” had failed. He told me, “don’t you worry about it; I have a plan that will make those Las Vegas boys pack up and go home.” In 1986 Crosby decided to respond to the competition by buying land near resorts and launching plans to create the Taj Mahal Casino: his vision of the largest, most glittery, over-the-top casino outside of Vegas; a project to rival Wynn’s Vegas Mirage. But in August of 1986 Crosby, died at 58 years old during an operation combatting his emphysema. It was only after his death that the financial labyrinth of Resorts began to unravel and it became clear that the Taj Mahal would never be completed; at least not by that company. By early 1987 the company was targeted for a hostile takeover by Donald Trump who purchased controlling interest during a Crosby heirs’ feud and made an offer to buy all outstanding shares. Before he could follow through with that offer, Trump became embroiled in a legal challenge from other stockholders headed by television legend Merv Griffin (the creator of Jeopardy and Wheel of Fortune, who already owned the Beverly Hilton and a chain of other hotels).  The battle ended with a settlement agreement in which Griffin won Resorts and Trump would take control of the Taj Mahal development property…and eventually hire Dennis Gomes as his CEO.  Disillusioned with the gaming industry and the Trump-esque name-calling bravado, Griffin sold the Paradise Island property to Sol Kerzner’s South African Sun International. After $90-million in renovations, eight years of marginal operating, and politically the overthrow of South Africa’s apartheid, Griffin sold Resorts to Kerzner as well (reportedly for around $350-million). Though Kerzner had announced a $500-million renovation plan, in reality he only invested less than 10% of that in Atlantic City, opting instead to transform the Paradise Island property from “Resorts International” to “The Atlantis” (which itself was bankrupt in 2011). Without the now decades-over-due full renovations, Resorts continued to lose money and in 2001 Kerzner sold the property for less than half what he paid for it. In another incestuous twist of the gaming industry (many of which we will see in the following pages), the buyer was Colony Capital — headed by Nick Ribis, Trump’s former attorney and casino advertising vice president.  Ribis headed a division of Colony that focused on buying failing casinos at fire-sale prices and operating them without investing much. Besides Resorts, they bought the Las Vegas Hilton, as well as casinos in East Chicago, Tunica Mississippi, and another Atlantic City property. Still not investing in a full renovation of Resorts, Colony too failed as an operator. As noted, in December of 2009, Wells Fargo foreclosed on Colony and announced that on December 31 2010, they would at long last close the property unless a buyer came forward. Since that foreclosure, Colony’s other properties also took dives. As noted earlier, in September 2011, Colony skipped three mortgage payments of $3.5-million each due on the Las Vegas Hilton, promoting Goldman Sachs to foreclose on its $252-million term loan to Colony. A year later, in September 2012, Goldman Sachs formed a JV with New York REIT Gramercy Capital to buy the LVH out of foreclosure (Hilton pulled their name from the property in early 2012 forcing a rebranding to LVH). Almost a year before the failure of the Las Vegas Hilton, Wells Fargo agreed to sell Resorts in Atlantic City to Dennis Gomes and his partner Morris Bailey for only $35-million; 10% of what Sun had paid and about 25% of what Colony had paid. Dennis gained control of Resorts in 2010 and early in 2011 he had asked me to come to Atlantic City to meet with him (as well as his writer-daughter Danielle). Unfortunately I did not meet Danielle before Dennis’ death, but I was able to be sort of an un-official receptacle of Dennis’ last year of marking and promotional vision for Resorts in Atlantic City. From the “roaring twenties” style exploitation of Terence Winter’s successful HBO series “Boardwalk Empire”; to “Cirque Risque —The Naked Circus” at Dennis’s Superstar Theater; to the casino’s rebranding of a million-dollar stakes races at Monmouth Park racetrack to the Resorts Haskell Invitational; to my urging that he re-contract with my old friend Frank Palmieri’s Media and Marketing Group as his advertising and marketing agency… Gomes and I talked at least a couple of times a month about marketing, brand positioning, and the future of Resorts.

 

 

I was told that in January of 2012, back in Vegas and around the time of the death of his oldest son Doug, Dennis fell while moving a marble table top. He knew he felt some pain afterwards and as he later described a conversation with his doctor: “He asked me, ‘Did you ever break your back? He told me, ‘Dennis, you’re the toughest SOB I’ve ever seen in my life. You’re the only person I know who’s walked around for one solid month with a broken back.'” He had four broken vertebrae. Either in conjunction with or after the fall (and the subsequent painful back brace that he was issued), Dennis told me that he was undergoing temporary kidney dialysis. On Friday February 24, 2012, Dennis, only ten years my senior, died in a Philly hospital from complications of that dialysis. Dennis Gomes had run all of Baron Hilton’s Nevada properties (including the legendary Flamingo and the Las Vegas Hilton; He had run the Golden Nugget in downtown Vegas; As CEO of Trump’s Taj Mahal between 1991 and 1995 he increased operating profits from about $85-million to more than $145-million; at Aztar he spearheaded growth that took the stock price from $4 a share to $40; all of this from the Nevada Gaming Control Board chief of the audit division who brought down Las Vegas organized crime. Shortly after his death, Resorts announced that Gomes’ turn-around strategies had brought the company out of the red and turned a profit for the first time in years. By July of 2012, Resorts was still posting more than $13-million a month in slot revenue, compared to only $10.9-million at the competing Trump Plaza. I had thought of contacting his son Aaron (who I have never met) and Mo Bailey shortly after Dennis’ death and offer to continue the vision; but I opted against it as too ghoulish. Nonetheless, in August of 2012 the Mohegan Tribe of Connecticut, operators of the Mohegan Sun Casino (itself reportedly $1.6-billion in debt amid their auditor’s “going concern warning”) agreed to take over management of Resorts. The tribe also agreed to buy a piece of Resorts and finance a $35-million expansion to bring a Margaritaville restaurant. New Jersey law requires that a management company be invested in a casino they operate. Back in the 1980s, the hotel-industry lust for casinos, clearly spawned by Gomes’ bringing a new flavor of legitimacy to the industry, had begun in a big way. Holiday Inns, the Memphis Tennessee motel giant billed as “The Nation’s Innkeeper” bought Harrah’s. (That by the way is why the massive and award-winning Harrah’s player database is still maintained in Memphis at the former Holiday Inn reservation center…on the same damned NEC computers from the 1970s!) Around the same time, Baron Hilton jumped into the business forging alliances first with Trump and later with Bally. And in the same decade Holiday Inn wanna-be-clone, Ramada Inns, bought the Tropicana casinos in Vegas and in Atlantic City while Sheraton bought the Desert Inn and others. While Harrah’s and Hilton became incredible successes, Ramada was not so well-run or fortunate (depending on your perspective). There was no Phil Satre (Harrah’s now-retired visionary chairman who currently sits on the board of the world’s largest slot machine manufacture) at the helm of Ramada to guide the hotelier’s entry into gaming. Right away there was a hotel-type remodeling of the Atlantic City Tropicana and creation of a two-story casino with a “Tivoli Pier” theme and rebranding of the strong Vegas/Havana brand to some hotel marketer’s vision: “Trop World”. The bleeding of Ramada cash was instantly clear as company profits fell from $17.2-million in 1985, to $10.3-million in 1986, and only $4.9-million in 1987. On the way to posting a $5.1 million loss with $260-million in debt, in 1988, the Ramada hotel brand was split from the casino brand and sold for $540-million to Hong Kong based New World Development Company. (How one sells a company for a multiple of 106 times earnings is beyond my limited financial abilities; never mind the fact that they were losing money.) At the same time, Ramada sold its Marie Callender restaurant chain for another $54½-million. (Incidently, since we were talking about Dennis Gomes and the adventures that became the movie “Casino” ― it was in the parking lot of the Marie Callender restaurant at 600 West Sahara Avenue in Vegas where Lefty Rosenthal’s car bomb exploded ― rather than in the hotel parking lot as shown in the movie.) Ramada’s remaining casino division was spun into a publicly traded company called Aztar Corporation which hired Dennis Gomes as guru (and, as noted, he increased share price by 10-times). Nonetheless, from that fiasco loss of its core business, an outside observer might hope that the corporate world (or at least investment bankers) would have learned that running a casino is NOT “the same as running any other business” and certainly not the same as running a hotel. Nonetheless, the most vehement and fervent soap box orators for “it is just like any other business” seem to be people who have entered the casino business, have ridden high on its cash flow, and then found a scapegoat for why they failed in the end. True to form, Aztar decided to operate their new casino empire from the hotel company headquarters in Phoenix…and run it like a really big hotel project; despite Dennis’ objections. Alas, hoteliers have still not learned that lesson even as of this writing; just take a look at the taking-private of Harrah’s with hedge fund money and it’s false start new IPO at the end of 2010. (As a friend of mine noted in November of 2010, “those guys aren’t in the casino business; they are in the hedge fund and capital management business.” Amen.) Aztar’s successor, Columbia Sussex, was yet another hotel operator and almost instantly bankrupted the Atlantic City Tropicana. Throughout the 1990s and into the early 2000s, as other operators were building multibillion-dollar properties and buying smaller casinos, Aztar was trying to pay down and refinance debt as well as repurchase their own stock. In fairness, I should point out that Aztar did try to expand by “testing the waters” (pun intended) in the riverboat casino business. One of my former business partners, Frank Haas (at this writing GM of an Oklahoma casino that he and I developed), opened a Caruthersville Missouri riverboat casino in 1995 for Aztar as its creator and first acting General Manager. He ran a profitable, albeit small, operation and he ran it well; but it was not enough to save Aztar and it did not become a business model for them. A decade later, I hired Haas as well as his Aztar riverboat captain/pilot, his Aztar IT manager, Aztar’s slot manager, Aztar’s marketing manager, Aztar’s table games manager, and Aztar’s games trainer to help me rebuild business at another Oklahoma casino. It was from that experience that Haas and I formed a short-lived development company to build our second foray into Oklahoma Indian gaming; the Ottawa Tribe of Oklahoma’s High Winds Casino. Frank Haas is another of those colorful casino characters that began as “a numbers guy”. Not an accountant, but a numbers analyst that came to Ramada Inns (hotel side) with business experience in a family business but not in gaming or hotels. Frank was the last of several generations of a Pennsylvania Dutch coffin making dynasty; and he has some really interesting stories about that business (is the pillow stuffed with cotton, poly-fiber, or shredded newspapers? And does it matter?). Rather than continue in the family craft, Frank took his cost-focus and accounting analytical skills to the hotel/casino world which in turn took him from Pennsylvania to Arizona where he landed at Aztar’s Phoenix headquarters (almost by accident after his wife had applied for a different job there and discovered they needed a numbers guy). At Trump (a few years after he left Aztar), Frank had been career-stagnated as a comptroller, politically overlooked for promotion to CFO (in favor of another former Gomes employee), and deliberately excluded from the top management circles. Seeing a lot of talent in Frank (as well as his just being a great guy), I began inviting him to join the meetings of our Trump management triumvirate (myself, the CFO, and the Jersey-based liaison) at the almost-nightly off-site dinners and strategy sessions. I had already seen Frank in action on the job and knew he was one of those unsung heroes that kept the business going. His addition to the management group could only enrich our group with his genius and focus on details. A few months later, when I left Trump to become GM of the then-largest casino in Oklahoma, I brought Frank along as CFO. In fact, that was a pretty goofy-situation itself.  At the Trump29 casino, as I prepared to leave, Frank told me that he was planning to visit Oklahoma soon to look at ranch and farm property. As an off-the-cuff comment of mere politeness I said, “Well, hell, if you ever get out that way, give me a call and I am certain I can find a job for you.”   LEFT: Frank Haas (left), Gary Green (center), and Will Wimmer (right) examine plans for development of a new Oklahoma casino. Circa 2004. My second week in Oklahoma, Frank called me — from the Will Rogers Airport in Oklahoma City; he was ready to take me up on the “job offer”. Caught completely off guard but surrounded by crooks, thieves, sharks, and liars (more on that in a later chapter), I needed somebody to watch my back, so I hired him on-the-spot for a few thousand more than he had been making at Trump.  I trusted him unreservedly and needed a guy like that! He went back for a two-week notice but got into some sort of pissing match with the new CFO there and walked off the job.  From the Trump property, in addition to Frank, I also hired a handful of low-level hourly-wage employees: good people but unlike being at Frank’s level, not exactly the top management of the casino. I hired the parking valet supervisor (a 23-year-old Black Muslim from East LA); one of the switchboard operators (a minimum-wage Mexican-American from Indio California who was a close friend of the prostitute in Indio who briefly had brought down televangelist Jimmy Swaggart); and the night supervisor of the players club, Will, who I had been grooming as my protégé since before he led the security team for the aforementioned Trump visit. I later heard that in relation to Frank’s walkout, that there were accusations that the Trump staff had been “raided”; though no one seriously ever thought that. A few years later, when Frank and I jointly built that northeastern Oklahoma casino, I personally wrote the job description for General Manager to match Frank’s resume and only Frank’s resume so that no other candidate could possibly qualify for the position. That was actually not a stretch, because Frank’s background was so rich and so laser-focused on the day-to-day functions of top management that even if a top-notch candidate had come along, that person would have a tough time matching the superior merits of Frank Haas and his skillset. I also single-handedly wrote the Tribal Gaming Commission’s policies and procedures to favor not only a general manager’s needs, but specifically toward Frank’s own personal eccentricities. I sat in on all candidate interviews and trashed the mediocre ones (there were no good ones)…all to make certain Frank was hired; again not a stretch given his quality —as a standalone, even, he could compete head-to-head with any G.M. in the country and come out on top. And, I made certain that the salary was a substantial increase over even what I had been paying him. Yes, Frank was “juiced” into the job (in the parlance of the casino world) and it was perfect for him. Six years later, when I visited him in Oklahoma, Frank had pictures of his cattle (yes his cattle!) as the wallpaper on his computer; his daughter, AJ, told me about chasing stray cows while she was wearing high heels; and Frank could not attend the National Indian Gaming Association convention in 2010 because his cows or bulls or something were doing something at the old ranch. Gotta love it. During the building of that casino, Frank and I had agreed that it did not matter which of us was “Number One” and which was “Number Two.” In fact, I had argued strongly to the Tribal leadership, over several objections, that I should take the Number Two slot rather than the top title. I reasoned that this would give the tribe the least amount of controversy once they opened a new casino (after all, I DO seem to cut a wide strip of controversy wherever I land…as you will soon see). Hence, I was able to write that job description and the regulations to match Frank exactly. Once Frank was in the GM position, he discovered that he did not have the budget to afford both of us and funneled the Number Two role to a former employee for a third of my cost. But, known only to Frank and none of his naysayers, I never had any intention of actually living in rural Oklahoma (I had stayed in a Marriott 20 miles away in Missouri for the 11 months of construction) and I had plans to develop other casinos across the country in other short-term assignments like that one. By contrast, it was Frank’s long-time dream to own a ranch in Oklahoma and ride his horses. And, as noted, as of this writing, he has accomplished those things. I see him for a week once a year either at the annual Global Gaming Expo in Las Vegas or the National Indian Gaming Association in New Mexico, Arizona, or California, and we talk periodically by email. Unannounced, I occasionally drop in on him in Miami Oklahoma (pronounced Miam-ah) at his casino there and pitch him slot machines, tracking systems, and free marketing advice; reminding AJ of the Lionel Trilling quote (usually attributed to Picasso) “Immature artists imitate. Mature artists steal.” I, of course, bastardize it for her (and for Frank) to “good marketers borrow ideas from other casinos; great marketers steal them.”  Thanks to Denny Gomes and Mark LeFever for the chicken. In 2009 I attended his daughter’s, AJ’s, chapel-wedding at the Paris Casino in Las Vegas and even paid two-thirds of the preacher’s fee because absent-minded-professor Frank forgot to bring cash.  As I have become more finance-savvy over the years, Frank has focused more and more on marketing his casino. He has the good taste not to be flamboyant, colorful, nor controversial and as that sharp contrast to me he remains steady. His daughter AJ adds a creative flair and together they have effectively branded the property and have taken it to the proverbial “next level” with the help of the aforementioned marketing gurus Frank Palmieri and Jan Talamo. Back at Frank’s former employer, Aztar, once Paul Rubeli became Chairman and Dennis Gomes became President of the resort division (resort division = euphemism for casino division), the company seemed to be on a road to recovery. Gomes really was a guy with a magic touch. Just before the William Yung (Columbia Sussex) takeover, Gomes-driven Aztar had turned around their losses to a $212-million EBITDA against $915-million in revenues. Had there not been a take-over fight and had Gomes moved into the Chairman slot once Rubeli retired… who knows. Dennis Gomes really was a magic man of this business.

•

Chapter Seven. I Run fucking Casinos: Gambling Halls; …NOT “Hospitality Industry” Hotels “It’s discouraging to think how many people are shocked by honesty and how few by deceit.” ― Noël Coward, Blithe Spirit “…hospitality industry, a euphemism for organized prostitution…”  — Annette Fuentes and Barbara Ehrenreich, Women in the Global Factory

L isten to me… VERY CAREFULLY: running a casino is not the same as running a hotel. “Gambling” is not a dirty word. And it is ok to call one of these “entertainment experience properties” a gambling joint. Oh, and we don’t have “same store sales” like the retail business. Look, people do not fly to Aspen for the hotels or the entertainment “experience”; they go to Aspen to ski. They do not go to Orlando for the hotels and the shopping experience; they go to Orlando for Disney. All the other millions of dollars of amenity revenue is icing on the cake. Take away the cake and the icing is useless. Take away the snow or Disney or whatever the primary draw is… and you have disjointed nothing. Eat just the icing and you are eating hollow junk that will ultimately just make you sick (even if it does seem to taste good at the time). Get it? The practice of basing a business model in Orlando assuming customers may or may not go to Disney or in Aspen assuming customers may or may not be there for the snow…is…at best flawed and at worst moronic. Yes, there are companies that will make LOTS of money with that model —for a short while and until the day they are shocked to learn that people did not come to Orlando because they have a nice hotel there. Sands Las Vegas (Venetian Hotel) founder Sheldon Adelson (once listed as the third wealthiest man in the world) made his fortune on the periphery of the gaming industry promoting conventions and hotel rooms in Las Vegas —where people wanted to come to gamble. In 2010, he emphatically insisted that he was not in the gambling business. But like Louie is Casablanca, shocked to learn that there is gambling going on, the depression of the late 00’s caused at least many Wall Street analysts to rethink Adelson’s apparent disdain for the rackets that bring people to his hotels and conventions. More on that shortly. People come to Las Vegas to gamble. People don’t come to a casino for the euphemistic “entertainment and hospitality experience” —especially non-destination local casinos that do not have hotels. People come to a casino to gamble. Period. Now, how do I explain that to an investment analyst? Wait; maybe I just did. In the transition of taking casinos from mob ownership to legitimate business operations, there was only one way that Wall Street and the investment community could justify getting involved: through established business models that bankers could understand. Those complex casino-world distinctions between coin-in, drop, and hold were not part of expected valuation formulas. Instead, Wall Street looked for a perceived “similar” industry to understand these enormous cash-flow generators. Hence, “casino” and “gambling” euphemistically became “hospitality property” and “gaming.” Under the new leadership of a Harvard Business School professor, even Harrah’s eventually began referring to their casino floors with such Wall Street friendly terms as “same store sales,” “up sell” and “cross sell.” And, across the industry, rather than merely amenities for gamblers, all of the rooms, food, alcohol, entertainment, and in some places even valet parking, each became revenue centers with their own P&L responsibilities. The focus moved from running a gambling hall to being “in the hospitality industry.” There was already a SIC code for hospitality, and even today if you search for a code for “casino” at the government’s SIC website (http://www.osha.gov/pls/imis/sicsearch.html) you find: 7011 Hotels and Motels: Commercial establishments, known to the public as hotels, motor hotels, motels, or tourist courts, primarily engaged in providing lodging, or lodging and meals, for the general public. Hotels which are operated by membership organizations and open to the general public are included in this industry. ― U.S. Department of Labor, Occupational Safety & Health Administration, Standard Industrial Classification (SIC) System latest revision: 1987

If that is where the United State Government classifies casinos, then it also is something bankers can understand, pitch to investors, and not worry about having to be creative. In that line of thinking, it seemed like a natural expansion for “hospitality” companies (hotels) to move into “gaming” as another same-store revenue stream. Some hotels have spas, some have gourmet restaurants, some have amusement parks, some have swimming pools …and some would have these casinos. (What a fucking bone-headed idea!) Think about it. Let’s reduce casinos to just another variation of a hotel, ok? Now let’s add this little twist to it: at my Trump29 Casino, when I left, we had an average “coin-in” of a little more than $100-million a month. Let’s use that as a model rather than actual numbers from there: Ok, now picture yourself as an investor in “hotels” (we didn’t have one there); your $25-million investment grosses $100-million a month! Holy shit! Of course you can sell that to the investment community. Hell, since this is the HOTEL/HOSPITALITY industry, you don’t have to explain those pesky little things like hold (that reduces your actual gross revenue to $8.5-million)…if anyone ever actually questioned it, you can call it “cost of goods sold.” Never mind casino operational costs at that time totaled about 40% (reducing that earnings number down to $5.1-million); oh and since you have already used “cost of goods sold”, I am not sure how you explain away the manufacture’s rev share that reduces your number to $2.9-million. Oh and let’s not forget the taxation (including tribal taxes) that reduces your number to $1.5-million. Ah, and the management fees that reduce the number to $1.04-million. Oh, let’s not forget promotional costs, separate from that operational number which could reduce your actual monthly earnings to $640,000. So, let’s not think about those casino-industry specific little things that would yield an annual earnings of about $8-million. Instead, let’s focus on a HOTEL that has $100-million cash flow monthly ($1,200,000,000: One-point-two-BILLION annually). It is a hell of a lot easier to get investors to line up behind a HOSPITALITY business that has $1.2-billion in annual cash flow than it is to get them on board with a casino that has a monthly EBITDA of $640-thousand. Thank God this is the legitimate business world now involved in “gaming” rather than those “casino guys.” As far back as 1999 or 2000 at the World Gaming Congress & Expo (the forerunner of the current industry trade show Global Gaming Expo —G2E), I debated on debated average daily rate (ADR) of hotel rooms on the Strip as part of one of the casino-industry panel forums. I sat on the dais along with then Mandalay Resort Group President/CFO Glenn Schaeffer, and Aztar Chairman Paul Rubeli. How I got on the podium with those industry heavies was more about force of personality than pedigree; I certainly didn’t have anywhere near the credentials those guys had. However, I did have a dissertation-like booklet on revolutionizing casino marketing methodologies and that booklet not only contained “inside information” given to me by executives at Harrah’s, Mandalay, and Hilton but it had been widely circulated in the industry amongst the analysts. I suppose, then, that I was a minor buzz figure amongst the giants. In those days, Schaeffer was a darling of the Wall Street boys (and in every right still is a brilliant operator/financier today). Even before that panel, I had always been impressed with his no-nonsense, albeit arrogantly brash, direct approach to complex issues. The fact that he is a patron of literature and holds an MFA in fiction writing, just impressed me even more; while Steve Wynn was playing at the arts by over-spending for masterpieces (and punching holes in canvasses), Glenn Schaeffer was a genuine renaissance executive who personally bankrolled writers and libraries. At the time, Schaeffer’s Mandalay Bay Hotel and Casino was one of (if not THE) most upscale properties on the Strip and he was a torchbearer for the multiple-revenue stream argument. (Hell, the top floors of the Mandalay were operated by The Four Seasons; it was a first class “joint” all the way.) Schaeffer, on that panel, suggested that eventually Mandalay would like to see a $600+ per night rate for rooms on the Las Vegas Strip. I argued that the best ADR (“average daily rate”) would be zero; I wanted hotel rooms to be a place to put gamblers to bed at night. Rubeli, agreeing with neither of us, but leaning toward Schaeffer, sang the woes of “giving away revenue” but agreed that the focus should be on gaming. (He had come a long way for a Ramada Inns hotel guy.) Don’t get me wrong: I am a big fan of revenue…anywhere we can get it. But my argument was that an average visitor to Vegas had a finite amount of money to spend and that we could capture the entire amount at gambling (and comp everything else) while creating a loyal return guest for the specific property; I wanted return customers. The idea was that we would build a long-term customer, with brand loyalty, who would come back to us again and again rather than a room-deal-hunting whore who would hop from property to property. Schaeffer’s argument was that capturing a portion of that finite budget was certain with room rate and less certain with the casino; and the huge (and seemingly never-ending) customer base made the brand loyalty issue more a function of the “complete package” than of the gaming experience. I could only counter that the certainty for casino win is a function of marketing, because once a player begins, there is a mathematical certainty of the casino’s long term win. Schaeffer, apparently, preferred the more definite, albeit perhaps short-term, capture of those dollars without regard to my loyalty issue. In fairness to him, at the time the industry truly believed there was an unlimited number of new customers –one of many reasons customer service suffered at so many casino hotels. Who cared? There was always another customer waiting in line. In fact, today, even in the 21st century, I still see that impersonal lack of customer service… sadly it prevails even amongst the industry giants who claim they are leaders in customer service. And, of course, in the non-resort “locals” casinos, there is absolutely no argument to support the “destination resort” school of thought. As far as revenue stream from sources other than gambling, I go back to t Sheldon Adelson’s “vision”. In July of 2010 The Economist magazine reported that Adelson claimed that he is not in the gambling racket and that 70% of his revenue came from non-gaming revenue centers. The magazine reported: “Mr. Adelson, the head of Las Vegas Sands and for some years the world’s third-richest person, insists that he is not in the gambling business, nor even in the gaming business (a distinction he and Michael Leven, Las Vegas Sands’ president, consider important; the difference between gaming and gambling, according to Mr. Leven, “is the difference between having a cocktail and going out drinking”).” The same issue of the magazine reported that only 17% of the visitors to Vegas do NOT gamble. Please don’t make the logical fallacy of misunderstanding the statistical data and think that the magazine reported that Adelson makes 70% of his money from 17% of the people (a variation of the Pareto principle and traditional sales “wisdom” that 80% of the sales come from 20% of the customers). Hell, if it was that simplistic, just give me the other 83%! Of course, it does not break down that simply since everyone has to eat and sleep…but there is still something unsettling if not out-and-out fucked-up about that report — even more than a decade after my panel with Schaeffer. After that panel debate, we all shook hands and I have neither seen nor talked to Schaeffer since; and I am sure he has forgotten all about the little encounter and all about me (if he even remembered me at all for a minute). Rubeli and I talked a few times, mostly about Dennis Gomes. In the short run, Adelson and back then, Schaeffer, absolutely were correct. After orchestrating the almost $8-billion sale of Mandalay Resort Group, Schaeffer moved on to head the Fontainebleau project with my old friend Mark Lefever as his CFO…and of this writing I have no idea what either are doing since the bankruptcy of that project. Meanwhile and unrelated to Glen Schaeffer, many Vegas hotel/casinos separated their amenities into independent revenue centers, with each being responsible for its own bottom line, and even its own continuation in business; each (financially) independent of the other revenue centers. The long-held practice of liberally giving gamblers free rooms, food, and drink, (“comps”) morphed into a complex accounting labyrinth that would have impressed even the mob’s greatest subterfuges of shell companies. In fact, the delivery of any player comps at all has become so complex that most “properties” either contract out the calculation or employ a highly skilled team of mathematicians and database analysts to prepare the computations. When I first arrived at Trump29, we actually paid a company about eight-grand a month to analyze our player tracking data and recommend what comps would go to which players. THAT is how complex this bullshit has become over the years. Technology guru Tom Trimble and I even created software that would automate the process. Called LogicComps, it took the tedious (and expensive) process of weighing the economic variables and automated/mechanized the progression of decisions so that even a clerical employee would be able to “issue comps” while still having decisions based on the overly-complicated business rules developed by the wags. In short, LogicComps allowed casinos an inexpensive way to utilize those over-priced player-tracking systems, without having to hire a staff of non-gaming technicians to calculate room costs vs. player value. Even that calculation is a head-scratcher. On paper, if for example, the “rack rate” (what you and I would pay if we just walked up asked for a room) for a hotel room was $600, then that room might have a “wholesale” value of $300 (we will get to THAT a little later). If the casino had a player who generated, for example, $1,000 in profit for the casino, then a portion of that profit would be used as promotion to build player loyalty and to keep the player at this “property” rather than sleeping at a competing “property” and possibly gambling there. Studies show people tend to gamble where they lay their heads at night. So consider that promotional money an “advertising” expense. That promotion might be in the form of a “discounted” hotel room, allowing the gambler to rent the room at, say, $100 a night ― a perceived huge discount (from $600) to “reward” the gambler for their loyal play. The hotel then would collect $100 from the gambler and send the casino a bill for $200 ― the difference between what was paid for the room and where the wholesale rate had seemingly-arbitrarily been set. Hence, collecting a total of $300 a night for the room, the hotel could show a profit and stay in business. Try to forget the fact that the $200 came from a different department of the same company and ultimately out of the same pocket. How phony-baloney is that corporate creative accounting? No wonder the world has forensic accountants; oh wait, this is legitimate business…I almost forgot… “Mob” duplicity is not part of the casino world anymore. This is that new model of 70% of revenue coming from non-gaming sources! Add to this seeming absurdity, 15 or 20 other variable factors (from zip code of the guest which allows a comparison of the historic spending behavior to other guests from that zip code; to frequency of visits; spending in other revenue centers of the property; propensity to accept free drinks; interest in shows; and on and on). The calculation quickly becomes unruly and in some cases scientistic rather than scientific. (In a later section of this book, I make some sense out of these schemes…as well as show some examples of the non-sense in some versions of them.) Even more complex, that “wholesale” rate for the room is not totally arbitrary; it too is actually formulaic. In the traditional hotel management world, not everyone pays the same price for identical rooms… just like with airplane seats. You have heard the stories of two people sitting side-by-side on a plane; one person paid $500 for their seat and the person in the next seat paid $200. The same types of pricing discrepancies exist rampantly in the hotel industry. There are special discounts for travel agents, reservation services, advertising promotions, corporate rates, government per diem rate, senior citizen rates, organization rates (AAA, AARP, CAA, etc.), convention & group rates, seasonal rates, weather-related rates, and scores of other variables…and those are just the “published” rates. Moreover (and most insidious to consumers) there are daily variations in non-published room rates determined by occupancy and other factors (more on this below). And, in the Casino world, we have very large discounts given to known casino players (“casino rate”). That, within itself, created a problem for those “multiple revenue centers” sycophants. Typically, a hotel does not give away free rooms to big spenders in other operational units (someone that orders a big meal in a restaurant; someone that buys a lot in the gift shop; even someone who spends hours riding a ski lift); you do not get a room discount just because you ordered a big dinner. Right out of the box, the hotel model needed some adjusting…despite insistence that gaming is less than a third of the revenue stream and that to be near the gaming just MIGHT be the reason someone rented the hotel room. Remember how Howard Hughes came to be in the casino business in the first place —and opened the industry to corporate America: he and his crew were paying for hotel rooms that Moe Dalitz wanted to GIVE to high-roller players (rather than collect revenue for renting rooms). A rented (“sold”) hotel room has a fixed cost that can be associated with it. There is the cost of the housekeeping service: if a housekeeper is making $10 an hour (and 30% in benefits) and can clean a room in 15 minutes, then there is a $3.25 cost associated with the room. Add the cost of linens for the room, utilities, peripheral staff (a percentage of front desk, security, and so on), even debt service and depreciation for the room’s square footage… and so on. The bottom-line number is the actual cost per room per day and (generally speaking) that number plus a fixed markup percentage (for R.O.I.) is considered by the hotel industry to be the minimum that can be charged for a room. As of this writing, in Las Vegas that cost per room per day, less the fixed mark-up percentage, is somewhere between $15 and $75 …depending on location, occupancy percentage, condition of property, etc. This number, notably, does not include the pro-rated per room per day per square foot amount of money to cover financing the property, cost of the money, and other finance-related expenses that have become so exorbitant with some of the newer properties caught in the money lending frenzy of the first decade of the 21st century. So a room that cost $15 to maintain, may have a minimum needed daily rate of $150 because of exorbitant financing. Nick Ribis is famously quoted after his purchase of the Las Vegas Hilton as saying, “I paid $90,000 per room, and Wynn’s rooms cost $1 million! If I charge $130 a night I make tons of money! He has to get over $300!” Just as operating costs dictate the minimum charge for a room, an entirely different set of factors that determine the maximum a hotel can effectively charge. These include: • Hotel demand, directly tied to the microeconomics of the travel industry (and this is another area where the hotel model does not exactly match the economic engine that drives travel to Las Vegas or Atlantic City and especially to those locals casinos); • Competition (supply & demand; degree of saturation; extent of rate-cutting and room-comping; differences in physical facilities (including condition); even customer service level); • Internal Elasticity (the airline industry calls this Yield Management) based on near-desperation of hotel management to assure a high occupancy percentage by using reservation center computers to adjust the price minute-by-minute based on projected occupancy for that date. To see this in action, visit Marriott or Hilton websites twice (a few days apart) and price the same room in the same hotel on the same date at each website visit. You will find different prices for the same room.) For example, I recently booked a room online for seven nights at Marriott.com. The AAA discount rate came to $1,876. I returned to the website six hours later and booked the same room for the same dates for $1,526 (and cancelled the previous reservation). The next day I went back to website and got a price of $1,284 for the same room and same days. Again, I made the change. Two days later, I was able to book the same room for the same dates for $1,120.52. The next day the hotel was sold out for some of my days so my taking advantage of the system came to an end. These price changes were a result of “yield management” pricing systems. Just from the standpoint of accurate revenue projections, how fucked up is that? So, instead of accurate projections, the industry takes occupancy percentage (hence the fanatical focus on keeping that number high) and multiplies that by the Average Daily Rate (ADR) of these all-over-the-place prices. In other words, even though I would be paying $160 a night for the room, some analyst somewhere would be reporting “projected revenue” for that room at $268 per night (at least). And, THIS is “legitimate” business…wait till you see the reason behind this madness! These are the factors used in the traditional hotel management and combined with one of several rate calculation formulas to create the actual cost of a room to the hotel. A typical hotel-industry formula process is contained in the endnotes of this book. One of the many devices brought from the hotel industry to casinos (ah, I mean to the new “hospitality industry”) is to announce the price of rooms even greater than the “rack” (published) rate. We did this at the Trump organization. For example, if a room costs the hotel $50 a night and the rack rate is $95 a night, then management publishes a rate (and posts it in the room) of $125 a night. Even though almost no one will ever be charged that $125 rate, every guest (even rack-rate customers) will think they were treated special and got a “deal.” (Even though in some circles that might be considered fraud; this is legitimate business in the “hospitality” industry.) Even more importantly, all this also makes a tasty little tax loss because we “had to” rent our room at a $30 loss. (But THAT thievery from the IRS is certainly not conspiracy or “organized” crime… right?). Such is the world of traditional hotel management and pricing…and such was the world of the new mangers coming into the casino industry. I used to periodically stay in a very large suite at the Paris in Vegas; when, on the rare occasion, I actually paid for the room, the rate was somewhere between $75 and $95 a night. The rate posted on the back of the door was $3,500 per night. Right; like ANYONE has ever paid that! So the rate charged by the hotel to the casino, absurd as it may sound, is based on some complex analysis of room costs. Never mind that all of this transaction between the hotel and the casino is merely on paper, and certainly never mind that $100 for a room is a hundred-dollars less with which to gamble. Never mind the debate over consumer perception and marketing value of a discount room versus a VIP free room. Never mind the fact that a customer now perceives that there is a “cost” to gamble (hotel and food) when in the mind of a typical gambler there is no cost to the activity itself. Despite the bankers’ insistence on sugar-coating gambling as mere entertainment (the gaming word versus “gambling”), gamblers play the games to win money…not to game like a video game on a computer. People gamble thinking they CAN win. They don’t hate losing if there are other benefits; but charging high rates for rooms and food takes away at least some of those benefits. I even argue that setting players’ club tier-levels too high for average gamblers is a mistake; but that is another discussion. One of my partners recently considered making an offer to purchase the high-end ($4-billion project) Cosmopolitan hotel/casino in Vegas. Owning casinos was never part of Deutsche Bank’s strategy and the bank told the Financial Times the Cosmopolitan was “neither a strategic nor a long-term investment”; yet they were stuck with it. The property lost $54.3 million during the second quarter of 2011, slightly less than the $56.8 million it lost during the first quarter. The casino opened on Dec. 15, 2010, so no previous second quarter numbers exist for comparison. During the first six months of operation, The Cosmopolitan, lost $111.1 million on net revenues of $231.08 million. Primarily recognized for its trendy nightclub and restaurant offerings, quarterly gaming revenue fell to $28.2 million from $31 million in the first quarter. But more to my point, Hotel revenue rose in the second quarter as the property continued to ready new hotel rooms for use. Food and beverage revenue climbed significantly and continued to be the Cosmopolitan’s largest source of revenue. In fact two of the bars at the Cosmo are among the top 10 grossing bars in the U.S. and one is THE highest grossing bar in America (The Marquis Bar). Yet the casino is losing money and therefore the entire project is losing money…so much so that privately (and yes I AM revealing privileged information at the time of this writing), Deutsche Bank has indicated they would unload their $4-billion nightmare for $1-billion. The ultimate argument is about the attraction itself: do people come to gamble or do they come for the hospitality experience…or in the specific example for the Marquis Bar; do they come to Sin City or do they come for an entertainment venue? Again, do they go to Aspen for singers in the auditoriums or for the snow? Do they go to Orlando for Disney or for the hotels? Do they go to Myrtle Beach for the beach or for the nice hotel (what? there are no nice hotels in their hometown?) And, by God, they come to Vegas to gamble; shows and food are amenities. Again, in the short-run, Schaeffer’s outlook was right on target and made some pretty significant fortunes for a good group of people…and made me look like a dinosaur…though chronologically I am decades younger. Sheldon Adelson’s model (of not being in the gambling business at all) has made the man a third or fourth fortune and by 2007 had him listed by Forbes as the third richest man in the world. In 2012 he was the single largest contributor to the presidential campaign of Mitt Romney; by July of that year he had put $10-million into a Romney “super pac” and Forbes Magazine predicted that by the actual number was ten times that and closer to $100-million . At least one of Adelson’s fortunes came from his creation of the huge COMDEX technology trade show of the 1980s that brought tens of thousands of computer goomers to Vegas to fill hotel rooms, eat, drink, go to topless bars, and attend his trade show. Booked, accurately at the time, as the largest trade show in the world, Adelson and his partners invented the show specifically to bring non-gamblers to Vegas where they had bought the Sands hotel (once upon a time the “home” of the Sinatra Rat Pack). Vegas old timers and cab drivers used to laugh at the COMDEX computer nerds, popularly saying “they come to town with five dollars and one pair of underwear and never change either one.” In fact, Adelson’s 2010 proclamation that he was not in the gambling business was just the most recent of curious interpretations of the man with almost as much money as Bill Gates or as the “Oracle of Omaha.” Adelson’s life history was that of a wheeler-dealer; not necessarily in a bad way. The Las Vegas Review Journal reported that he made his “first million” as a middleman teaching small companies how to go public and became a self-described “venture capitalist” and owner of more than 70 companies. The 1960s stock market crash destroyed that fortune and Sheldon moved into the mortgage brokering business focusing on condominium conversions. He attended a condominium-market trade show that had been advertised in an industry magazine. There he discovered that the magazine actually owned the trade show, and sold booth space as expensively as advertising space in the magazine. Apparently, he liked the business model. With a crash of the real estate market, he purchased a small publishing company in Boston and launched a trade show based on one of the magazines: a highly-specialized field called “Data Communications”… the computer industry. A Dallas Texas show in 1978-79 was the first personal computer trade show. Mildly successful as it was, the show was not enough to stave off a dispute between Adelson and his partners and they parted ways with Sheldon keeping the trade show and the partners taking the publishing company. Adelson launched a trade-show production company with a new group of partners, Richard Katzeff, Ted Cutler, Jordan Shapiro and Irwin Chafetz. In 1979 they rebranded their computer trade show as the Computer Dealers Expo (COMDEX) and booked into Bally’s (at that time known as the MGM Grand, before the current MGM was built) in Vegas. Though it was just one of several dozen trade shows the company produced, the timing was right for COMDEX: the PC explosion was beginning. Within a couple of years that one show had outgrown both Bally’s and the Las Vegas Convention Center. Adelson was making a another very large fortune: the Las Vegas Review Journal reported that he was renting convention space at 10₵ a square foot and selling it at COMDEX for $50 a square foot. Adelson even financed the building of the expansion to the Vegas convention center and sold it to the Las Vegas Convention and Visitors Bureau. Realizing the pull of that convention and not seeing and end to it in the near future, he set out to buy his own hotel in Vegas where he could build his own convention center. After unsuccessful runs on the Landmark, the Dunes, the Frontier, and the Aladdin, he finally was able to buy the Sands. The Sands had been the old mobbed-up hangout of the super-cool Rat Pack during the filming of Oceans 11 and at one time was THE symbol of Vegas. In the mid-60s Howard Hughes bought the hotel; in 1988 Kirk Kerkorian bought if from the Hughes estate and seven months later flipped it to Adelson’s Interface Group trade show company. From his standpoint, Sheldon Adelson now had a hotel (and, alas, apparently to his chagrin, a casino) to be amenities to his primary business: owning and producing trade shows. He now had a place to put trade-show attendees to bed at night. And it even had restaurants and one of those casinos. Clearly the computer nerds did very little gambling so Sheldon apparently was right. The model worked and brought a new kind of visitor to Vegas, ultimately changing the entire paradigm of Las Vegas visitors. Adelson really was the poster-boy for non-gambling revenue and in 1995 he sold the convention (COMDEX) to a Japanese company for $862-million. That was for the name only; he retained the Sands convention center and hotel, built the Venetian, and in 2004 took the company public while retaining 90% of the ownership. Of course, the downside of moving away from the business of running a gambling joint is the very model itself. By separating the casino from its amenities, the businesses depended on the typical competitive and economic forces of those businesses…the Marquis Bar competes with other bars. And Las Vegas, for example, has somewhere upwards of 150,000 hotel rooms to rent ever night. That is a lot of competition — especially if one begins with the premise that these are “just hotel rooms” rather than places to put gamblers to bed. There are, also, more than 2,500 licensed restaurants in Las Vegas. Sheldon Adelson’s empire based on non-gaming has certainly suffered those ups and downs. Apparently, his investors, at least the ones who buy the stock, foolishly think he is in the casino business. (I guess people DO go to Macau for the weather and NOT to gamble.) His stock has roller-coastered and from October 2007 to October 2008 his stock price fell from $148 a share to $4.70 while his market capitalization plummeted from $49-billion to $3-billion, forcing Adelson to personally invest an additional $525-million into his company. His investment followed a Bloomberg headline that warned “Las Vegas Sands Plunges on Default, Bankruptcy Risk” and a letter from PricewaterhouseCoopers, warning of a potential default on loans that would cause “substantial doubt about the company’s ability to continue as a going concern.” Nonetheless, by April of 2009 the stock was trading at $2.25 a share. . Of course, such are the ups and downs of the non-gaming sectors that Adelson (and others) had chosen along with the financial market freewheeling to finance expansion (that I might call, at best, dubious) in the early 2000s. As of this writing his stock is trading somewhere around $41 a share, down from $60 in 2011. Despite the economic downturn of the last years of the Bush presidency and first years of Obama’s, those Vegas room numbers were still increasing (though some mildly stalled). There has long been an argument that Vegas has “too many” hotel rooms —it was even argued that the Flamingo was “too big” to support itself when it opened in 1946; and Steve Wynn’s original Mirage was thought by wags to be a monstrous waste in 1989. That has NEVER been my argument. I simply argue that people come to casinos to gamble and we are in the gambling business. The entertainment, restaurants…and yes, hotel rooms…are merely amenities to make sure the gamblers stay in my joint instead of the one next door. Further (and MOST alarming about the business model adopted by some casino operators), I argue that the Schaeffer-Adelson Las Vegas model of not being in the gambling racket can NOT be exported to casinos outside of Las Vegas. Please trust me here…no one is going to Shawnee Oklahoma, Coachella California, Black River Falls Wisconsin (or scores of other casino locations) for the nice hotel, the great show lineup, the gourmet restaurant, or the magical fingers of the masseuse: they go there for the fucking casino. They go there to gamble! Yet some of these casino managers have exported what they learned in the corporate hotel world to their new jobs in Indian Country or at remote casinos. In the longer run, we will have to rely on the fallout and aftermath of the extremes adopted by these operators; the total separation of casinos from the amenities. Nonetheless, we CAN thumbnail-look at the recent history of the melding of the hotel/hospitality with casino gaming halls and while noting some significant successes, many have been to the determent of the original hotel brands (and those amazing valuation multiples): HOTEL OPERATOR CASINO COMPANY RESULTS Holiday Inns Caesars Entertainment (formerly known as Harrah’s) CASINOS HUGE SUCCESS; HOTELS FAILED. Went from icon with 1,400+ hotels, Trailways buses, and other companies to the hotel brand being sold off to a British beer company, and after several splits became the InterContinental Hotels Group.      Primarily because of the leadership of former hotel executive Phil Satre and the business-school expertise of his replacement, Gary Lovemann, Harrah’s, of course, became one of the most successful casino operators, and as of this writing the largest casino company in the world, purchasing Caesars Entertainment in 2005. Holiday Inns, on the other hand, became an “also ran”.      This, of course, is notwithstanding the Harrah’s 2006 management-led buy-back of the company with financial instruments tied to mortgage securities at the end of the first decade of this century and a Apollo Global Management switch of equity and debt. Hilton Bally’s CASINOS SPLIT OFF. Hilton Hotels spun off its casinos, including the Las Vegas Hilton and Bally’s, into publicly traded Park Place Entertainment to get the casinos more value from Wall Street. Park Place bought Caesars Palace, renamed themselves Caesars Entertainment (and was bought by Harrah’s in 2005 for $9 billion). Thriving Hilton Hotels gave the world Paris Hilton and by the end of the first decade of the 21st century a P/E Ratio of -0.010, not tied to any gaming operations. Sheraton Desert Inn & others HOTELS SPLIT OFF/MERGE. Sold casinos; split parent company; merged hotel into large hotel operator. Ramada Inns Tropicana HOTELS FAILED. Sold hotel brand to Asian company; sold restaurants; started casino spin-off (Aztar) which was sold off as board chairman retired. Columbia Sussex (Aztar) / Tropicana CASINO FAILED. Highly successful manger of hotels for Marriott, Holiday Inn, Sheraton, Radisson, Hilton and 8 other brands. Purchased Aztar in 2006; casinos filed for bankruptcy in 2008.

In Autumn of 2008, the divergence between hotels and casinos became even more dramatic when MGM/Mirage’s then-Chief Executive Officer, Terry Lanni, told a conference call of investors that the company might consider splitting its nongaming hotel subsidiary into a separate publicly traded company. Reuters Financial, Dow Jones, and Bloomberg all reported that (then) Deutsche Bank gaming analyst Bill Lerner observed, “What MGM Mirage is looking at is almost a reverse of the Hilton move.” During that conference call, my friend Lerner noted that the Four Seasons upscale hotel chain had a valuation of 28 times cash flow before it was taken private. So the issue seems to be two-fold: • Firstly, my assertion that operating a hotel is not only NOT a prerequisite to operating a casino, but it is in fact detrimental to operating a casino in several cases; and • Secondly, pure hotel groups (hotel pure-plays, to use “Street” slang) have consistently shown more favorable earnings multiples than casino-hotel companies. In fact, the second issue seems to support my first assertion. Of course this was (a month or so) before the late Terry Lanni resigned (at the time of a Wall Street Journal-reported controversy around USC’s denial that Lanni had an MBA from their school). Thank goodness these new corporate executives are pillars of integrity and veracity, unlike those organized crime guys that started this industry. To me, Lanni always behaved as a gentleman and an evangelist for his outlook (though we radically disagreed in management philosophy). He died in July of 2011 (at the same age Gomes was at his death: 68). The philosophical split in the industry is between “casino guys” and “non-gaming guys”. I entered the industry on the casino side and learned the business side. Hence, I run casinos rather than hospitality experiences; and I am a Gambling Man rather than…

•   Chapter Eight. Pay no attention to that man behind the curtain

OZ’S VOICE: Oh – I – Pay no…. LS — Shooting past the Four at left to the Curtain in b.g. – Dorothy goes over to it and starts to pull it aside — OZ’S VOICE: …attention to that man behind the curtain. Go – before I lose my temper! The Great and Powerful —…. MCS — Dorothy pulls back the curtain to reveal the Wizard at the controls — he reacts as he sees Dorothy — Dorothy questions him — the Wizard starts to speak into the microphone — then turns weakly back to Dorothy — CAMERA PULLS back slightly as the Lion, Scarecrow and Tin Man enter and stand behind Dorothy — OZ’S VOICE: … — Oz — has spoken! — The Wizard Of Oz Movie Script

D uring my very first week working for The Donald, I was sitting in Mark Lefever’s office lamenting over a string of losing nights for the property. I knew there was a problem at the blackjack tables; Mark had told me that. And, I knew enough to realize that if table games had been losing for months then there was either a legitimate card-counting team or an inside-job crime of some sort. That was an issue within itself and Mark had asked me to watch the tables and see what I could find. But on this particular afternoon we were discussing the seemingly impossible: a recent string of losing days from the slot machines…in the high-limit area. Based on my own fairly substantial understanding of slot machine math, I knew that machines could not lose over the long haul, though a losing day here and there is totally typical; my business revolves around that premise. I also knew that, from an accounting standpoint, if the slots take in a couple of million dollars for a day and some lucky stiff hits a $5-million jackpot, then there is a losing day. Hell, the tic-tac-toe chicken adventures with random number generators showed that kind of volatility. But, for several consecutive consistently losing days at the Trump property to happen and without any huge jackpots being won…then something must have been up. What was happening to my “long term” confidence level? Here we were on a day in the middle of a week (the slowest time at the casino) with barely $2-million in “coin-in” for the day and we were suffering from an actual multiple-day loss on the slot floor. Was someone stealing from us…again? Just a few weeks earlier, the “eye-in-the-sky” surveillance staff had nailed a two-person team of a slot attendant and a change girl that had managed to scam over a hundred-grand in a slight-of-hand during hopper fills and customer hand-pays. So we were all alert to possible crime. To be honest, I sort of hoped that was the problem; at least it would be easy to explain. In the casino world, we have a movement that we call “washing hands” that was designed to show the eye-in-the-sky that we are being honest anytime we touch money. The best way to observe the move is to go to the cashier’s cage and watch what the clerk does after he or she counts out your winnings. They will lay the money on the counter and then spread their palms face down in front of their body, flip their hands to the palms-up position, clap/scrape their palms together (as if they were washing their hands) and then again show their flattened palms. The various cameras in the ceiling (and other places — often hidden to even them) watch the hand-washing, and can clearly see (and record) that no money is being misplaced (or deliberately hidden). By the way, if you go to a casino where they do NOT do that at the cashier’s cage, I recommend leaving and never returning—something is not right (more on THAT later too). These two morons were stealing dollar-tokens from our dollar slot machines when they would do a hopper-fill (adding coins to an empty machine). When they would “wash their hands”, they would each hold one coin against their palm with their thumb and slight-of-hand hide it from the cameras. One dollar at a time, one machine at a time, they took more than $100,000 by averaging 250-hopper fills a-day over the course of a little more than a year and a half. When we finally nailed these two assholes, we made an executive decision to make a statement. We arrested them on the casino floor, in front of customers and their coworkers. We handcuffed them and very forcibly led them to the back of the house, loudly announcing for all to hear “no one steals from the players in a Trump casino”. In the back of the house we separated the duo and took each to a dark room with one bright spotlight in it. Alas, yes many casinos DO still have those “backrooms” you see in the movies. In one casino I had a guy on my staff whose entire job was to look scary in backroom interrogations. He was a great happy-go-lucky guy and as friendly as you’d ever want to know; but when he was playing the role he was a hulking giant of man who could make a priest confess to the Kennedy assassination. He was one scary motherfucker and he was on my payroll for that reason. At Trump29 we made each of these thieves believe that we were going to resort to all the myths they had heard about from old Vegas: cut off their fingers, torture them, and maybe even bury them in the desert. In no time, after wetting their pants (literally), they confessed. Is it legal? Is it admissible in court? Was it kidnapping and illegal arrest? Well… not exactly. We were in a sovereign Indian nation and exempt from many State and Federal laws. Let it be a word to the wise, in some Indian casinos, be damned careful; you may not have Constitutional rights. (More on that in a later chapter, too.) When one runs a casino, amid the hundreds of thoughts constantly barraging the brain, various ways people will steal is always on the front burner. During this particular week, with almost $2-million churning through the machines on this “losing” day, the casino should have grossed a neat $170,000 for the day. Instead, we lost $35,000 and that fact was what was giving both Mark and me heartburn. I came from the world of cards; blackjack card counting and poker (not the newly-fadded Texas Hold’em world, but hardcore draw poker). If the problem had been with table games, I would have (as I had in the past and did many times in coming years) gone to the pits and found the problem. Though most surveillance teams are well-trained, there is nothing like a player’s perspective to spot traditional cheats like past posting, signaling, gadgets, mucks, chops, switches, shiners, stacking, cuts, pitches, crisscrosses, riffles, passers, teams, shuffle tracking, a dozens of other old-style cheats. To spot worst-case scams, or to train staff, I would call my old friend George Joseph. The Detroit native has run surveillance for Bally’s, Paris, Aladdin, Dunes and other Vegas properties. He is the author of at least three books and constantly on television as an authority on casino scams (I have seen him on 48 Hours; America’s Most Wanted; CNBC; Criss Angel Mind Freak; Dateline NBC; The Discovery Channel; several A&E shows; The Learning Channel; and just about any show that talks about “inside” Las Vegas). He is by far one the most brilliant card mechanics and card magicians that I have ever watched. I have attended a half-dozen of his seminars and I have used his services several times to train my staff. In fact, in Oklahoma City I brought him in to train surveillance and Gaming Commissions from a dozen casinos. George is the guy who caught the notorious gang of computer scammers that had been stealing hundreds of thousands from Indian casino blackjack games all over California and New Mexico. Though I had read the details many times and had heard him describe it in seminars, there is nothing like hearing his personal reminiscences of how he made the capture.

 

Master gaming protection advisor George Joseph  Over pizza one night in Biloxi, George, dressed in all black, gave me a detailed recap of the whole adventure —even down to a malfunctioning computer mother board taped to the back of a player, setting the player’s shirt on fire. In the midst of the general conversation, George casually rolled off, “I was telling Mohammad Ali about this, one night at dinner and…” I interrupted. “Whoa, you know Mohammad Ali?” It was then that I learned that George is married to Joe Lewis’s daughter and Ali was a close family friend. At any rate, if there were a card scam or slight-of-hand that I had not seen in casinos over the years or learned from my father and his carny days, then I would call on George to spot it and to train my staff to spot it. I’ve never seen one slip by him. But… this was a slot machine problem, not a table games scam so I was reluctant to call George (though he is an expert there too). From my standpoint, as The Donald’s new marketing Vice President, this was MY problem and specifically meant I was down $205-thousand for the day; not just the loss of $35-large, but on top of that the $170,000 that I should have been ahead. Thank goodness, this was before Trump popularized “you’re fired” and that flick of his wrist imitated by millions of TV viewers; otherwise I would have been seriously worried about my near-term employment options. And this was not a one-day volatility issue; it had been going on for one week and two days. How the fuck does a slot floor lose money over the long term? As the top casino executives scratched our collective heads (and proverbial asses) over the issue, our database manager wandered into the office and casually asked a question that solved the mystery: “Was Larry here playing last night?”  You remember Larry…my high-roller from the “typical day”; this was my first encounter with him. Our database manager, Steve Sohng, was at that time one of the finest and most under-utilized marketers in the industry. Born in Korea (where his parents still lived), Steve spoke with a heavy Korean accent which made him difficult to understand for many people; I always suspected that is why his talents had never been fully utilized; not exactly an underlying racism, but certainly a language issue. Frankly, rather than hire me to market that particular Trump property, someone should have promoted Steve to the position (though he might not have been ready at that point). I eventually helped with that little oversight by officially making him my Number One and bumping his salary as high as was allowable under company guidelines. There was definitely a noticeable growth in his confidence level (as well as the way he dressed for work) after I began to rely on him so heavily. In fact, many of the staff decisions that I made (or were attributed to me) were actually made by Steve and implemented by me. I have often used the management technique of allowing subordinates to make unpopular decisions within their realm of responsibility and then personally taking the heat for the unpopularity in order to shield them. I did that with Frank Hass at our first casino in Oklahoma, I did it for Steve Sohng at Trump29, and I would repeat it many times to foster growth, development and especially self-confidence when ambitious detractors might otherwise stymie it. Sometimes a good manager has to protect his subordinates from their coworkers as well as from boards of directors (or Tribal councils).

 

The should-be legendary Steve Sohng  Steve was another real life casino industry character; he was a caricature of what every non-casino employee imagines casino life must be like. He drank a lot, he gambled a lot, and he had the reputation of a “ladies’ man.” His adventures, while typical of many casino employees, were the extreme version of the conglomerate of all employee stories. If I wanted to create a fictional character to amalgamate the extreme casino stories of a dozen lives, I would create Steve. He did it all…for real. He is one of those figures that most people would not want to actually know but love to hear about; he was like the Rolling Stones’ Keith Richards —the extreme of all things in his genre. If USA Network television as part of their “characters welcome” promotion asked me for the BEST casino character, I would give them Steve Sohng; he is a great guy! During the grand opening party for the Agua Caliente Tribe’s Spa Casino in downtown Palm Springs, Steve drank enough that my secretary, Tanya, and I decided that he should not be driving. Even before we arrived at the six-hour party, I literally pick-pocketed his car keys and rolled him into the backseat of my car (leaving his car at my condo). At a get-together at the home of two of my player development staffers, before the party, Steve drank enough that we were able to convince him that one of my hosts was going to handcuff him, blindfold him, and hoist him in the air on a BDSM (a combination of 3 acronyms, BD for Bondage Discipline, DS for Domination and Submission and SM for Sado Masochistic) pulley system and have her way with him. By the end of the night we had to pull over twice for Steve to open the car door and vomit. By the time we got back to my building he had passed out and we carried him up a flight of stairs to my condo. He did not regain consciousness as I tucked him in on my couch, and I confidently left his car keys on my kitchen counter, before retiring to my own bedroom. The next morning I arose to find the apartment empty. There were stale stains of recently-cleaned wine-filled vomit all over my couch and carpet, the car keys were missing, and Steve’s car was gone. I had parked inside the gated community, but his car was just outside the gate. The fence was 12-feet high, topped with coils of razor-wire, and could be exited only through a keyed gate; and the key was with me. Hours later Steve called me to tell me that his clothes were in shreds, his arms were bloody, and he could not remember how he got home from the party. On another occasion, Halloween, I took Steve and Tanya out to dinner to the gourmet room at a rival casino. Steve drove. Being the consummate gentleman, when he returned to the car he held Tanya’s door in the back seat and then my door in the front sheet. Unaccustomed to having men (or anyone, for that matter) hold a door for me, I slammed the car door shut once I was in my seat. Unfortunately, Steve’s hand was still in the door-jam when I slammed it. Five hours later, we finally navigated the Emergency Room’s absurd bureaucracy to get him to a gurney in front of a doctor. To calm Steve and take his mind off the pain, the physician began to make small talk about the Trump casino and our showroom. As if he was not in severe pain with a bloody nail-less thumb, Steve reached into his pocket and produced two complementary tickets to the next night’s concert in the showroom and presented them to the doctor. “If you will come in and play for a couple of hours, then I would be honored for you to be my guest to see Tony Bennett tomorrow night,” Steve told him. Steve Sohng never stopped prospecting for customers. Like me, Steve began his casino career because he was first a player. He once told me that when he first came to the United States to attend college at the University of Nevada at Las Vegas, his father had given him money to pay the first year’s tuition, books, and room & board. Steve, being a true gambler, lost all of the money…every dime…at baccarat… before school started. Gotta love that kind of gambler! By the time I knew him, Steve’s game of choice was video poker and he had the fastest reaction time I have ever seen playing those machines. Many times I have thought of writing to Bob Dancer, or one of the other video poker gurus just to introduce the amazing Steve. Once I timed him playing at the Augustine Casino in Southern California ― he hit those frigging buttons on the average of a full game (holds included) every second: 60 games a minute; 3,600 games an hour. He was playing full coin-in on a 25¢ machine, which translates to $1.25 per game or gambling $4,500 per hour. Over the course of four hours that night, Steve went through $18,000 in coin-in. The machines were set to “hold” 4% (without perfect play) so his theoretical win was about $17,280; hence he was losing an average of $720 over the course of the evening. But besides being fast, Steve was good; VERY good and very accurate. He only played very select 9/6 or better machines (more on what that means in a later chapter), and his play was near theoretically perfect. So in fact, he was actually winning about 103% of his play; meaning that he had a new profit for the evening of about $540. That equates to being paid about $135 an hour for sitting at a video poker machine. And the fucker did it consistently. That is not to say he never lost; but damn, he was definitely a player. Dressed in a dark suit and on the casino floor on a busy Friday or Saturday night, Steve was one of the best casino hosts I have ever seen. Because his “day job” was our database manager (before I made him my assistant and then Director of Marketing) he would run an analysis of players’ who were active on the floor and then set about one-on-one contacts loaded with offers and inducements targeted to each player specifically. Far more targeted in offers than even I could develop for direct mail, his personal contact consistently increased the average play of any customer he targeted by about 35%; a phenomenal increase. Armed with show tickets, restaurant comps, and credit approval, make no mistake about it, when Steve Sohng was on the casino floor he was almost always personally responsible for double-digit percentages increases of that day’s bottom line profit. So much for a language barrier, Steve was a fucking money machine for the casino and anyone that does not use him for that is an idiot. On the database side, Steve and I clashed from the onset over his traditional (and proven successful) use of “theoretical” win for the casino to segment customers. I had developed a somewhat controversial player-targeting methodology that was based on actual win rather than theoretical win and combined it with frequency of visits to the casino as well as how recently a player had visited. Instead targeting customers from a two-dimensional linier graph with traditional “X” and “Y” axes, I was using a 3D model similar to the “RFM” model that the paper catalog industry used to segment customers. My method flew in the face of standard casino wisdom, but was supported early on by Mark Lefever (who as a number-cruncher probably saw the abstract mathematical soundness in it). Steve and I continued to debate the method until we finally tested it against a third-party database analysis. Once it was proven, Steve and I became fast friends on the professional level. In fact, that behind-the-scenes database modeling was the key to not only Steve’s friendship but the entire success of that Trump property. Steve Sohng was hard-playing, but he was also brilliant on the business side. To this day, I argue that Steve is one of the most under-appreciated geniuses in the industry. He is well worth deep into a six figure salary and more. During that first week of my work with Trump, I could see the light come on in Mark Lefever’s eyes as he heard Steve’s question. Mark wheeled his chair around toward his computer and typed in a query for a list of players on the floor the night before. Indeed, “Larry” had been playing. Who the hell was Larry? (And, by the way, does it worry you that he got a list of customers that fast? Don’t let it; that is what we do.) “Well that explains it; and he has been here all week,” Mark sighed with relief. A few calculations later, between the computer screen and the electronic adding machine on his desk (remember he is a CPA and THOSE guys love 10-key adding machines), we discovered that on this one day — excluding Larry’s play — the slots had actually held almost 12% (a gross profit for the casino of $240,000 instead of the revenue projection of $170,000 for the day). Without “Larry’s play” I was not at all $205-thousand in the hole; I was $240,000 ahead and even $70,000 ahead of projections for the day. But damn. That meant “Larry” had won enough to put us in the hole; he had to have won some large part of that $240,000 plus the $35,000. A phone call to the cashier cage and a review of Federal W2-G tax forms indicated that the speculation was correct as the computer screen showed. And I felt like a complete novice who had no idea of how a casino operates. Also, now I was feeling like Butch or Sundance staring in the distance at a white hat and asking “Who the hell IS that guy?” What was the secret of one guy whose slot play could change the fortunes of a casino for the day or the week? What is it that he could do that would send the executive staff (or at least me) running for bottles of Maalox? He did not cheat. He was not a mathematician that understood formulas and Pascal’s probability tables. He didn’t have a “system”. He was not an industry insider that knew of a weakness in a computer chip. He was just a guy; a guy who won tens of thousands of dollars of the casino’s money on a regular basis. True, he did play $25-machines (slot machines where the minimum bet was $25) and he played full coin-in (meaning he played the maximum number of bets per spin of on some machines was $625). Larry would often play four or five hours a night, rarely stopping except for a bathroom break or to drink from a bottle of water brought to him at the slot machine; but on other days he would play for less than an hour and leave. A really busy slot machine (not being played by a mad genius like Steve Sohng) can spin between 600 and 700 times an hour and that meant Larry was betting at least something greater than $45,000 an hour and as much as ten times that per hour. During the course of his five-hour of nights, he was gambling a minimum of a quarter of a million dollars. If he had been playing my penny video slot machines I could have expected to keep about $27,000 a night of his money. If he had been playing my regular quarter or dollar slot machines, I would have expected to keep a little more than $19,000 of his money per night. If he had been playing Steve-perfect strategy on my video poker machines, I would have had a problem; but fortunately there are few people that can concentrate on a skill game for that many hours and stay focused enough to beat the house…to beat me. Larry was playing a mindless slot machine; and on top of that an older reel-style machine. I have used a lot of jargon so far and I probably should take a minute to talk about some important terms that surface over and over (and are important in understand the “Larry problem”): win, drop, hold, and coin-in. All three refer to money played, but all three are distinctly different measurements. Like Steve Sohng and hundreds of other casino executives, I started in casinos as a player… and truth be known, I am still a gambler. To the world of us casino players, the word WIN means how much money we make when we play. If we come into the casino with $100 and leave with $125 then our WIN is $25. Of course some gamblers would claim they won $125 and lost $100. It is all relative, I suppose, but for a player the WIN is how much more I have in my pocket when I leave the casino than when I arrived. Anything less than what I arrived with, is a LOSS rather than a WIN. But in the terminology of a casino boss, WIN is how much money the casino made, not the player. The term is totally upside down for the casino compared to what it means for the player. At the end of the day, a week, or a month, or any gaming period, casino WIN is how much players LOST. For a casino operator WIN is gross profit. Just remember this: when a player has a WIN then the casino has a LOSS; and when the casino has a WIN then the player loses. It is just a matter of switching hats…or in this case switching “sides of the table.” (Often, when people ask me what I do for a living, I tell them “I am a gambler who plays both sides of the table.”) You have seen signs over some slot machines that announce things like “92% payout”. For a player, that sign is supposed to make them think that they win 92% of the time they play… or at least that 92% of every dollar played is paid back as a win. But for the casino that sign means that the long-term WIN is only 8% of all the money played in the machine. That 92% player payout (often mistakenly called “par”) is the opposite of hold. The hold is the percentage of money that the casino makes in the long term from a game. If the hold is (for the above example) 8%, this means that the slot machines pay out 92% to the customer. On the average, then, over the life of the machine, for every $100 played, the casino keeps (or wins) $8 and the remaining $92 are paid back to players. What makes slot machines interesting to play is that the 92% (in this example) is not predictably consistent. A machine could take in $10,000 without a single payout and then suddenly pay one winner $9,200. If that person had just walked up to the machine and this was their first spin, he or she would proclaim how “loose” the machine is. On the other hand, if several other people played a cumulative $10,000 without winning anything, they would be cursing how “tight” the machine is. In reality slot machines are set for neither extreme. Rather, they payout based on a complex table of probable minimum payouts. This table takes into account such things as the layout of the physical and virtual reels; odds for each of the winning combinations; the payout amounts for each of the combinations; combinations of some large and some small payouts; and other mathematical formulas. The spreadsheet for this complex payout schedule is called a Payout And Retention (PAR) Sheet (often incorrectly called Pay Table and Reel or Probability Accounting Reports or Percentages And Returns —all indicating just how “mysterious” this industry is). Every machine manufacturer provides casino operators with a PAR sheet for each slot game they offer. (Well at least every manufacture SHOULD and is compelled by law to do so in many jurisdictions; but some rinky-dink companies don’t do it or don’t have them to give). In many jurisdictions there is a licensing requirement that PAR Sheets must submitted to the regulatory body overseeing casinos. For example, in my home state of Florida, state law very specifically (and typically) addresses PAR sheets: “No slot machine game shall be certified for play by a licensed independent test laboratory if the manufacturer’s Payout and Retention (PAR) sheet does not indicate a probable minimum payout percentage of at least eighty-five percent (85%) of all credits played over the mathematical cycle of the game at a ninety-five percent (95%) level of confidence. The licensed independent test laboratory shall test the slot machine to certify that the slot machine game meets the probable minimum payout indicated on its PAR sheet at a ninety-nine percent (99%) level of confidence. The manufacturer or distributor shall also provide a PAR sheet with each slot machine game delivered to a slot machine licensee.” ―Rule 61D-14.038, Florida Department of Business & Professional Regulation, Division of Pari-Mutual Wagering, Pari-Mutual Facility Slot Machine Operations Needless to say, these PAR sheets are guarded fanatically by the manufactures. As a casino operator, I have been offered tens of thousands of dollars by manufacturers to provide them with the PAR sheets from their competitors. For every one legitimate operator like me, there are probably a half dozen that gladly provide PAR sheets. When we get around to talking about how slot machines work, you will see why the math of these PAR tables is so valuable. One of my favorite games, in terms of bonus rounds, is the IGT Price Is Right Game. Unfortunately the damned thing has to pay a percentage to the owner of the theme of the game (Merv Griffin Productions) and hence the hold is usually an absurd 14.955%; a great number for the casino but a horrible number for the player. You can compare that par sheet to the publically-available par sheet in the endnotes  . That hold we talked about (8% in the example) is called theoretical hold because it is the mathematical formula for which the machine is set. But like that damned tic-tac-toe playing chicken, just because the machine is set to payout 92% of the time, does NOT mean that 92 out of every 100 spins are winners for the players. While it is true that over the long-run that formula itself will be 95% to 99% accurate, in a short period of time it can be way off. Several times I have opened new casinos and on opening day, after less than $100 of play, a machine would hit a jackpot $10,000 or more. If that machine never allowed a player to win another penny, it would still take three months to recover that payout (at $100 play per day). Add into the equation that there would be hundreds of minor payouts, and that machine would be “upside down” with a negative actual hold for a long time. The theoretical hold would eventually cause a long term correction but in the meantime the cumulative hold of the machine would be a negative number. If we measure hold for one hypothetical day and on that day only have 100 people in the casino with each one playing exactly $10 then our theoretical hold for the day should be $80 (100 people x $10 each = $1000 and 8% of that is $80). But, if in that same day with those same bets, someone hit that $10,000 jackpot then the actual hold for the day would be a negative 1000% hold. Of course that $10,000 jackpot would be part of the theoretical payouts defined by the PAR sheet and would be the accumulation of many plays to mathematically work out in the long run to 92% of the money put into the machine. But in the short run and for the day… ouch. If you are not a math person, don’t let your eyes glaze over; I am about to show you which slot machines pay out better. Okay… As I said, there is a difference between theoretical hold and actual hold. Hence there is a difference between actual win and theoretical win (thus, the debate that Steve Sohng and I had about targeting customers based on their “theo” (theoretical) vs. their actual losses). Now that you understand the terms hold and payout, you can see the usefulness of this information to a player who wants to decide which casino or which machines to play. The chart below shows a recent Nevada state report of the average Las Vegas slot machine payouts and holds. Location Denomination Payout Hold Strip $25  96.51% 3.49% Downtown $1  94.55% 5.45% Downtown $5  94.16% 5.84% Downtown Quarters 93.8% 6.2% Strip $5  93.46% 6.54% Downtown $25  93.28% 6.72% Strip $1  92.48% 7.52% Downtown Nickels 90.41% 9.59% Strip Quarters 89.96% 10.04% Downtown 1¢ 88.81% 11.19% Strip Nickels 88.27% 11.73% Strip 1¢ 87.48% 12.52% Strip IGT Megabucks $1 86.09% 13.91% Downtown IGT Megabucks $1 85.95% 14.05% From this chart you can see that for a player, the best chances of winning are the $25 machines on the strip, the $1 machines downtown, $5 machines downtown, and the 25¢ machines downtown. The best machines for the casino (and worst for players) are the IGT Megabucks $1 machines anywhere, penny machines anywhere, and nickel machines on the strip. Actually, for the player, the very best slot machine bets in the Las Vegas area are the $5 machines in North Las Vegas and: Location Denomination Payout Hold North Vegas $5  98.55% 1.45% Strip $25  96.51% 3.49% North Vegas Quarters 95.8% 4.2% Clark County $5  95.56% 4.44% As of this writing, the North Las Vegas casinos include: Bighorn Casino; Cannery Casino and Hotel; Five Star Tavern 53; Fort Cheyenne Casino; Jerry’s Nugget; Opera House Casino; Poker Palace Casino; PT’s Gold; Silver Nugget Casino; Speedway Casino; Texas Station Gambling Hall and Hotel; and The Beverly Hillbillies Gambler Casino. Should a Vegas-novice reader decide to venture that direction, I recommend that you dress very casually and blend; the area has not historically been without street crime. Guys in Armani suits and driving Jaguars probably shouldn’t go there; trust me, that is the voice of experience speaking. It is also very important to emphasize that this description of hold is strictly for slot machines. Hold for table games is a far more complex calculation that almost no one observing the industry, and few inside the industry, ever get right. With slot machines we are measuring hold percentage against every single bet by the player (the coin-in that we will talk about in a minute); at table games, we only measure against the drop. To understand this, let’s go back to slots, the primary revenue source: Remember that $1000 cash that was fed into the machines by the players for us to understand hold percentages? At the end of the gaming day when that money is taken out of the machines… it is called the “drop”. Simply stated, “drop” is the amount of cash put into the machines, by the players (regardless of payouts). Apart from of how much money is paid out of the machine in player win (casino loss), the drop is the amount of money put into the machine and stored there. The whole issue of drop has gotten really complicated in recent years with technological advances. In the golden olden days (which I have spent so much time talking about to let you into my mind) drop was relatively simple: there were paper money and coins. Coins were counted in what we call “hard count” because it was “hard” money (as opposed to soft paper). There were complex machines, scales, and verification devices that were all part of the count room process to assure that no one was stealing money. Hard count requires lots of labor to deal with the massive weight and space taken up by relatively small amounts of cash (compared to paper money). Additionally, because of the weight of coins there are more frequent employee injuries and workers comp claims. This is separate and apart from normal change coinage. There is a vast different in the number of coins needed to make change for point-of-sale or even change for slot winnings versus the number of coins needed for all payouts to be in coins dropped from a machine hopper. The former merely requires standard cashier coin procedures; the latter requires an entire room of equipment and storage as well as heavy-duty carts and bins to hold all the heavy coins. A quarter weighs about two ounces (5.67 grams), so a thousand dollars in quarters weighs about 12 pounds; thus the $375,000 required to operate a floor with 1,500 slot machines would weigh two-and-a-quarter tons (4,500 pounds). Try carrying that around on a casino floor…without dropping any bags of coins on a foot and breaking it. In one of my early naïve days I made the mistake of trying to get a cashier at the Las Vegas Hilton to tell me how much a bag of silver dollars weighed. This general curiosity question caused her to call security to question me as to why I wanted to know. One of the Gomes-discovered Stardust skims involved an employee of a the company that provided coin-weighing scales adjusting the scales to give an incorrect weight in the hard count room so that crooked employees could then steal the overage without it being tracked. Paper money is counted in rooms called “soft count”… meaning that paper is softer than coinage. The soft count room is filled with machines that count the bills and sort them by denomination. The process of counting paper money from slot machines involves a casino function called “drop and count”. Though there are variations from casino to casino and regulatory jurisdiction to jurisdiction, basically the drop & count process is uniform and designed for efficiency, security, and integrity of the cash. After all, this is where all the cash is.  The following section outlines a typical drop and count process, if not procedure: Gary’s Drop & Count Process DROP: Members of the casino drop team dress in brightly colored jumpsuits (a lot like you see prisoners wearing when they are brought into court); this way they are readily identifiable by security and surveillance. The drop team members are not allowed to have pockets, purses, or anything that would provide a place to stash the money they are taking out of the slot machines.

1. The drop team uses stanchions to cordon off a group of slot machines on the floor. 2. Uniformed security officers stand guard at the stanchions to keep the public from crossing into the drop area.

3. Once several banks of machines are cordoned off, the drop team rolls a large metal drop-cart (at right) into the roped-off area. These heavy-duty carts can hold 3,500 to 6,500 pounds of money. The carts are loaded with empty “drop boxes”.

4. Each slot machine has several sets of specialty keys that unlock various parts of the machine. The keys are color-coded for their different functions. At the left is a typical key used in the process.   5. Typically the “belly glass” holder is dropped down to a 90˚ angle in front of the machine, revealing the “drop door” inside the machine. The picture above shows two of the locks; the picture at the right shows a Bally slot machine cabinet with the belly glass holder dropped open.     6. Once the door is revealed, another key is used to unlock the door, revealing a drop box. There are a minimum of two drop boxes assigned to every machine; one is actually in the machine and a second is loaded onto the drop cart before the cart is rolled onto the casino floor. The drop box on the cart is empty. The picture at the left shows the drop-box inside the slot machine.

7. This drop box is removed from the machine and placed in the chair in front of the machine. The drop box has money in it, from the “drop” that players have put into the machine. Depending on the machine manufacturer and on jurisdic-tional regulations, an audit report is printed out at the machine when the box is removed. (This report can also be printed via a server from an audit office, in some jurisdictions.)  8. Each slot machine has a number affixed to it (called an “asset number”). Each drop box has an asset number that matches the asset number of the slot machine. For example, if the machine is number 1234, then one drop box will be numbered 1234-A and the next will be numbered 1234-B. The drop team picks the full drop box up from the chair and replaces it with the corresponding empty drop box. In other words, if cash-full box 5432-B is taken from the machine, then empty box 5432-A is placed in the chair. The cash-filled box is then placed in the drop cart and the empty box is put back into the machine. The door is locked and the belly glass door closed. This process is repeated for each machine until the section is finished. The drop cart is then locked and rolled back into the soft count room. COUNT: Count rooms/vaults are generally protected by a man-trap set of doors (see drawing at right). A man trap is a small waiting room with a locked door at each end. The first door must be closed and locked before the second door can be unlocked. This keeps unautho¬rized people from walking through a single door to get to the count room and vault.  Generally a man trap uses both surviellance camera identification and an

electronic key for each door, often with different locks or key codes for each door. With electronic locks, the second door cannot physically open until the first has closed.   9. Once inside the count room, each drop box is removed from the cart, unlocked with a special key, and the cash from that box is counted (at least twice) and compared to the machine-audit num¬ber. Counts are done either by bank-style cash counting machines or manually. This process continues until the cash matches the audit number for each machine; if there is no match then an exception report is filed for the overage or underage (and in MY casinos someone is going to be fired). When completed, the emptied drop boxes are loaded back onto the cart for the next drop. The picture at the left is an open (and empty) drop box. Note the springs … which are pushed down by the weight of the cash.

What I have just described is the process for “soft count” … without coins. But the soft count process has become a little more complex in the past few years, from an accounting standpoint. Casinos have almost universally moved away from slot machines that accept coins; so hard count has all but disappeared. In its place, most slot machines accept both paper money and printed payout tickets called a TITO (ticket in / ticket out). These tickets are bar coded slips of paper, which can be redeemed for cash, or inserted into the bill acceptor for play at other machines. Since these tickets have a cash value (both in other machines and at the cage), and since they are inserted through bill acceptors into the drop box, they necessarily become part of the drop and count. From the audit side, there needs to be an entry for cash drop as well as an entry for ticket drop. Suddenly the drop is perverted from real cash to cash plus paper tickets. Hence to fully understand the daily play through a slot machine we need another measure; one that combines the cash and the tickets as well as non-cashed-out credits played through the machine. This is the measure of “coin in.” (Even though there are likely no coins involved, the term is a throwback to the early slot days). Indeed, for many, the most complicated measure of casino money is “coin in.” The concept is so complicated and misunderstood that I have noticed several top-notch casino text books and lecturers get it wrong. In fact, one of the very best casino text books, often used at the University of Nevada, gets it totally wrong. This is exactly why casino operators are different from hotel operators, operators of other businesses, and even academics. It is a highly complex and specialized business. In a nutshell, coin-in is the amount of money wagered or played through a machine. In that sense, it is gross revenue of a machine—before payouts. Simple as that seems, it is not so simple to wrap your head around because it gets confused with drop. Let’s slowly go through the concept so that it is clear. To do this, I will run through several scenarios. 1. You sit down at a slot machine, insert a $10 bill, make 10 consecutive $1-plays and lose each one. You get up and leave. In this case, the coin-in was $10; and the drop was $10. 2. In a second example, you sit down at a slot machine, insert a $10 bill, and decide not to play at all. You instantly cash out and get your $10 back. In this case, the coin-in is Zero; but the drop was $10 (because when the cash can is emptied there will be a $10 bill in it — even though $10 was paid out in either a ticket or some other device). 3. For a third example, you sit down at a slot machine, insert a $10 bill, make one $1 bet, lose it and decide to leave with your remaining $9. Coin-in, in this example, is $1; but the drop was $10. So far it is easy to follow: coin-in is the amount of money that is actually bet. It does not relate to win nor even drop. It is simply the amount played. But let’s look at a fourth, more complex and more realistic example: 4. You sit down at slot machine, insert a $10 bill: ACTIVITY: COIN IN DROP CASH HOLD HOLD % You make a $1 bet and lose it. Your cash available is now $9; your coin-in is $1; and the drop is $10. $1 $10 $1 100% From that remaining $9, you make another $1 bet and win 75¢. Your cash available is now $8.75, You have bet a total of $2; your coin-in is $2. $2 No additional $1.25 63%      From the remaining $8.75 you make another $1 bet, reducing your bankroll to only $7.75. You win $10, upping your bankroll to $17.75. You now have a net win of $7.75 (over the original $10) However, your coin in is only $3. $3 No additional -$9.75 -258%

From your $17.75 bankroll you make 17 more $1 bets losing each one. Your bankroll is down to 75¢. Your net loss is $9.25; the casinos net win is $7.25. But your coin-in is $20; (the 17 one-dollar bets in this example, plus the $3 coin-in from the above three bets). $20 No additional $9.25 46%

In this example, your actual cash bankroll was only $10. The actual drop into the machine was only $10. The casino win was only $9.25. But… the coin-in was $20 (double the drop in this case). An actual break-down of the progress of this example looks like this: DROP bet # Bet amount total of all bets made player win (this hand) player cumulative win player bankroll (credits available for cash out) Total coin in Casino Win Casino Cum Win Hold % $10.00

 

 

 

 

 

 

 

 

1 $1.00  $1.00  $0.00  ($1.00) $9.00  $1.00  $1.00  $1.00  100%  2 $1.00  $2.00  $0.75  ($1.25) $8.75  $2.00  $0.25  $1.25  63%  3 $1.00  $3.00  $10.00  $7.75  $17.75  $3.00  ($9.00) ($7.75) -258%  4 $1.00  $4.00  $0.00  $6.75  $16.75  $4.00  $1.00  ($6.75) -169%  5 $1.00  $5.00  $0.00  $5.75  $15.75  $5.00  $1.00  ($5.75) -115%  6 $1.00  $6.00  $0.00  $4.75  $14.75  $6.00  $1.00  ($4.75) -79%  7 $1.00  $7.00  $0.00  $3.75  $13.75  $7.00  $1.00  ($3.75) -54%  8 $1.00  $8.00  $0.00  $2.75  $12.75  $8.00  $1.00  ($2.75) -34%  9 $1.00  $9.00  $0.00  $1.75  $11.75  $9.00  $1.00  ($1.75) -19%  10 $1.00  $10.00  $0.00  $0.75  $10.75  $10.00  $1.00  ($0.75) -8%  11 $1.00  $11.00  $0.00  ($0.25) $9.75  $11.00  $1.00  $0.25  2%  12 $1.00  $12.00  $0.00  ($1.25) $8.75  $12.00  $1.00  $1.25  10%  13 $1.00  $13.00  $0.00  ($2.25) $7.75  $13.00  $1.00  $2.25  17%  14 $1.00  $14.00  $0.00  ($3.25) $6.75  $14.00  $1.00  $3.25  23%  15 $1.00  $15.00  $0.00  ($4.25) $5.75  $15.00  $1.00  $4.25  28%  16 $1.00  $16.00  $0.00  ($5.25) $4.75  $16.00  $1.00  $5.25  33%  17 $1.00  $17.00  $0.00  ($6.25) $3.75  $17.00  $1.00  $6.25  37%  18 $1.00  $18.00  $0.00  ($7.25) $2.75  $18.00  $1.00  $7.25  40%  19 $1.00  $19.00  $0.00  ($8.25) $1.75  $19.00  $1.00  $8.25  43%  20 $1.00  $20.00  $0.00  ($9.25) $0.75  $20.00  $1.00  $9.25  46%

We measure coin-in because it truly is a reflection of amount of money bet during the session. At any point during the play you could have cashed out and left. Instead, you chose to play $20 worth of bets…even though you only paid $10 in actual cash from your pocket for those bets. The additional $10 in bets came from money you won from the casino and could have cashed out. In this fourth example, the numbers for measuring one player’s monetary performance are complex and look like this: Theoretical Hold Actual Hold Drop Coin-In Casino Win Casino Loss 12% 7½% $10 $20 $9.25 0 Machine Win Machine Loss Performance Player Win Player Loss $18.25 75¢ +4½% 0 $9.25 We will deal with that “theoretical hold” number later. Assuming this player was using a players club card, I have this information as well as such things as the length of this playing session, the theme of the machine, how many spins per hour the player made, and a lengthy recitation of other benchmarks. Knowing your coin-in number tells me what kind of gambler you are and consequently tells me what sort of offers I can present to you in order to entice you to reach into your own pocket and further contribute to my drop. My drop, on the other hand, gives me a basis for a simple mathematical function for my win for the day. Keep in mind that hold and win/loss for the casino, are the same calculation. Through subsequent chapters and anecdotes, coin-in will be a key term. And in the industry itself, it is a lifeline. That coin-in number gives me an indication of any particular player’s propensity to gamble; but more importantly, it gives me a snapshot of how much play a particular slot machine is getting. At Trump, for example, all executives were texted the previous day’s coin-in number as soon as the drop and count teams finished; that would give us a snapshot of how we did the previous day. On the other hand, I have worked for some Indian casinos and some charitable casinos that had no regard whatsoever for coin-in and don’t even track it. In the case of my high-roller rooms, that coin-in number determines who gets the comps and who gets an invitation to join my “Platinum Club.” Designed to be like the airlines’ frequent flyer program, tiered players clubs have a proven history of increasing play. I have always made it a point to make the various tiers of my player’s clubs to mimic my experiences with Delta Airlines (that I discussed earlier). Whenever players visit another casino, I want them to feel separation anxiety from me. A casino’s “high roller room” (or Platinum Room, as I always brand them), is designed to do help that happen. It is a tool to make good players (measured by high coin-in) feel PAIN if they go to another property. My platinum players are coddled in any way that it takes to own their loyalty. ANY way that it takes; understand the full implication of that necessity as you “read between the lines” here. During the period of time that I was working for Trump, I was at an off-site gourmet restaurant for one of our many Platinum Members Only parties hosted by members of the Tribe and my staff of Casino Hosts and Hostesses. One of my Hostesses was a 21-year-old extremely flirty girl who had been “surgically enhanced” (breast implants, butt-reshaping, nose job, and whatever else she had done). After observing the girl’s enhancements and her flirty mannerisms, one key tribal member (a female) pulled me aside and seemingly-scolding asked “Is that the new Hostess that you hired?” I respond, “Yes M’am it is.” She (the tribal leader), whistled and said, “Gary, that little cunt is going to make us a fucking fortune. I want you to pimp her ass out to every dirty old man on our Platinum list. She needs to give that stuff away to everybody. She will make this tribe a fucking fortune. Good work” Unlike Nevada, prostitution is not legal in Southern California; and we had gone to great extremes to repeatedly chase hookers out of our casino. Don’t think for a minute that I have some moral objection to the profession, much more simply I believed that if gamblers are spending money on whores then that is money they could be spending at my tables or machines. If they have to have a hooker, I would much prefer that it be a marketing expense offset against their play than have them put that precious gaming cash into the prostitute’s coffers. (Steve Sohng and I chased a working girl out one night, only to have her offer her “services” to all of casino management in exchange for allowing her to stay and “work.” How do you spell “ewwww”?)

•     Chapter Nine. How do you fit “gambler” into the ole resume? (and what do slot machines have to do with it?)

“It’s like gambling somehow. You go out for a night of drinking and you don’t know where you’re going to end up the next day. It could work out good or it could be disastrous. It’s like the throw of the dice.” — Jim Morrison

K irk Douglas was wearing a suit…much nicer clothes than the other men at the card table. He also appeared to have had a bath and a shave; another thing lacking from his “gaming” companions. My grandfather used to sell 30-minutes in the bathtub and shower for 25¢ at his barber shop in rural North Carolina; so I knew the significance of a recently-bathed dandy in the midst of men who purchased a bath maybe once a week on a Saturday night. A flashily-powdered girl with a too-low-cut brocade dress was at Kirk’s left side and a glittering diamond-studded stiletto was in his right boot. He was Doc Holliday in the 1957 film Gunfight At The OK Corral and he was one cool cat…clearly the coolest dude in the whole film (probably the only cool guy in the whole film). A few moments later Burt Lancaster’s Wyatt Earp was told that Holliday was “a professional gambler.” From that moment on I wondered just exactly how one gets to be a “professional gambler” and how that works into the resume. At that point I had no clue that one day I would know exactly the answer to that and would be considered one of the biggest (or at least most controversial) “casino bosses” in America. As the years passed from my childhood into adolescence, more specifically and less flippantly I wondered how one could actually make a living as a “gambler”. These professional gamblers seemed to have a hell of a good time. Even “Bond, James Bond” was often seen at a baccarat table. How cool was that? (And never mind the fact that in the 2006 remake of Casino Royal, they changed the game from baccarat to Texas Hold ‘em.) Early in my adult life, I had been a theatre manager, a journalist, a recording artist and touring musician, a union official, a public relations political operative… why the hell couldn’t I be Doc Holliday? The biographers of Mafia gambling mastermind Meyer Lansky repeatedly tell of his pondering the very issue of professional gambling and coming to the conclusion (at the age of 12) that the only way to “win” in gambling is (as he put it) “to own the joint.” This revelation came, apparently, after he had lost the family’s hard-saved weekly nickel for Sabbath “cholent/ hamin” by being taken at a street-corner craps game around 1915. Come on seven! I won $800 from a Director of Operations for one of my casinos —a gaming professional — rolling dice until he finally noticed that one die only had fives on it and the other only had sixes and twos. Even the best are gullible at times; what can I say? (Yes, I gave him the money back.) Though I had several close encounters with the man I was told to call “Mister Meyer” (Lansky) and his business interests about 65 years later, it took me a while to understand the error of his early adolescent pronouncement. (And for the record —especially for gaming control commissions— my “close encounters” in no way reflect an association in any manner.) Nonetheless, as a southern boy I was much more attuned to the colorful Georgian, Doc Holliday, than the New York Jewish gangster, even if my business sense was with the bookkeeper’s philosophy. Even today there is a three-foot poster of Doc Holliday’s face on one wall of my office. Long before Val Kilmer’s brilliant portrayal of Holliday in the film “Tombstone,” I was totally dazzled by the very concept of a “professional gambler,” but everything I knew about business made me think that there must be SOME reason that Wall Street invests in gaming. Today at least three casino companies are still in the Fortune 500 list of America’s largest corporations; and I know from my IPO’s during the dot-com era that the investment banking community doesn’t get involved unless they can examine viable metrics and realistic financial projections. If a Wall Street financial analyst is going to recommend an institutional buy of a stock, you can bet your sweet bippie that the numbers are as solid as any other SEC-approved public corporation; hence my willingness to lean toward the Lansky school alongside the Holliday school. On the other hand, I am totally amazed, stunned, and bewildered that so many gaming companies based their early 21st century expansion on mortgage-backed instruments pooled in trusts for bond holders to call when the real estate industry crashed. More on this later, but this is what happens when MBAs and accountants run casinos instead of gambling men (and women). But, alas, I was indeed a child of the 1950s, raised on a healthy dose of both historical and fictional western passion plays seven nights a week on television. So I was used to hearing of colorful 19th century characters that had no visible means of support other than gambling. And these guys always had the fanciest clothes, the hottest chicks, the fastest guns, hearts of gold, and by God they were just cool. I mean, who could argue that anyone in the entire old west was cooler than James Garner’s Brett Maverick, Jack Kelley’s Bart Maverick, or their British cousin Roger Moore’s Beau Maverick? What about Rhett Butler? Other than that unfortunate little gun-running incident, Clark Gable’s character was nothing more than a professional gambler…and a damned cool one. God! America loves a scoundrel. But beyond these fictional characters, John Henry “Doc” Holliday was a real life breathing human being…and a professional gambler. Get this: The sickly-sweet character of Melanie in Margaret Mitchell’s Gone With The Wind was based on the author’s great aunt who had a love affair with her first cousin. The great aunt, in shame, retreated to a convent and as a nun became the model for Ashley Wilkes’ wife. Her real-life cousin paramour: John Henry “Doc” Holliday, who fled Georgia in disgrace to begin his life as a gambler. And that dashing gambler was the model for Rhett. In the world of gamblers and scoundrels, truth is often stranger than fiction. American historical frontier lore (fact and fiction) is well-spiced with those characters whose only income seemed to be from “games of chance and skill.” Like I said, Doc Holliday was just cool. My running some of the most successful gambling halls in the country has given me amazing insight into both that thin line between folk lore / reality and Lansky’s conclusion that the only way to make money is to own the casino. And my expert opinion, as a gambler who has taken that seat on both sides of the table, is that many times the lore is correct and Lansky was wrong. Oh don’t get me wrong…casinos do always win in the long run. That is what the whole exercise about “hold” was all about; and that, of course is how we build all these fancy glitter palaces. But on any given day…any given hour…or God-forbid, any given minute; I make no guarantees to you about which side wins. Remember every time Larry from Iowa came in, my coin in would go up but my bottom line was always in jeopardy. Nine times out of ten, the son-of-a-bitch would beat the house for more money than the rest of the players would lose all added together. The scary thing is that almost any successful casino operator will still explain losing days by tell you “that is why they call it gambling.” Even the tightest run house has losing nights. Even the most Wall Street-savvy gaming executive will use words like “luck” and “chance”. Even the most hardened Chief Financial Officers will talk about “winning” days and “bad luck.” Oh yes, Lansky WAS wrong. And I love to point to the most ironic example of his being wrong. In 1948 Lansky financed the fourth casino to open on Highway 91 (the Las Vegas Strip): The Thunderbird. On the north end of the Strip across from what is now Circus-Circus, the Thunderbird Casino opened in September of 1948 with Meyer’s brother Jake running the joint. Opening night was a Las Vegas style disaster even more impressive than the day-after-Christmas 1946 disastrous opening of Benny Siegel’s Flamingo that made that hotel close two weeks later. It was a disaster’s disaster that proved Mister Meyer wrong. By the end of that opening night, the casino had lost so badly and paid out so much money that two players ended up owning the casino … literally. The owners lost the fucking casino in a craps game! The point is that the house does NOT always win. Larry showed it, the damned tic-tac-toe playing chickens showed it, Thunderbird showed it, and I see it all the time at casinos all over the country. It is true that in the long run, mathematically, the house always wins. But as we have seen, the “short term” can last a really long time. Remember, when I first met Mark Lefever, his blackjack tables had been on an 11-month long losing streak. Now think about that: if the house loses for that long a period of time, then players are beating the house for that long. So, at least in that “short” term, it very clearly IS possible to make money by beating the house. In fact, if the house has winning AND losing days…then the house too is “gambling for a living;” just as much as the players are gambling for a living. So, in fact, professional gamblers do sit on both sides of the table. The trick is learning how to identify the winning and losing streaks and maximize them…even make them happen. THAT “trick” is what makes one a professional gambler. And it is the trick of figuring out which side of the table to be on at any given time. Let me define “gambling” just a little further. Gambling is not about being stupid. It is about taking risks…and good gamblers take calculated risks. Laying $50,000 on a hard way 4 at a craps table is not gambling; it is stupidity. Playing a Steve-Sohng-special  9:6 video poker machine with a 1% hold with perfect strategy, shooting for a Royal Flush is much more like gambling. Going “all in” at a $25/$50 Texas Hold’em table with a non-suited K-6 before the flop is not gambling; it is entertainment (or a totally whacked-out tournament strategy for someone watching way too much television). Above all, let’s not confuse amusement and entertainment with true gambling. On the other side of the table (or machine), properties that rely totally on promotions are not gambling; they are just pissing money at the wind and hoping some of it blows back to them. I know, I have done that too. There is a fairly well-known lunatic in casino marketing circles who is recognized not for his successes but for his incredible failures at promotions. One among my favorite absurdities was his giveaway of a huge pots-and-pans set to anyone who would bring in a post card (targeted based on a player’s theoretical loss). Hundreds of players received the mailing and lined up at the players’ club to claim the cookware. Each was given an oversized 22-pound box which was impossible to carry around the casino from machine to machine. So, the players promptly took their boxes to their cars and drove home. He had successfully brought hundreds of players into the casino. It got them into the casino but it was as if he had devised a scheme to force them to leave without playing. Basically the casino spent a ton of money on the design of the post card, the cost of mailing, the cost of the cookware, the staffing for the promotion…and received zero return on that investment. THAT is not gambling; it is flushing money down the toilet. Frank Haas, my once CFO and once partner in a casino management company, tells me about a promotion one GM created where a radio spot advertised a “secret word”. Anyone coming to the casino and mentioning that word would get $20…in cash (and not in playable credits). To make matters worse, the redemption center was in a different building from the casino. AND, this obviously-for-locals promotion was targeted to lower income and unemployed people. As a sensible person might deduce, the low income folks went to the out building, said the secret word, took their $20 and went home. Even worse, the word was distributed at a local homeless shelter. Almost no one went into the casino. That was not gambling; it was simply madness. Look, I have been responsible on a day-to-day basis for several thousand slot machines. By some accountings, I have overseen a conglomerate of more slot machines than anyone else in the world. In any accounting I have had a LOT of slot machines. In recent times I have even worked for a slot machine developer and have co-owned a slot manufacturer. Believe me, I know slot machines. Some days I DO lose. And THAT is what makes it gambling. But I am not stupid. In the long-haul, I win because on the average, nationwide, I hold about 8½ % of whatever is put into my machines…and in some jurisdictions a lot more than that. That does not mean that there are not days when you may show up, put a twenty-dollar bill into a machine and walk away with two-million-dollars. It happens. But it is a gamble that I am willing to take with you because in the long run, I win more money than I pay out. Even when I pay out thirty or forty thousand or even a million all to one person… in the long-haul I still win. One key to my winning in the long run is my having a large enough bankroll to weather the storm of paying out guys like Larry or guys and gals like you. When I was on the other side of the table (as a player), I counted cards, collected Bingo hot cards, found 9:6 (and even 10:7) video poker machines with a 1% or less hold, got inside information about slot holds (and PAR sheet frequencies) and used any number of other tricks to even out the odds or sometimes to shift the long-term odds to my favor and for my bankroll. I was still gambling, but I made calculated gambles not idiotic bets. Gambling and betting are two different things. In the fourth draft of Kevin Jarre’s 1993 screenplay for the film Tombstone, one set of dialog seems especially apropos: MORGAN: Going into business for ourselves.  Wyatt just got us a Faro game. DOC: Since when is faro a business? WYATT: Didn’t you always say gambling’s an honest trade? DOC: I said poker’s an honest trade. Only suckers buck the tiger.  The odds are all with the house. WYATT: Depends how you look at it.  I mean it’s not like anybody’s holding a gun to their heads. So how did it get to be MY honest trade? You remember that the Jersey tough boy had asked “Who the hell are you?” A second later he had backed away, turned, and then was gone into the same shadows that had borne him. Not many weeks had passed since the day I took the side door out of Resorts to Pennsylvania Avenue and almost shot the would-be mugger. At that time, the Taj and Showboat had not been built and that side street was not so tourist-friendly as it became in later years. On my subsequent twice-a-week trips to Atlantic City I had carefully avoided the side streets except Iowa Avenue beside the Trop (when I took the cheap buses rather than luxury coach). Baltimore based, at the time, I had been bouncing around the east coast playing guitar and promoting my third album on New York’s small but prestigious Folkways Records. I used to tell people that there was good news and bad news about that: the good news was that I made about $750-an-hour on stage; the bad news was that I played about an hour a month. I had just come off of a very cold New York City tour when I read that a stock exchange hot shot had won $145,000 in just ten days playing blackjack at the one casino that had opened in Atlantic City New Jersey. This guy, named Ken Uston, supposedly had an IQ of 169 and had written a book about playing Pac Man. Hell, I supposedly had an IQ of 180 and loved Pac Man (actually I preferred Ms. Pac Man and really preferred Space Invaders), and had been playing blackjack since before I was in elementary school. As a child, I learned addition from adding the face value of cards. Why the hell didn’t I make $145,000 in two weeks? I was living in Baltimore at the time running a folk music coffeehouse bar and commuting to NY for guitar gigs. Atlantic City, a little more than two hours away from Baltimore, had just legalized casino gambling. After this last series of coffee house gigs in New York, I was unemployed, past due on the rent, and not real sure from where the week’s groceries might come. The unemployment rate was high enough that my job searches had not yielded anything and there was little market for a guitar-playing recording artist and newspaper reporter…with a ponytail. This guy Ken Uston got me thinking again about the whole concept of a “professional” gambler. From my enthrallment with the black-and-white television westerns and big-screen gamblers, early on it seemed to me that either (1) most of these gamblers cheated to win; or (2) gambling games have changed and gotten harder over the years; or (3) one CAN in fact beat the house and win. Now, Ken Uston was reinforcing the latter. There is in fact, a plethora of historical evidence that the first two were somewhat true. The first and second propositions are clearly substantiated by the disappearance of Faro as a casino game and by any gambling museum’s collection of card cheating devices. Nonetheless, there was even greater evidence (as well as scientific data) that showed my latter supposition is absolutely true. Doctor Edward O. Thorp’s famous book Beat The Dealer began to prove that to be true. Driven more from desperation than recreation, I began reading about this alleged “science” of card counting for blackjack. Convinced, by the 60-Minutes Uston story that the research made sense, I shuffled eight decks of cards together and began following various systems and modifications for counting cards. To my total amazement, in practice, I came out ahead of the house almost every time. Even better than Uston’s pop-culture book and Dr. Thorp’s computer-geek book, I found most useful Lawrence Revere’s Playing Black As A Business . Revere is the pseudonym of the late Griffith Owens, a pit boss who played both sides of the game as both the house and a player. He worked closely with computer guru Julian Braun who helped Dr. Thorp develop his models. Revere’s book was written in common English without the need of my understanding mathematical models. His book told me what to do without the need to understand why it worked (at that point). After absorbing Revere and the other authors, I began some reconnaissance trips to Atlantic City. To feed my desperation I responded to an ad in the Baltimore Sun selling trips to Atlantic City. The excursion was basically free; a $19.95 bus ticket was refunded with $20 in quarters upon arrival at the casino. I borrowed the $19.95 and headed into my foray as a professional gambler. I even dressed for the role, donning a Victorian shirt and an Edwardian frock coat for my adventure…and for my test. Two decades before actor Val Kilmer’s Doc Holliday would warn “I’ll be your huckleberry,” I was decked out to be the huckleberry of all huckleberries. I sat silently on the bus ride up Interstate 95 and then east along rural southern Jersey roads. Letting my imagination roam to the finest Gene Rodenberry Paladin (Have Gun Will Travel) script, I tried to ignore the hunger in my stomach and the potential eviction if I failed. From a stake of $20 in quarters I needed to raise $350 for rent and another $100 for groceries and other expenses. At the time, this wild west adventure to the Jersey shore was a life or death mission. But first I needed to understand the “lay of the land.” Ten hours later I was back on the bus hearing, “Turned that roll of quarters into $7,000 in thirty minutes; I bet ‘em the hard way; five at a time.”  The speaker was a 64-year-old retired schoolteacher from south Baltimore, recently widowed and feeling really good about a “huge” win on a 25-cent slot machine. “I’ve been coming to this casino every week for two years and this is the third time I’ve hit the big one: $250 on a roll of nickels! Of course, I’ve probably put twice that much into these machines on the weeks I didn’t hit.” This laughing speaker was a security guard who visited Atlantic City every weekend from his home in Washington, DC. Sitting quietly near the back of the bus, sipping Jack and Coke from a wax deli cup, was the owner of a chain of small fruit stands. He was friendly and full of smiles, but had very little to say about winning or losing. Privately he flashed a pocket full of returned “markers” totaling almost ten thousand dollars in checks that he had written to the casino and won back. And unlike most markers issued to players, these were not for table games but for slot machines. He had been playing the $25 slot machines in the “high rollers” slot area and had more casino credit than most typical slot players made at their daily jobs in six months. On the other hand, his possession of the cancelled markers simply meant that he had won back (or paid off) some portion of the checks he had written. Beginning in 1979, every day of the week between 35 and 70 buses, all operated by private tour companies, rolled out of Baltimore to Atlantic City. Even larger fleets pulled out of Philadelphia, Washington, New York, and Newark…all Atlantic City bound. The average casino-bound bus filled about 60 percent of 47 seats, though several companies often booked 160% of capacity and on many days added a second bus during the most popular travel times. “The casinos do not pay for these buses,” explained the owner of one of the mid-sized bus companies. “One of the biggest misconceptions about this business is that these are hotel buses. People expect bus drivers to be able to answer hotel questions for them,” He added, explaining that his company sent between 35 and 40 buses a week to Atlantic City. Pointing out that most of his runs are chartered for churches, clubs, civic groups and other organizations, he concluded, “It is a day of entertainment; it is glitter, glamour and in some ways a sort of escape for people who otherwise would never be able to have this kind of luxury.” A young nurse on a 6 p.m. to 6 a.m. roundtrip explained her junkets, “I don’t expect to win anything. I made $200 twice. But that’s not what I ‘m really going for. I mean, I only take about $15 with me and I get the twenty or so they give. That’s all. I just enjoy the excitement of playing the slot machines. I love that sound when the coins hit the tray” A typical bus trip offered cash and voucher payment to bus riders: $15 in quarters for day trips; $17 in quarters at night; with up to a $22 voucher for a free return trip. Some also offered free buffet meals. A trip generally cost the rider $17.95 (I don’t know why they didn’t just charge $18) and with those rebates from the casino a rider actually came out up to $4.05 ahead. During busy times at the casinos, a return voucher might be as little as a $2-discount off of the next trip. In my case, after shopping around I had found a $19.95 bus ticket and was rewarded a $20 roll of quarters, a $5 buffet credit, a $5 return-trip cash voucher (which meant I could get $25 on my next trip), and a $2 discount for my next trip.   ABOVE: A May 1979 $2 return voucher from Baltimore to Atlantic City for a line run bus casino trip in 1979. Notice the voucher is called a “deferred discount.”

“People do choose which bus company to take by how much they get back,” one operator told me, adding, “They don’t all go by the incentives, but a (large) number of them do.” “Hell, if I could afford to go twice a week, I wouldn’t have to gamble; I’d have money,” one woman told a friend who was talking about a second trip in one week. Among the riders on my first month of bus trips to Atlantic City were a large percentage unemployed people, those with no income, people with very low income and older people with fixed income. Thinking that if my gambling expedition failed I would at least be able to write an article about it, I took copious notes on the trip: • More than three-quarters of the people on each of eight midweek bus trips that I surveyed were low income African American women, most widowed, divorced or simply single; • One 24-year old had hocked a stereo at a pawn shop to take the trip in hopes of winning enough money to pay the month’s rent and get the stereo back; • Two older men, sharing a case of beer, discussed cashing unemployment checks to go gamble; • A sad-eyed 44-year-old cashier hoped to make enough money to buy a car so she could stop riding buses to work every day; • And a very eager (and incredibly overweight) bag-lady-looking woman belted out Baptist hymns in freedom-bus style (reminiscent of the civil rights era bus trips), punctuating her loud songs with almost-comical prayers to win at the slot machines. At the end of each trip, sad eyes were even sadder. In my own focus-group-like poll taken on my first three Atlantic City bus trips I found only two winners; one with a $25 win on quarter machines and one with a $10 win on a nickel machine (penny machines were very rare in those days). Everyone else I talked with had lost. Even the ones who had loudly boasted of turning rolls of coins into hundreds (or thousands) of dollars had fed those winning right back into the hungry slots until they had lost it all and then lost the change in their pockets. All-in-all, this was not the romantic image that I had hoped to find; it was not the Doc Holliday legend. At the time I was not even sure if it was gambling. This is not what I wanted to find and it certainly was not looking terribly encouraging for my card-counting adventure. As one casino bus marketing manager explained of the passengers, “They will give us the $20 back as well as $20 or $30 of their own money.” He added, “Las Vegas is in the middle of a desert; there is nothing around it. But within three or four hundred miles of Atlantic City there are literally millions of people. With the bus programs we can bring those people into the casino for six hours to play the slots and have them back home the same day. No pain-in-the-ass hotel rooms to fuck with.” He added, “The marketing strategy here is easy to see. It is volume and we have just scratched the surface. There are hundreds of cities and towns outside of the metropolitan areas. Once we reach into those little towns we open up a whole new field of customers.” When I began my adventure, more than 5,000 buses rolled into Atlantic City every week to deposit a quarter-million riders from the Northeast for non-overnight day trips; as far south as Washington and as far west, incredibly, as Detroit (11 hours by bus). The Atlantic City casinos, during prime bus hours (noon to 7:30 p.m.), were packed with slot machine players. “I’ve been on this one for three hours and the best it has done is a $5 payoff. It’s due for the big one anytime now: Good luck,” a woman cheered on a waiting player as she finally ran out of quarters and gave up her machine. “Don’t you touch my damned machine; I’ll knock your lights out honey,” warned an overweight, chain-smoking woman as she stood idle in front of a nickel machine, waiting for change. (The seeming correlation between chain smoking and grind joint slot-machine pullers is at best interesting and at worst choking.) “I don’t want that machine; it just paid big. It’ll eat up my money and not hit good again for a week,” a mother of four said after waiting an hour in line to get to an open machine. “This one ain’t no good. It must have paid off yesterday; it’s not doing a thing for me” pouted another player as she gave up her machine. Meanwhile change attendants continued to bring fresh rolls of nickels and quarters to the machine worshippers. In those days there was no TITO (ticket in ticket out) and very few bill acceptors; so most everything was coin-driven. The cocktail waitresses continued to stop by every half hour with free mixed drinks to further numb the brains watching the spinning symbols. The players continued to wait for a machine to “hit”. And the buses keep rolling to the casino bus lounge door and then pulling way. I was definitely getting an education. In that early world of slot players, I fortunately discovered a different set of “VIP” buses providing sharp contrast to these every-nickel-counts trips. These buses were not the 47-seat modified Greyhounds but were 15-seat luxury coaches. Rather than “paying” the riders, the riders did the paying…$50 for the privilege of taking such a bus and no roll of quarters waiting at the other end. These sleek super-coach trips included two onboard meals, all the free drinks anyone could hold, and an ever smiling hostess (who on at least on one bus was a 20-year-old alleged former Playboy Playmate). Experienced junket masters with a history of high roller junkets to Las Vegas and the Bahamas ran most of the VIP bus trips. Upon the player’s arrival at an “embarkation point” (rather than a “bus station”, like the line-runs) a secretary assigned seats while the Playmate/on-board hostess took orders for breakfast. There were no tickets, waiting rooms, or boarding numbers on these upscale buses. Unlike on the 5,000 slot-buses, each passenger was personally welcomed with chitchat and small talk. And, of course, each player was expected to drop $1,000 or more at the casino…as opposed to the $30 to $60 per player average on the “herd” buses. By the time the junket master made his greeting rounds from seat to seat, spent a few minutes getting to know his “guests” and returned to his own enlarged four seat section in the back of the bus, breakfast was long over and the hostess was coming out of the on-board kitchen and passing along the aisle to serve pre-lunch drinks. And by the time lunch was finished and the hostess had talked and joked with the gamblers (as she offered beverages from soda and beer to wines and liquors), the bus had arrived at the casino. Since players’ clubs and player tracking had not been adopted yet, passengers on these VIP trips were required to attach tiny cloth logo pins to their jacket lapels (gentlemen were required to wear jackets) which identified them to casino employees as being with a specific junket master and able to sign the check for all the complimentary food and drink they wanted while at the casino. This, of course, was before the creation highly-structured points-for-comps policies now in place. The real perk of these luxury bus trips was the complimentary dinner (by reservation only) in the members-only gourmet restaurant high above the casino and a world away from the bus lounges, sneeze-guard buffets, and the rolls of quarters. (In fact these buses didn’t even drive to the bus-lounge area; they stop at the front door of the hotel.) While several of the low end line-run (as they were called) bus trips offered a very fine buffet dinner with the traditional roll of quarters, none came near the elegance and service offered to these players. The VIPS could order anything on the menu, including the high-end wine list…all free of charge. There were no lines in which to wait and there was constant service; though I did note that several of the restaurants had two sets of menus and wine lists; one for giving the free-meal customers and a different one with the $200+ wines. For the line-run bus rider, a role of quarters could last hours at the 25¢ slot machines; almost all day at the nickel slots. But that role of coins would not cover even one bet for the VIP passengers. Finally, this bus group was a lot closer to what I had in mind for the gambler’s life; though I was still having a rough time equating even the luxury VIP buses to taking the stage coach into town. So with my own observed lay-of-the-land, a few “test trip” bus rides up to Atlantic City, my rent due, and my electricity past due, I borrowed that $19.95 from a friend and hopped on a mid-week line-run bus from Baltimore to the Boardwalk. Just outside of Atlantic City the bus pulled into the staging area and took its place waiting in line behind a dozen other buses scheduled to arrive at the same time. Once it was our turn, the bus inched forward to park beside a singlewide mobile-home trailer with a vinyl “Tropicana” sign attached to the door. A twenty-something-year-old woman stepped into the bus and gave us a rah-rah speech about how wonderful the Trop was. After she finished her canned sales pitch, she gave us some basic instructions about the time and location to re-board the bus; it was the same speech I heard every time I had taken a scouting trip to check out the gambling. As she reminded us of the bus number and the loading time, she walked along the aisle and handed each of us three vouchers: one for a roll of quarters; one for an additional $5 on our next trip; and one for a reduced-price buffet. Line-run bus riders were discouraged from playing table games, after all these were slot runs. So, I traded the coin voucher for a role of quarters, opened the roll and dumped it into a plastic coin cup beside a slot machine. I carried the coin cup to the cashier and watched as a cashier poured the cup of quarters into giant coin-counting machines. It stopped at $19.75 and the cashier slapped the side of the machine with her fist. Apparently this jarred loose the final lodged quarter and the LED screen registered $20. She handed me a twenty-dollar bill and I walked toward the $2-tables. Three hours later, to my dismay and amazement, I had won my rent money, my utilities, and enough groceries for a month; $501. That was the goal I had set as my greatest expectation and had vowed if I reach that number I would walk away. The truth is…rather than walk way I more like skipped and danced away! I was thrilled (and stunned that it worked). At the cage I fished into my pockets for four black ($100) chips, three green ($25), four red ($5) and three white (normally one-dollar chips but in Atlantic City they represented $2) and collected the five one-hundred-dollar bills and the one George Washington. Almost trembling, I made a beeline for the exit door feeling as if I had just robbed a bank and wanted to get out before I was nabbed. I still had three hours before the bus was due to take me back to Baltimore…but I was literally afraid to go back into the casino, fearful that someone might discover what I had done and make me give back my rent and groceries. By the time the chartered bus had crossed the Maryland state line, I had calmed enough to realize that I had broken no laws and had not even done anything immoral or unethical. Still, it had seemed too easy. Just like the pusher who says, “The first one is free, after that you pay me,” the rush (and the money) had sucked me in. I spent the next couple of years learning everything I could about gambling, casino operations, and all the other tenets of my new profession. Before I walked away from the tables, I was running high-roller junkets to Atlantic City, the Bahamas, and Vegas. I graduated far from the $2 tables and was comfortable at hundred-dollar-minimum tables varying bets to as much as $3,000 bet on the turn of one card. The most I’ve ever played is $60,000 on one roll of dice. One afternoon I was sitting at a $25 table at the Sands in Atlantic City. I had been making minimum table bets and the count began to turn to my favor. For some reason (or in hindsight: some insanity) I didn’t increase my bets as the deck got better; for one thing, I suspected that I had attracted the attention of the pit boss by doing that earlier. I was feeling very paranoid and was almost sure that the “suit” had discovered that I was a card counter. As the deck got better and better I still made the minimum table bet of $25 per hand. Still the pit boss was hovering and I felt eyes on me. Imaginary or not, my stomach was churning and I felt like I was about to have a very serious fight. There were absolutely no tangible signs of any danger at all… but it just did not “feel” right. And like everyone, I had heard the stories of card counters being dragged into “the backroom” and having their knuckles broken…or worse. Finally the actual count became absurdly high in my favor; one of the best shoes I had ever seen favoring the players. “Fuck-em if they can’t take a joke,” I thought as I begin fishing hidden chips from my pockets; lots of greens ($25) and blacks ($100). The Sands (and much of Atlantic City) was so poorly managed in those days that there were no top-end limits on many of the table games; a player could bet the table minimum as low as $2 sometimes (but $25 in this case) and could bet an unlimited maximum. And THAT is just what I did; after digging through all my hidden pockets I increased my previous hand’s $25 bet by 720 times. I bet $18,000. I was dealt 15 and did not hit it. A second after I brushed my hand across the cards to indicate “stay”, I was tapped on the shoulder. I turned to see two VERY large men dressed in the cheapest J.C. Penney off-the-rack suits I had seen in a long time. “Mr. Green, we would like to talk with you,” one of them said in a comically stereotypical New Jersey “mob” accent. I was thinking this could be bad since no one here knew my name. “Let me grab my money here, first,” I said. “OUR money”, the speaker said, attempting to “correct” me. “Naw, trust me on this one; it is MINE, hoss,” I said to him in my very best combative Southern drawl. The second man firmly grabbed my left shoulder and began backing me from the table. I stepped toward him, a little quicker than he was expecting and it caused his grip to loosen just enough for me to twist my body under his massive arm and back toward the table. I was now facing him and thinking of how I was going to take out his equally large friend after I would give this one roundhouse kick to the celiac plexus. Two uniformed security guards appeared from behind a bank of slot machines before I had the opportunity to deal with either issue. “Well hell,” I sighed as I prepared to get my ass kicked severely, “why waltz when you can rock and roll?”      ABOVE: The late Sands Hotel/Casino in Atlantic City (right) and the Claridge (left) next door. circa 1980s. The Sands was imploded in 2007 and the Claridge was sold to Hilton, nee Bally, nee Park Place, nee Harrahs, nee Claridge at Ballys. LEFT: Three $25 green cheques (chips) from the Atlantic City Sands blackjack tables.  I stepped into a “T” stance and pulled my hands up prepared to strike at the jugular veins of the first suited man and poke out the eyes of the second… knowing full well that I was going to seriously lose this confrontation. I also knew that once they discovered that I was armed, this was going to get very ugly. My mind began racing to all of the scenarios of a shootout in the casino, the arrests, the deaths (including mine), and a dozen other possibilities. Fuck. This was a no-win. Before I had to worry about the outcome, the first man spoke again, “Mr. Green, there is no problem here. Let’s all just be calm. Your play is just a little too rich for the Sands. We would like for you to leave.” “My money…” I began. “We will escort you to the cage to cash out the cheques and then you will have to leave,” he said in a calm and controlled voice. Out of the corner of my eye, I spotted a New Jersey Gaming Control Board agent overseeing the entire event. Well, at least it would be safe and my gun would remain hidden. I was escorted around the people waiting in line at the cage and taken directly to a waiting cashier. He carefully counted my chips, handed me the cash, and washed his hands in the air in front of the cameras. My entourage of escorts then walked me to the side door, and closed it behind me with the one speaker saying, “You will no longer be welcome at The Sands. Please never attempt to return.” “Eh screw ‘em,” I thought as the door closed, “There are eight more casinos on the boardwalk.” Since I was already off the boardwalk, I walked next door, just across the alley-street into the Claridge Casino and Hotel. As I stepped through the revolving door a uniformed security officer blocked my path and waved his index finger from left to right while shaking his head no. Damn. Less than two minutes and I was already barred from the property next door. Except for how fast it happened, I was not terribly surprised at being barred from the casino directly next door. They were mere steps apart and shared a common alleyway. I walked back up Park Place and to the Boardwalk to enter Bally’s from the Boardwalk entrance. Through the tinted-glass doors I walked into the maze of slot machines. Except for a benign security guard watching the door, there was no sign of “heat” and in my full Victorian gambler’s attire (carefully designed to attract attention) I made my way through the casino. Instead of walking directly to the blackjack pits, I milled around a few slot machines dropping three quarters here and a dollar there. Slowly and methodically, I played machines in several banks as I worked my way toward the blackjack pit. I decided to start small, and I walked up to a $5 table, sat down, and handed the dealer a twenty-dollar bill. “Cheque change twenty,” the dealer chimed out to the pit boss. The pit floor-manager suit answered an automatic “okay changing a twenty” but then did a double-take as he glanced toward me. “Mister Green, you are welcome to play our slots or at any of our other table games, but I am afraid you are just a little too lucky to play blackjack at Bally’s,” the floor (manager) very politely said. It was the same story at every casino on the boardwalk. From the Golden Nugget to Tropicana down to the Playboy on down to Caesars, (I already knew about Bally’, Claridge, and the Sands), back down to Resorts International. All eight casinos had blacklisted me. On my walk back down to Resorts to wait for the bus back to Baltimore, Bob Goulet brushed by me and stopped just long enough to say, “evening Gary; you ok? You look like they finally caught you counting.” He kept walking and before I could respond he was gone. I had run into Broadway legend Robert Goulet about a half dozen times in Atlantic City, but only small talk; it is not like we were close friends. Christ, did everyone in AC know that I was counting cards? In a depressed fog, I walked into the lobby of Resorts to wait for the bus departure time. I had taken one of the luxury coaches, with the hostess and gourmet dinner; but I was not feeling much like a gourmet dinner (or any food for that matter). I sat down on a plush sofa in the hotel lobby and decided to just wait. I had only been sitting there for a minute or so when an elderly Jewish man sat down beside and began nodding his head at me as if acknowledging the answer to some question he had asked. I recognized him immediately as Willie Maizer, the owner and host of the luxury bus junket company. In fact, his name was painted on the side of the bus. “They finally caught you didn’t they?” he asked. “What are you talking about? Caught me doing what?” I shrugged. “Look kid, don’t bullshit a bull shitter,” he smiled, “you were good. Maybe one of the best I have ever seen; but it was just a matter of time until they caught your ass. I knew it was coming.” “Well why the hell didn’t you warn me?” I asked, trying to decide if I wanted to take offence to being called “kid”. I was barely over 25 and he was almost 50 years older than me, so I concluded that it was probably ok. “You had to learn it for yourself. You wouldn’t have listened to me,” he smiled grandfatherly. Tell me, do you know other gamblers in Baltimore that would come to Atlantic City?” I shrugged again, “I guess so; some.” “I don’t mean nickel slot players. I am talking about table players. Craps players. Not whales, but people who will gamble $300 to $500 in a day. Do you know people like that?” he asked. “It can’t be that hard to find them,” I said, knowing full well that he was talking about my entire rent for a month being gambled on a roll of the dice. Despite my success with big numbers at blackjack, I did not consider that gambling. The idea of anyone betting even $100 dollars on a roll of the dice was just bizarre to me, even though I had seen Mister Maizer gamble thousands at a time and had done it myself on a “don’t” bet. In fact, all of that hoopla and yelling around dice tables gave me the creeps. I mean, my father had taught me to play craps before I was in the first grade, and I certainly knew all the cool code words for the dice combination. DICE ROLL SLANG TWO Snake Eyes THREE Acey-Ducey FOUR little Joe from Kokomo FIVE Fever SIX sixie from Dixie SEVEN Come on seven EIGHT eighter from Decatur NINE Nina from Carolina TEN Pair of roses ELEVEN six five, no jive; craps out TWELVE boxcars

I had played craps in street games, office games, and neighborhood games. Figuring the odds doesn’t take a genius; there are 36 different ways the dice can come up and a seven can come up six of those 36 times. There are five ways to roll a six or an eight; four ways to roll a five or nine; three ways to roll a four or a 10; two ways to roll three or 11; and only one way to hit two or 12. Beyond that, it is just a matter of figuring odds and the chance of rolling any given number; not something I wanted to depend on for my rent. And those proposition bets that so many dice players go for…were just insane. Nonetheless, I was honest when I told Mr. Maizer that it should not be hard to find gamblers willing to play at the levels he was asking about. As he continued to talk to me, he led me up two flights of escalators to the gourmet Italian restaurant near the showroom. We spent all of dinner, a couple of hours after dinner and the long ride back to Baltimore talking about the junket business. By the time the bus dropped me off at the Shell station where I had parked my car on Reisterstown Road in Pikesville near Baltimore, Maizer had offered to hire me on a commission-basis to fill buses with gamblers.  Before I agreed to accept the offer he warned me that the bus junket business in Baltimore was dominated by a man named “Captain John” (I later learned that he meant the legendary gambler/business man Captain John Kassap who in 2004 helped two internet nerds (ok, one of them was a seasoned Vegas guy) buy the Golden Nugget in Vegas). Mister Maizer told me that he had worked either with or for The Captain but had some sort of falling out before going out on his own. He went on to tell me to avoid The Captain because he was “connected to the wrong people” (incidentally, there has never been any evidence whatsoever of that being true). Most curiously, and forebodingly, Mister Maizer told me that his operation was “protected” by his silent partner in Miami Beach Florida, a “Mister Meyer.” He said that “Mister Meyer” had arranged that Willie Maizer Casino Tours would have the exclusive bus rights for high-roller bus trips to Resorts International because Mister Meyer was a silent partner in the ownership of Resorts. Maizer went on to tell me that while the “other” bus operators deal with marketing departments and bus mangers, he bypasses all of those people and deals directly with the CM (casino manager) or even Resorts’ President Jack Davis and CEO Jim Crosby.  It was clear that Willie Maizer did enjoy very special treatment for his high roller buses from Baltimore and later Washington DC; treatment that no other bus operator received. I know that long before player tracking existed, each of Mister Maizer’s players were rated. It was not until just before Meyer Lansky’s death in 1983 that Willie Maizer told me that his “Mister Meyer” was in fact Meyer Lansky who allegedly owned a piece of all junket business going to Resorts in both Atlantic City and on Paradise Island in the Bahamas. In relatively short order, following a haircut, a shave, and a strategic change of wardrobe, I began hanging out with Willie Maizer and his high-roller clientele. It was a never-ending fast-ride flume of adventures and education through the junket racket with Maizer and the (at best) shady slough of Resorts International and its complexities. While guys that I would later know (and answer to in some cases) were making their bones as break-out dealers and floors, I was hob-knobbing with the headline makers who were totally removed from the day-to-day floor operations and more concerned about dodging Denny Gomes. While those guys were learning to be steady and solid earners, I was honing the flamboyance and showmanship and calculating gambles to take. In fact, my “aerial” view of Resorts gave me a perspective of the full operation and not the limitation of the pits, or the slots, or accounting or what-have-you. My education was “global” and casino-wide not “local” and how-to-stack-cheques-for-a-pit-boss-quick-count.   Above: Gary Green, with hair pulled back in pony tail, days before the shave & haircut to start work in the industry. Below: Casino operative, Gary after the haircut and shave. Same 1980s glasses.   On the other hand, it probably was not the best industry route for someone seeking a “career” in the business. I was not in the “trenches”; I was in the executive offices. Because of the things my father had taught me, Maizer’s “revelations” to me that games of chance are not necessarily so much “chance”… was never a news flash to me. Most interesting in that education was the fact that the casinos could mitigate losses through a series of advanced but very subtle manipulations of games, of player data, and even offers to players. And even that data was…suspect at best. It is no wonder Gomes was less-than-amused. Let’s say, hypothetically and for example, the owner or executive of a large casino (or group of casinos) wanted to take his girlfriend on a shopping spree about which his wife should not find out. Well…somewhere in the player database there is, dormant, a player whose action earned him a huge amount of cash-value comps. Those comps are carried on the casino’s books as a liability, because at any time the player could show up and claim them (and the casino would have to pay out). Now, let’s suppose the player died or got pissed off at the casino, or for whatever reason was never going to return. In theory, that liability stays on the books either forever or until some random date management picks to “expire” the liability. So let’s suppose a bad-haired casino owner wanted to waltz his southern-beauty-queen girlfriend through the high-end shopping mall in the casino concourse for a quick Harry Winston necklace or two. In theory it would be possible for him to charge the purchase to the casino and for a casino executive to pay for the purchase from an open liability account of a player who had died or otherwise disappeared. Liability off the books; girlfriend happy; no money out of pocket. How is that for living large? What an education! Being Maizer and Lansky’s token Shabbat goy was not a bad gig. In fact it was graduate school casino training in so many areas that I would later put to use in finding bad operators, corruptions, and out-and-out thievery that most casino bosses just didn’t have the training or experience to spot. UNLV can teach the theory and George Joseph’s workshops can train amazingly. But nothing beats hands-on global understanding from both sides of the table. Lansky died in early 1983, the business started slowing down, and Maizer (who had long been in ill health) also died; leaving me Vice President of nothing. Mister Maizer drove one of those ridiculous Cadillac’s that GM made as an eight-cylinder that changed to six-cylinder that changed to four-cylinders operating, depending on the acceleration; I always wondered who got stuck with that in his will. Based on Maizer’s training and Lanksy’s blueprint, I expanded my casino sphere into associations. Using a combination of their influence and my own folk-music reputation, I took a paid gig as a business agent for a large labor union. In less than a year I was representing more than 40 unions as both a business agent and a “public relations manager”, in which role I was able to arrange junkets to Paradise Island (the Bahamas) and to Atlantic City for my Resorts friends; all without the necessity of a gaming license. Reaching beyond labor unions and trade associations, I took my music days experience of running a folk club/ coffee house and opened the Sht Creek Casino with the uncle of a family friend. Maryland, at that time, had one of those typical laws which allowed charities to have “casino night” to raise money. Of course none of the charities had casino equipment or expertise; so, a guy like myself could create an all table-games casino, bring a following of players, and provide tables, dealers, and a percentage of profits for a different charity every night of the week. A temporary alcohol license allowed me to serve beer and wine for any three-day event and I got two of those every week… so in effect ran a full scale casino. When there was no charity available, we stored the equipment in Baltimore’s historic Fells Point district in an apartment that my partner rented there. Rumor had it that he was running the games from his apartment with topless blackjack dealers and cocktail waitresses turning tricks in his back bedroom. To get into the apartment there was an elaborate B-movie-style entrance up a long dark hallway and two flights of stairs; hence giving rise to saying that one was “up Sht Creek” when they visited. Beyond the hallway there were three sets of doors, a man-trap, and to get inside a set of code words that changed daily. Whether the rumor was true or not, was lost forever when my partner and a one-night-stand girlfriend fell asleep in the apartment with cigarettes burning. They set the entire half-block on fire, destroying all the contents of the apartment. He flew to California the next day and I only saw him once again, about 10 years later. A few years after that I heard he had been murdered in Tampa Florida. I spent the next few years bouncing around various marketing functions in the commercial casino world and eventually ended up running a casino-circus (along the lines of Vegas’ Circus-Circus). When the Soviet Union came to a crashing end, the new Russian government began selling-off state assets. Amongst the many things they sold was the 100-year-old state-owned Moscow Circus. Elements of that circus ended up at an entertainment complex in Myrtle Beach South Carolina. I had written a semi-best-selling travel guide about Myrtle Beach   and I was co-publishing a magazine touting the Myrtle Beach area as a tourist attraction. The circus, rebranded “Euro-Circus” had purchased several full-page advertisements in my magazine. When they defaulted on the advertising payment, I (by virtue of a printers’ lien) became a partner in the venture.          Above Left: Back cover of Insider’s Guide To Myrtle Beach. Above Center Top: The magazine owned by Gary Green and his father, which resulted in a printer’s lien on the circus and Gary’s ownership. Above Center Bottom: Television and stage personality Mickey Finn’s promotional material. Right: Myrtle Beach newspaper business page article about Gary Green’s ownership of the Russian circus.  At some point during that venture piano-playing legend Fred “Mickey” Finn showed up in Myrtle Beach looking for a venue after his shows closed in Vegas and Atlantic City. After giving him a tour of the entertainment venues of this 12-million-tourist-a-year Mecca, he asked me why I didn’t have slot machines in my circus. Duh. South Carolina, like most bible-belt states, outlawed gambling, of course; however the State did allow limited video poker machines “for amusement only” under certain limited conditions (more on that —MUCH more— in a later chapter). Mickey Finn’s idea of running a casino circus may have been very Vegas-esque to the non-gaming world; but it was a natural grey-area-of-the-law fit for Myrtle Beach South Carolina — long recognized as the “Redneck Rivera of Sin”. Shortly after taking one-third interest in the circus, my other two partners disappeared from the scene. One, a septuagenarian, suffered a massive stroke at an airline ticket counter on his way back to Myrtle Beach from his winter home in Vermont. The second partner was a Russian national and well-connected entrepreneur who started from nearly nothing and got rich through connections to the corrupt, but elected, government of Russia during the state’s transition to a market-based economy. That partner, like many of the Russian oligarchs, abruptly disappeared during a visit to Moscow during Vladimir Vladimirovich Putin’s rise during the Boris Yeltsin administration. The international intrigued of THAT adventure would, within itself, make for a good adventure novel, but the “bottom line” was that it left me as the sole owner of the circus/casino. With the two partners, I had been merely the marketer of the venture. The older guy had been the showman and the Russian had been the liaison to the Russian performers. Full operation was a little more than I bargained for. Shortly after the Russian’s death I was visited by a guy that I can only describe as Russian mobster, offering to buy me out for one-dollar “and other considerations.” The other considerations, he explained, were that I would not disappear the way my partner in Moscow had done. Before I could respond to his generous offer (he had given me 24 hours), I was visited by an emissary for Saudi Arabian billionaire arms dealer Adnan Khashoggi who told me that the gun runner had a romantic interest in one of the aerialist in my trapeze act, and Khashoggi wanted to buy the show and move it to Vegas. The U.S. Department of Justice recommended that I accept the Russian’s offer and with a South Carolina a political climate that was likely to outlaw the games soon, I thought it best to accept the Russian “offer” (that I couldn’t refuse). The non-Russian partner had been a showman and producer for more than a half century. Among his many triumphs was the production of several Super Bowl halftime shows and World’s Fair main pavilion shows. Before his death, he introduced me to a friend who had partnered with former Louisiana Governor “Fast” Eddie Edwards to produce the 1984 scandal-plagued New Orleans World’s Fair. At the time of the demise of my circus this guy was knee-deep in a new extravaganza project in the Philippines. Philippines Vice President Doy (Salvador Roman Hidalgo) Laurel had a plan for casinos in his country; six years before the anticipated centennial celebration there and 10 years before western investment in Macau casinos. Laurel was planning to leave office and be appointed by incoming President Fidel Ramos as the chairman of the Philippine National Centennial Commission. Fast Eddie’s partner was the developer, ATT and FedEx had signed on has sponsors and plans were underway to create a centennial entertainment complex. The United States had just closed the naval base at Subic Bay in Olongapo Zambales in the Philippines and the land was under treaty to be returned to the government of the Philippines. Laurel was eyeing a spot for a casino-complex at the huge concrete circle that had been the Navy’s southeast Asia radar array. After several trips to Washington to visit the Philippines Embassy and the U.S. State Department I accepted Laurel’s invitation to spend a week with him in Manila. The casino was to be owned and operated by the Philippine Amusement and Gaming Corporation (PAGCOR), a government monopoly that had been created by President/dictator Ferdinand Marcos. Ostensibly Laurel was looking for American casino expertise to develop the project for the seemingly haplessly managed PAGCOR. However after a few days of meetings in Laurel’s office, at the hotel, and at the Subic location, it became clear that the Vice President was actually looking for an underwriter to fund the project. At that time I did not have access to that level of funding —and not a lot of interest in gaming in the Philippines. I returned to the United States after thanking Doy Laurel for his offer, but passing. As a diversion I had been exploring the new communications medium, the Internet. Before the circus adventure, as a personal friend of then-United States Senator, Al Gore, I had read his 1991 High Performance Computing and Communication Act and thought there might be some future marketing potential there. By 1993 I was an early user of Marc Andreessen’s Mosaic web browser and created one of the first few web pages. By 1996, I had created early advertisements and ticket sales for my circus using America on Line (AOL) and the early internet. Pursuing a plan to sell merchandise on-line through a software development company, I called some old friends in the IT department of Mirage Resorts in Vegas. I asked for an audience with them to pitch an “online store” to sell casino chotskies around the world. In the midst of presentation, which for the time was pretty technical, Steve Wynn walked into the room with two large dogs at his sides. My host told me to continue and everyone in the room, though visibly tense, continued to take notes as if their CEO had not walked into the room. In the midst of my babbling some technical jargon, Wynn spoke, “Well that’s all good but what-the-hell can you do about my player tracking problem?” Wynn explained his problem like this: He had high-roller customers staying at and playing at the Mirage Resort. These players were “rated players” and entitled to thousands of dollars in comps from the casino. They would occasionally wander next door to his other property, Treasure Island. They were, of course, sophisticated enough to know that Wynn owned both properties. They had a players club card that was good at the Mirage but at the Treasure Island the card did not work. The pit bosses could not see player history and the card did not work in the slot machines…even identical machines. The player tracking computer systems at the two properties were two different systems and could not communicate with each other; even if they had been the same brand on the same kind of servers, none of the systems had a method to communicate with each other. Today that is a “no brainer” issue but in the mid-1990s it was a major issue; though not so much for an Internet company that relied on client-server computing. “Nonsense,” I blurted. “I can solve this in 15 seconds.” I pulled the paper napkin I had been using as a coaster out from under a water bottle and quickly sketched a solution using ASCII message files and constantly updating the two systems every minute or so. I tossed the napkin toward Wynn, who did not move nor reach for it. Instead, the IT manager looked at it, looked at me, and then turned to Wynn. “This guy just saved us a hundred thousand,” he told Wynn. Shit. I should have sold it to them. I quickly learned my lesson. I arranged meetings with Harrah’s and with Mandalay Resort Group. The other two large operators on the Strip refused to meet with me: MGM and Park Place Entertainment. I quickly learned that the buzzword in casino marketing and management circles was “a one-card” system; a players club card that players could use at all the properties of a particular operator. Wynn only had two properties; the other operators had lots of properties and the problem was magnified exponentially. I detailed my napkin-sketched solution in a patent application and added an element to automatically sort the player tracking data the same way that catalog companies had sorted customer data for years. In addition filling out the patent application, I self-published that little 100-page dissertation booklet outlining the solution; the booklet that I gotten me on the speaking stage with Schaeffer and then big boys at the trade shows like the American Gaming Summit in Las Vegas (the forerunner of G2E) and a serious of industry-media interviews.    Above Left: Yahoo Finance announcement of the pending patent of Gary Green’s casino management system. Above Right: the cover of Gary’s booklet outlining the methodology.

Wynn immediately implemented my “one-card” strategy and began serving their customers better. Harrah’s decided that their communication issue could be resolved using their old Holiday Inns reservation system with dedicated phone lines from each of the property transmitting data overnight (not real time) to and from their data servers in Memphis Tennessee (the former headquarters of Holiday Inns). Park Place continually refused to talk with me even though the gaming analyst at their investment bank insisted that their CFO read my booklet. MGM never returned my calls and at a trade show their CEO, Terry Lanni, told me that MGM had no interest in a system that would share player point liabilities between properties. Mandalay Resort Group continued to bring me back again and again as they struggled to created their one-card solution. But the real interest came from Las Vegas pioneer Bill Bennett. Bennett was the leader of the 1980s and 1990s push to make Las Vegas a “family attraction.” His Circus-Circus expanded to create the Egyptian-themed Luxor, the Camelot-themed Excalibur, and then the luxury Mandalay Bay. He expanded to other cities, rebranded his company as Mandalay Resort Group, and took the company public  launching a post-Wynn love-affair between Wall Street and the casino industry. He acquired Gold Strike Resorts and brought that company’s executives into the leadership of the Mandalay; that group included Glenn Schaeffer (who I had debated over hotel ADR) and Michael Ensign (father of now-disgraced United States Senator John Ensign. The history of Circus-Circus and its madman founder Jay Sarno is a book-length adventure story, but Bill Bennett’s chapters ended when Ensign, Schaeffer, and their younger generation of operators forced him to resign. He sold his stock and purchased the legendary Sahara Hotel Casino at the north end of the Strip. The Sahara, in 1952, had been the fifth casino to open on the Strip. Among many distinctions, it was the home of the Jerry Lewis Labor Day telethon for decades. Shortly after he bought the Sahara, Bennett wrote to me about the advances Harrah’s had made in database management and how those advances might differ from my methodology. He wanted in: “I don’t know if you have a copy of Harrah’s last annual report…I understand they are not doing very well. I am interested in having something similar to Harrah’s (database). If it is as good as you have stated, I can contact three or four more friends of mine who have casinos. I merely tell you this so that you will know the potential of doing business with us.” Until his death in December of 2002, Bill Bennett mentored, guided, trained, and directed my development as a casino marketer and operator. More than anyone else or any other company, he influenced my marketing systems. We often fought loudly and bitterly over the issue of bringing families to Las Vegas; I hated the idea. He eventually admitted that he had gone that direction only because the one casino that he could get his hands on was Circus-Circus and mere ownership of that property doomed him to that demographic. Despite that acknowledged concession, his arguments could be vicious, loud, and at times ash-try-throwing violent. But his arguments were also informative, revealing, and provided hours and hours of personalized Las Vegas history and casino operating and marketing tips. When he entered the casino industry he was a furniture salesman who worked as a casino host. By the time I knew him, Forbes Magazine estimated his net worth at $600 million, naming him one of the 400 richest Americans at the time. After hours, days, and months of direction, guidance, and conversations, on April 16 of 2002, he wrote to me: “Unfortunately, I fell down a small mountain and lost my left leg half way between the knee and foot and lost one half of my right foot. I have been trying to learn how to walk again, and I am sure I’ll get it done some day.” On June 2, Mister Bennett wrote me again to tell me that he had given up trying to recover: “I am going to UCLA tomorrow, as they specialize in the type of ailment that I have. I am sorry to have to tell you this, but, under the circumstances, I don’t see that I can do anything more, unless UCLA comes up with a way to cure my problems.” Those “problems”, actually tied to alcoholism and related illnesses, resulted in his death in another few months at 78. He died almost exactly a month after the death of his friend Ralph Engelstad, owner of the Imperial Palace Casino.   Above: One of Gary Green’s World Series of Poker registration tickets. Following Bill Bennett’s death, I continued to hone my marketing system and teamed with technologist Tom Trimble to fully automate it to a module that could augment any player tracking system and continued to consult with the methodology to Indian casinos from Washington State to California to Oklahoma. It was one of those pitches that brought me to Trump29 casino. Meanwhile, lest anyone think I retired from being a casino player after my encounter with the two goons at The Sands in Atlantic City, I continued to play at casinos (where I was not licensed) and continued to play in the World Series of Poker (until it started getting thousands of amateurs playing in it and then I moved to the side games). Look beside you at your next blackjack table; I may be there…you never know. •

“Jed, only one man in a hundred plays poker by the odds. Luck’s only important when you sit down with men who play as tight as you do. When I find that out, I quit. It’s gambling.”   — James Garner as Bret Maverick, 1957   Chapter Ten. Can You Beat These Damned Machines?

“I ain’t sayin’ I beat the devil, but I drank his beer for nothing.  Then I stole his song.”  — Kris Kristofferson

A s much as I would like it otherwise, the truth is that the house does NOT always win; you (the player) can beat the house. Really. Larry showed it…remember? The damned tic-tac-toe playing chickens showed it with the visiting nurse and with Trump himself; random number generators ARE random. I see it all the time at casinos all over the country. It is true that in the long run, mathematically, the house always wins. But as we have seen, the “short term” can last a really long time. Remember, when I first met Mark Lefever, his blackjack tables had been on an 11-month long losing streak? When I talked about the definition of gambling I noted that if the house loses for a long a period of time, then players are beating the house for that long. So, at least in that “short” term, it very clearly IS possible to make money by beating the house. What about those huge-payout wide-area-progressive (WAP) slot machines; gambling or entertainment? Before you rush out and start pumping money into those progressive slot machines, let me tell you that the chances of winning these things are…well… let’s say not real favorable to the player. Your chances of winning the MegaBucks® jackpot is around 50-million to one; your chances of winning an average Nevada “linked progressive” is about 16,777,000 to one. By comparison, according to the National Oceanic and Atmospheric Administration, your chances of getting hit by lightning are one in 280,000 in any given year or one in 3000 over your lifetime. You are a lot more likely to get hit by lightning than you are to win that huge progressive. According to the National Transportation Safety Board you have a 1 in 7.6-million chance of dying in car accident; better than twice your chances of winning an average WAP. So, don’t bet your mortgage payment on hitting the wide area progressive. And even if you DID win, the payout is usually over a 20 year period; not all at once. Still, the casino operator in me has to tell you: you can’t win unless you play the game and it is a small bet for a huge payoff. That is why they call it gambling. The other issue we have to address before we can talk about winning against the casino is the entire collection of myths concerning the layout of a typical casino floor (though no slot floor is typical). These casino myths are more about great psychological manipulations using floor layout by some devious evil-genus of behavioral science and architecture. Who the hell ever heard of someone being both an architect and a psychologist and how do I advertise in the paper to hire someone for that job? Actually, in most new casinos (outside of the Vegas strip or the Atlantic City boardwalk) here is how floor configuration works: The casino manager gets a copy of the architect’s “as built” floor plan of the room where the slot machines are to be placed. He sends that floor plan, with the specific measurements of walls and electric supply, to a slot machine manufacture; usually IGT or Bally. Someone at those companies has a Computer Aided Design (CAD) program. They are given the instructions that “this casino wants to fit 800 machines in this room; find the best way to do it.” Thus is born the general layout of the typical casino floor. In some small casinos (especially in Indian Country) it is often even more absurd; machines are just fit in anywhere they can be stuck. I even know of several cases where vendors gave casino bosses substantial kickbacks to put their machines in high-traffic areas (usually when slot machine companies are sharing machine daily revenue with the casinos). The kickback … er … I mean “placement fee”…to the casino or slot managers is offered in much the same way soft drink companies pay fees for shelf space at the grocery store. The slot machine vendor then makes up for the kickback by charging the casino more (a higher percentage revenue share) for the machines.  “Revenue share” or “participation” is a euphemism for ways that slot machine companies lease games rather than sell them to the casinos. A sense of rev-share vs. purchase is important to players because it can be a clue to a machine’s hold…leased games are usually worse for the player (though not always). Casinos obtain slot machines one of two ways: they can purchase them or lease them. The purchase price of a new slot machine (as of this writing) ranges from about $7,500 to $18,000, depending on the manufacture, the features, popularity and the theme of the machine. With a purchase, there is a separate annual contract for upgrades and maintenance. And, if a specific game does not perform well on the casino floor, there is an additional fee to change the game to another title or theme. By contrast, the cost of leasing a slot machine is generally based on a percentage of the revenue that a machine generates (or a flat daily fee, loosely based on revenue). Revenue, for this calculation, is certainly not coin-in or drop but, rather, is based on win (cash drop minus payouts). Typically a revenue share is structured so that the casino keeps 80% of the revenue and the slot vendor keeps 20%. These revenue share deals can be couched as revenue share or as leases or as lease-to-purchase or any number of other catchy phrases for sharing the income. Depending on the clout of the casino and the popularity of the slot machine (and the vendor), that percentage can be as low as 85% & 15% or as high 62½ % & 37½%. Most contracts fall in between those extremes with the 80% and 20% being typical. Think about the math. If the average win per machine per day is $100, then the slot machine company gets $20. Multiply that time 365 days and the slot machine vendor gets $7,300; multiply that by a typical three year contract, and the vendor collects $21,900 for the game that cost them $7,500 to $18,000. More interestingly, if the game is on a “rev-share” at a high-grossing casino (like Hard Rock in South Florida, or Cherokee in North Carolina, or dozens of other successful casinos around the country), then the games are winning around $350 per machine per day or an annual take of $25,550 for the slot machine company or $76,650 over three years for their machine. Now double those top-end numbers. The Indian Gaming Regulatory act prohibits Tribes from entering into rev shares of seven years or longer; so many vendors lease to Tribal casinos for six years and eleven months! Not bad. In fact, I often pitch investors by asking “What is better than owning a casino? Owning the slot machines inside the casino!” In those lease arrangements, it is in the interest of the manufacturer to provide games that have a higher hold for the casino (a lower payout) so their 20% is a higher actual dollar amount. Especially in smaller casinos that hold is totally controlled by the manufacturer rather than by the casino. Hence it really is beneficial for the player to know if the casino owns the games or if they are on a revenue share basis. Some slot titles are not for sale at all and can only be obtained through revenue share agreements. These titles, generally, are ones that are either extremely popular or have third-party proprietary themes. The immensely popular Wheel of Fortune machine, for example, is not for sale; IGT has to pay a royalty —a percentage of each win— to Merv Griffin Enterprises, which owns the rights to Wheel of Fortune. There are also a number of third-party companies that do not manufacture slot machines but only purchase them and lease them to casinos under a revenue share plan. Many of these third party companies will also loan casinos (especially Indian casinos) money to build or expand. The loans then are repaid by increasing the revenue share (say, up from 20% to 37½%). With those deals the additional percentage does not go down once the loan is paid off; they are in perpetuity. Regardless of kickback or loan schemes and the worse hold of leased machines, there is still an entire collection of myths concerning the layout of a typical slot floor (though, as I said, no slot floor is typical). Generally these myths are specific to how we place loose or tight machines on the slot floor. I have heard from players or read (as supposedly factual information from “experts” and web sites). Let’s look at some of these myths; in advance, I want to thank several web sites and “tip books” from Amazon.com for providing me these myths as supposed “tips” of “how to win” against slot machines.

SLOT MACHINE MYTHOLOGY 101: 1. Machines with a car sitting on top of them or a high progressive jackpot are placed in high traffic areas. Nope. Some people do it; some do not. It is not a hard and fast rule and you should make no decisions about play based on any supposition about it. My Ford Mustang giveaway at the Trump property was stashed away in a corner of the casino that had almost no traffic except during showroom nights once a month. (By the way, as an aside, it took three years for anyone to win that car; then it was won three times in one week. Damned random number generators and Bunky’s chickens.) 2. New machines with higher holds are always placed in high traffic areas. Not even true. Sometimes we place new machines in low traffic areas to drive traffic back to them; sometimes we put them in high traffic areas because we want to replace machines that are already in those areas. There is no rule. 3. Dollar and Five-Dollar machines are always near the table games. Nope. In fact many casinos put those games in special areas for “high limit” slot players. They are usually nowhere near the game pits. One casino in Southern California even puts their $5 games in a special room that only club members who have reached a certain level of play may enter. The general public could not play them even if they wanted to. 4. The best payout machines are put in areas obnoxious for players like at bathroom entrances, near concert halls, near smelly food courts, or where people are standing in line to attend some other attraction. This is supposed to discourage play on the good machines. I have to ask, why would I want to discourage play on any machine I put on my floor? If wanted to discourage play, I would just take the machine out. Duh. 5. The most popular machines are set near the entrance to the casino so passersby can see people playing and be encouraged that there must be “loose” machines there. A little contradictory to the previous myth, but most myths are a series of contradictions. With the exception of clusters along the boardwalk in Atlantic City or Fremont Street in Vegas or State Street in Reno, I can’t think of any areas where the casino floor is visible to a lot of foot traffic. In fact, once I have someone in my casino, getting them to play the machines is not really the issue; I am more interested in how long they play and the how many coins they play…and bringing them back. 6. TV themed machines pay off better near entertainment halls, video poker machines pay off better near a poker room, keno machines pay off better near the keno parlor. No. 7. Better paying machines are put near the table games pit so as to create an atmosphere of excitement around the table games; and 8. Worse paying machines are put near the table games pit because the people who play near table games are hanger-ons who come to the casino to wait on the person at the table. These games will keep them busy while the “real” gambler plays at the tables. No to both #7 and #8. Besides being mutually exclusive, both are silly. As for the latter, in the 1950s and 1960s slot machines were considered amenities sometimes thought to be only for “girlfriends and wives” of “real gamblers” that played at the tables. The boyfriends and husbands could keep an eye on the girls without being bothered during their supposedly serious gambling. As I said, some casino managers subscribed to that strategy; but that was before slot machines were responsible for most of the revenue of the hall. As for the former assertion, I feel like there is excitement enough around table game pits with craps players yelling like Irish Banshees every time they get a pass. 9. The loosest machines are in busy parts of the casino to give an illusion of lots of casino activity. This is another one of those myths that I scratch my head about and say “Duh.” If an area of the casino is busy, it is probably because the loosest machines are there, not the other way around. The area was not automatically crowded with players at tight machines and a casino boss one day said “Gee, lots of people are already playing there on our best machines, so let’s put our worst machines there so everybody will be excited.” Yeah right. 10. Loose machines are at the beginning and end of traffic patterns but not in the middle. Just not true. There is no universal strategy or rule about where to put tight or loose machines. Everyone does it differently. 11. Loose machines are placed on elevated carousels so they can be seen; and 12. Loose machines are placed near the diner or restaurant so people will hurry and finish eating and get back to playing; and 13. Loose machines are near the cashier cage so people waiting in line can see more winners and be encouraged to play more. In answer to numbers 10, 11, 12, and 13 above: a resounding Bah Humbug. What one slot manager may choose to do does not make it a universal rule. There are no universal rules for placing slot machines. Most slot managers lack the knowledge or lack the willingness to get that complicated. The good slot managers have more important things to think about. Ultimately the casino always wins; it is a function of arithmetic. The slot manager needs to get people to play all of his machines, so the issue of where the “good” ones are is far less important to him than it is to players. 14. Casino mangers spend hours and hours with human behavior studies to plot where to place machines. Nope. Outside of mega-casinos, placement of machines at most smaller casinos is at best haphazard; at some casinos it is based on floor plans manufacturers provide. 15. Casinos pump 100% pure oxygen into the slot floor to keep you awake all night, playing the machines. I love the work of author Mario Puzo; like many of my generation I can quote long passages from The Godfather verbatim. Hell, I have quoted him repeatedly in this book. His book Fools Die is one of the best Vegas novels I have ever read. However, despite my respect and affection for him, his creation (or at least perpetuation) of this myth is just silly. Firstly and foremost, do you have any idea how flammable the casino would be if pure oxygen was pumped into all those cigarette smokers? Remember rockets launch burning pure oxygen. Jeeze. Now what IS true is that many casinos do pump scented air freshener through the air condition systems. While there is an aromatherapy science of what scents make people more alert, think more clearly, or put them to sleep. But, the actual for the reasons for these air fresheners are much less dubious: Casinos are places where people smoke constantly, stay for long periods of times without baths, and drink and eat god-knows-what. Without a little air freshener, they would seriously stink. And I should note that there are a couple of companies pitching pheromone technology to casino to modify behavior; but as of this writing I know of no evidence it works or any company actually doing it. The single most important thing that I can tell you about slot machine floor layout myths is to forget everything you have ever heard and forget every “feeling” you have about machines. To this day I will tell people facts about machines, based on my years of experience with them, and they will still respond, “Yes I know that, but my neighbor always plays the third machine from the end in every casino she goes to and she wins all the time.” The problem with these, and most, gambling myths is that a few coincidences seem to give credence to them. It is a lot like the millions of people who follow the daily newspaper for astrology tips on how to live their lives. In fact, the very behavior that gives rise to these myths is the behavior that the slot machine business depends on to exist. The psychologists who follow the works of the late B.F. Skinner (and others of the “behaviorist” school) have learned that “intermittent reinforcement” is a more powerful behavior modifier than constant reinforcement. In English, that means that if you push the button on a slot machine 100 times and one of those times you get a big payout, you will be psychologically encouraged to push the button 100 more times; as opposed to pushing it every time and getting a small payout every push, which would become boring very fast. That theory of gaming, watched by manufacturers of games, is about as complex as we get. Except for marketing gimmicks (like the afore mentioned “up to 95% payback” signs), slot managers tend to set all the machines of a like denomination and of like platform with the same hold. If you come on a bank of eight or 16 machines that are all the same theme and same denomination, most likely every machine in the bank will have the same payout. It is very rare that a slot manager bothers to deviate from that; it is too complicated to keep up with; especially in smaller casinos. This, of course, is ever-changing as technology advances. However, there are some facts (in contrast to myths) about floor placement that you do need to know; these facts are based on a number of independent tests and tracked play: • Bright signage over banks of machines tends to get customers to play the machines more, regardless of the machine’s payout. • Machines that can easily been seen across the floor are played more often, regardless of their payout. • The higher the ceiling from the top of the machine, the more the machine is played, again regardless of payout. • The taller the machine, the more the machine is played. • Floors that are designed as “warehouses” of long rows of slot machines tend to get less play than floor layouts of individual little “cubbies” of slot machines that encourage exploration or direct traffic patterns. However, the cubbies have to be open enough so that players can see other machines. • Slot machines that are near the table games pit do get more play, regardless of their hold. • The attractiveness of cocktail servers has been shown in repeated academic studies to increase the level of play of both sexes (regardless of the seeming sexism of the assertion). • Brighter lighting, better air circulation (pulling smoke away, even from smokers), and cooler air temperature all cause more play on the machines. This information, and a ton of other data and scientific studies, is available to most slot directors, casino managers, and operators. But the sad truth is that few have the time or patience to use this kind of information. Remember, in most casinos, a manufacturer designs the floor layout and the slot manager orders all the machines to pay out the exact same as all the other machines of a particular style, theme, and denomination. So is it real or is it Memorex®; is it gambling or is it entertainment? Is it myth or is it reality? Can you beat the casinos? Several years ago, I hired a very young guy to be a shift manager at my players’ club. He was totally inexperienced in casinos, had some minor sales experience, had played some college-buddy poker games, but had a great attitude and incredible customer service skills. Somehow I just sensed he was “one of us”; and he wanted to put professional gambler on his resume. He did indeed excel at the job and was soon promoted through the ranks. One night, when he was on duty, he overheard that Steve Sohng, Mark Lefever, and I were going to play at a nearby competing casino. He began asking me about the games at that casino; he was looking for tips for winning. Though the hold on the games at that casino was (at the time) pretty good (from the player standpoint) I was not certain that I wanted to encourage him to drop his paycheck into slot machines. In the industry, those PAR sheets, the actual payout percentage of my machines, your odds at hitting one of the huge progressive jackpots, floor layout strategies, and the location of my best-paying machines are all considered proprietary information. I know many casino operators that have fired staff for even hinting to players at these “secrets”. For the record, I think that all the secrecy is absurd and wrong-wrong-wrong; and I also think that those columnists and writers (like the great John Robison and others) who teach about these machines are right-right-right in doing so. Hell if it was up to me, I would print everyone’s par sheets right here; dozens are on the internet anyway. As I have pointed out repeatedly, mathematically and in the long run, slot machines always win; THAT is how we build multi-million (and now billion) dollar casinos. Casinos are not built on winners; they are built from the profits from losers. Not to sound like a Star Trek character or like Sheldon Cooper discussing Heisenberg’s uncertainty principle of quantum fluctuation, but … in the short term, just like with those damned Bunky Boger chickens, that random number generator is totally unpredictable. And, that of course, is why people keep playing the machines. See, here is the thing: if I have a slot that has an 8½% hold (paying out 91½%) a really uninformed player can change my hold to three or more times that; paying out closer to 70% instead of the 91½%. That is because with many slot manufactures, that hold percentage is based on playing “full coin-in” (meaning, maximum number of lines with the maximum bet per line). In other words, on a penny machine that typical 8½% hold is based on playing 25 lines at up to 18-cents per line. Thus a “penny” slot machine is actually a $4.50 slot machine. In order to get that 8½% hold, each bet would have to be $4.50. However if you bet only one line (instead of 25) and just one cent (instead of 450-cents) then the hold is entirely different. I have one group of machines where that hold climbs to 27½% if you play just one penny at a time. I love uninformed players. For a one manufacturer of an especially fun line of slot machines, I actually designed their math pay tables (the frequency and volatility). Since I designed the math, my first thought is to include those par sheets here; but they are the proprietary intellectual property of that company and not really mine anymore. Nonetheless, take my word for it; planning pay schemes IS a science. In slot machine pop literature, the really good writers generally offer very legitimate insight and tips that serve to answer a lot of the mythology about slot machines. More importantly, for players, while the machines cannot be “beaten”, following the legitimate tips from legitimate experts (as opposed to con men peddling “systems”) can at least give a player chance of losing less.  I decided to have a little fun with that hungry-for-action new-hire and share with him some basic industry information that would seem to the less-informed to be valuable “inside information” that I was offering. So, I gave the young plebe a check list of a thirteen “insider secrets” to slot play:

Gary Green’s Bakers’ Dozen Slot Tips for the New Hire 1. The most popular slot machine in the country is the IGT-manufactured Wheel of Fortune® machine. It comes in a variety of styles, denominations, and even generations of the machine. Walk into to your favorite casino and find an old-style Wheel of Fortune slot machine; not one of the newer ones, but one of the older reel-type in an aging, fat, dirty, black cabinet. (A reel machine has physical reels instead of a video screen. The older reel machines can be spotted by their dirtier, slightly-beat-up reels instead of the translucent new reels that light up from behind.) Wait until you see one on which someone has just hit a “Spin The Wheel” bonus jackpot and walked away. People often walk away right after they hit a bonus round because they, mistakenly, believe that another bonus is not “due”. Generally and usually, this is totally untrue; but due to some really bad programming, there is occasionally an exception. Sit down at that machine and play minimum coin-in (usually a quarter) for 40 spins. At the most it will cost you $10 (if you lose on every spin), but it will probably not even cost you that because you will win a few mini-payouts along the way. Beginning with the 40th spin of the reels, play the maximum number of coins (three coins are required on those old machines in order to trigger a bonus round). Here is the “big secret”: on those older machines, the “Spin The Wheel” bonus was set to pay off between every 40 and 50 spins … consistently; no random number generators, no few-million spins. The bonus round was triggered between 40 and 50 spins. Period. With the required maximum bet in place, you will spin the wheel and win more money than you started with. Cash out. Walk away. The end; you just beat the house. You may not win the top payout, but you will trigger the bonus round and win a minimum of 25 coins ($6.25 on those old quarter machines) and you will be ahead of where you started. If you don’t walk away, you have another 40 spins to wait and there is always the chance that in those 40 spins you will lose the whole $10 it takes to spin 40 times…thus putting you in the hole. Walk away after the bonus round. You won.  Short of this flaw, the Wheel of Fortune machine generally holds 15.486%; a miserable payout for the player. Moreover, your chance of winning the “top” jackpot is one in 15,728,640 and despite the player’s “hope” of hitting on any of the multiple lines, it is available only on the 400th coin and the 1st line. For the player, despite its popularity, the game sucks. 2. Choose where you play wisely. On the average, slot machines in Las Vegas pay off twice as well as slot machines in Mississippi (Tunica, Biloxi, and Gulfport). Vegas machines pay off up to three times better than the machines at Foxwoods and some of the other Indian casinos and 20% better than Colorado. Vegas machines pay off about 60% better than most riverboat casinos. And we won’t even talk about how poorly the captive-audience cruise ships pay! Additionally, in Vegas, (as we have seen in earlier chart) the suburbs in North Las Vegas payout better than Fremont Street (downtown) which in turn pays out better than the Strip . This is all based on public record; not mythology. 3. Look for a “Jacks or Better” video poker machine and examine the posted payoff table for the machine; this is usually printed on the glass at the top of the machine above the video screen or on the screen itself. Look in the column for “one coin” and the lines for Full House and for Flush. Ignore the rest of the payout table. Most machines will indicate that Full House pays 8 coins (or credits) and Flush pays 5 credits. In the business we call that an 8/5 machine. Avoid those machines. Look for a 10/7 machine: Full House pays 10 coins and Flush pays 7 coins. When you find a 10/7 machine, there is a negative house advantage; the pay table is set in favor of the player and not in favor of the house. The closer that ratio is to 10/7, the better your odds. It does not matter (at this point “why”…just believe me. Most likely the best you will find will be a 9/6 machine. Play it.  However, understand that even playing that kind of machine, to get a positive return consistently you need to play nearly perfect strategy…which at times definitely flies in the face of what would seem to be common sense. Nonetheless it is not SO difficult to learn. The very best training aid I have ever seen is a software program created by Video Poker genius Bob Dancer: Video Poker For Winners. I have no affiliation whatsoever with it or with him; but I will tell you that it absolutely is THE tool to learn to make money at video poker. His books are great too, but his software is phenomenal. 4. If you find yourself in an Indian Casino, ask any employee if the slot machines are “Bingo Machines” (also known as “Class II” machines). If they are “Class II” then the payout is most always set by the manufacturer of the machine who shares in the revenue with the Indian Tribe. These machines, generally speaking, are much less favorable to the player than standard slot machines (or “Class III” machines). Avoid playing the Bingo Machines altogether if you can. Play only the Class III machines in an Indian casino. There are a couple of exceptions to this…but they are rare.

5. If your only casino choice is an Indian casino that only has Bingo Machines (some in Florida, some in Oklahoma, Texas, Alabama, Washington State, New York, and a handful of others as of this writing), then look closely at each machine and see the copyright © notice printed on the glass plate at the front of the machine. The copyright notice will tell you the name of the company that manufactured the machine (and thus the company that set the payout). In Bingo Machines, as of this writing two companies set their payouts more favorable to players than the other companies: VGT and AGS. Look for their branded machines (Red Hot Ruby, Mr. Money Bags, Gems & Jewels, Star Spangled Sevens, and a handful of others for VGT; Royal Reels, Liberty Sevens, and The Mouse Game, for AGS). The VGT Mr. Money Bags machines at the $5 denomination with maximum coin-in ($15 per spin) have an amazingly high payout level; probably the best I have seen at Indian casinos. If you can handle a couple of hundred dollars loss, the payouts are really good on this machine. In fact, their Money Bags and Red Hot Ruby mechanical reels, M-1 series holds only 2.33% with three credits ($15) paid and only 2.85% with one credit played; their M-2 series games at $5 pay out 98.1% (holding only 1.90%). Any way you slice it, that is an amazing player-favored payout scheme. 6. Look for IGT’s Megabucks Jackpot slot machines. When you find them, run the other direction. They are historically the worst payout of any slot machine in America. They get away with it because they also have the highest payoff for the smallest bets. For a $3 bet you could win millions of dollars…potentially. But in the short term, you will lose more on those machines than on any other machines. The IGT Megabucks machines account for about 20% of the revenue of Las Vegas casinos. 7. Look for multi-denomination slot machines. These are machines where you choose to play either 1-cent, 5-cents, a quarter, a dollar, or even $5. Two rules about these machines: (a) they historically payout better than any other machines and (b) the higher denomination you play on these machines, the better the payback . 8. Look for branded games; slot machines themes with a TV show, a movie, a celebrity, or some other pop culture icon. These themes are licensed by the manufacturers and the casino has to pay a license fee (and often shared revenue) to the person or company that owns the theme. That makes these machines more expensive for the casino to operate than non-themed machines. While the themed machines are by far the best entertainment, the extra cost for the machines is passed along to the player as the lowest payout. That fact disappoints even me; as a player my favorites over the years have included the Elvis, Regis Philbin, Price Is Right, Sinatra, and Beverly Hillbillies machines. I loved them for entertainment value and at times even felt it was worth the few extra percentage points in payout just to go through the entertainment bonus rounds on those machines. But the fact is somebody has to pay the royalties on those machines; that someone is always the player who gets a worse payout. 9. Look for signs above groups of machines that advertise high payback; but this is a little tricky. If a sign says something like “up to 95% payback” then you definitely do not want to play the machines; the trick is the “up to.” In casino operators’ minds, that language actually means that (at least) one of the machines in the group pays back that much; the rest of the machines under the sign could payback some terrible amount. Despite my earlier explanation of how difficult it is to switch up a bank of machines, it is relatively easy to have one or two high-paying machines in with a bank of “regular” machines. The correct language is just the payback percentage without “up to” or “some machines” or similar wording. Actually in Nevada and in New Jersey there are legal restrictions on the use of such signs. If the signs say “95% payback” (without the additional words) then every machine in that group must have that payback level. (Though remember our earlier discussion, though, about volatility.) Look for signs that payback 96% to 99%. You have a better chance of winning those machines. (This supposed strategy of having just one machine in a bank that pays out at that level is very “old school” thinking and most casinos are getting away from it.) However, be aware that even with such a high payout, the frequency/volatility issue is still there: if a game pays out 99% it could pay out nothing for the first $100,000 played through it and then suddenly pay out $99,000 to one person OR there are thousands of math schemes that allow that payout percentage without giving you the frequency. Be careful. 10. Look for busy banks (rows) of machines and watch the players at them. Usually banks of machines are busy because the regular (frequent) players know the machines payout well. This is not always the case, and there are times that I have used all sorts of deceptions to give players the illusion that machines payout better than they actually do. However, in general, local regular players know which machines payout the best. Walk through the casino and see which banks of machines seem very busy. Before you start playing in one of those banks of machine, stand behind a few machines and watch the players. If the machines seem to be paying out pretty frequently, then chances are the locals have spotted the best machines in the casino (and have not been duped by some marketing guru like me). 11. Players’ Club Cards. The first thing I do when I go to a new casino is join the players’ club. At this writing, a number of Las Vegas give you $10 in free play just for joining the club. At very least, in almost any club, you earn points that are good for cash back and all sorts of freebies. While using a club card has absolutely no impact whatsoever on your play, the freebies have a cash value that clearly offsets some of the losses you may have. Consider the $10 just for joining. Let’s say you are playing a 25-cent machine with the maximum number of coins you can play at a time being three (75-cents). You put in a $10 bill and spin six times, losing each time; this has your bankroll down to $4.50. On the 7th spin you win $2.50, getting your bankroll back up to $7. That means you have lost 30% of your starting money. But if you include the $10 in free play that the casino gave you, then rather than minus 30%, you are up positive 70%. Even if you are playing dollar machines instead of quarter machines, the benefits of players clubs actually increase the value of your play. When I joined the club at the Aladdin (Planet Hollywood) in Las Vegas, there was no cash bonus but my 45 minutes of play on $1 video poker machines brought me a buffet for two (valued at almost $40), a free jacket ($20), a hat (2.50), and a few other trinkets. All in all, they rewarded my 45-minutes of play with about $65 in value. Join the players’ clubs; there is no negative impact on the machines and there are plenty of positives that help make you a winner.  In the larger sense, if you find a game that pays 98% and a players club that gives you a 3% rebate cash back (or comps) then from the get-go you are already at 101% of what you gamble. Lots of casino glitter-houses were built on margins as small as 1%. And, on top of that, you contribute to that magical database that I have talked about.  Additionally, in late 2012 based on slot play I was comped 4 nights at four different hotels in Las Vegas. Based on average rack rate for those rooms, the equivalent cash value of those 16 nights was a total of $1,842. Since that money would have come from my gambling budget, we can count that as a “win”. That means that if I played the slots and lost $500, I would still be “up” more than $1,300 because I didn’t have to pay for the rooms. JOIN THE PLAYERS CLUBS! 12. Tom’s Rule. When my friend Tom Trimble (the brilliant technologist who at one time designed slot machines for one of the largest manufacturers, designed systems for a mid-level manufacture) was leading design teams to create new slot machine games he had a rule for his guys: if a player puts a $20-bill into a machine and the play on that twenty dollars does not initiate at least one bonus round, then the game sucks and should not be produced. Actually, as Tom explains it, his $20 rule was used by his development team to determine any possible play problems with a game, “Multiple failures normally meant there was a math problem and the bonus frequency had to be lowered. In some cases discussion led to the test being over ruled. I don’t think there was ever a real popular game (during my work there) that failed that test, even though several were released.” When visiting a new property (remember new-age casino executives call casinos “properties”). Tom and I both always use Tom’s Rule as we scope out the machines looking for the good bonus rounds. While it is almost impossible to determine how good (or bad) a machine is based on only a few spins, the Tom’s bonus rule is still a really good measure. Look for some of the games Tom worked on in varying roles (some were near completion when he arrived): Aristocrat’s One Big Cheese, Pick Pocket, Big Shot, and Looney Sevens. Also, I insisted on Tom’s Rule being applied to the development of games for Synergy Gaming, so on those games look for Caribbean Island, Desert Nights, Winter Carnival, Miami Heat, M-O-N-E-Y, Platinum Blonde, Tic-Tac-Toe Chicken, and others. 13. Baker’s Dozen Bonus Tip #13. Look for $1 denomination Blazing Sevens branded mechanical reel one-line machines manufactured by Bally and play $3 per spin on them. In setting these machines up, one of the options that slot managers have is a slightly better (for the player) payout than many other slot machine models. Since so many players know about Blazing Sevens machines, several manufactures (including Bally themselves) produce knock-offs with similar names. Accept no substitutes. Though slot directors don’t always exercise this option, in many properties these machines have outstanding payout. Watch other players on the machines (tip number 10 above) and see if those machines are crowded. Extra Tip #14 In Case You Didn’t Like Any One Of The Above. The math is a little flawed on certain bonus features on some machines at certain denominations. The flaws are not bad enough that they warrant either taking the machines off the slot floor or even reprogramming them; but they are significant enough that you can exploit them to make a little money…if you walk away immediately after you hit them. For example, IGT’s original Lucky Larry’s Lobstermania in the nickel game video version (only the five-reel 15 line version): when you hit the bonus round there is a disproportionate bonus payout to the number of credits played if you play one level below maximum coin in. Maximum coin-in is 75 nickels but if you play at 45 nickels instead (three coins per line instead of five) the bonus feature pays out a little too much and gets you ahead of where you started. When that happens: take your money and walk away. IGT discovered this flaw and on newer Lucky Larry’s they have corrected it; however the new ones are easy to spot because they have gone to 90-nickels rather than 75. Also from IGT, their five-reel, twenty-line original Cleopatra video slot played at the penny denomination with maximum coin-in has a killer bonus round if you can last long enough to trigger it. The nine-line version does not seem to have this issue; and Cleopatra II simply sucks. Almost always the 20-line bonus gets you ahead of where you started, regardless of how long it took you to trigger it. The best we can tell, this only seems to be a problem on the penny machines when you play full coin in ($2 per spin).  Even in normal play the 20-line 300-coin game pays out 97.993%; a 2.007% hold compared to that 15% hold of Wheel of Fortune. This is generally speaking a GREAT game for players. I should point out that computer (and hence slot machine) technology changes constantly and many of these “tips” refer to older games —which, make no mistake about it, are still widely available and dozens of casinos across the country. However, in most modern games many of the mistakes or oversights that caused these seeming flaws in the games have been correct. For example, except for buy-a-pay or multiplies (which I cover below) most modern slot machines maintain the same payout (and hold) percentage regardless of the number of credits played. All of these seeming tips are simple operational facts that we know from the experience of operating these games on various casino floors. Actually, the best tip I could give the young newbie was to walk away as soon as you are ahead of where you started; even if you are only ahead by a few dollars. Let me tell you something, the guys – like me – that run casinos for a living were not usually your high school valedictorians; hell, without spell-check we can’t even spell valedictorian. We don’t have brilliantly-conceived slot machine plots to trick you out of your money and very few of us would know when to change the payout on a slot machine even if we knew how…and believe me, we don’t know how. (Okay, actually I do…but most operators do not…and most have not also been in the slot manufacturing business). So beating us should not be rocket science if you were going one-on-one against most casinos bosses (which, unlike bad movies or the late Benny Binion, never happens). Of course we rely on the computer and the math to take care of winning, but one more reason that our casinos consistently beat you is that we count on players being absorbed with ignorance, myths, “systems”, and (as Nero Wolfe liked to say) “flummery”. As long as you cling to the flummery, my casinos (and lots of others) are going to keep making money off of you; but if you know as much (or more) than my staff then you are going to lose less and even beat us more frequently than other players. I cannot repeat nor emphasize enough to the novice that over a period of time it is mathematically impossible for a casino to lose money on the slot machine floor. But in the short run, a savvy player can spot the most favorable machines and walk away better than average players. And as a casino operator, I don’t mind…much. Slot machines are, without debate, the most simple casino games to play. They also happen to be the most complex to understand. They offer the highest potential payoff for players with the lowest wager of any casino game; where else can you (possibly) win tens of millions of dollars for a 75-cent bet? Most importantly for me, slot machines are responsible for more than 80% of my revenue on any given day … unless a particularly savvy and flummery-liberated player comes into my property. Remember that bastard, Larry. Everyone knows that there are always some big winners. Jackpots are so common that we have three-part jackpot “hand pay” forms that slot attendants carry around with them in stacks of 25. Besides, who would come back to a casino if everyone lost? Remember that payouts are a lot more frequent than the general public thinks. Author and columnist John Robison fielded a letter from a player who complained that he knew “factually” a local Indian casino was only paying out 19% (that would be an 81% hold —I WISH!). He ranted on that payouts changed at different times of day, from one tribe to the next, and that such a payout scheme was an outrage and no one should ever play at that casino. Despite a well-thought-out and well-written response by John, I too had to respond to the players’ outrage. John was kind enough to print my response in his column: John: Saw your column of letters on slot payouts (casino hold). Specifically the person claiming that the casino was holding 81% (or rather “pays 19%” as the person said). The specific casino they cited was the Hard Rock in South Florida…owned by the Seminole Tribe of Florida. A good part of that floor is filled with IGT Class II (Bingo server) machines. Those machines, unlike standard commercial or Indian Class III machines, do not have a flexible way of controlling the hold. In fact, they have three settings and that is it. The most hold that can be set on those machines is 14% and I don’t think ANYONE is doing that. As you know, of course, a 14% hold means an 86% payout. As an operator I would LOVE to have machines that hold those absurdly high numbers like 80-something percent HOLD, but we all know that if machines only paid out so poorly, no one would ever play them. The delightful thing for operators is that we don’t NEED those huge holds that people imagine. The low-ball industry standard 8.5% is a delightful number that pleases me well. Finally, as you know, some Class II machines (like those manufactured by VGT and AGS) have manufacturer-set holds and they are as low as 3.5% with the casino (or Tribe) having no control whatsoever. Hence, of course, the perception that times-of-day or even one tribe to the next having “better” payout is pure mythology. But then again, THAT is why I love this business. As long as there are “believers”, my machines will keep making money! Gary Green And John kindly added, in his column: Dear Gary, Thank you very much for sharing your inside information about the slots at the Hard Rock in Florida and the casino industry. Gary Green is a casino marketing guru and you can learn more about him at his website, www.garygreengaming.com. John As I have said, typically I only keep eight dollars out of every $100 that you gamble in my joint. It takes a lot of hundred-dollars-gambled to build billion dollar hotel casinos. Almost all of the money that you put into a slot machine gets paid back out of the machine to you or to other players. Of course that payout may come after you put in five $20-bills and lose every bit of it, the person behind you does the same, and a third person puts in only $5 and wins a jackpot of $188. In that example, overall, the machine paid out about $92 for every $100 played … but it did so over several players and not to every single person that put in $100. In fact, a more realistic (albeit simplistic) pay schedule is probably even more complicated: • You may put in your five $20 bills and lose all of it. • The next player puts in $100 and wins $10. • There is still $174 that has to be paid out in some undefined combination and to some undetermined number of players. It could come as a $174 win to the next player or it could come as $1 wins to the next 174 players or any combination in between. If only it were so simple! But the truth is, the mathematical possibilities get to a headache level; especially for me. Let’s take for example that Blazing 7s Double Bonus machine from Bally. With its basic settings (out-of-the-box without a casino altering settings) the game pays out 91.96% with one credit played and 92.7% with maximum (three) credits played. Let’s take just two possible outcomes for example: out of a total of 1,038,054 possible plays of the game there are 38,976 opportunities for the reels to line up blank-blank-blank (nothing) but only 3,248 possibilities for blank-blank-double jackpot symbols to appear. That is one very basic and very simple example of math tables for slot payouts. Keep in mind that all of these payout possibilities are themselves merely the volatility within the limitation of the hold. In other words, taking into account that 92.7% AND recognizing that some players will only play one credit or two (which lowers the payout and changes the volatility table), just those two outcomes fluctuate. Specifically, in only 1,000 spins of the reels there is a “margin of error” of +/-104.69% that those outcomes may or may not be accurate. However in ten-million spins of the reels that possibility changes to a “margin of error” of only +/- 1.05%: Number of Spins Margin Of Error 1,000 104.69% 10,000 33.11 100,000 10.47% 1,000,000 3.31% 10,000,000 1.05%

There is an episode of Star Trek Deep Space Nine in which Chief Miles O’Brien (played by the Irish actor Colm Meany) is confronted by an abnormality in the space time continuum and frantically complains, “thinking about this gives me a headache.” I can relate, when it comes to slot machine math. After a harrowing bout with algebra in the 7th grade, I successfully avoided math classes until I was 30 years old. It was only then that I began to understand patterns, and became addicted. Fortunately, you don’t need to be a mathematician to own, operate, or even beat slot machines; the game designers handle that stuff. All you need to understand is the theory of how they work and how casinos use that theory. Successful players understand these things a whole lot better than average players and better than most casino executives. If you really are interested in the math behind games (not just slots but casino games in general), my friend (and at times my attorney) Tony Cabot has written THE book on the subject: Practical Casino Math by Anthony N. Cabot and Robert C. Hannum, published by the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada in Reno. For my young novice friend wanting to tag along with the “big boys”, before I could introduce him to that “bakers’ dozen” so-called “tips” and the supposed minutia of slot strategy, I first had to get rid of some more of the bad information and out-and-out nonsense about machines: • Slot machines are never, ever, ever, “ready to hit.” In modern times, there is no such thing as a machine being “due.” Just because a slot machine has been played for a long time and not given a payout does not mean a payout is due. If this was ever true, it is not true with computer-controlled slot machines. • The temperature of a machine has nothing to do with the payout. A “hot” machine is not physically hot. Seriously, there is one internet “beat the slots” system that sells for $49 that tells you to feel the temperature of the machine. Don’t even believe it. • Casino bosses do not loosen or tighten the payout of a machine on a whim or at will. As I said before, most of us don’t even know how and in many jurisdictions it takes State approval and supervision to make such a change. Have you ever been around any state bureaucracy? It is never a quick process to do anything with government supervision; I can assure you that even if I wanted to change payouts based on the time of day, I could never get through the government bureaucracy in time to get it done. That aside, it is just not part of our strategy. • Putting a player card in a slot machine does not in any way affect the payout. I wish-to-hell it did so I could control the “Larrys” of the world; but it does not. At one of my casinos I had a really good high-roller slot player. (“Really good” for me means that she lost a lot of money every time she played.)  She absolutely refused to use her players’ club card. Yet she insisted that my casino hosts give her all kinds of freebies including gourmet meals, prizes, cash back, and the whole range of goodies we “comp” to good players. Empirically we could observe that she was a good player; but with the absence of hard computer data, we had no accounting process against which we could charge off the costs of these freebies. She refused to use the card because she was certain that insertion of the card changed the payout of the machine. Not only is it technologically impossible to do so (with current machines), but it is also illegal to do so. I never could beat this into her head; some myths refuse to die. • Articles that tell you how to hit huge jackpots and find ready-to-hit machines are generally a waste of time and money; ones that tell you how the machines work are perhaps more worth reading. • A newly opened casino does not have “looser” slots that tighten up after the opening…for all the complicated reasons I just stated. However, by contrast, occasionally when I open a new property, I do monkey with the locally-controlled options. For an Indian casino that I had set to open in the spring of 2006, I decided to set the payouts on the machines about 4% higher than the payouts at the six competing casinos in the area. Subsequent might, in fact, change them somewhere down the line but it will not be a quick nor easy process. I should add to this list the fact that betting-management systems don’t work at table games and are absolutely silly when applied to slot machines (the Martingale, the Double-Pyramid, and so on). Just forget about them; they are really stupid. I have a good friend (if not one-time mentor) who has been managing table games for almost three decades. He knows more about card players and table games than almost anybody I know, with the sole exception of gaming guru Vic Taucer (the author and former Caesars Palace table games manager turned college professor). This friend of mine loves to play blackjack. Now you might think that he either counts cards or does some other “advantage” play; after all, he has run the card pits at one of the largest casinos on the planet in Macau. Nope. He uses the Martingale betting system. Un-fucking-believable. The Martingale system is an asinine (and antiquated) betting system usually associated with roulette but periodically popping up at other games (even, amazingly enough, at slot machines). The way it works is: he bets a minimum table bet, say $25. If he loses he then bets $50. If he loses that, he then bets $100; and you guessed it if he loses that, he bets $200. If he wins, he takes his winnings and starts over at the minimum. When he finally wins, after a series of double-ups, his net win is one unit of the table minimum. In other words after that series I just described, with $400 on the table (the $200 bet plus $200 won) his NET WIN is only $25. But…he is ahead. The problems, of course, are monumental. Even if he was only on a $5 table, if he had 20 consecutive losses, his bet would need to be $2,621,440; it is just like the old story of doubling pennies every day for a month and on the 30th day the days’ number is $5,368,709.12 with the total save being $10,737,418.23. On a $25 table that figure becomes more than $13-million just to win a net $25. Even during one of the worst weeks of the economic crisis, I received an email announcing that six-month T-bills had fired off at 1.2% that would have meant a profit of a pitiful $156,000 on a $13-million investment. But even THAT abomination would be 6,240 times better than the return on his thirteen-million at a $25 blackjack table using the Martingale system. Hell; just buy a casino. I will make you considerably more than $25 for every $13-million you invest. Besides, no table games boss in his right mind is going to allow unlimited bet maximums. That is what cost Jake Lansky the Thunderbird and it is what cost me a career as a card counter. My friend would argue that the chances of him losing 20 games in a row are pretty slim; but assuming a blackjack pit has a $300 maximum bet on a $5 table, only six losses in a row would put him out of business. Additionally he would argue that that the likelihood of blackjacks, doubling-down, and other specialty pays would make up for the minor $25 wins. If he is making a $200 bet and wins, he would win a net $25 (lose 25 + lose 50 + lose 100 = total loss of $175 then win $200 for a net gain of $25); however if a blackjack pays 3 to 2 (150% of the original bet) then he wins $300 for the hand and a net win of $125 instead of just $20. Don’t hold your breath for that. Besides remember he is out of Martingale double options after four hands at many $25 tables. Most system players would blame even that many consecutive losses on a “losing streak”…which even I have referenced in this book. But I need to be clear: There is absolutely no such thing as a winning streak or a losing streak. The whole concept is totally flummery. The myth is based on a belief that winning or losing is not random and not independent. There is actually a belief that bets are somehow (mystically? technologically? religiously?) connected to each other and therefore all wins should be balanced out by losses. So, according to the myth, if there has been a long string of losses on a machine, then a long streak of wins is due. Legend has it that my gambling hero, Doc Holliday, would never shoot a man if Doc was on a winning streak; but God help you if he was on a losing streak. The fact is, the issue was solved in 1654 by the mathematician Blaise Pascal when he worked out the first Craps theory for a gambler named Mom’s Knight (Chevalier de Mere). (Who says only modern day poker players have cutesy names?) Though it has been a mere 350 or so years, this is one of those gambler myths that refuses to die…and what we know about changing odds at blackjack (blackjack ONLY) serves to confuse the muddled-thinkers even further. I am not going to give you a math lesson here (remember I hated math in school), but if you really want to cling to the idea of a streak, please go buy a probability text book from a college bookstore. There really are no streaks in gambling. (Oh, and by the way, the world is round not flat either). Finally, on the subject of slot machine mythology, I want to refer you to actor Everett Sloane playing “Franklin Gibbs” in “The Fever” episode (1.17) of The Twilight Zone, from January 29, 1960: “Franklin Gibbs: (after maniacally playing a slot machine for nearly 24 hours, it “deliberately” breaks down on him)… Give me back my dollar, you miserable dirty… That’s my last dollar! (He attacks the machine and pushes it over; it crashes to the floor) GIVE ME BACK MY DOLLAR! (he is dragged out of the casino by security guard).” A casino measures revenue within 24-hour gaming days. Most casinos are open 24 hours a day, seven days a week; however the actual gaming day is rarely from midnight to midnight. In fact, the start and end point of the 24-hour period is a carefully-guarded secret by most casinos and differs from property to property. This has nothing at all to do with your ability to win or lose, but is directly tied to Federal money-laundering laws (specifically Title 31 of the US Code and more recently (Public Law 107-56) The Patriot Act). The Internal Revenue Service requires you to pay taxes and the casino to file a tax report on any player who wins more than $1,199 in one gaming day. If you had several payouts that totaled $1,200 or more and you knew precisely when my gaming day ended, then you could cash-out up to $1,199 one minute before the gaming day ended and then cash-out another $1,199 one minute after the gaming day began; thus evading Federal taxes and the tracking of that money. Massive amounts of cash move in and out of casinos so fast that for the purpose of transaction reporting, we are treated as financial institutions in much the same way as banks and are subject to money laundering regulations. So any transaction of more than $10,000 has to be reported in a “suspicious activity report” (SAR) just like a bank transaction. So if you “laundered” $9,000 before the end of the gaming day and another $9,000 a minute later, technically you would be legal but certainly a red-flag. Hence to make certain that a player is not siphoning cash to Al Qaida, $2,000 at a time, casinos keep our gaming day secret. One casino might end the gaming day at 4am and another might end it at 10pm. The time is of no importance whatsoever. What is important is that we measure slot win in terms of the gaming day. This is important because you need to understand the mindset of a casino boss when it comes to machine payout; even if it IS archaic to think a money laundering scheme would involve only $2,398 ($1,199 times two gaming-days) . Many of the terms of the slot machine world (like “coin-in”) are indeed similarly archaic throw-backs to the origins of the devices, so I will give you a another two-minute history lesson here. Initially, slot machines were not the big-time revenue generators that they have become in the 21st century. Slot machines began as chewing gum and candy vending machines; some even dispensed cigarettes…one at a time. A “player” would put a penny in a machine and pull a handle. Driven by clanking gears, three mechanical reels would spin around, viewable through a glass window. Each reel had a series of symbols representing flavors of the gum or candy. If each reel stopped spinning so that three cherry-symbols were visible in the center of the glass window, then the “player” won cherry-flavored gum or candy; if the reels stopped on three lemons, then the prize would be lemon-flavored gum or candy. If the reels stopped without having all three reels lined up on matching symbols, then the player got nothing. Since the cost of one piece of gum or candy was negligible, owners of these machines counted their profits by counting the number of coins put into the machine. Hence coin-in. And, inevitably, many times the “player” would not take the gum at all, instead opting to take the cash-price for the gum; thus making them very grey-area gambling machines. Eventually those machines evolved into true gambling devices that paid out cash rather than just gum. A nickel machine from the 1930s would typically payout: two nickels for one cherry appearing in the window; four nickels for two-cherries; ten nickels for three oranges; 14 nickels for three blueberries; eighteen nickels for three bells; and a “jackpot” of $7.50 (150 nickels) for three bars; all for a five-cent bet. (There were no multiple-coin plays originally.) The guy who invented slot machines in 1895, Charles Fey, patriotically put a cracked liberty bell as a symbol on each of his reels and soon slot machines became known as “Liberty Bells.” That is why many slot machines today still have bells as one of their symbols… along with the fruit flavors of the gum and candy. The modern machines still look like the old ones in many ways; cherries and liberty bells are as popular as ever; but many other symbols have been replaced by various marketing themes of the machines (characters from movies or television shows, cartoon or other pop-culture icons, and so on). Instead of taking one penny or one nickel, machines now take multiple coins and bills (as well as printed tickets). In those early days, slot machines had three mechanical reels that rotated and stopped…all controlled by a series of gears. After starting the gear motion by pulling the handle on the side of the machine (giving birth to the term “one armed bandit”), you could listen for all three gears to lock and the coin to drop into place. There were five very distinct “click” sounds from the machine and old-time casino hands will tell you that slot players used to listen very carefully to those clicks like a safecracker listens to lock tumblers. When I play the antique slots in my own collection I often close my eyes and wait for each distinctive “click.”

ABOVE: The internal mechanical works of a vintage Buckley nickel slot machine from the Gary Green Collection. Note all of the mechanical parts.

LEFT: The front view of that same Buckley machine nickel slot machine (maximum payout $7.50) from Gary Green’s collection. Note the handle on the right side; the only way to make the reels spin. Also note at the top the coin slot for one (and only one) nickel.

BELOW: The payout plate (left) from that same circa 1939 Buckley slot machine and (right) the $7.50 guaranteed jackpot plate on the front of the machine.

Even if those “safecracker” players could somehow predict the outcome of the game by the sound of the gears, those days are long gone…and so are the gears. The slot machines you will find in casinos today are computers. They are not run by computers or controlled by computers; they ARE computers. At the same time I am writing this description for you, I have just ordered 400 new slot machines for casino I am building in the Midwest. The internal workings of those slot machines are Intel Core i7® computers, with the exact same chip as the one I am using to write this chapter. The same computer that “Little Johnny” uses to sign on to the internet and research his homework (or play video games and look at online porn) is the exact same machine that is inside every single slot machine at your local Indian casino or on the Strip in Vegas. Even in the slot machines that still have spinning reels inside, rather than video screens, there are computers. As I said earlier, some early casino managers considered slot machines to be a nuisance on their floor only as something to keep “wives and girlfriends busy while then men gambled” (presumably at the tables). Regardless of such dated thinking, initially slot machines were put into casinos as only minor revenue sources, not unlike vending machines. Somewhere between those first Liberty Bells, Buckley and other original slot machines and the computers that they have become today, there were several intermediate stages that eventually led to computer chips controlling mechanical reels. Those intermediate steps produced a host of strange part-reel and part electronic machines as well as many quasi-video hybrid machines, pre-touch screen video poker machines, and quite a few pure electronic test machines. A lot of those are still around (as of this writing) in older casinos. The way a modern slot machine works is a little unsettling when one thinks about how much money is fed into each one of things; at least it is unsettling once you realize that most of what you see (spinning reels or videos) is just a show and has nothing to do with determining the outcome of the bet. That’s right, the outcome has been determined long before the reels (or video) stops spinning. The spinning is just a show to make you feel like something is happening. On a modern slot machine, a computer program begins running the instant the machine is turned on and “booted up.” The program continues to run until the machine is turned off. The entire time, thousands…tens of thousands…of games are being played; but are not being displayed. A computer program called a Random Number Generator (RNG), usually embedded on a special government-regulated chip in the computer, constantly calculates a series of number combinations (for example, two-billion is not an unreasonable series — some programs generate far fewer combinations, but the method is the same). The number of combinations is determined by a mathematical formula that corresponds to the number of different symbols and blank spots in the video or on the reel. Each one of these numbers is equal to one (and only one) combination of positions on the reels. For example the reel-alignment of a cherry on the first reel, blank spot on the second reel, and bar on the third reel might be represented by the number 27. In the same series, the number 10,928 might represent a cherry on the first reel, a different blank spot (from another position on the reel), and a different bar on the third reel. These numbers are randomly picked at the rate of thousands of combinations per minute (if not per second).   ABOVE: The insides of an “intermediate” era slot machine; note the mechanical reels (this one was “themed” by Coca-Cola® ―notice their logo on the first reel). Notice also the two areas of computer components in this “hybrid” era slot machine.

ABOVE: The insides of a modern (as of THIS writing) video slot machine; no reels. Notice the back of the flat-screen computer monitor to the left and the fan at the right to cool the Intel chip. Both of these slot machines are from Gary Green’s personal collection.

Okay, so now you walk up to a slot machine, feed your $10-bill into it and push the button to start playing. When you push that button you may think you are starting the wheels to spin until they randomly (or magically or what-EVER) stop on symbols. In reality, you are “freezing” the program for the tiny fraction of the second it took you to push the button. Whatever number combination was on the program at that particular fraction of a second when you pushed the button becomes the outcome of your bet. It is all over before the reels (or video) even begin spinning. The only reason the reels spin is to create a show for you. It does not matter how long it takes for them to spin, the outcome of the bet has already been determined by the computer. The reels will stop at the combination that you “froze” when you pushed the button. You look at the screen and think, “Wow, I almost won the top jackpot because that one reel is just a half-inch off.” Nonsense; you are just looking at a show. The outcome was determined an eternity (in computer time) before the reels even started spinning; between the time you pushed the button and the time the show stopped running, the program probably ran 100,000 other number combinations. While all of that applies to either video or spinning reel machines, a video-only slot machine can get even more complex. On a video slot machine, hitting the button not only freezes the number, but it also starts the video movie running. Those movies look like spinning reels and there may be all sorts of options for various angles of play (diagonals, horizontal, reverse, multiple lines, and so on), but the fact remains that the outcome (whether you win or lose has been determined) long before the movie ended…and in fact before the movie even started. Oh, by the way: some modern slot machines still have the old “one-armed bandit” handle on the side of them, and you can pull the handle to get the reels spinning. Inside the slot machine there is a tight spring on the handle and even a sound device that simulates pulling a handle to start the gears turning and wheels spinning. The truth, of course, is that pulling the handle simply triggers the button that freezes the program the same way pushing the button does. The outcome is already determined and it makes no difference if you push a button or pull a handle. Even more headache-giving complexly, the introduction of multiple coins playable in a machine opened up all sorts of mathematical and psychological possibilities. Getting a payout from a machine does not necessarily mean that you win more than you gamble; a payout is not necessarily a winning payout. Let me tell you about my favorite payout gimmick; I call it the “IGT trick”, because it is most often masterfully presented by the largest slot machine company in the world, International Gaming Technologies (IGT). (IGT has their own name for it.) Let’s say you bet the maximum number of coins on a particular machine, maybe 45 nickels per spin. Every few spins you “win”…maybe 20 nickels. Psychologically, YOU ARE A WINNER and all sorts of videos, bells, and whistles sound on the machine. Factually, you bet $2.25 and you lost $1.25 of it; or you “won” $1 back. Either way, the technique is designed keep you playing. The game pays out frequently and you win frequently; just not an amount more than you had bet. (And just imagine what this does to your “coin-in” number if you replay those “winnings” in hopes of getting a bigger win.) Technology changes fast; five years ago this was only true on video slot machines but today reel machines can have the same gimmick. Four years ago it was primarily IGT’s gimmick; today WMS has taken this methodology to entirely new levels. There were just a few more basics that my novice slot player needed to understand: the different kinds of games that were available on modern slot machines. • Buy-the-payout. Remember those Bally Blazing Seven machines I talked about? They are three-coin machines. They are generally $1 machines with a maximum bet of $3. The symbols on the reels are bars and fiery (“blazing”) sevens. If you land on various bar combinations you win a few coins, but if you land on three sevens you win $100, $200, $300, or a bigger jackpot. However, if you land on three sevens and have only played $1 or $2, then you win nothing at all. In order to “qualify” for the prizes associated with the 7’s you have to play three dollars. This is called maximum coin in. On these buy-the-payout machines, the payout options are directly tied to the number of credits you play on the machine. • Multipliers. These machines also encourage you to play maximum credits, but all symbols pay — regardless of whether you play one credit or the maximum. These machines multiply and increase the amount of the payoff based on how many coins you put in the machine. For example, with one credit played, the winning symbol of one cherry might pay two credits. But if you played maximum coins (three in this case), the same one cherry symbol would pay off maybe 6 credits. For example, the same multiplier (x2) for any given symbols would be: CREDITS PLAYED PAYOUT MULTIPLIER One Two X2 Two Four X2 Five Ten X2 However, some machines have different multipliers that increase with the coins played and might payout like this: CREDITS PLAYED PAYOUT MULTIPLIER One Two X2 Two Six X3 Five 25 X5

• Lines. If you don’t have a headache already from the complications of these games, get ready for a guaranteed headache. Line games allow you to activate different payout lines depending on how much money you put in the machine. For example, one credit might activate the center line only so that you only win if three symbols line up across the middle of the glass and along the center line. A second coin might activate another line just above the center line. A third coin might activate a line just below the center. A fourth coin might activate a diagonal line from bottom left to top right. A fifth coin might activate a diagonal line from top left to bottom right. Any winning combination of symbols that show up along one of the lines pays out only if you have activated that line. I have a number of slot machines on the floor that are 25-line machines. There are also combinations of these three basic game types. For example, line games are usually also multipliers. Many nine-line games can be played from one to 45 credits; one credit activates only the center line with a multiplier of one while 45 credits activates nine lines with a multiplier of 5. Often bonus rounds (see below) are only triggered when all lines are played with full coin in per line (maximum bet). In fact, there are also a number of pretty common gimmicks that are added to these basic game types by most manufacturers: • Bonus rounds. If you remember the first quick-and-easy tip I gave the newbie employee, the old-style IGT Wheel of Fortune machines go into a bonus round every 40 or 50 plays. The Tom Rule (also from those quick tips) was also about bonus rounds. Bonus rounds are little mini jackpot games within the slot game itself. On the original Wheel of Fortune machine a player spins a large wheel at the top of the machine to win from 25 to 1000 credits. Various spinning wheels are popular bonus features (Wheel of Fortune, Monte Carlo, etc.). Video cartoons are also popular, as are actual film clips from TV shows (Beverly Hillbillies, Munsters, Alfred Hitchcock, Twilight Zone, Elvis’s 1968 Comeback Special, Green Acres, Hee-Haw, M*A*S*H, etc.). There are a host of other bonus rounds; one of my favorites is Bally’s original $1 Millionaire Sevens, which features a rising-bar of jackpot numbers. Most of these bonus features are interactive features between player and machine that take time away from the standard game. Bonuses payoff higher (or appear to be greater) than the standard spins.. • Nudge machines. These are cute and fun. The reels stop spinning, and you notice you “almost” won, but the reels are completely stopped. Then suddenly the reel that is only one position away from your win, nudges forward to line up perfectly with the other two symbols on the pay line. You win. • Bonus Multipliers. IGT’s Double Diamonds machine is the archetypical model for this gimmick, though there are scores of imitations both from IGT and from other manufacturers. Let’s say that on the pay line you get a bar on the first reel, a second bar on the second reel, but on the third reel you get the special “Double Diamond” symbol. You still win, but rather than the standard payout for three bars, you get double that payout. These special bonus multipliers come in double-payout, three-times payout, five times, seven times, ten times, 20 times, 50 times, and even 100 times the payout. • Scatter. The scatter feature is a combination one two or more of a particular symbol anywhere on the screen —not just on the pay lines. A scatter either triggers a specific larger payout than typical matching symbols or trigger one of the bonus features. Understood, though, that the payouts from all of these “bonuses” figure into the overall hold of the machine; hence there may be very few or very small payouts in the “regular game” if there are frequent and larger bonus payouts. Also, understand that all of these special features, gimmicks as I call them, are designed to encourage you to play more…with you hoping to reach a bonus level, a multiplier, or a special nudge. And studies have shown that they all work in increasing your time-in-play at machines. The outcome of the game is still determined the same way; but the gimmick gets you to play more. It is important to know, however, that the special increased payouts of these gimmicks are all figured into my hold percentage and are mathematical functions of that relationship between frequency and volatility of the machine. As a marketing inducement to get you to play more, they may look like opportunities to win proportionately large payouts; but factually they payout no more or no less than the machine hold is set for the game. The one gimmicky exception to this rule are those Wide Area Progressive (WAP) that I discussed earlier. A progressive payout takes a very small percentage of every credit played in a machine and puts that into a prize pool. For a 25-cent machine, the progressive share is usually 1¼ cents per 25¢ bet; for dollar machines it is about two-cents per dollar or six-cents for three-coin-in dollar bets. (This may be top secret information that casino bosses don’t like to give out, but I don’t see the big deal in telling you.) One of my partners has created a WAP for games in the country of Chile. The games grab 1½% of the bet with ½ of a percentage point going to the payout on the progressive jackpot, ½ of a percentage going to fund future WAP jackpots, and ½ of a percentage as a “management fee” to my partner and his group. Now remember that the WAP contribution is based on the play —the coin-in— rather than the win. Think about that WAP scheme. If each machine is winning $100 per machine and the hold is 8% that means the coin-in on the machine is $1,250 per day. The WAP contribution then is $18.75; which is 18¾ % of the win or hold. Now, if there are 1,000 machines on the WAP then the WAP contribution is $18,750 per day; times 365 days is almost seven-million dollars a year ($6,843,750). The “management fees” for that comes to $2.28-million a year. And that number is based on only $1,250 coin-in with only 1,000 machines on the network; the formulas increase as the coin-in increases and the number of machines increases. Consider 10,000 connected machines across multiple casinos with an average coin in of $3,750 (around $300 win per unit per day); then suddenly that contribution would jump to $13-Billion a year. What is better than owning a casino? Owning the slot machines inside the casino! The WAP machines are almost always buy-the-payout games in which you have to play maximum coin-in to qualify for a chance to win the Progressive Jackpot. The slot machine is linked, by computer networking (just like a network at an office), to other slot machines casinos all over the particular state in which you are playing. With the jackpot coming from a few cents per bet per machine at every casino on the network, in almost no time these progressive jackpots are hundreds of thousands of dollars and even millions in some cases. Along the same lines of gimmicks to encourage play, in addition to the wide-area progressives, some casinos often have their own internal progressives (LAP: Local Area Progressive) that operate in the same way. Like WAPs, the local progressives use a separate computer program to payout the progressive jackpots. To begin a local progressive, we usually seed the pot with $10,000 to $150,000 to encourage play. We let the progressive play build up to that seed amount, adding the percentage of each bet and then building to it. Your chances of winning a local progressive are usually better than winning the huge Wide Area Progressives. In many cases, while the standard payouts on these machines are functions of the hold; the payout of the Progressive Jackpot is a separate computer program (or algorithm) that is not really related to the standard payout schedule. That means your chances of winning the WAP or a LAP are unrelated to the machine’s payout schedule. Whether the WAP/LAP payout is connected to the machine’s volatility, frequency, hold and other payout measures is strictly a matter of manufacture’s preference and the rules of the governing regulatory authority. You usually can spot WAP machines by the big, brightly-flashing LED signs over the bank of progressive machines; a sign with a constantly changing number showing some huge payout potential. Because the machines are typically linked to play at several casinos, the number changes several times per second. At the very second I am writing this to you, there is a Progressive Jackpot of almost $3-million available on my friend Max Baer Jr.’s  IGT Beverly Hillbillies slot machine but that number is subject to change as quickly as I type the next paragraph. The Elvis quarter machine is offering about a million dollars; and the huge MegaBucks jackpot is set to pay out more than $10-million to one person. And the list goes on with different, constantly changing progressives. In each of the cases, which I just checked by looking at the slot screens, the actual number is calculated down to the penny and changes quite literally changes several times per second based on play across the state (or across the country in some cases). For example, the largest MegaBucks jackpot ever paid from one of these machines was $39,710,826.36 paid in March of 2003 at the Excalibur Casino in Las Vegas. (A 25-year-old Los Angeles software developer was visiting Vegas to bet on college basketball’s March Madness. He pumped about $100 into the machine before it hit .) Clearly the value of these machines, to my casinos, is that I can advertise the huge potential jackpots to attract players to come try their chance on the machine. Again, in most cases the normal hold is different from the Progressive Jackpot. I keep more of your money on these machines than on any others; remember the chart I showed on machine hold in Las Vegas. I have also, by design, not taken the time here to go into the details of how to play (and allegedly take advantage of) table games. There are scores of books on the subject…and some of them are actually good.  So, can the machines be beaten by players? In the short term yes. But, you really need to remember to walk away when you win —even if it is only a small win.

•   Chapter Eleven. What the hell is an “Indian Casino”  (or how did I get a casino in my neighborhood?)

“I am a red man. If the Great Spirit had desired me to be a white man he would have made me so in the first place.” — Sitting Bull, Lakota Medicine Man & Chief

M ake no mistake about it: there are actually 562 little independent countries INSIDE the USA. When you walk into an Indian casino you are leaving the United States of America and entering another nation. Not figuratively, not because of the glitter of casinos lights; not because of some cultural romanticism about Native Americans; not because of the tragic history of the “vanishing American”; but quite literally you are on foreign soil. Tribes existed as sovereign nations long before white Europeans arrived. In most cases there are no border crossings and no customs agents, yet when you step into that casino it is just the same as if you crossed through the revolving steel gates in San Diego to enter Tijuana or across the bridge from Detroit to Windsor. By sheer numbers, most of the “real” casinos in the United States are “Indian Casinos”. Of the purported 1,500 “gaming establishments” in the country, all but about 800 are (to put it nicely) less than what we would generally describe as a “real” casino; those are more akin to the South Dakota-style store-fronts (where there are 51 “casinos” with a statutory maximum of 30 slot machines each). That count on less-than “real” includes “charitable gaming”, pari-mutuel off-track betting, lottery rooms, cruise-to-nowhere ships, and California-style card-rooms. Of the 800 or so “real” casinos (that look like a Vegas tourist attraction), about 122 are in Las Vegas (with another 266 in the rest of Nevada), 16 are in Atlantic City, 33 are in Mississippi, and a smattering in other states (Detroit’s three casinos; Philly’s; Pittsburgh’s; Baltimore’s; Fort Lauderdale’s; etc.), and a few riverboats across the country (like Missouri’s 13 stationary “riverboat” casinos). But there are more than 300 Indian casinos spread across the country. The 562 “federally recognized” tribes (and the hundred or so that have been “decertified” by the U.S. Government) make up only about one-percent of the U.S. population. Only a little more than a third of those Tribes have casinos; and population-wise the members of those tribes barely make up one-third of the Native American Indian population, or about 1/3 of 1% of the national population. And those 201 casinos are hardly equally distributed amongst the participating Tribes; the Chickasaw Nation (of Oklahoma) alone has 13 casinos; the Cherokee (of Oklahoma) have eight; the Seminole (of Florida) have four; and several other tribes own multiple casinos. In fact, only 22 Indian casinos produce 56% of the revenue of Indian gaming. The reality is that a vast majority of Native Americans do NOT benefit from gaming revenue. Despite the incredible wealth of some of the tribes that have casinos, the majority of Native Americans are still struggling in a centuries-old cycle of poverty. According to the U.S. census, more than 30% of all Indians earn less than $6,300 a year. Having recognized that dire situation, unarguably inflicted by the U.S. Government over the centuries, it is at very least interesting to frame that poverty within the context of the tribes that DO have casinos; of all the programs to fight Native poverty, gaming truly is the only economic development that has worked for the Indian Nations. However, before I share some of those incredible numbers with you, let me further set aside the notion of “rich Indians” that is often used to claim that “assimilation is complete” (as if such digestion was even a desirable thing). The poverty-level numbers are themselves alarmingly compelling; and they stand in stark contrast to reports of the Tribal Council of the Florida Seminole paying $965-million cash to purchase the Hard Rock Cafe, hotel and casino business while the local newspaper charged that Tribal Council members have spent more than $280-million on luxury vehicles, televisions and stereo systems, as well as for cosmetic surgery for tribal members. The abject, miserable (if not hopeless) poverty on some of the New Mexico reservations where the only home stove is outdoors (as is the plumbing) and the houses are still mud/straw adobe walls and floors, stands in incredible disparity to the $80-plus-million paid by six tribes to disgraced lobbyist Jack Abramoff to “protect” Indian gaming interests. The near-squalor of living conditions in Native North Dakota, western Montana, and even coastal North Carolina are hard to generalize in the same breath as the popular Jeff Benedict book that claims that tribes assimilate out of existence and are replaced with wanna-be Indians who scam their way into owning casinos. In that kind of pop-culture bastardization of reality, there are, even today, those who seriously argue that there should be no more “recognized” Indians. Similar to saying “there is no racism in America because a black man was elected president and there are African American multi-millionaires”, the argument is that rich Tribal nations (like the Florida Seminole) are not suffering enough to have sovereignty or even be recognized as a Tribe. There are strong (though not necessarily valid) arguments that the obscenely foul 1887 Congressional General Allotment Act, was finally successful (in the 21st century) to “civilize,” “de-Indianize,” and assimilate native peoples into mainstream society. The only step left, according to that thought, is to continue the Roosevelt through Kennedy policies to terminate the government’s trusteeship of Indian lands and integrate the Indian population into white America. Within that backdrop, according to the National Indian Gaming Association, in 2011 Indian gaming produced $26.2-billion in gross revenue and another $3.2-billion from related hospitality and entertainment services (resorts, hotels, restaurants, golf, entertainment complexes, travel centers, etc.). Indian casinos generated 628,000 jobs and paid $9.4-billion in Federal taxes and $2.4-billion in state taxes, revenue sharing, and regulatory payments. THAT is a hell of a lot of money; but it is not an “answer” to the reality of Native America. The single most important thing to understand about Indian casinos is something called sovereignty. Indian casinos exist because of it. Native American gaming is the story of one of the most illogical, sometimes tragic, and always absurd chapters of American history. The rise, proliferation, and operation of Indian casinos is a paragon of the preposterous becoming reality. I have organized, developed, built, and operated Indian casinos all across America. And for the record, I am a white baby-boomer male, raised in the rural South on a healthy dose of 1950s black-and-white cowboy and Indian television shows, and educated in Tennessee where Andrew Jackson is considered a hero rather than a devil-incarnate that he is to many Native Americans. Following my Tennessee introduction to Johnny Cash’s Bitter Tears album of Peter Lafarge songs, in college I distributed the Mohawk Tribe’s radical newspaper Akwesasne Notes (and after college indexed it for the Alternative Press Index), and was a major organizer (and alleged gun-runner —if you believe FBI informants) for the American Indian Movement’s siege of Wounded Knee in the early 1970s. And as an activist for Native American rights, I helped write the first iteration of the Shumway Bill (that eventually became the Indian Gaming Regulatory Act). I had some role (though often minor) in every nationally-publicized Native American Indian civil rights struggle of the second half of the 20th Century. So it is clear to the reader where my politics are at least on the question of Native Americans. As an adult, I have been key in some of the most publicized Indian casinos in the country: I was a vice-president for Donald Trumps’ one foray into running Indian casinos; I was the television and billboard spokesman for one of the Midwest’s most successful Indian casinos; and I have been a frequent speaker on effective Indian casino operation & management at casino industry trade shows including the National Indian Gaming Association as well as a front-cover poster boy for the official publication of that organization. Two of my companies, as of this writing, are associate members of that organization. One cornerstone of my business has been the fact that you —the casino players— were coming into a different nation when you came into one of the casinos that I operated for tribes. So exactly how is it that the 5,726 people in Wetumpka Alabama woke up one morning to find a 16,000 square foot casino with one slot machine for every ten residents in their little rural town? Their answer is the same answer for scores of small towns that have suddenly and unexpectedly become gambling centers; and that answer is the story I will tell you here. It really is a story of cowboys and Indians. The story is not about good guys and bad guys. It is certainly not about “rich” Indians taking advantage of anything and it is not even about genocide or perceived new imperialism by white government. While there are inevitably elements of all of that in any history of American expansion and Native American Indians, this story is about a string of improbabilities, oversights, and blunders that brought America’s favorite vice to within a two-hour drive of every citizen. We all know and understand that if we travel to Canada, to Mexico, to Europe or Asia, we are in a different country. US laws do not apply there; we have no “constitutional rights” there; and in many countries there is no concept of “innocent until proven guilty”. These nations have their own laws and what may be legal here in the United States may be a major crime in some of those countries. Likewise what is a major crime here in the USA may be totally legal in some of those countries. (How many college kids visit Amsterdam where the sale of small quantities of marijuana is allowed by ‘licensed’ coffee shops?) It is all because each country is its own sovereign nation. Each is an autonomous state exercising supreme power and controlling influence over the body politic with freedom from external control. In the United States, under current law, those 562 Native American Indian tribes  in the country are recognized as sovereign nations just as surely as Japan, Canada, or France are sovereign nations. Despite many state and local governments fighting them at every turn, these Indian tribes are entitled to their own governments, police departments, court system, housing authorities, health care systems, roads departments and…casinos. Historically these governments have been “wards” of the United States’ Bureau of Indian Affairs; but in recent decades that chancery-esque legal guardianship or custody has been redefined to allow more (if not yet complete) autonomy to the 562 nations. For entertainment this weekend you may go to the local movie theatre, next week you might go to the civic center for a concert, and the following weekend you might visit a local Indian casino to play the slot machines. All may be within a few minutes’ drive of your home and the same greenback dollars are good at all three. Few Americans realize that when they go to that casino they have become international travelers. All-in-all more than 5.2-million people identified themselves as American Indians in the 2010 Census and more the 2¼-million people identified themselves as part Indian or Native American. The 562 “recognized” sovereign Indian Nations are dotted across almost every state, with Oklahoma and California having the most recognized nations within their borders. Some of these “nations” are huge and have many citizens. The Navajo Nation, for example, is made up of more than 16-million acres, about the size of Maryland, Massachusetts and New Jersey combined. And there are at least 80,000 Navajo who live in that nation. Others are somewhat smaller, wiped out by white expansion, disease, poverty, or even warring with other tribes. The Augustine Band of Cahuilla Mission Indians has one member and her “nation” is about 500 acres that no one lives on  (though the casino there is open 24-hours-a-day and seven days a week). California’s 29 Palms Band of Mission Indians (where I worked under the Donald Trump contract) has 13 members with none living in the Nation. If an Indian Nation is located within the boundaries of a State in which casino gambling is illegal, the Tribal Nation can still operate its own casinos. THAT shocking fact is just the beginning of the implications of the sovereign power of these Indian Nations within the borders of the United States. In every state in the Union, murder is a serious felony; on at least one Indian Nation in the State of Oklahoma, it is a misdemeanor punishable by no more than one year in jail . When I was running an Indian casino in California, we would periodically have customers threaten to sue us for various negligence issues or violations of California law. As a matter of routine, we would tell the customers, “Get a life, you are in a Sovereign Nation you have no rights here and California law doesn’t apply. Get the hell out of here.” A tribe in New Mexico has its own speed limits (44, 34, 24, and 14) as you drive up the roadway toward the casino. Tribal police write tickets, payable to Tribal Court, if you drive 35 instead of 34. If you need emergency services at an Indian casino, don’t expect to dial 911 on your cell phone; local police are forbidden (by Federal law) from entering the Sovereign nation to provide police, fire, or ambulance service without Tribal invitation or pre-signed agreement to allow them there. When celebrity-tramp Anna Nicole Smith died at the Hard Rock Hotel on the Seminole Nation near Ft. Lauderdale Florida, it was the Seminole Tribal Police and Seminole Tribal Rescue that answered the call; not the Florida or Broward County officials. The examples go on and on. But the point is clear: Indian casinos are located within independent Indian Nations – sovereign countries within the borders of the United States. You don’t need a visa; you don’t need an official government travel warning (because there really is nothing to be concerned about); it is just a political structure that evolved to allow you to gamble close to home. Historically speaking, there should be no question in anyone’s mind about the brutality and out-and-out genocide that white colonist waged against Native American Indians as this country was being settled. There is even strong documented evidence that the western-movie staple of “scalping” settlers was actually a practice that white Texans began against Indian settlers rather than the other way around. Whatever the case, most people accept that white treatment of Indians has been historically shameful. Even long after the establishment of the United States Government, white people continued a history of “Indian wars”, exploitation, and the seemingly deliberate and systematic destruction of racial, political, and cultural groups of Indians. War of 1812 hero Andrew Jackson, father of the modern Democratic Party, and leadership guru of my adopted home state of Tennessee, still today is viewed by many Native Americans with the same despise as Adolph Hitler for the genocidal Trail of Tears removal of Natives from their Eastern homelands. (For my entire life annual Democratic fundraiser dinners in every state were called the Jefferson-Jackson Dinners; in 2009 Jackson’s name was dropped from many —over that political sensitivity.) In residual effect, those tribes that were not reduced to a handful of members by sheer brutality did suffer from being at the lowest economic rung of society. The poorest health care, widespread malnutrition, alcoholism, and a scourge of externally inflicted social and physical maladies all explain the true reasons for the “vanishing American”. There is strong evidence that the genetic propensity toward alcoholism was further exploited as a genocidal tool by white imperialists. The life expectancy in the 21st century for Native Americans is the late 40s (compared to the late 70s for white Americans). In half-hearted efforts to appease, atone, apologize, or perhaps deceive, the United States Government adopted the official policy that the former tribes were like independent nations conquered in war. Under this policy the tribes were treated as independent and sovereign nations just as a foreign land “under our protection” would be treated following a war; not unlike the occupation of Germany by the US, England, and the USSR following the Second World War or Iraq immediately following our invasion and removal of Saddam Hussein. Tribal members were considered “wards of the nation,” incapable of making their own decisions. Just like with military foreign occupation, the administration of tribal matters was assigned to the War Department (in a special Bureau of Indian Affairs, until that bureau was moved to the Department of Interior in 1949 when the War Department was abolished). Without a doubt, the Bureau’s role in dealing with Indians has changed as American political sentiment has changed; sometimes hurting Indians and sometimes helping them. Currently the bureau’s mission has moved from subjugation and assimilation to social services and partnership…at least as far as their official mission is described. In an effort to help (or force) tribes establish BIA-acceptable governments, the 1934 Indian Reorganization Act created US-like constitutions for the Tribal Nations. Under that law some tribes kept a traditional “chief” as their head of state while others adopted more white-society titles like California tribes’ “Chairman” or Midwestern tribes’ “President” or Oklahoma tribes’ “Governor” and Tribal Councils called everything from Council to Congress to Parliament to Legislature. The complexities of Tribal rule, Indian sovereignty and US motivations are probably good fodder for someone’s dissertation, but for us the issue revolves around how this special status allowed casinos to pop up in places that they were seemingly outlawed…like that little Alabama town or Eagle Pass Texas where the Kickapoo Indian Nation operates one-thousand slot machines and twenty table games for 22,000 people. Indian sovereignty was not invented for casinos; and Indian gambling was certainly not invented because of sovereignty (though Indian casinos were). In fact, each of those statements is so emotionally-charged in the Indian world, that they have obscured the financial foundations that eventually allowed those casinos to exist. Time Magazine, in an emotion-inducing (and at times factually inaccurate) cover story lambasted by most Indian rights activists, reported in December of 2002: “Imagine, if you will, Congress passing a bill to make Indian tribes more self-sufficient that gives billions of dollars to the white backers of Indian businesses—and nothing to hundreds of thousands of Native Americans living in poverty. Or a bill that gives hundreds of millions of dollars to one Indian tribe with a few dozen members—and not a penny to a tribe with hundreds of thousands of members. Or a bill that allows select Indian tribes to create businesses that reap millions of dollars in profits and pay no federal income tax—at the same time that the tribes collect millions in aid from American taxpayers .” In an equally emotionally-charged response to the Time article, the president of the National Indian Gaming Association charged that Time defamed Indian gaming and Tribes with the article. President Ernie Stevens, who I have called friend and have supported often, blasted back: “Your story is based on the false and offensive premise that “Washington” created Indian gaming as a “cheap way to wean tribes from government handouts.” Indian gaming is not a federal program. Instead, it is one tool that Tribes use to generate revenue for their communities. The Federal programs that you refer to as handouts represent an attempt by the federal government to live up to thousands of treaty obligations incurred when establishing the land base for this Nation. American Indians have been victimized by federal policies supporting genocide and assimilation, which took millions of lives and millions of acres of Indian land, and caused economic and cultural destruction. Our grandfathers, Pontiac, Tecumseh, Crazy Horse, Chief Joseph, Geronimo, and so many others, fought for our rights – especially our right to self-government on our own land. The U.S. Constitution, the President, Congress, and the United States Supreme Court all recognize Indian Tribes as governments. Indian gaming is self-reliance. ” As I said, the emotions run high on both sides and consequently the facts sometimes get blurred in the furor. The history of Indian gaming and the structure of Indian sovereignty are both in the midst of that blur. For the local gambler, or the struggling casino operator, it only adds to the amazing plot of the story; but in this case Ernie was accurate.  It is a fact that Indian gambling has been around for centuries. California’s Chumash Tribe, for example, gambled for centuries in special areas called malamtepupi – roughly a casino for several ancient games of skill and of chance . This and dozens of other ancient tribal games have been used as a strong emotional argument that “gaming” is therefore a part of Native American Indian culture and any attempt to limit gaming by tribes is a racist and imperialist assault on their culture. Be that as it may, nobody in their right mind believes that roulette, craps, blackjack, and slot machines (or even bingo) are old Indian traditions. More complexly on the emotional level, is the fact that the concept of Indian sovereignty was apparently established by the US Constitution; at least that is the way courts have upheld it over the years. Specifically the Constitution excludes, in two places, Indians from taxation  and gives Congress the power to regulate commerce with Indians Tribes just as it does with any foreign government . These constitutional references have been interpreted to endorse tribal sovereignty as part of the “conquered foreign lands” philosophy. Based on this repeated interpretation, most of the laws, War Department regulations, and US Supreme Court cases have dealt with the administration of the conquered land. Ultimately the administration of that land is the key issue of sovereignty and of building casinos. Even today the BIA’s mission statement begins with: “The Bureau of Indian Affairs (BIA) responsibility is the administration and management of 55.7 million acres of land held in trust by the United States for American Indians, Indian tribes, and Alaska Natives. There are 562 federal recognized tribal governments in the United States. Developing forestlands, leasing assets on these lands, directing agricultural programs, protecting water and land rights, developing and maintaining infrastructure and economic development are all part of the agency’s responsibility. ” There is no doubt that most of these policies historically have been wrought with paternalism, anti-Indian racism and out-and-out land grabbing for white farms, transportation, and later oil. The financial rape (and despicable as the term is, that accurately describes the violation and emptiness left) of the Osage people in Oklahoma by oil companies and the court-ordered payment to tribal members a quarterly royalty check (sometimes of mere pennies), is a prime example. But regardless of the perhaps less-than-honorable motivations, the US Government for more than 200 years has been officially a proponent of at least some form of the Sovereign status of the Indian Nations within our borders. The emotional question has been the issue of how far the cover of “dependent sovereignty” goes. Both the Tribes and the US Government have pushed that question in every imaginable direction through thousands of court cases, public laws, and agency directives. For a casino operator, or for a gambler, there is almost nothing that I can think of that is more boring than legal history. I have always loved quoting Dick the butcher, from Henry VI, “The first thing we do, let’s kill all the lawyers ”. But in understanding how casinos started showing up in your neighborhood, it really is interesting to see how court rulings impacted day-to-day life. The lawyers’ debacle actually coincides with the romanticized but often brutal Wild West era that we know so well from television and film. In the 1830 the US Supreme Court set the stage for the battle with a definition of Tribal Nations as “domestic dependent nations. ” That decision severely limited the idea of total sovereignty and gave state, local, and Federal authorities all sorts of jurisdiction on tribal land. In fact, that 175-year-old ruling is what allowed the Bible-belt white families in south-central Alabama to find a casino in their backyards and what allowed New York City to find the largest casino in the world only 139 miles from midtown Manhattan. The most provocative land issue raised by that ruling was the ownership of Tribal land. Based in part on this ruling, Indian lands are owned by the United States Government but held in trust for the Tribes. The Indian Nations cannot sell the land but can use it for their own nation as their tribal government sees fit. A Tribal Nation or an individual Indian can buy land just like anyone else buys land, but it does not automatically become part of the BIA-administered trust land. The only land in “trust” is the Indian “homeland” assigned by the BIA to be the reservation and home for the tribe. That assigned trust land is not necessarily the ancestral homeland of the tribe (as is clearly evident from the Cherokee Nation’s trust land in the State of Oklahoma where they were driven from their actual homelands in North Carolina, Georgia, and Tennessee). Occasionally a tribe will purchase land and ask the BIA to place that land into trust. In those situations, the argument is that the land purchased was originally part of the tribal homeland (“aboriginal home”) but was stolen from the tribe, in one way or another, and by historical justice needs to be returned to the Nation. Land purchased that is not put in trust is called “fee land.” Land assigned by the BIA (whether purchased or granted and whether to a Tribal Nation or to an individual Indian) is the trust land. This definition of “trust land” became the single cornerstone to placement of casinos a century and a half later. There are uncountable variations of Trust Land that have been played with over the years; some have stuck and others have disappeared, with new ones popping up all the time. One example is that in addition to Tribal Trust lands, there are issues involving individual allotments of land held in trust by the Department of Interior not for an entire Tribe but for specific members or families within a Tribe. Though tribal lawyers spent the next 150 years fighting the results of that 1830 Supreme Court decision, it wasn’t until the last half of the 20th century that any headway was actually made and the door was opened enough for casinos to sneak through. The modern history of the tug-o-war began, perhaps appropriately, in a trailer park and with a 1976 United States Supreme Court case called Bryan v. Itasca County . Itasca County Minnesota had sent Mr. Bryan (who was a Chippewa Indian) a personal property tax bill for the mobile home in which he lived. The trailer was located on land held in trust by the United States for members of the Chippewa Tribe on Leech Lake Indian Reservation. Bryan’s attorneys argued (and won) that his personal property was exempt from taxation because it was on trust land; it was in the sovereign Nation of the Chippewa Tribe and the United States cannot tax foreign countries. This seemingly was a very literal interpretation of the US Constitution by the High Court; but the dude got to keep his trailer when the tax collectors tried to seize it for unpaid taxes. In 1979 the Seminole Tribe in Florida decided to push the sovereignty issue to the limit. You may remember from high school or college history that the Seminole are a tribe that never signed a treaty with the United States. It seems the blue coats weren’t all that interested in chasing natives through alligator-infested swamps of South Florida. The aforementioned Andrew Jackson was the Florida governor who, despite his reputation as an “Indian Fighter” was not so keen on chasing the Seminole into the swamps. At this writing, I am living in South Florida so I can relate to that other Tennessean’s reluctance to wrestle gators. In the 1970s, the State of Florida allowed charities to run Bingo games as fundraisers provided that the games had certain limits on the size of the prize and the times the game could be played. The Florida law provided for criminal penalties against anyone operating a Bingo game outside of those regulations. The leadership of the Seminole Tribe started their own Bingo games, without regard to the State’s rules and regulation for charitable Bingo games…especially the limit on size of payouts. The Tribe’s high stake bingo games were immensely popular with the Ft. Lauderdale/Miami retiree community and the publicity was massive. The Broward County Sheriff raided the Bingo hall and charged Tribal leaders with violation of State criminal laws. The case went to Federal Court with the Tribe suing the State of Florida over the issue of sovereign immunity. The Court ruled that the State’s rules about Bingo were regulatory and hence just because there was a criminal penalty attached did not make the Bingo game illegal. Rather, the court said, Bingo is legal but regulated. And, the court concluded, since the issue was regulation, then the Bryan trailer tax decision applied: Florida did not have the jurisdiction to regulate on tribal land . The US Supreme Court agreed and refused to hear the case. The fallout from the case was landmark. Suddenly, by approval of Federal Court and the tacit approval of the United States Supreme Court, Indian Nations could operate high stakes bingo games free from State regulation. In fact, suddenly any regulation from any State was in question when applied to Indian lands. Eight years later, in 1987, the high Court further opened the floodgates and caused a tidal wave by deciding in favor of Tribal sovereign immunity for a high stakes bingo hall in California . In that case the Supreme Court expanded on the Seminole case and added that once a state had legalized any form of gambling then Indian Nations within the boundaries of that state could offer the same game but without any State governmental restrictions. That meant that if the state allowed legal “casino night” operations (like I ran in for charities in Maryland), then Indians could have the same games without the regulations and limitations imposed by the State. The prospect of unregulated gaming of any kind is a dark and scary storm cloud; just wait till you get to my chapter on “grey area” gaming! Remember that gambling is a cash business with millions of dollars changing hands. At that Donald Trump operated casino in California we handled about $100-million in cash a month in “coin-in.” That much cash floating around with no regulation…especially given the dark history of casino gambling…is an open invitation to God-only-knows what sort elements. Clearly the United States Congress had to act fast to protect both the Tribes and the rest of the US population from people like… well, frankly, like my first employers in the gaming industry. The resulting Pandora’s Box was twenty-one pages of complex legalese woven into a Federal Law that Congress clearly thought would be an insignificant piece of legislation to appease the States as well as the Tribal bingo halls. It was one of those pieces of Federal legislation where no one stopped to think about the implications before the approved it. As I said earlier, as 1985 I was working with tribes to support a bill introduced by Congressman Mo Udall of Arizona and by California Congressman Norm Shumway to affirm Indian Nations’ right to have any form of gambling regardless of whether or not a state had any form of gaming regulation. Regardless of the motivation of the Congressmen, our motivation was two-fold. As a longtime advocate of Indian Sovereignty, I wanted US law clearly and specifically to state that Indian Nations were sovereign enough to be independent of the rules, laws, and regulations of State governments. My involvement in this issue predated my casino career and went back to my college days when I headed a 10,000-member coalition put together to support the Oglala Lakota Nation “siege” of Wounded Knee in the early 1970s. For me, it was simply an issue of self-determination for people we had abused; and perhaps one day an expatriated location for me. Secondly, by then I was an Atlantic City junketeer with the legendary Willie Maizer (and by extension Meyer Lansky), and I viewed the possibility of Indian casinos as a new market for me to deliver eager gamblers. Though our bill was defeated, a couple of years later Congress did pass a compromise put together by Senator Daniel Inouye of Hawaii and Daniel Evans of Washington. The new law greatly reduced the scope and freedom offered by our bill and was probably expected to appease all sides enough for Indian bingo to disappear as a troublesome political issue. The Indian Gaming Regulatory Act (IGRA) tried to answer all of the emotional as well as legal questions that had been raised since the Bryan decision and more importantly since the Seminole decision. And, on the surface, the new law seemed to serve both goals well. Addressing the emotional issue that games of chance and skill were a centuries-old part of Indian culture, IGRA defined games into three “classes ”: 1. Class I gaming was defined as “social games played solely for prizes or minimal value. ” The law explained these as the traditional forms of Indian gaming played in connection with tribal ceremonies or part of tribal culture. The Act affirmed that the Indian Nations could conduct these games at their will and without interference or interest from any outside government. Wagering on these games was the private matter of the Tribe and the Individuals and would not be subject to any state or federal gambling laws. Addressing the Seminole and California (Cabazon) issues of unrestricted bingo prizes, IGRA set up a very specific category for bingo and even allowed for the emerging 1980s technology that was beginning to allow electronic bingo games. 2. Class II gaming was defined as “bingo or lotto whether or not electronic or computer or other technologic aids are used. ” The law allowed the Indian Nations to run these games free of interference or regulation from any government. In fact, this section proved to be the most radical allowance of the law, affirming the sovereignty of the tribal nations by noting that this bingo right exists whether or not states have legalized bingo in any form and regardless of a state’s approval or disapproval of bingo within its borders. Class II games were in fact the cornerstone of sovereignty and put to rest any issues still surrounding the Seminole and the Cabazon lawsuits as well as their fallout. Finally, the law went on to totally quash any fears of unregulated Las Vegas style gaming-gone-wild by banning certain games except in very special circumstances: 3. Class III gaming was defined as “all forms of gaming that are not class I gaming or Class II gaming. ” These are the traditional Las Vegas style games like blackjack, pai gow, baccarat, slot machines, sports betting, roulette, craps, keno, lotteries, and so on. Once they were defined, the law went on to say that an Indian Nation could have these “Class III” games only if the State in which they are located allowed these sorts of games already and if the State entered into a specific contract with the tribe to allow the tribe to have these “Class III” games. The law called these “international” contracts a “compact”. In effect, the lawmakers apparently thought, the issue of unregulated games was dead since only Nevada and New Jersey had legalized “Class III” games. New Jersey had zoned casinos to only Atlantic City and Nevada was, well, Nevada is Nevada. But in 1988 the likelihood of any other state legalizing casinos did not seem very probable. Just for good measure, IGRA went on to establish an independent federal regulatory agency; the National Indian Gaming Commission (the NIGC) was charged with a seemingly noble mission: “The Commission’s primary mission is to regulate gaming activities on Indian lands for the purpose of shielding Indian tribes from organized crime and other corrupting influences; to ensure that Indian tribes are the primary beneficiaries of gaming revenue; and to assure that gaming is conducted fairly and honestly by both operators and players. To achieve these goals, the Commission is authorized to conduct investigations; undertake enforcement actions, including the issuance of notices of violation assessment of civil fines, and/or issuance of closure orders; conduct background investigations; conduct audits; and review and approve Tribal gaming ordinances. ” Made up of a chairman (appointed by the President and confirmed by the Senate) and two commissioners appointed by the Secretary of Interior, at least two of the three had to be members of a federally recognized Indian Nation. Then, seemingly to give teeth to the law, the NIGC created 141 pages of fine-print rules and regulations published in Chapter 25 of the Code of Federal Regulations that already dealt with “Indians.” Advocates of IGRA and the NIGC insist that “Indian gaming is more heavily regulated and more secure than commercial gaming.  When the law was passed, almost three-decades ago, most everyone agreed that with Class III games virtually untouchable, the actual regulation of bingo halls was a no-brainer job. Then it happened. In March of 1989, less than a year after the passage of IGRA but four years before the first NIGC was appointed, the Governor of Connecticut received a certified letter demanding that his state comply with the new Indian Gaming Regulatory Act and enter into negotiations for a state compact with the Mashantucket Pequot Nation to establish Class III games. Both the Governor and the Attorney General were at a loss. Their reading of IGRA defined Class III games as Vegas-style casino games. Casinos were illegal in Connecticut and the law required a state to negotiate a compact only if the State allowed these sorts of games already. The attorney for the Pequot Nation reminded the Governor that Connecticut law did allow “Las Vegas Nights” to be held as fundraisers for charities; the same kind of casino nights that allowed for MY grey-area SHT CREEK Casino in Baltimore at about the same time. The Seminole and Cabazon questions of whether or not the Indian Nation could therefore have the same games but without the State’s limits and regulation had been clearly addressed by IGRA. Moreover, IGRA had put teeth into the legislation by requiring that if a State government refused to negotiate a compact with a Tribe, then the Federal Government would negotiate on behalf of the State and enforce the State’s compliance. Five months later, in August of 1989, the Pequot Tribe filed suit in Federal Court against the State of Connecticut to force the Governor to negotiate a compact with the Tribe for a Class III casino. In mid-May of the following year, a Federal judge ordered Connecticut to negotiate a compact with the Tribe. In September, the US Court of Appeals upheld the ruling and in May of 1991, the US Supreme Court concurred. In the same month, despite a flurry of anti-casino lobbying and scare tactics that included stories of an AIDS epidemic in casinos, mafia infiltration of Connecticut, and people losing their homes to gambling debts, the Bureau of Indian Affairs and the State of Connecticut agreed to a compact with the Tribe. Nine months later the largest casino in the world, Foxwoods, opened its doors in Connecticut —minutes from New York City. (Never mind the allegation that since no one lived on Tribal land at the time then the “Tribe” only had one member, Skip Hayward, who had spent his lifetime claiming to be white.) The creation of Foxwoods, of course, set the precedent for Indians Nations within the border of any state that allowed charity “Vegas Nights,” legal card rooms, off track pari-mutuel betting, state lotteries, or any other form of gambling…including Bingo halls. Overnight states found themselves compelled to enter into compact negotiations to allow casino gambling within in their states. Suddenly, unintended and without warning, full-blown casinos were springing up in states that thought they had outlawed them. Currently there are 249 Class III Indian casino compacts with states. Yet only twenty-eight of the 50 states have tribally-owned casinos…either Class III or Class II. These casinos have created more than 400,000 jobs, 75% of which are held by non-Indians, though in states of high unemployment (like the Dakotas) 80% of the tribal casino employees are Indians. Seventy-five-percent of Tribal casinos devote all of their revenue to Tribal governmental services, economic development, and charity. Only 73 of the tribes involved in gaming distribute the profits to their membership. Before IGRA there had been no successful Federal economic development programs on reservations.  Still, detractors of Indian casinos claim: that the casinos are legal shields for white con men to operate otherwise illegal casinos; that tribal gaming is an unregulated magnet for organized crime; that Indian people do not pay income taxes; that the casinos drain resources from surrounding non-Indian communities; and that a host of moral issues challenge areas that have voted opposition to gambling. Despite hard evidence to counter each of these fears, and overwhelming popular (non-Indian) support of casinos, many communities are still troubled by a taste of Las Vegas suddenly appearing down the street from their schools or churches. In Miami Oklahoma the parking lot for the Stables tribal casino bumps against the local Board of Education and a local school; on weekends, approaching the casino, one sees a sea of school buses that appear to be parked in the casino parking lot.  Even more troublesome to some, the states that did not have charitable “Vegas Nights,” no state lotteries, and no racetrack betting found casinos popping up within their borders. States like North Carolina, Texas, Florida and Alabama, deep in the Bible belt found that bingo halls were being transformed into what appeared to be full-fledged casinos. And in that “Class II” world, states were powerless to do anything at all about these casinos. After all, they were just playing bingo…so it seemed. •   Chapter Twelve. Bingo? It LOOKS like a slot machine to me (invisible bingo cards and virtual ping-pong balls)

“It depends on what your definition of “IS” is.”  — President Bill Clinton

S hortly after the dot-com bubble began in the mid-1990s, I was standing at a booth at a casino trade show looking at an “electronic bingo game” that made my eyes want to jump out of my head. For all the world, this game looked like a slot machine. I couldn’t believe it was bingo. I walked up to the machine, put my coins in, pulled a handle (like an old one-armed-bandit handle), and watched video-game-looking slot machine reels spin. Bar-Bar-Cherry. No winner. I put another three coins in to spin again. Bar-Bar-Bar. I won! It was a fucking slot machine! But it was not EVEN a slot machine. My putting the coins in the machine triggered a series of computer processes that were totally invisible to me but were happening in a fraction of a second on the computer. Putting the coins in the machine “bought” me an invisible (“virtual” in computer lingo) bingo card; a card that was only on the computer and running as a program in the background that I could not even see. I am serious: an INVISIBLE bingo card!   Pulling the handle on the slot machine triggered two functions in the invisible computer program. First, it drew invisible (again “virtual”) ping-pong bingo balls from an invisible (“virtual”) ball hopper. Seriously, follow me here: we are talking invisible ping-pong balls too. Then it automatically virtually (or invisibly) “daubed” my invisible bingo card for any matching virtual (invisible) numbers. Again, all unseen by me. Pulling the handle also started a video cartoon movie running; which is all I was aware of (and, frankly, didn’t know it was just a movie or a cartoon). The “movie” was of three slot machine reels spinning…looking like a real slot machine in Las Vegas, Atlantic City, Tunica, Biloxi, Reno or any other “real” casino. I thought I was playing a slot machine, not running a movie of a slot machine. When my invisible bingo card “won”, on my second play, the video movie stopped with three bars on the “pay line” so that it looked just like a slot machine.   The salesman explained to me that three bars on the video screen were an “electronic facsimile” of an invisible (virtual) diagonal bingo on the virtual (invisible) bingo card. Three cherries would have been an electronic facsimile of a vertical bingo. Three lemons would have been an electronic facsimile of a horizontal bingo. The top jackpot on the machine, several thousand dollars, would have been won by an electronic facsimile of a full-card cover bingo… on that invisible bingo card, of course. Welcome to Indian gaming Class II slot machines! Hell, welcome to the entire State of Alabama a few years later in 2007. Little did I expect that one day I would have more than 1,500 of these machines operating in an Indian casino in Oklahoma, convincing players they were gambling on “Las Vegas style slot machines;” or that I would be ordering ten thousand of these machines to place in “charitable bingo halls” in Alabama in 2009. If I had not experienced this myself, I am not sure even I would believe it. In fact, to make things even more bizarre, when IGT, the largest slot machine company in the world, decided to get into the “Class II” market, I became their single largest customer with the first 600 of their first-generation “Class II” machines on my casino floor. The existence of these invisible ping-pong balls revolves around a loophole in the law, how bingo is played, and the U.S. Department of Justice’s interpretation and enforcement of a federal slot machine law for Indian tribes. It also involves the necessity to clear up a lot of technical jargon; bear with me as we do so.

IGRA firmly established the rules: if the state does not already allow gambling games and if the state is not interested in entering into a “compact” with a tribe, then the law limits Tribal Nations to only Class I and Class II games. That means a tribe is stuck with a bingo hall if the citizens of a particular state do not want casinos in their backyard and if the state does not already have charitable “Vegas Nights” or a state lottery. Or so it might seem! Here comes that amazing “bingo” slot machine that I played at that trade show. Remember that little section of the Class II description that says “whether or not electronic or computer or other technologic aids are used”? Therein is the issue … and the root of the seeming deception. And that is how such conservative states as Alabama, Oklahoma and Florida ended up with huge casinos. Back in 1988 when the Indian Gaming Regulatory Act was passed, there was no Internet, there was no technology boom, there were relatively few personal computers, and there was no client/server computing that could exchange data. Bingo halls, especially in Nevada (and other states that allowed large-scale commercial bingo) used primitive electronic aids to make bingo games go faster. An electronic aid was as much a part of bingo at that time as paper cards were a generation earlier; but by today’s technological standards those late-1980s electronics look like watching reruns of the 1960s version of Star Trek. In Bingo, since someone wins every game, the way the house (the casino) makes money is to play a lot of games or at least sell lots of cards per game. “Technologic aids” and “electromechanical facsimiles” of bingo were invented to allow players to buy and play hundreds of cards at a time (and allowing the bingo halls to sell “packs” of cards instead of individual bingo cards). In the early 1960s when I first started playing bingo in commercial halls, cards were ten-cents each per game. Typically, a good player could accurately play four or six cards when a number was called. In those days we covered the cards with a popcorn kernel but by the early 70’s that had evolved to disposable paper cards marked with an ink blotter called a “dauber” (to “daub” the number on the card). The house would make about 60-cents a game off of me or about six-bucks an hour before they took out the costs of payouts. After payouts, the house would make about $4.50 an hour off of my play. By the late 1980s when IGRA was written, “electronic daubers” had been invented which would allow players to keep track of hundreds of cards at once. Suddenly the cost of playing one game of bingo went up from a dime to 60-cents up to as much as $25 or $30 for a “session” of maybe 12 different games. But proportionally the chance of winning went up as well…and the length of time between winners went down.   Circa 1989 GameTech’s TED (The Electronic Dauber) that represented electomechanical facsimile of Bingo cards. In the 1980s a player could rent an electronic unit and pay for a fixed number of bingo cards for the unit; from one to several hundred. The most common electronic units (manufactured by really good companies like GameTech and others) looked like an over-sized calculator, but rather than calculator keys they would have the letters B-I-N-G-O and numbers from 0 to 9. When a bingo number was called, the player would press the keys for that number (B and 8 for B8 or O and 7 and 2 for O72, for examples). The electronic unit then would search all the cards loaded into the unit (hundreds possibly) and if any of the cards contained the entered number, the card would be marked or “daubed” automatically. The player did not have to ever look at the cards; the machine did it all. Once a unit “won” a bingo, a floor runner would come to the player and visually confirm the winning electronic card to pay the prize or money to the player. All machines then would be automatically reset for the next game. This was the most advanced “technologic aid” that existed when IGRA was written and what was probably expected to exist in Indian casinos under the “Class II” definition originally created by lawmakers. The addition of that video display of the slot-machine-like movie was established in a landmark 2001 court case created by a brilliant Chickasaw Indian named Jess Green. Green had spent a career fighting to expand gaming on behalf of his tribe and other Oklahoma tribes and ultimately argued and won the landmark cases that defined electronic bingo. The history of bingo itself still plays a vital role in understanding what goes on in tribal casinos. Bingo itself was neither the invention of church fundraisers nor of carnivals, though both had a hand in it. The game apparently began in the 16th century with an Italian state-run lottery that featured a ball-draw and some letters printed in columns on a card with numbers under the letters. At least by the early 1900’s a version of the game had found its way to the carnival circuit in the USA and was being played in horseshoe shaped booths covered with numbered cards and small piles of beans. The caller would draw a small wooden square from a cigar box, call out a number that was printed on the square, and wait for players to check their cards to see if the number called matched a number on their card. If it matched they would place a dried bean on the card over that number. Once a player filled a line of numbers on their card, either horizontally, vertically or diagonally, they would call out “Bean-o!” (because of the beans they were using to cover the numbers). Winning players would get a doll or some other carnival prize. The folklore of bingo tells us that in 1929 a traveling salesman named Ed Lowe bought some dried beans, a rubber numbering stamp and some cardboard to start his personal home version of the game. During one party at his house, one of his players was getting more and more excited as she got close to winning. When she finally won, she jumped from her seat, became tongue tied, and instead of shouting “Beano,” she wildly stuttered “B-B-B-BEAN-GO!” There was such excitement and laughter about it all that Lowe decided to market the game and call it “BINGO”. While there probably is some truth to that version of the story, let’s cynically also consider that “beano” was probably a public domain game and word associated with the game and the new “bingo” word was something that could be copyrighted, patented, and sold. We are talking about a business, after all. Regardless of the origin of the name, several months after Bingo hit the market as a home party game, Lowe was approached by a priest from Wilkes-Barre, Pennsylvania with an interesting Bingo problem. The priest had bought several sets of Lowe’s two-dollar Bingo games to use as a fundraiser for his church, but each game produced half a dozen or more winners because of the duplication of winning combinations in each box and then even more duplication because he bought several game sets. Salesman Lowe could immediately see the tremendous market in fundraising with Bingo if he just could work out that little kink. At an absurdly high fee (a charge per card of up to $100 near the end) he hired a Columbia University mathematician to devise 6,000 different card combinations for him. Suddenly BINGO was a real business and Lowe was marketing to churches, schools, and civic groups. From there it was a short step to commercial bingo halls and the tremendous popularity of the game. In the 1950s and early 60s when I was growing up, American Bingo was played with 75 ping-pong balls, each of which was imprinted with a number from one to 75. In addition to the number on each ball, there was also a letter on the ball (either B, I, N, G, or O). Basic bingo has not really changed since those days. A bingo player’s card has 25 squares which are arranged in five rows and five columns. Each column is headed with a letter (either B, I, N, G or O) and each square has a number in it. The “B” column has five numbers randomly from the range of 1 to 15; the letter “I” has five numbers from 16 to 30; “N” has only four numbers from 31 to 45 (with the center space on the card in the “N” column as a “free” space); “G” has five numbers in the range of 46 to 60; and “O” also has five numbers taken from the range of 61 to 75. The 75 ping-pong balls are put in a wire drum or a plastic air-blower and are drawn out one by one until someone wins. A caller reads the letter and number on each ball. Players look for a matching number on each of their cards and when they get a match of adjacent numbers in a row spelling B-I-N-G-O or get numbers in a row under any letter, they win. Bingo differs from many gambling games in that someone always wins at Bingo; the game continues until there is a winner. With slot machines and other gambling devices (roulette for example) it is possible that all players lose and only the house wins. With Bingo, it is a contest against other players; the game continues until one player gets a “Bingo”. This is a very important concept. Since there has to be a winner of every game, the mathematical odds for how much money you can win at bingo vary from hall to hall and are based on the difference between what the hall takes in and what is paid to the players. In other words, if the house pays prizes of $75 for every $100 taken in, the game operates at a 25% house advantage. That means the players can expect to lose 25-cents of each dollar they spend on “card packs”. An average $25 purchase of “card packs” lasts for a one-hour session of bingo. Hence, the house can count on winning $6.25 per hour per player. Average 250 players in a bingo session and the house average win is $1,625 per hour. Four sessions per day and the house gross win is $6,500 a day. This method of payoff is very similar to horse tracks or dog tracks that allow pari-mutuel betting. The players vie for cash generated by other players and not from a house bank. This, too, is a very important concept in Indian Gaming. In other words, the players are playing against each other and not against the owners of the bingo hall. The profit for the bingo hall comes from the difference between what is paid out and the commission kept (the $25 in the above example). Now we get a little technical, but follow me here and you will see why the invisible bingo scam came into being. In casino terms, all of that math means that bingo has a 25% “hold” (in this example)…higher than almost any table game, slot machine, or other game of chance in a casino. However, in terms of revenue per hour, the number is vastly different. A traditional bingo hall, to seat 300 or so players needs about 16,000 square feet. So the casino’s daily win-per-square-foot-per-gaming day for bingo is only about $4.06 (in this example) compared to a win-per-square-foot-per-gaming-day of anywhere between $12.50 and $50 for slot machines taking up the same amount of space. In short, slot machines make from three to 12 times more than bingo makes per square foot, despite the higher percentage win-per-game. Moreover, slot machines require fewer personnel to operate. Clearly, anyone with half a brain would want to have slot machines instead of a bingo room. However, of course, the way IGRA was written, a slot machine would be classified as a “Class III” game rather than a bingo game. All this is well and good and makes for interesting lore on how bingo works and where it came from. What the laws did not anticipate was the incredible technology boon of the 1990s spurred by the dot-com bubble and the amazing graphic video games that can be played on almost any personal computer. It was that technology windfall that gave birth to the “virtual bingo” or “invisible bingo” slot machines that I first encountered at that trade show. It seemed, at the time, that the only thing keeping Indian casinos from installing thousands of these “bingo” slot machines (euphemistically called “Class II machines”) was a little-used federal law called “The Johnson Act .” In the best of legalese, the Johnson Act attempts to outlaw slot machines by giving jurisdiction to the Federal Trade Commission and the FBI over manufacture, transportation, and usage of slot machines. The Act goes on to say, “It shall be unlawful to manufacture, recondition, repair, sell, transport, possess, or use any gambling device in the District of Columbia, in any possession of the United States, within Indian country … or within the special maritime and territorial jurisdiction of the United States…including on a vessel or documented under the laws of a foreign country. ” It then list pages of exceptions to that “general rule of law”, most of which are for shipboard gaming but also contains the exception for any state that has legalized slot machines. Hence, states like Nevada, New Jersey, Mississippi, Missouri, Colorado, and so on are exempt. The authority of the Johnson Act gets even murkier in its definition of a slot machine. Like the Indian Gaming Regulatory Act, this law was written at a time long before the technology explosion. The definition of a slot machine covered by this federal law gives an accurate description of antique slot machines like those in my collection, but doesn’t come anywhere near describing a modern day slot machine in Las Vegas. The law defines a slot machine specifically:  “(1) any so-called “slot machine” or any other machine or mechanical device an essential part of which is a drum or reel with insignia thereon, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or (2) any other machine or mechanical device (including, but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or (3) any subassembly or essential part intended to be used in connection with any such machine or mechanical device, but which is not attached to any such machine or mechanical device as a constituent part.” Arguably, today’s slot machines are far from the old mechanical reel devices. In fact, it is really hard to find a mechanical reel slot machine in most jurisdictions; and even when you CAN find reels in a slot machine they are not mechanical, but are controlled by a computer chip and a random number generator. Again Chickasaw attorney Jess Green came to rescue. Through judicial review, Greene forced the Federal government to exempt Tribes from the Johnson Act. There you have the loopholes in the law. If the laws are taken literally …not on “intent” of the authors or predictions of future technology… then The Johnson Act only deals with antique mechanical slot machines and their successors. In the same literal style of interpretation, the IGRA regulations for “technologic aid” mean any technological version of classical bingo – which would include even those invisible “virtual” bingo cards and invisible ping-pong balls. Initially, when the technology of invisible bingo was first devised it was widely seen as such a slimy interpretation of loopholes that the major slot machine manufactures would not have anything to do with it at all. The large, respectable, publicly-traded corporations like IGT, Bally, Aristocrat, and the others totally ignored that market. “That market” was potentially huge. All of those sovereign Indian nations located in states with no form of gambling could now have slot machines. Prime among such states was Oklahoma which had dozens of Tribes that had been relocated to BIA trust lands. Even in states where Tribes had the ability to enter into compacts, placement of Class II bingo machines would mean that the revenue from the games would not be taxable under state laws. The market was potentially huge. Still, the large manufacturers avoided the seemingly grey legal area of these invisible bingo cards. Thus the fabrication of these machines at first fell to a handful of garage manufacturers based in Georgia, South Carolina, and other traditionally non-gaming states. Moreover the sales schemes and marketing of these machines to Tribal casinos were initially in the hands of a group of companies that Harpers Magazine characterized as “rinky-dink, homegrown, “and “sinister. ” The history of those companies was as bizarre as the “Class II” market they came to serve. Many of them began by manufacturing Windows® based video poker terminals in basements, garages, and mini-warehouses in South Carolina. That state, like most others, has had a decades long battle with “unregulated” (read: illegal) slot machines in backrooms at bars, gas stations and fraternal clubs like VFW, Elks, Moose, Eagles, and so on. South Carolina became so saturated with such games that in the early 1990s the state actually passed a law to regulate the games . The bizarre law stopped short of legalizing casinos but allowed a business to have no more than five video poker or blackjack machines (not slot machines) and no advertising, promotions, nor comps for the games. The law went on to limit payouts to any one person to $125 per day, and to impose a tax on the machines and a tax on the winnings of the machines. No other regulation was attached to the law and almost immediately mini-casinos began popping up around South Carolina. Each mini-casino was a building filled with small rooms with five machines in each room. Each room was its on Limited Liability Company and had its own electric meter. It was very common to see a 3,000 square foot triple-wide trailer with sixty electric meters behind it to support 300 video poker machines inside. Beyond the whole spirit-of-the-law “grey area” issue in just that, these mini-casinos and the machines were not regulated. Non-regulated games means that the public was not protected from absurdly high holds, being cheated, validation that the games even played accurately, and a host of other machine-related issues. Non-regulated casinos meant that there was no protection from skimming, minors could gamble, there were no requirements for any internal control standards, no taxes on winning, no requirements that players even actually had to be paid if they won a big jackpot. Lease you brush off this South Carolina scheme as rinky-dink nickel-and-dime racket, the State of South Carolina reported that revenue from those video poker mini-casinos was $2.8-billion per year. That is BILLION with a “B”…and that is reported income in a jurisdiction that doesn’t require reporting. Those unregulated machines were holding about 35% so the actual coin-in for a year was something near $7-Billion; Seven Billion dollars CASH was passing through South Carolina video poker machines every year. In previous chapters I have talked about the unscrupulous elements that flock to large unregulated amounts of cash; so you can just imagine what South Carolina was like. I was there, and know exactly what it was like and a later chapter in this book will discuss the unregulated gaming world. Despite those huge numbers, wisely IGT, Bally, Aristocrat, WMS, and the legitimate slot machine companies that were licensed to provide games in regulated jurisdictions wanted no part of such at atmosphere. Even the possibility of questioning the legal operation of their games anywhere could result in the company losing its license to do business in a legitimate, protected, regulated jurisdiction. The Dennis Gomes’ of the world had fought long and hard to clean up the gaming industry. Legitimate operators and legitimate vendors could not afford —nor did they want— to be involved in unregulated gaming.  With so much cash flow there was expected controversy; and the overt sleaziness of having banks of electric meters behind converted mobile homes was a little much for almost anyone to swallow. Finally, in July of 2000, after almost ten years of operation, the Supreme Court of South Carolina ruled to outlaw video poker. This decision in a relatively unnoticed southern state seems, at first glance, neither particularly interesting nor germane to anything having to do with Indian Gaming. But a closer look at the video poker industry in South Carolina reveals some amazing precursors and shows how a handful of vendors ended up leading the charge into Indian country; vendors characterized by an analyst at the University of Nevada at Reno as “the lowest rung” of the casino industry . Up until that ban, South Carolina – which most people probably didn’t know even had legalized casinos – had more places to gamble than any other state…INCLUDING NEVADA. With more than 7,000 places to gamble, South Carolina had 36,000 slot machines (more than any state but Nevada, New Jersey, and Mississippi) . South Carolina’s gambling empires were born of small businesses finding those absurd loopholes in the law like the electric-meter scam; of taking advantage of the fact that technology changed faster than laws changed; of the darkest, most consumer-exploitive gaming in the country. This is a familiar theme that we will see repeated for Indian tribes…and especially in other unregulated markets. Since hose huge publicly traded slot machine companies were nowhere to be seen in South Carolina, the dominate companies in South Carolina had names that ended with “Music Company,” “Amusements” or “Coin Machines”; names that would at least be changed (though the owners and managers would remain the same) once they reached the Indian Tribes. The names themselves give clue to the company origins and hence the origins of the transformation of Indian gaming a decade later. By the end of the 1960s the dozens of jukebox route vendors in the South were losing business. There were fewer and fewer jukeboxes as American music became more portable with cassette tapes (and eventually even CD’s and ultimately iPods and MP3s). In search of another route business, many of these vendors initially entered the pinball machine route business. The business model was the same as jukeboxes had been: the vendor would own the machines, place them into various businesses (like gas stations, convenience stores, and bars) and split the profits with the owners of those businesses. Additionally, pinball machines could become gambling devices of sort, with cash payouts given for “free games” won by players. Of course this practice was eventually outlawed by most states because of that gambling aspect of it; nonetheless, the practice persisted. I recall as early as 1964 in nearby East Tennessee watching guys play a pinball machine in the garage at a gas station my father owned; if they reached some magical number of points they would win a dime or multiple dimes for other point values. The dimes were paid out of my father’s cash register. By the late 1970s the early days of video games, like “Pong” and “Space Invaders,” had appeared. This also allowed traditional mechanical pinball machines, with their steel ball bearings and spring flapper-arms to be replaced or upgraded to video arcade games and video pinball games. By the early 1980s video arcades were all the rage for the former jukebox route jobbers. Under some state laws, “pinball” machines could become anything that could be represented on a video screen as long as it was a skill game. It might be a representation of actual pinball with video balls and flappers, or it might be a Space-Invaders-kind of game where your “skill” allows you to kill more aliens than some players, or it might be…say…a video representation of five playing cards where your “skill” at playing video poker could earn you a higher score than other players. Get it? South Carolina law outlawed games of chance, like most states. However, pinball was considered a game of “skill” because you “win” by playing the game better than other players. The law allowed that if a pinball player obtained certain scores they could “win” a free game on the machine. That definition of a “skill game” became very important by the 21st century on Indian reservations. Now, follow this amazing leap of logic: • If it cost a quarter to play pinball, then winning a free game must have a cash value of 25-cents. • If one possible outcome of a game is that you qualify for one free game, then another possible outcome could be that you qualify for 400 free games (or any number picked by the owner of the machine). • If one free game has a cash value of 25-cents, then 400 games would have a cash value of $100. • So if you played a 25-cent video arcade game you could possibly (though your amazing skill) win $100 from that one play. Though the law specifically banned distributing money to a player for winning, there was nothing in the law that banned distributing a free game to the player. Moreover, of course, since each free game had a cash value of 25-cents, there was nothing to keep the player from selling his “free games” back to the company for their face value. So, instead of dropping coins into a winning tray (like an old-style slot machine) or dispensing a ticket-in/ticket-out coupon (like the newer slot machines), these machines simply paid off with a printed receipt indicating the number of “free games” or “credits” won; actually the words “free games” were usually replaced with the word “credits”. A player that hit a jackpot of $1,000 would actually receive a printed receipt for “4000 credits”. The winner would then take the printed credit voucher to the cashier cage and “sell” it to the cashier for a thousand bucks. Just to make certain the player (and the State) understood these were playable credits and not a cash payout; the machine stored those playable credits and allowed the player to actually use them as free games. The voucher was only printed if and when the player decided to “print receipt”…a multi-step function initiated by the player through touching a series of spots on the video screen. For enterprising trailer owners that wanted to be in the casino racket, the vendors were happy to enter into a revenue share agreement and even teach the operator how to skirt the law. “Think of it like a flea market renting out little stalls to different people,” one machine vendor explained to me. “It is totally legal; you payout to the customer by buying their game credits from them at the cash value of a free game,” one vendor explained to me as he tried to convince me to install 300 games. The revenue share was normally 50/50 but in some cases the vendor took as much as 80% of that almost $3-billion dollars. Once the games were outlawed, those vendors were losing a lot of money. They needed a “new South Carolina” to ply their trade. Most set their sights on Indian Tribes. The plan was to use the same strategy of finding legal loopholes and jump head first into the fastest growing gaming market in America: tribal casinos. Let’s consider the South Carolina elements they could bring to Indian tribes: SOUTH CAROLINA ELEMENT INDIAN COUNTRY VERSION In South Carolina, these vendors found a loophole in the definition of pinball machines and through video technologies created video poker. For Indian reservations these same guys found a loophole in the definition of “electronic aids to bingo” and created slot machines with invisible or virtual bingo. In South Carolina, the vendors owned the machines and placed them in the businesses at no charge, splitting revenues with the business proprietor on a 60%-40% basis or in best cases a 50%-50% basis.  This exact same method was used for Indian tribes; tribes were not able to buy machines – they were not for sale. That particularly sleazy aspect of the scheme often turned into an illegal (at worst) and usury (at best) way of financing entire casinos for poverty-stricken Tribes. In South Carolina the vendors helped business proprietors set up dozens of independent enterprises to each house five machines separate and apart from the other machines. Besides skirting the law limiting the number of machines, this system forced each small group of machines to have its own accounting records; maintained by the vendor and not by the business. In such a system, it was impossible for the proprietor to know exactly how the machines were doing.  For Indian gaming, vendors used the same technique of segregating games from any sort of central accounting system by keeping each vendor’s game machines separate from any other vendor’s games. This way, the Indian casinos could not have any sort of central accounting system to analyze all games from all vendors (or any games from some vendors). In South Carolina the pay tables for the machines and the actual frequency a customer could win was set by the vendors and not by casinos. Unlike Las Vegas, where casinos compete with each other by adjusting the payouts of machines, in South Carolina every machine from any one vendor paid out the exact same percentages at any casino in the State.  The exact same system remained in place when these vendors moved to Indian gaming.

This is one of several absurdities of the first forays into Indian Gaming that made me, at very least, unpopular with a number of machine vendors: I required a centralized accounting system and MY access to it. As recently as 2007 I was having that argument with Class II vendors and calling the president of one of the companies an asshole for not allowing it; I got taken off his Christmas card list (though his wife and his vice president of sales both continued to sleep with one of my key operational executives to hold his interest in their company). Not particularly surprising, among the first vendors of the Class II “revenue share” machines to rush to the Indian casinos were permutations of South Carolina and Georgia gaming companies: VGT (Video Gaming Technologies) then of Roebuck South Carolina; Nova Games of Piedmont South Carolina; Cadillac Jack Gaming of Duluth Georgia; World Touch Gaming of Cumming Georgia; and others. Amongst those first movers, VGT alone stands out as company that from its beginnings worked to differentiate itself from the sleaziest elements of the industry by focusing on quality, hands-on client service, and regulated-quality integrity of their games. The biggest of these companies was Leisure Time Technology of Norcross Georgia with their popular “Pot-O-Gold” game. In 2012, looking back on those days, the founder of that company confessed to me that he personally made close to a billion dollars over several years in those days. In 2001 that company filed a bankruptcy following the end of South Carolina gaming as well as accusations by Arizona authorities that the company (1) was selling gaming devices to tribes that lacked state gaming compacts, (2) illegally moved machines across state lines, and (3) provided false information to regulators and misrepresenting its financial condition in documents filed with the SEC . Nonetheless, the reorganized company (as Vision Gaming and Technology) sold and re-licensed their games to pop up at Indian casinos all over the country. In 2008, Vision was purchased by SED Gaming of Greenville South Carolina which itself is deep into Indian Country as well as the grey markets like Alabama. By far the shadiest of any of the companies were a group of middle-men who neither owned technology nor machines. They were merely salesmen at best (con men at worst) who used sweetheart contracts, cash-payments, prostitutes, and old-fashioned kickbacks to develop and exploit relationships with Tribal officials and management. Route Operators, most called themselves. These companies would negotiate an “exclusive territory” to be the distributing agents for a particular manufacturer or several manufacturers. The “exclusive territory” was a business model that former jukebox rack-jobbers fully understood and encouraged. Among other benefits, it meant that the manufactures did not have to hire expensive sales and support staff; those would be furnished by the jobber…er…”exclusive territory company”. The middlemen, or jobbers, would agree to distribute a minimum number of machines in exchange for their exclusive territory. The manufacturer would agree, as part of such a deal, to reduce the revenue share to a more standard 20% split going to the manufacturer: still a pretty substantial figure as we will see shortly. Think of it like this: A company agrees to put one machine in your gas station (for example). The machine wins $100 a day. The owner of the machine takes $20 of that and leaves you a daily profit of $80. Now, the owner of the machine has so many machines that he will not deal with anyone who wants less than 100 of his machines. Your gas station can’t handle that many machines so a middleman steps in. The middleman takes 100 machines from the owner and agrees to assign one to you. The middleman needs to be paid too, so he takes another 20% of that $100 for himself. That leaves you with only $60 out of every $100 taken in. With only 20% of gross revenue needed to pay the manufacturer/owners, the jobbers were free to negotiate whatever deal they could arrange by whatever method they found necessary. Consequently it was not uncommon to see revenue shares with numbers like 37½%, 32.6%, 40%, or in some cases totally upside down deals with the middleman taking as much as 60% and leaving only 40% for the tribe. The lopsided jobber commissions were used, among other things, to fund the “marketing expenses” of the jobbers. What kind of marketing expenses? At the 2005 convention and trade show of the National Indian Gaming Association, at least one of the jobber middleman companies flew three prostitutes from Nevada to the convention site in San Diego to “entertain” select Tribal officials and casino managers. The services of the girls were offered to members of my own staff in exchange for placement of machines on the casino floor; unfortunately for the jobber, my slot manager was a gay man and had no interest in that particular gratuity. In this bizarre discussion of invisible bingo, I have not even touched on the other type of Class II machine, the virtual “pull-tab” machine; but these machines are so scarce and generate such little revenue that they hardly merit more than a paragraph or so. These machines dispense paper pull tabs (legal under Class II definitions) like any vending machine. Pull tabs are small cards that either have printed “no winner” or indicate a prize amount won. A pull tab session contains a fixed number of cards, say for example 1,000 cards. Each card is sold to the player for a fixed price, say one dollar. The lot of 1,000 cards will contain, for example, $750 in cash winning tickets ranging from $1 prizes up to a $500 prize. The total of all winning tickets adds up to only $750 (in this example) even though $1,000 worth of tickets would be sold in a cycle. The casino keeps the remaining $250; a 25% hold. Traditionally pull tabs were sold manually to players. However there are pull-tab dispensing machines that will also sell the cards to the player. These machines often have video screens that look like slot machine play or look like video poker play (without the player’s ability to “hold” cards for the outcome). Clearly dispensing machines (they actually drop the little card-ticket into a tray with each purchase), pull tab machines do not carry the “invisible game” stigma carried by virtual bingo machines. As I said, pull tab machines are such a small part of the landscape that they are insignificant other than to understand that many Indian casinos do have these machines; but they are the basis for the 21st century grey-market of “sweepstakes” machines across America (more on this later). Consider pull tabs a niche market that comes nowhere near competing with slot machines but are often confused with slot machines because of their video screens. Many vendors take advantage of this confusion to argue that their machines are not slot machines (as defined by the Johnson act) but merely vending machines like pull tabs. Despite the tiny niche of pull tabs, the Leisure Time bankruptcy and the “middleman” companies, for the remaining southern-based companies, South Carolina’s multi-billion dollar industry was a mere drop-in-the-bucket compared to Indian country’s growing 14, 15 or 16-billion dollar industry. So it was not long at all before a second tier of manufacturer/vendors jumped into the Class II market. Two companies quickly rose to the top of the pack amongst the myriad of new (non-South Carolina) vendors to rush into Class II: (SDG)Sierra Design Group (later purchased by Bally) and Multimedia Games of Austin Texas. In radically different ways, these two companies totally changed the landscape of Indian casinos and ultimately opened the doorway for the larger manufactures to step into the market. The stage was set for big business to enter Indian gaming by three disparate events. First and foremost was the size of the cash market itself. I don’t think the average American has any grasp of how much actual cash flow we are talking about in just one casino. The numbers are staggering even to me as an insider. If a casino has 2,000 slot machines on its floor winning an average of $150 per machine per day, that is a daily gross profit of $300,000 or an annual gross of $109,500,000 (that is almost $110-million) profit for just one casino…all in cash and all in small bills. If we extrapolate that win to coin-in then there is more than $1.2-billion dollars of cash flow per year for just one casino…CASH MONEY. We discussed the cost of buying a slot machine. But in Indian Country the model brought from South Carolina, the games were not for sale. In a revenue-share deal the vendor took 20% and the tribe kept 80%. In that arrangement, slot machine vendors would take home $21.8-million per year per casino of the size I used in the example above. Hence rather than a one-time $26-million for the sale of slot machines, the vendor company would take the $21.8-million a year for six years and 11 months;  or a total of almost $150.7-million for their trouble of providing financing. (Moreover, the wholesale actual costs for these second-tier machines is much less than that $13,000 average retail figure; it is closer to $5,000). That is certainly enough return to get big business involved. Secondly, IGT, Bally, and the other large publicly-traded corporations that manufacture slot machines were already heavily involved in Indian gaming before these invisible bingo schemes came along. Remember the entire world of Class III games, which includes real Las Vegas style slot machines. The Indian Gaming Regulatory Act allows tribes to have that type of game provided the tribe enters into a compact with the State. Tribes located in “compacted” states, like California, had access to real slot machines from real vendors. For years, through its South Dakota subsidiary, SODAK Gaming (SO-South; DAK-Dakota) IGT offered tribes a lease-purchase agreement so that the tribes did not have to come up with millions of dollars upfront to get started in the casino business. A typical revenue share pioneered by SODAK and copied by the other big boys in the industry was an 80/20 split with SODAK taking 20% of the win-per-unit and the tribe taking 80% over the term of five years to finance the machines. With a $150 average win-per-unit-per-day, IGT would finance the $13,000 machine for a mere $54,750. Calculating that as simple interest, it is 300% charged to the tribe. And THAT is the model used by LEGITIMATE, large publically traded corporations. That, keep in mind, is the standard deal without the whole scheme of Class II invisible bingo balls and taking 30% to 40% of revenue rather than 20%. Meanwhile even in the Class III market with regular Vegas-style slot machines, individual state compacts varied on how many slot machines could be installed. In California for example, the pre-Schwarzenegger compacts with tribes limited each tribe to no more than 2,000 machines (regardless of the number of casinos a tribe might own). The only way around that 2,000 limit was to add Class II machines to the mix; the state compacts had no jurisdiction over Class II machines (and hence no tax could be collected for them). If Class II machines could be made to look like and act like regular slot machines, then who would know the difference? And THAT was clearly a market demand for invisible bingo balls. The fact that IGT’s SODAK was already among the biggest vendors in Indian gaming at very least had IGT’s attention watching the Class II market. The third factor that set the stage for the big boys to enter the market was the IGRA-created National Indian Gaming Commission. By the early 2000’s the NIGC was carefully looking at invisible bingo and apparently scratching their collective heads wondering what happened to good old-fashioned bingo. At first they questioned the whole concept of invisible bingo by disallowing certain games, fining casinos and their operators, and closing down some casinos. But the grey-area vendors were old hands at skirting government regulations and they were quick to respond to the NIGC. When the NIGC insisted that “invisible bingo” was absurd, the manufacturers responded by making video-movies of miniature bingo cards visible on the screens of the slot machines. Hence it was still virtual but no longer invisible. When the NIGC raised the same issue about invisible ping-pong balls, the manufacturers responded in the same way. They made an animated cartoon ball draw appear on the screen. The Indian Gaming Regulatory Act very specifically further defines electronic aids to bingo as something that “broadens participation by allowing multiple players to play with or against each other rather than with or against a machine.” No problem. The vendors simply expanded the client-server technology so that all the players were playing from the identical ball draw by networking the slot machines like personal computers in an office. Simple as THAT sounds, it is one of the most perverse complications that led to the big boys coming into the market. A normal slot machine, in Vegas, is a stand-alone unit. That means that if every other slot machine in a casino is unplugged and only one remains plugged in, that one can still operate. That is NOT the technology that the South Carolina boys used in Indian Country. For a “stand alone” slot machine, the computer in the machine must have the entire game program, accounting of the money, and all the elements on that one machine. If you have 1,000 machines in a casino then those programs must be replicated 1,000 times. Even more complex, each of those 1,000 machines must have its own random number generator chips (that randomize the outcome of each game). That is a damned expensive and technologically complicated process; no wonder they get $13-large for selling the machines! For years the large manufacturers have advocated a more simple technology that would allow one copy of the programs and one control chip to sit on one computer server. Each slot machine would be just a terminal, receiving everything from the server. It would work just like the Internet. In fact “server based gaming” is the big trend that slot vendors are pushing right now in their sales departments. In their wisdom, the Nevada Gaming Control Board, as well as other regulatory agencies around the country, has been very slow to approve this technology because…well, at best, its integrity and security seems a little questionable. In short, if someone can hack into a web site, it is not unreasonable to think that they possibly could hack into a slot machine that uses the same technology as the internet. Nonetheless, a version of server-based games is all the rage currently amongst the slot manufacturers. But our boys, late of South Carolina and Georgia, had been using “client server” technology all along. Who wanted to be bothered with those cumbersome individual chips for each slot machine or having to replicate the program hundreds of times? From the onset, many of their models were to use a server; and the slot machines were just dumb terminals. Those that did not use the server model used stand-alone machines that did not meet even the basic minimum requirements for Nevada or other tightly regulated jurisdictions; some were actually written in MSDOS-based programming code and some were hard-coded boards from Taiwan with built-in reset cheats and 35% holds. The ones who were using server technology had it easy: when the server program picked the virtual ping-pong balls (now visibly represented on the screen by a video cartoon of balls with numbers on them), it was a simple step to have the same pick of balls for every single machine. After all, it was just one program doing it. So another NIGC objection was answered by technology. From afar, the major manufacturers continued to watch Tribal gaming. However, it would take two more developments to get them to jump into the fray. Those two developments would set the stage for corporate America to enter Indian gaming in a big way. If we accept, as somehow legitimate, the leap of logic that allows the invisible bingo cards and virtual ping-pong balls to be replaced by video cartoons of bingo then the next steps in development of the Class II market makes perfect sense. If we reject the legitimacy of invisible bingo, then we might have a hard time believing the bizarre spiral of events and inventions that came next. It is important to remember that this entire business is based on the loophole of the electronic facsimile of bingo. The final stage begins with a relatively amazing way to convert regular slot machines to the virtual bingo format. Sierra Design Group (SDG) was a brilliant little technology company founded by a casino industry veteran who created a technology that would allow familiarly branded slot machines to operate in a Class II environment. The bingo-only Indian casinos could use the SDG platform so that players now could play slot machines they recognized from Vegas, Atlantic City, Tunica, or any of the Class III Indian casinos. Suddenly players in states where slot machines were outlawed could play IGT’s stalwart brands like “Double Diamonds” and “Lucky Larry”, Bally favorites like “Blazing 7’s”, Aristocrat market leaders like “Jumping Joeys”, and scores of other proven brands. Up to this point Class II games had brand-names that no one particularly knew or had any loyalty toward…outside of the small grey-market areas where they were played. The only consistent brand had been the “Pot-O-Gold” machines, which were branded as much by the animation in its bonus rounds as any other feature and they were not EVEN class II. But the new SDG innovation allowed bingo hall casinos to lose that South Carolina-like atmosphere that Harper’s Magazine had called dark, depressing, and as un-Vegas-like as possible . Instead, these bingo halls could be alive with recognizable and exciting branded games. A television advertisement for Florida’s Seminole Tribe’s Class II casino (before they added Class III) summed it up perfectly, “Real Games; Real Fun.” Using SDG’s servers and bingo platform (or video lottery platform in some states), two major break-throughs were accomplished. First, the branded games were brought to the players in areas where those very games had been outlawed. Much more importantly for the development of the industry was the licensing of game programs that IGT, Bally, Aristocrat, and others leased to SDG. This allowed the big companies to see how well their games would do in the Class II market…without having to risk the investment of developing server-based games with phony-baloney bingo back ends. (And without endangering their licenses in regulated states.) If the SDG experiment was a success, then it would be a positive metric for the big boys to consider entering the market. Equally as important to the landscape being tilled for the big boys was the contribution of publicly-traded Multimedia Games (MGAM). Primarily a technology company focused on gaming (rather than a gaming company looking for technology), MGAM brought a number of technological improvements to the landscape. This Austin Texas based company led some major fights with NIGC regulators to define the nature of bingo facsimile. They won some and they lost some. Publicly traded on NASDAQ since 1996, MGAM’s CEO Gordon Graves moved bingo-based games light years ahead of the old South Carolina model that grew from lesser companies’ survival desperation. Like SDG, Graves and MGAM licensed branded games from Nevada-popular slot machine companies and adapted them to the Class II requirements with MGAM’s own proprietary protocols. He replaced the old South Carolina printed receipt of game credits with a slick high-tech EFT (electronic funds transfer) card that appeared to store the “credits” like an ATM card but (like a real ATM card) merely stored a customer ID number and recorded the cash transaction (and player data) on a server. This allowed players to take the EFT card out of one machine and move to another and play credits stored on their server account and identified on the card…either from credits won on the previous machine or cash deposits onto the card. Graves also successfully mimicked IGT’s thriving pay table formula of giving frequent payouts of small values. MGAM also created an “instant bingo” platform called “MegaNanza”, which still played “invisible bingo” but was much more slot-machine like in its internal workings. It also pitted the players against the casino rather than against each other. Though rejected by NIGC’s Class II scrutiny, it did set the standard for how an instant bingo machine should and could work for players. In 2002 the NIGC informed tribes that the most-popular game in play in many Indian casinos, MGAM’s “MegaNanza” machines, were Class III and any tribe using them without a compact would be fined. In some cases these machines were winning in excess of $400 a day for the tribes. This setback, of course, wounded MGAM but it also fueled the company to find a new way to generate revenue. However, by far, all technology aside, Gordon Graves and MGAM’s most important contribution to the landscape of Indian gaming was the company’s own business model. More than anything else they or any other company did, MGAM’s business model opened the door for the major companies to take the market seriously. In the world of slot machine sales (or leases for that matter), there is fierce competition between manufacturers. Offering branded machines gives a competitive advantage, but equally important for obtaining market share is customer perception of the machines; the belief by customers that the machines payout well. Machine manufacturers pay for promotions in casinos, give away tee-shirts and trinkets to players, and advertise their brand-specific games locally for casinos. On the wholesale side, the manufacturers offer special discounts, incentives, and a whole host of inducements to get market share…to get floor space…to get more games on a casino’s floor. MGAM created a relatively unique way to guarantee floor space for their machines: they financed the casino, built it, directed construction, managed it, and marketed it for the tribes…all in exchange for a guarantee of floor space for their machines. Of course the company denied that they managed and marketed and argued about building, but the facts were pretty clear. In the tiny town of Thackerville Oklahoma, one mile from the Texas border on Interstate 35, MGAM “financed,” hired designers, and assigned a construction project manager to build a 1,300-machine casino for the Chickasaw Tribe. In exchange, the tribe gave approximately 80 percent of the floor space to MGAM’s machines, plus shared 30 percent (rather than 20%) of gross revenues from those machines with the company . The casino was so successful that MGAM repeated the process all across the country both for the Chickasaw Tribe and for other tribes. MGAM created finance deals for the Osage Nation, the Peoria Tribe, and the Kickapoo Tribe. In fact, in November of 2004, MGAM (through its subsidiary company, “MegaBingo”) even went so far as to buy land for a tribe; a tract of 216 acres and another of 118 acres . Additionally, Multimedia Games owned the fixtures (lights, seats, etc.) in the building until the end of the contract . And, on top of the 30% revenue share, MGAM wanted another 2% to put into a special “marketing fund” to promote their games at the casino. Let’s do some quick math. There were (at that time —a LOT more now) approximately 1,300 games at Thackerville and Multimedia had 80% of those…or 1,040 machines. Thackerville, being on the Interstate and at the Texas state line is a very high traffic casino, but let’s assume a daily win-per-unit of that same $150 figure we have been using. That is a daily win per unit for MGAM (at 30%) of $45. Multiplied by 1,040 machines, that is a daily take for the company of $46,800 or an annual take of $ 17,082,000. Over the course of the five-year agreement, that is a total of $ 85.41-million for MGAM. In addition to that huge revenue, the “development deals” (as MGAM liked to call them) also required tribes to pay an additional daily fee back to Multimedia based on the number of other gaming manufacturers’ machines . This sort of penalty fee at just the Thackerville facility covered about 260 slot machines and forced the tribe to compute that penalty fee into the cost of operating any machines other than MGAM’s; in short, any other vendor was penalized from the onset. In 2004 when I talked to Summit Structures, the company that built the fiberglass tent-like structure that became the Thackerville casino, I was quoted a price of about $13-million to build a similar facility. Again, in terms of simple interest, MGAM makes a cool 85% interest for loaning the tribe money to build a casino…and that does not include the penalty fees charged by MGAM against those vendors’ games. There of course is no applicable Federal usury ceiling for this kind of transaction and the State of Oklahoma has a maximum rate for business loans of 45% . But, as we have discussed, Indian tribes are sovereign nations and in most cases immune from State or Federal law. So such a “loan” was certainly legal. Tribes, generally speaking, are unable to get more traditional business loans for a number of reasons. Firstly, many financial institutions don’t want to fund casinos or other “sin businesses.” Secondly, and more importantly, under the Federal “sovereign nation” status that allows the casinos to exist, the land and building cannot be used as collateral for a loan because they cannot be sold. This is a complex issue, but for now it is sufficient to recognize it as a significant roadblock to traditional financing. Finally, tribes cannot be sued for default on a loan or a contract unless a specific waiver allowing them to be sued is signed; remember the bank would be trying to sue a “foreign country” in that nation’s court system —in “Tribal Court”. With nothing for the banks or traditional financial institutions to latch onto for collateralizing their loans or setting recourse, there were no sources of funds other than “development deals” like the MGAM deal…or handfuls of other far less scrupulous deals (if you can imagine that). I will discuss these deals in more detail in my chapter on managing, financing, and marketing casinos. The Chickasaw had few or no other options (at that time) than to play with MGAM. And the income from that one Thackerville casino accounted for about 15% of MGAM’s revenue for 2003. It is no wonder that seven other similar deals were started by the company . In Goldsby Oklahoma the machine revenue share for MGAM “financing” was reported to be a 40% share for MGAM. Stock in the slot machine company jumped from a 2002 low of $17.82 a share following the NIGC’s “MegaNanza” decision to a high of $49.05 by January of 2004 with the Thackerville deal as the new business model. By their own business model, MGAM had become a casino developer, a casino manager, a land management company, a finance company, a slot machine company, a fixture supplier, a marketing company, and who knows what else. In short, MGAM became a casino company with the Chickasaw Tribe fronting for them. In late April of 2004, NIGC Acting General Counsel Penny Coleman sent MGAM and the Chickasaw Nation a “letter of determination” informing them that the NIGC had determined that the Thackerville “development” agreement was actually a management contract under the definition of IGRA and 25 C.F.R. On the surface and to an industry outsider or a casino player this might seem like some industry technical mumbo-jumbo. However, an understanding of this distinction shows how it changed Indian gaming forever. For one thing, at the shallow-most level, it helped MGAM’s stock to plummet below $7 a share. While I note that as the shallowest of the impacts of the decision, most of my analyst friends would tell you that a loss of 86% market cap is devastating to most companies. (Market cap is a measure of the total dollar value of all outstanding shares of a company, computed as shares times the current market price. This is a pretty standard measure of corporate size and strength.) Up until the decision letter, other vendor companies had begun to follow the successful MGAM model. Georgia-based Cadillac Jack Games (since purchased by Russian investors and embroiled in a control issue with founder (and 30% stakeholder) Mike Macke) bought prefabricated buildings for casinos in exchange for floor space  and other companies investigated the same model. A “management contract” under the Indian Gaming Regulatory act is far more than a simple agreement to manage a casino. Just the definition of the contract takes up nine pages of the tiny-print Code of Federal Regulations. The 4,833 words that define a management contract are backed up by an extremely complex approval procedure. At this writing, the approval process for a management contract is taking 18 months to two years. (See the Trump management contract in the Endnotes of this book). An NIGC-approved management contract also must adhere to very specific regulations, which include among other things, limiting the amount of money the management company can make and restricting the scope of activities in which the management company can participate. The regulations also prohibit a management company from owning or transferring ownership of any land or other real property. Even more complexly, a management contract requires submission of three years of detailed financial statements, detailed background and personal information of the officers of the company (even down to misdemeanor and traffic convictions), and specific limitations on the activities of the officers of the company. Moreover, IGRA requires that tribes maintain “sole proprietary interest” in their gaming enterprises. In short, the NIGC destroyed the MGAM  business model. MGAM responded with a bevy of chest-pounding statements claiming that the NIGC acted beyond their scope and that NIGC’s decision was not presented in a timely manner . Additionally, MGAM had its client tribes raise as much political pressure as possible to defend the business model by characterizing it as some sort of charitable effort by MGAM to help poor tribes that could otherwise not afford to enter into the lucrative world of casino gaming. Lobbying was so powerful that the leadership of the Senate Indian Affairs Committee, Senator Ben Nighthorse Campbell and Senator Daniel Inouye fired off a two-page letter “warning” the NIGC that the commission was having a “chilling effect” on “those who would come forward to assist tribes.” The letter continued, “As you well know, for many tribes entering the gaming arena, their only means of providing compensation to those who are involved in the start-up and development of gaming enterprises is to commit a percentage of future net revenues to pay for these non-management agreements.” This “charitable enterprise” argument, as humanitarian as it might have sounded at the time, was a hard pill to swallow when it came to a close look at the Thackerville issue. The Chickasaw tribe owned more casinos than any other tribe in the country and at the time was expanding with several multi-million dollar projects. The destruction of the development contracts further opened the doors for other manufactures to step into Indian gaming. With the “other vendor penalty” removed for properties, the opportunity to lend money to tribes, and most importantly the destruction of the single-vendor monopoly, the stage was finally set for the major vendors to step into Class II gaming. And it happened quickly. Bally Gaming, the Reno Nevada based giant (and among the inventors of video poker), bought Sierra Design Group (SDG) and instantly was in the market; and in fact dominating the State of Washington. The former owner of third-largest commercial slot machine manufacturer Aristocrat, joined with Bally’s former CEO to found an exclusively Class II company called C2 Gaming (and those founders, Steve Wiess and Lowell Hansen (respectively) are two of the industry’s stalwarts of integrity, unlike many of the companies’ that were already in Class II gaming on the roadway from Georgia and South Carolina). Frank Haas and I traveled repeatedly to Reno and to South Dakota to try to convince the 900-pound-gorilla, IGT, to enter into the Class II universe. When at long last they agreed, I took the first 600 machines off the Reno assembly line. Shortly afterwards they abolished their SODAK Indian gaming division (which they had not founded in the first place), folding it into the primary company and began large scale manufacturing their own Class II platform with placements almost immediately in Florida, Alabama and Oklahoma. All the doorways were open and all the roadblocks were cleared for corporate America to enter Indian gaming. But it was not instantly smooth sailing for the corporate giants. At dinner one night in Oklahoma City’s Mickey Mantel’s Steakhouse, an IGT executive confessed to me that part of the reason IGT did not have more Class II games on casino floors was that “the other guys” … he moved his fingers in the motion of counting money… “and we are not willing to pay people off to get our machines in there.” Large publicly-traded companies really can’t afford to participate in that sort of duplicity…the South Carolina model. Still, even with the SEC-watched corporations in the market, one should not forget the foundation of this entire business: cartoon representations of invisible bingo cards and invisible ping-pong balls. There is a fucking multibillion dollar business of taking YOUR money that is based on that concept. Get it? Aware of many of the seeming-absurdities and loopholes in the regulations, beginning on March 31, 2004 and by mid-2005 the NIGC had finished a fifth rewrite of the Class II regulations that would, among other things, do away with the loophole of invisible bingo. In their proposed revision of 25 CFR, the NIGC wrote “These standards for classification are intended to ensure that Class II gaming using “electronic, computer, or other technologic aids” can be distinguished from forms of Class III gaming that employ “electronic or electromechanical facsimiles” of a game of chance or slot machines.” They went on to say “Electronic or electromechanical facsimile means a game played in an electronic or electromechanical format that replicates a game of chance by incorporating all of the characteristics of the game.” After reviewing the lengthy proposed changes, attorneys for well-respected Indian gaming law firm Hobbs & Strauss reported that the new regulations would disallow every existing Class II slot machine and turn Class II gaming back into paper bingo and dauber facsimiles of it. Still, the United States Department of Justice sharply criticized the proposed new regulations as not going nearly far enough to curtail the Johnson Act violations perceived to exist in Indian gaming…especially in non-compacted states (moving gambling devices across state lines). Even the first proposed rewrite of the regulations, in 2004, set the stage for devastation of the industry and of casinos for tribes in states without compacts. Hobbs & Strauss as well as other tribally-hired law firms spearheaded a major push for compacted games in every state. In November of 2004, partly due to the law firms’ push, voters in Florida and Oklahoma (two huge Class II states) approved ballot measures for the state to enter into gaming compacts for Class III games and totally bypass the whole Class II debacle. Yet the Class II games remain all over the country; and as recently as November 10, 2008 the NIGC published (in the Federal Register) their “final” new technical standards for Class II games. Specifically, the “final” standards added new parts to the Class II regulations: requiring independent laboratory certification of games; and amending the definition of “facsimile.” Very specifically, the published rules made it clear that “the rule does not attempt to distinguish Class II gaming from Class III gaming. Rather, the rule assumes that games played on Class II gaming systems are, in fact, Class II.” The NIGC added, “The rule also seeks to permit flexibility in the implementation of technology and to embrace the development of future technologies unforeseen and undeveloped.” I would not say that I played a “significant” role in these clarifications, but I was certainly a part of a number of the hearings, comment sessions, and reviews beginning in 2004 and for several years. And, I ghost-wrote tribal commentary to proposed changes for two  different Oklahoma Tribes, having Tribal Governors or Chiefs sign their name to my commentary arguing that Class II should not be tampered with by the NIGC on the grounds of Sovereignty rather than on technology standards.  I note that some of my comments made it into the Federal Register published October 10, 2008. It appeared that those proposed changes would die before actually becoming regulations with the coming of the Obama administration beginning in January of 2009. However, the same standards came back to the forefront in 2012. “Bottom Line” (as the accountants say) is that it appears that there were no substantial changes in Class II for a five-year “grandfather” period that ended in 2012. And, ultimately, as two Oklahoma IGT employees told me at a Global Gaming Expo convention, the large companies like IGT are getting out of the Class II business and focusing exclusively on compacted states and the Class III model. At the same event, the son of one of C2’s founder confirmed to me that their company, founded exclusively for Class II (as their name indicates), was developing Class III games. And the giant of all Class II companies, VGT, originally of South Carolina but lately of Nashville Tennessee, also indicated that they are switching their most popular games to Class III. Meanwhile, concerning electronic bingo and facsimiles of bingo, it really is as President Clinton said on another subject: it depends on what your definition of “IS” is.

•   Chapter Fourteen. How I killed Elvis in Indian Country

“Hell, we don’t have to worry about genocide from your people anymore. We Indians are going to kill ourselves off before you have a chance to do anything else to us. Since we have casinos and a little money, white people can just sit back and watch us destroy each other over this bullshit.” — Russell B. Ellis, former Treasure of Absentee Shawnee Tribe

I n Indian Country I killed Elvis. I pissed off almost all of those Class II slot machine companies from South Carolina. I “conspired” with the FBI to destroy a casino-finance plan. I raised one Tribe’s revenue by $55-million dollars for the sole purpose of seeing my name in print. Oh, and I screwed an oxycodone addict out of a $2-million job at a casino. At least those are among the most common rumors, stories, legends, and complaints about me. Undeniably, I have spent a lot of years in Indian Country; first as a displaced 1960s radical following the post-Wounded Knee struggles for sovereignty and later as a developer and operator of casinos on behalf of various Tribes across the country. I have been either fortunate or cursed, depending on one’s perspective, to have avocation and skills in both arenas. Remember, I am a white Southerner with an obvious fixation on 1950s westerns as the passions plays of my culture; and I grew up thinking the unrelated Jackson boys (Andrew and Stonewall) were the good guys. So I suspect my original journeys to Native America were probably less about historical reparation and more about the romanticism of reliving Sam Houston’s being adopted into the Cherokee Nation, Davy Crockett’s fight with Andrew Jackson against the notorious Indian Removal Act, or some other fanciful (if not paternally racist) imagination of my gambler hero Doc Holliday’s time living with the Ute. While distributing Akwesasne Notes, playing guitar and singing “Custer Died For Your Sins” on stage with my friend Kanghi Duta (Floyd Westerman), or raising money, support, and “supplies” for Wounded Knee, the romanticism melded with the zeitgeist of early 1970s political radicalism. Organizing and demonstrating with AIM leadership, TAIMSG, and AIMSG ; secret meetings with Tuscarora leaders; and a whirlwind of rallies, gatherings, and protests; all facilitated that transition a decade and a half before IGRA. It is just one of those oddities of historical circumstances that this backdrop eventually melded so well with my career as a professional gambler to bring me to Indian Country to develop and operate casinos. Still, I really do not know how even to begin describing the transition I observed in Native American life in the 20th and 21st centuries. Consider the middle-America ethos of “work hard and get out of poverty,” against something more akin to being jerked from the lowest depths of degradation to seemingly overnight controlling and self-regulating hundreds of millions of dollars in cash flow. Regardless of one’s politics, almost everyone can agree that there is a culture of poverty that is outside the mainstream of America. Regardless of racial demographics, poverty itself is a culture-delineator and breeds, encourages, and almost-requires certain behaviors from health and hygiene to alcohol and drug abuse to failings of education to a host of criminal activities. Add to that the ethos of more than 500 years of undeniable holocaustic attempted genocide (and “decertification”) of an entire race. That skin-and-bone noir bleakness is not a glass house that easily is shattered by sudden communal ownership of a casino. The revelation of more than 500 little sovereign nations is disconcerting to some. The concept of invisible bingo cards and virtual ping pong balls seems inexplicable to most. The abject poverty and attempted annihilation of hundreds of nations and an entire race is unconscionable to most. Just imagine, then, what life is like operating casinos in that environment. While the collection of anecdotes in this chapter is an accurate picture of some of those tribulations, these stories are very specific to the Tribes involved and very special circumstances that gave rise to each one —even my killing Elvis. At the same time, some of the issues that I will explore in these accounts are symptomatic of complications that would inevitably plague those complex circumstances that have given us modern Indian Gaming.   Since it is anecdotal, I will present this chapter as a narrative continuation of the day Trump showed up to play against Ginger, the tic-tac-toe chicken. Picture an Indian Tribe with only 13 members left alive —and their very own casino of 2,000 slot machines and 20 table games. From casino revenue, each member of the Tribe collects a per capita payment close to $48,000 a month plus a nearly-one-million-dollar annual Christmas bonus. Yet it was not unusual for some Tribal members’ bank to call casino management complaining that the members’ checking accounts were overdrawn or that they surpassed their credit card limit and did not pay the bill. Draw your own conclusions as to why this was. Travel four miles down the street and there is another Tribe…with only one full-blooded surviving member and five partial-blooded members. They also own a casino; but with only 500 slot machines. Let’s see: 500 machines winning an average of $100 per-unit-per-day is $50,000 a day or $1.5-million a month or $18.25-million a year. At even a 40% operational cost, that would be a net profit of almost $11-million a year for the “Tribe’s” six members. Their Augustine Tribe was a band of the Cahuilla that have inhabited California for more than 2,000 years. White imperialism, purchase of land by unscrupulous developers, and marriages (and assimilation) into Mexican culture apparently destroyed the band, except for the lone surviving full-blood and her five relatives. The larger, 13-member, 29 Palms Band of Mission Indians is also part of the Cahuilla. According to one of the 13 members, their band was known as the shaman and medicine-man sect of the Tribe. So in addition to suffering the same extinction forces as the Augustine, they also were attacked, rejected, ostracized, and often killed by other Cahuilla bands. Their extinction, like the Pequot who own Connecticut’s Foxwoods was less at the hands of General-Custer-like “Indian fighters” and more at the hands of their own and other Tribes. This does not imply, even for one thought, that these two examples are typical of Indian gaming. In fact the Augustine Band is the smallest of the federally recognized Tribes and both are an exception rather than the rule: especially when it comes to wealth. My gig with Donald Trump was in conjunction with Trump Hotels and Casinos having the management contract for the casino belonging to the 29 Palms Band of Mission Indians. Dubbed Trump29 Casino, for that reason, it was my second foray into Indian Gaming since helping ramrod the original federal law, the Indian Gaming Regulatory Act. It was also “The Donald’s” first foray into Native American casinos. The oldest of the thirteen members had, in their youth, suffered the poverty, racism, and outcast status that I had observed in the 1970s. One member had spent decades as a housekeeper and was worn down from years of scrubbing other peoples’ toilets and mopping their floors. She would periodically conduct spot inspections of the casino bathrooms to see if our housekeeping employees were doing the job that she knew so well. Nearly toothless from years of inability to afford dental and health care, she spent many days drinking and complaining about how white mangers were robbing her. The youngest of the thirteen were spoiled in cash, drugs, sex cults, and the dregs of Southern California Mexican-American street culture. One member boasted of having the largest pornographic video collection in California. One member bought a new Hummer the day they became available to the public but parked it in her front yard never to be driven after the first 40 miles when she discovered that she had to climb up into the cab in her high-heels. Another member was away serving what we were told was “drug time” in prison. Several of the 13 were prone to fits of rage, seemingly unprovoked, at staff members of all levels…from housekeeping through management. I was once told to fire a marketing manager because a Tribal member thought the young blonde woman was too pretty (Sovereign Nation: no employment law protections). Others were mild-mannered and seemingly beaten back in defeat…except for their half-million dollar annual paychecks. Still, the educational level (actually lack thereof), the generations of victimization, the propensity toward alcoholism, the behavior that many of today’s teens would call “ghetto”…were all unshakable simply by pumping massive amounts of money into members’ pockets. This Tribe especially, but almost all of the smaller Tribes that got into gambling early, had been (at one time or another) victims of those grey-area vendors, of the various “development” schemes we have discussed, and almost every con-man scam I have ever seen or read about. Just as white speculators, thieves, conmen, and “expansionists” had invaded Indian Country in the 19th century to steal land, butcher buffalo, and assault Tribal wealth and resources in every way imaginable, so too hordes of 21st century white men invaded Indian country’s new-found casino riches. From Abramoff-style conmen to less silver-tongued out-and-out thieves, to job-hunters, white America once again descended on Indian country’s treasures after isolating them for a century. Consequently, the Tribe (as a personality itself) was at best leery and at worst highly suspicious of anything not Native. That especially included the slick New York Donald Trump and his band of professional operators and gamblers. In the eyes of some of the Tribal members, Trump had promised to transform their small Bingo Hall and Class II casino into a world-class property bearing the Trump name and bring in high roller gamblers from around the world. Their own (white) General Manager had brokered the Trump deal and in addition to the hefty salary they were already paying him, negotiated himself a lifetime annuity based on the revenue of the casino. Rather than pumping millions of New York dollars into Coachella California, Trump’s company guaranteed the first several million of a loan package for the Tribe through a large Midwestern syndicator; but the Tribe itself was on the line to pay off the loan. RIGHT: Trump29 Casino in Coachella California, near Palm Springs, circa 2004.  The syndicator, in turn, having a long track record of financing Indian Casinos required specific limited waivers of sovereign immunity that included control of the bank accounts where daily drop funds were deposited. The loan document was so restrictive that biweekly payroll, food & beverage purchases, and anything spent had to have prior approval of the syndicator. All other debt was subordinated to the syndication and even slot machine changes had to be approved. At first I thought these loan covenants to be absurd, repressive, and racist-paternalistic; and apparently federal regulators eventually agreed with me since a few years later they had taken control of that syndicator and forced it out of business. The bankers argued that the perils of sovereignty and the less-than-stellar track-record that many Tribes had in paying back loans made such covenants the absolute minimum necessary to assure loan repayment; covenants borne of years of defaults, bad experiences, and in many cases deliberate fraud. To add to the uneasiness between the Tribe and The Donald, Trump’s contract required a 30% share of all revenue. From that fee only the General Manager’s salary was paid; the rest of the executive and subordinate staff was paid from the Tribe’s 70% share of the revenue (even though ALL employees answered to the Trump organization). That within itself is a formula for resentment. Moreover, Trump was paid an additional fee for the licensing of his name and image for the property. The entire Trump management contract (at least the portions that are public record) is contained in the endnotes of this book. By the time Donald Trump arrived to play tic-tac-toe with my chicken, there was open hostility toward him and his contract. Several of the 13 wore tee-shirts with his catch phrase “you’re fired” and his name scrawled beneath. As I said earlier, the true purpose of his visit was for the Tribe to express that they wanted out of the contract. They sincerely believed that the Trump organization was providing them nothing for their fees. (Never mind the fact that I had increased their revenue by more than double). This hostility and belief that they were wasting their payments was partially fueled by a California Tribal attorney (himself white) who had a long history of involvement in Tribal ventures beyond just casinos. He had, in fact, found ways to create huge legal fees from an entire cafeteria-list of “investments” for many nouveau millionaires amongst Native American populations. One of his key assertions was that the Tribe could handle professional managers equal to or better than Trump’s choices for a fraction of the costs. Unfortunately he was not proven wrong until long after I, Trump, and the management contract were long gone; revenue plummeted to pre-Trump levels and vastly below pre-Gary Green levels. While Trump had indeed brought the loan syndicator to the table, guaranteed a portion of the loan, and provided top-notch staff and advisors; it was not unreasonable to conclude that those functions might have a somewhat steep price tag that, at least in part, paid for the Trump mystique. It was in that context that I began to ponder just how much value that mystique brought to the table versus what portion of it was simply good staffing. In the midst of these conflicts, Donald’s Vice President of Casino Operations (and my good friend), Vince Mascio decided to experiment with the Trump29 branding and appeal. For the first two years of the Trump management contract the appeal and focus had been Donald Trump himself. Using that strategy, the casino was doing about $45-million-a-month in “coin-in”. With the employment of the tic-tac-toe chicken and our brand shifting from Trump to Ginger the Chicken, the coin-in had grown to an average of more than $70-million. This led us to discussions about the cartoonish image of a branding character in general. We were enjoying the benefit of Trump and The Apprentice brand combined with the Ginger branding. Vince wondered aloud what would happen if we threw a couple of other faces into the branding mix. First we hired a “spokes model”, the aforementioned Kimmie, to appear on all of our billboards, newsletters, TV, and print ads. Located in a Twilight-Zone existence between the poverty of Coachella and Indio California and nearby affluent Palm Springs, Palm Desert, and La Quinta, we had picked a Mexican-American model that also carried an exotic Anglo look. Her success was difficult to gauge initially but clearly she was tied to the brand. We then began to wonder about the actual power of Donald as the total brand. To test our suspicions, our next direct mail piece was divided into two versions; identical letters with identical offers. One was signed by Donald Trump; the other by me —Gary Green, Vice-President of Marketing. We wanted to see if one signature drove more revenue than the other. I, of course, expected to be trounced by “The Donald.” To my total amazement, the letters bearing my signature brought in 21-times the revenue of the letters signed by Trump. Stunned, we repeated the test with the following week’s mailing, reversing the two groups and achieved similar results.   ABOVE: Gary Green as the larger-than-life casino boss, taking a sledge hammer to a poorly-paying slot machine on a billboard for Donald Trump and The 29 Palms Band of Mission Indians casino near Palm Springs California.

It was time to pull together a focus group of respondents and find out what-the-hell was going on. Almost universally we were told “I knew Donald Trump was not sending me a personal letter, so I considered it “junk mail” from the casino; but this guy, Gary Green, is obviously a real person and a personal letter from him is probably really a personal letter.” From that day forward, the official marketing strategy of Trump Hotels and Casinos for Southern California was to brand the casino with Gary Green’s signature and face. I signed all the direct-mail letters. I was on billboards. I was the official face in the television commercials. I became a larger-than-life cartoon character of a “casino-boss”.   The Trump29 high-roller invitation to Gary Green’s 50th birthday celebration. We had no idea what a monster we were creating but we DID know that the $45-million-a-month coin-in that had climbed to $70-million, now rocketed to $100-million-a-month. While Trump’s casino properties in Atlantic City were taking a financial dive, his California managed-property was posting metrics that were beyond reason. There was no change in the economy; there was no physical change; there was no shift in competitive strategies. The only measurable change was the rebranding. The more that the revenue climbed the more the Trump organization insisted, frankly over my objections, that I become the branding face of the casino. My advertising face expanded to public appearances, a cameo walk-on in an Indy film about a couple that meets in a casino, to the aforementioned New Year’s Eve countdown for a Los Angeles television station. A celebration of my 50th birthday was transformed by the Trump organization to a high-roller party inviting 300 of our best players along with celebrity look-a-likes (Sinatra, Elvis, Dean Martin, Sammy Davis Jr., and the same “Marilyn Monroe” actress who had appeared in Pulp Fiction) as well as pages of B-list Hollywood personalities who lived in or near Palm Springs. My good friend Eddie Garrett, who had played the photographer for the Los Angeles coroner’s office on NBC’s Quincy, sat at my table. It was during the preparation of this party that I learned the Hollywood racket of celebrities being paid to attend parties. Once word got out that there was a big party being planned for Gary Green, the casino was approached by a number of celebrities (or their agents) wanting to attend for a fee. The two standouts in my mind were David Spade who offered to show up and sit at my table for $15,000 and former Batman Adam West, who offered to spend the evening at the party for a mere $7,500. We rejected all pay-to-attend offers; though I would have loved for Adam West to have visited (in 1966 he was my hero). Using me as a branding tool would have seemingly reinforced the Tribe’s anti-Trump argument that Donald’s name and image was not nearly as valuable as its price tag. But instead of seizing on the value of that momentum, several of the 13 members complained that rather than use Gary Green as branding, the image on the billboards should be a tribute to the Tribe’s history and culture. Trump’s Vince Mascio strongly argued that I was a caricature, a cartoonish branding image. His words would have fallen on deaf ears had he not also been armed with hard metrics that showed the effectiveness of the campaign. He then argued that the white and Mexican gamblers, who collectively were responsible for that $100-million a month, would not be enticed to gamble by a lecture on tribal history but would continue to be enticed by fun gambling images. Even though I was spending more cash on marketing than a typical casino should spend, my results were undeniably effective. With my seemingly exorbitant marketing expenses, the casino still was operating at a very healthy 42% (rather than my then-optimal 39%). More importantly I was $700,000 ahead of revenue projections for the fiscal year and a million dollars ahead of the previous year. Those are the kind of results to write home about! Casino financials are generally confidential information but because of the Trump bankruptcy and because of the management contract, certain financials are actually part of the public record (if one can find them). The following page shows my January 2004 financials. This snapshot gives you a good insight into the revenue and expenses of running a mid-sized Indian casino. (By the way the “M” at the end of EBITDA takes into account the Trump management fee.) Meanwhile, I was now more convinced that the value-added by having Donald Trump’s name on a casino was probably initially worth the price tag but certainly not long term except to firmly hold the brand. This was not an opinion I openly shared and certainly did not mention it to Tribal members or anyone close to them. Nonetheless, it was becoming clear to me that a highly-branded and segment-targeted marketing campaign tied in with Trump could be more powerful than a licensing fee to Donald J. Trump alone.

 

Between that realization and the handwriting on the wall for the future of the relationship between the Tribe and Trump, I began quietly looking at the job market without actually floating resumes. Since my 15-minutes-of-fame, I had received about a dozen job offers and had turned them all down out of loyalty to Trump; and while that loyalty was not wavering, I saw an inevitable parting between the 29 Palms Band of Mission Indians and Trump Hotels and Casinos. Given the failing state of the Trump properties everywhere else (and the uncertainty of Mark Brown’s job) I suspected there would be no place left for me. There was an unwritten “promise” that I would be given the General Manager position at Donald’s new casino at Trump Island Villas on Canouan Island. (Tiny four-square-mile Canouan is one of the Grenadines Islands belonging to St Vincent; it was 3,000 miles closer to my home than Southern California.) During my consideration of Trump’s offer, I was contacted by a headhunter for an Indian casino near Oklahoma City. Never a fan of the fly-over states and certainly not interested in the heart of the Midwest, I at first tossed the offer with the others that had dropped at my doorstep. After I ignored the email, the headhunter made a follow-up phone call dropping a salary figure that was 75% more than what Trump was paying me and contained a quarterly bonus offer that was a many-times multiple of the salary. That, at least, got my attention and I agreed to accept their plane ticket to Oklahoma for an initial interview. The headhunter met me at the airport dressed in jeans and a Harley-Davidson leather jacket. I was whisked away in her black Mustang at about 85-miles-per-hour to meet with an accountant for the Tribe who explained to me that the Tribal Treasurer had fallen into a diabetic coma while I was on the plane and he was not expected to live. This accountant, I was told, would nonetheless interview me and report her findings to the Tribal Council. Ooooook. Given the high incidences of diabetes amongst Native Americans, this troubling news was not shocking; just disturbing. She explained that the position was not actually to be General Manager of their existing to casino but to become the General Manager and developer of a proposed new casino…which had not yet even been financed. On that charming revelation I was dropped off at the Marriott Courtyard in downtown Oklahoma City and told that we would resume the “interview” the next day. I accepted that it had been a wasted trip to middle America and was content to see the tourist sites including the scene of the infamous Timothy Mcveigh bombing as well as the National Cowboy Hall of Fame. The next morning I was driven to a downtown hospital which I recognized from the television news broadcast of the bombings. At the hospital I was told to put green scrubs on over my Armani suit and don a facemask as I was led into the intensive care unit of the hospital to meet the treasurer. Even with I.V. tubes running out of his arms and with his face gaunt from the disease, Russell B. Ellis looked like a force to be reckoned with.

Above: Russell B. Ellis, who went to great extremes to avoid being photographed, is almost caught in this picture at an NIGC hearing with Gary Green. First, he was every white boy’s ideal vision of a Native American. He looked as if he had been chiseled on the face of a buffalo nickel or had been the stand-in for Iron Eyes Cody; from his long grey pony tail to his classic facial bones, he looked so “Indian” that I almost gasped at the sight. He was a man that obviously stood well over six-feet, when he could stand. Despite the pronouncement to me that I was meeting him on his death bed, I could see that this was a man that would be around for a long time. “Well how the hell are you?” he asked me as I stepped beside his bed. “A damned sight better than you are,” I answered this complete stranger. “Look, I am going to be out of here in a couple of days and I want you here in Oklahoma helping me. I have a fucking mess that needs to be cleaned up and I need somebody that can market the hell out of this thing as well as manage it. I want you to come,” he said in stern seriousness.  “Just like that? No formal interview?” I asked. “Hell I know more about you than your damned mother does and that is why I flew you here. I want you to start in two weeks,” he answered. The truth is, he did know a hell of a lot about me. The Tribe had recently hired David Cook, just four months retired from the Oklahoma City Police Department as the most decorated living officer in the history of the city. Cook had been asked to secretly “find out everything you can about this guy,” and being a former undercover agent accustomed to building RICO and other major cases, he took the orders very literally. Cook immediately ran all of the routine investigations (one of his favorite sayings is “In God we trust; everyone else we run through NCIC” –National Crime Information Center).   Above: Renowned casino regulator and law enforcement authority David Cook. David told me recently that those investigations were just the beginning. Using his network of police contacts he had an undercover agent in Palm Desert California verify that my condo actually existed and that my car with a Florida license plate was actually parked there or at the casino. “I was used to people giving phony addresses, and I was not going to take any chances with you,” he told me. “By the time I was finished with you, you could have gotten a top secret clearance with the Federal Government,” David told me as I was preparing to write this book. He checked every state where I ever had lived, talked to even casual acquaintances, and knew even where I regularly took my meals. At point he called me about my Folkways /Smithsonian record albums and in perfect Midwest police style questioned, “Now about these records you allegedly have recorded; what exactly is on them.” He prepared a detailed dossier on me and delivered it to Treasurer Ellis before the decision was made to fly me to Oklahoma. David went on to serve a number of Tribes and commercial casinos in investigative, enforcement and compliance matters. In 2008 he was a finalist for the Chief of the Enforcement Division of the National Indian Gaming Commission and is widely recognized as one of the casino world’s top compliance investigators and trainers. I told Ellis that I would consider his offer and contact him after I returned to California. He told me that he had already decided that I was taking the position and he needed an answer within the week because (as he put it) “I have so much crime, rip-offs, and fucked up people that I need you here now.’ The truth is, I had serious misgivings about being in Oklahoma, wasn’t excited about leaving the metro-Los Angeles area, and wanted to give Trump the opportunity to counter offer. I remained loyal to Vince, Mark Brown, and (of course) Donald. I liked my coworkers and my subordinates at Trump29. And, I was sort of non-paternalistically bemusedly fond of the disfunctionality of thirteen members of the 29 Palms Band of Mission Indians. Before leaving for the airport, I asked the headhunter to drive me to the Tribes’ existing casino so that I could get a general “lay of the land.” She drove south of Oklahoma City in the town of Norman, on State Road 9, passed the University of Oklahoma (which for some inexplicable dyslexic reason is called OU rather than UO). Along the way we passed the United States Postal Service’s national training center; the location that had made an indelible mark in the national culture when a crazed worker lost control and shot several of his coworkers… causing the coining of the term “going postal.” Ah yes, Oklahoma! Another seven to ten miles and we arrived at the Absentee Shawnee Tribe’s Thunderbird Wild Wild West Casino. Rural and removed from the population center as it was, the visual stunned me. It was a genuine themed casino with an old-West-town façade attached to the steel building. All it needed was a stage coach out front and it would have looked ready for the Las Vegas strip or at least for a Disney World attraction. I quietly wished that the GM position available were for this casino and not a new one not-yet-under-construction. As we pulled into the parking lot, the head hunter asked me, “Did Russell tell you that the General Manager here would be reporting to you?” “Ah, no,” I answered. “Well that is the plan. I don’t want to say too much. You make your own decisions,” she said as she decided to sit in the car while I visited the casino. Given that information, I decided it best to be totally “undercover” as I perused the casino. I took off my jacket and tie, unbuttoned my shirt, took out my cuff links and rolled up my sleeves and stepped inside the casino. In the next few minutes I observed more graft, scams, rip-offs, skim operations, Federal Minimum Internal Control Standards violations, safety hazards, and questionable procedures than I had ever seen, cumulatively in my entire life or even in books and movies. I wandered around the casino stunned and in amazement. In Southern California, someone would have gone to prison over any number of these violations. At Trump29 I was once called before a Gaming Commission inquiry to explain why a spot check of a marketing-give-away of stereo systems apparently had one more stereo than was on the list of schedule recipients. (It was, by the way, for a wild-card drawing.) The point is, I was from a world where strict policies and procedures had to be written and followed for every action. The most outstanding thing to be said about the 29 Palms Band of Mission Indians is that they operated a gaming commission that should be held as a model for every Tribal regulatory body in the country; they were meticulous. RIGHT: Exterior theme of the Thunderbird Wild Wild West Casino near Norman Oklahoma (circa 2004); note the horse sculptures “hitched” in front of the casino.  In Norman I was walking through a world that looked like James Cagney’s grapefruit-in-the-face gangster and his sidekick George Raft were running the joint. It scared the hell out of me. Appalled, I caught myself “washing my hands” in front of the surveillance cameras as if I believed any legitimate surveillance had been in place. I was totally at a loss for words to describe the number of independent criminal activities, operational violations, and just stupid procedures that I observed. I returned to the waiting car and said nothing other than “well that was interesting.” The headhunter pressed me and I honestly responded, “That is probably the most fucked up casino I have ever been inside.” She smiled and said that Russell was really going to like working with me and I should definitely let him know what I had seen. Back on the plane, I decided to not accept the offer but to write Ellis a scathing letter detailing what I had seen and my reasons for turning down his offer. In my office at Trump29, I put together a four page letter of blunt bullet points outlining the horrors I had observed. In that letter, datelined from Palm Desert, I began: “First, I want to again thank you for taking the time and the energy to meet with me from the Intensive Care Unit of the hospital. THAT act alone said a lot to me and showed me a man whose vision and spirit are stronger than any of the limitations that usually make people say “impossible.” That speaks volumes about the potential success of this project. I continued: Russell, you will find that I speak very frankly and very directly. I am going to do that now. I toured the Thunderbird property. From what I have seen I strongly believe that either (1) it has some very very serious management failures or (2) someone is stealing from you.” The letter then continued into my bullet points of issues. I dropped the letter in the mail and decided to accept the Trump offer as soon as Vince returned to town at the end of the week. The day before Vince’s scheduled arrival Russell Ellis telephoned me. He said that he had read my letter. “You cut right to it, didn’t you?” he asked with a grinning-sounding tone. “Well, yes Sir, I figured there was no reason to beat around the bush about it,” I answered. “That casino started out making us a small fortune 13 years ago and it has been going downhill ever since. Last month I had to loan the casino $18,000 from the Tribal treasury just to make payroll. It is more fucked up than you can imagine. I want you to come in here, take it over and clean the fucking house. You will have absolute authority backed by me and I want every one of the thieving bastards out of there,” he said in a spewing of excited tones. What he did not tell me was that former police officer David Cook now officially had been appointed Executive Director of the Tribal Gaming Commission and was already deep into his own investigation. Cook’s initial reports identified exactly the same issues that my bullet-point letter had raised. This validated both me and Cook as well totally convinced the Treasurer that it was time to make a change. He also did not tell me that he had hired investigators from The Fidelis Group, former FBI and IRS forensic auditors and investigators, to find out what was going on at the casino; and their initial findings were identical to my walk-through. Ellis’ excitement suddenly put the project in a whole new light for me and just to drive home the point he sweetened the offer by increasing the bonus structure. “Our Tribe charges the casino a six-percent tax on the daily drop,” he began. “On the drop?” I interrupted; “don’t you mean on the “win”, on the “hold”? “Hell no. We want our cash off the top; if we waited for the win, that bunch of fucking crooks in there would tell us we weren’t winning anything. We depend on that damned money to operate the tribe so we take it off the top,” he continued. I interrupted again, “but if you take six-percent off the drop that is an effective tax rate of 70% of the revenue; leaving the casino to operate on 30% of the revenue. A typical casino operates on 39% to 40% of revenue.” “Hell, we own the building. There is no loan. If they can’t operate that place on 30% then somebody is stealing something,” he added. “Well you are definitely right on that point,” I told him. “Right now we aren’t getting a damned thing out of that casino. I am highly confident that you can turn that around and make us some money. Since our money is tied to the drop then I want your bonus to be tied to us making money. I am offering you one-half-of-one-percent of the taxable drop as a bonus. If we don’t make money; you don’t make money. And if we get rich then you do too,” he concluded his offer. I did some quick math and realized that if the drop is even $30-million a month then my bonus would be $150,000 a month. There was no TITO (ticket-in / ticket-out) so coin-in would be drop plus replays. Forgetting coin-in, even going absurdly low, if each machine averaged only $50 a day in drop cash, then my bonus would still be $54,000 a year on top of my base salary. I had just seen the win results for the Claridge in Atlantic City; they had about the same number of games as Thunderbird and they won for the year $109,574,000 (before expenses). Okay, even ½ of 1% of win at that rate would be a half-million dollar bonus. And if the casino did what Trump29 was doing, that would translate to an annual bonus of $6-million. I was getting a headache. I told the treasurer I would get back to him but I needed to give Trump at least a 30 day notice. The next day I sat down with Vince Mascio and told him about the offer. Vince’s advice was “jump at it”. He told me that even if the job only lasted a year, it would be well worth it and he did not think Trump would survive a full year either in Atlantic City or in his contract with the Indians. There was a clause in the contract that allowed for termination if either party became insolvent and THCR was on the brink. Trump also responded. After initially offering to match whatever Oklahoma tendered, upon hearing of the bonus structure the word came from Trump, “I hope you enjoy your new position.” I laughed. I formally tendered a 30-day notice, knowing that in the casino industry it is traditional to immediately escort a resigning employee off property, to protect assets. It turned out, though, that I was so entrenched in the property, so key in its operation, and so tied to the brand, that my month-notice was accepted. Working with Mark Lefever, Vince Mascio, Steve Sohng, and a dozen other really good people was an experience I was not eager to leave behind. Leaving the prestige of being a Vice President for Donald J. Trump was a major step as well. Though I took with me the valet guy, one of the phone operators, Will (from the players club), and Frank Haas…it was not like I was raiding the staff. And since there was no shared customer base between Coachella California and Norman Oklahoma, there was not much chance of leaking any proprietary information between the two. (I did, however, as a matter of security remove the SIMS card from my company cell phone and replace it with a blank one.) I began using my remaining month to rebrand the property from “me” to the new General Manager; but he lacked the force of personality or the larger-than-life attitude to be an actor on that stage. The effort quickly fizzled and I then began instructing the management staff on how to stick to the direct mail formulas I had created; and I obtaining their promises that they would not deviate from those formulas. I wanted to make certain the transition was smooth and that revenue did not dip back to that lower level just because Gary Green left. My focus was to keep the property at its current level, position it to grow, and maintain a close relationship with the Tribe, with Trump, and with the staff. But a week later David Cook called me. David’s investigation further had confirmed many of the bullet points I had sent to Treasurer Ellis and the Tribe had appointed David “interim General Manager” of the Thunderbird Casino with the charge of securing tribal assets. In doing so, Cook had fired the General Manager and 110 other employees. He was recommending criminal prosecution and had met with the FBI twice. Meanwhile, Ellis had announced his contract with the forensic accounting firm. Cook was calling me to tell me, “Mr. Green, can you come to Oklahoma earlier? I am a little over my head here. I am a police officer and an investigator and I don’t know a thing about running a casino. I have started cleaning it up for you here, but I need somebody in here that knows how to operate a casino. Can you please get out here sooner?” At a Trump “going away” party for me, the newly appointed General Manager asked if there was anything he could do to convince me to stay. The Tribe’s Chairman, Dean Mike, asked the same question. There was nothing either could do by then. My arrival at the Absentee Shawnee Tribe’s Thunderbird Wild Wild West Casino SHOULD have coincided with my departure from the Thunderbird Wild Wild West Casino as well. Any operator in his (or her) right mind would have run the other direction after the first day. I, on the other hand, either out of sense of challenge, adventure, or temporary insanity, decided to stick with it. I am far beyond the racist concept of “the great white hope,” but damn these people seriously needed help. Shortly after my arrival, and before actually reporting to the casino, Treasurer Ellis revealed to me the details of that $18,000 loan from the Tribal treasurer to the casino; funds needed to make up a shortfall in making payroll; and he was expecting that trend to continue until revenue increased or expenses went down. As if that were not enough, then he hit me with the classic “oh-by-way.” In this case, the oh-by-the-way was that the Tribe owed the National Indian Gaming Commission more than $4-million in fines for operating illegal blackjack games and illegal Class III re-spin games and refusing a cease-and-desist order following a Notice of Violation. Apparently, the (now-former) General Manager had refused the order and was actually arrested; and ordered to wear ankle bracelet while he was under house arrest. Unlike their neighbors at the nearby Seminole Tribe, where the NIGC took over management and operation of the casino, the Absentee Shawnee had attorneys that were able to keep the casino under “Tribal” control. However, because of the shortfall in cash flow, the Tribe was now behind in their payments to the NIGC and in danger of closure by regulators. I found this out before I knew that Frank Haas was on his way to Oklahoma, and I reached back into my memory of what little I had observed of how Frank had implemented Mark Lefever’s payoff negotiations with that evil loan syndicator for Trump29. I called Lefever to get his suggestions of how to get out of this mess. His first comment to me, before offering advice, summed up the situation absolutely accurately, “you’re fucked.” Oh swell; but that is what I like about Mark —to the point and no bullshit. I finally met the Governor of the Tribe, Kenneth Blanchard, who shared with me three years of independent audit reports showing that casino had been “flat” for all three years. Blanchard, correctly, asked the question, “How can they make the exact same amount of money every year?” Governor Blanchard was hard to get to know. It took several months to understand what he was all about; but when I did, I came to respect him more than any other member of that Tribe. Blanchard had an amazingly down-to-earth focus on economic development; he was constantly pursuing ways to improve life for his Tribal members. Traveling with my parents through the hills of our Appalachia homeland during the 1950s and 60s, I had seen firsthand some of America’s most dire rural poverty: wood frame houses with the cracks between the wallboards “insulated” with wadded newspapers shoved into the holes; cardboard boxes cut in the shape of window panes to keep the blowing snow out; no running water and toilets a few yards behind the house, with a hold dug into the ground and an “outhouse” overtop of it; one bucket of coal to fire the only heat in the house for the entire winter. If it had not been for President Johnson’s “war on poverty in Appalachia,” many kids would have never tasted pasteurized milk. In one east Tennessee elementary school we attended, my brother Ron came home one day to report a little boy in his first grade class has urinated in his pants rather than pee into “that pretty white bowl” where he was taken to the bathroom; he had never seen indoor plumbing. On his desk in Shawnee Oklahoma, Ken Blanchard kept a notebook filled with photographs of the homes and living conditions of his people before the recent economic development programs … and casino gaming. The stark images of poverty from the travels of my childhood were practically images of luxury compared to the bleakly severe deficiencies and abject poverty suffered by the Absentee Shawnee Indians of Oklahoma. Page after page of Blanchard’s scrapbook served to remind him and show me the necessity of economic development programs, health care, housing, and jobs provided by casino gaming on his Tribal land.  Not only was my mission clear, from talks with Ken Blanchard, but his vision was clear; more clear than that of any leader of any Tribe I had talked with before or since. Ken Blanchard had a mission in life and this casino was part of that mission. Talks with him were among those few-in-a-lifetime defining moments and my decision to stick with the Thunderbird Wild Wild West Casino rather than run back to Trump or back to commercial gaming was driven by Blanchard’s sincerity, his vision, and the mission he had given me. A little more than a year later, after a long and expensive battle, when the voters of Oklahoma finally empowered their governor to sign a gaming compact with Tribes, Governor Blanchard was with Oklahoma Governor Brad Henry at one minute after midnight on January First when the law went into effect. The two Governors signed the history-making document and Blanchard became the first Tribal leader to sign with the State.   Absentee Shawnee Governor Kenneth Blanchard (right) with Oklahoma Governor Brad Henry (left) at one minute after midnight signing the first Tribal Gaming Compact for any Tribe in the history of Oklahoma. It was this kind of visionary leadership that should have made Kenneth Blanchard a legend among his people and for generations have his name spoken with the same reverence as the first great Shawnee leader, Tecumseh. But, alas, such was not to be the fate of Blanchard’s selfless dedication to his Tribe and to his people. And such was not to be the legacy of either the Compact with Oklahoma nor the Thunderbird Casino. But before that legacy could be explored, there were more serious issues facing the casino than merely flat revenue and the casual observations I had made to Treasure Ellis. First, but not even foremost, there were the issues of a huge American Express bill and of charge accounts at clothing stores all of Oklahoma City. Ellis told me that the previous General Manager had opened an American Express account in the casinos’ name without the Tribal Council’s knowledge or consent and had issued cards to several employees. (I later learned that the former Governor of the Tribe, now deceased, had in fact authorized the account if not how the cards were ultimately used. His administrative assistant told me, however, that he was bedridden and not aware of what he was signing at the time the GM visited him in a hospital with the form to sign.) Additionally, several marketing department employees had confessed to Cook (the ex-cop was a master of getting confessions) that they had purchased personal clothing and household furnishings from department stores and charged the items to casino accounts, authorized by the Director of Marketing (who was married to that General Manager). The NIGC fine, these bills, questionable management, and a pretty fat staff (the marketing department had almost 20 employees) all combined to paint a clear picture of the financial status of the business. I added to my inquiries of Ellis only the daily cash flow, drop, and hold. I also wanted to review, in detail, those “flat” casino audits for the past three years. The NIGC requires that Indian casinos submit to an independent outside audit and this Tribe had contracted with one of the most respected firms in the industry. However the audits were a woeful disappointment; the last pages detailed the casino management’s refusal to release financial data and refusal to give access to auditors. Ellis was baffled and the audits were worthless; they had no data. Something was definitely up. After the status report from Ellis, I finally met David Cook in person. Cook had been given the task of leading me around the casino, introducing me to staff, and briefing me on what he had discovered in his investigations…as well as who he had already fired and why. The first fired had been the General Manager; the GM had already fired his own wife when he was “shocked to discover that she misused the American Express account.” (Shades of Rick Blane paying Louie’s gambling winnings just as Louie was ordering Café Americain closed). My first stop was the GM’s office, which still had a cloud of stale cigarette smoke hovering in the air. The desk was coated with a thick, yellow, sticky film of nicotine and when I rested the side of my hand on it, my palm became coated with a yellow stain. I had already observed that the separate administration building was a two-story wood-frame structure with no sprinkler system nor smoke detectors; and most of the employees in that building smoked at their desks. Several of the offices had burning cigarettes in ashtrays but no one in the office. Walking through the casino to the GM’s office with David Cook, I noticed there was no fire suppression or sprinkler system over most of the area. And so my inspection began. Just outside the rear entrance to the casino, a long refrigeration trailer (from an 18-wheel tractor-trailer rig) was parked. Electric wires ran from the casino to power the refrigeration unit on the truck. There was a small padlock on the doors to the trailer. David Cook told me that he had put the padlock on the trailer after learning that it had at one time been totally filled with frozen restaurant-quality steaks. When he opened the doors, there was only one pallet of the meat left; in less than two months the small casino and its tiny coffee shop had gone through an entire truck load of steaks. OR…with the door not having a lock and no surveillance camera in the back of the casino, someone possibly had been stealing the meat. That was one of the oldest rackets in stealing from a restaurant. I think Nicholas Pileggi detailed that scam in Wise Guys as did Demaris Ovid in The Last Mafioso; Jimmy the Weasel Fratianno. This was the first time I had actually seen it in action. As I walked along the outside of the casino, I noticed electrical wires and CAT-5 network cable looped along the side of the building without conduit or even ties. Subsequent examination revealed that these were the cables that carried the game outcomes (from the Virtual Bingo draw) from the server rooms to the slot machines. I asked Cook, “What is to keep someone from slicing one of those lines and changing the outcome of the game?” “You mean like that?” he responded as he pointed to a ball of black plastic electrical tape wrapped around an obvious splice point. “Oh you haven’t seen anything yet,” Cook told me as he read the pained expression on my face. I scanned the parking lot and the back acreage of the property, looking for backup generators (in the event of loss of power). Running 600 server-based slot machines could be a big problem if customers had money in play during a power outage; unless there was a generator in place to pick up where a local UPS would fail. Most Minimum Internal Control Standards required backup generators. Here there was no such requirement and no generators. As we walked toward the door to go back inside, I got a hefty whiff of what smelled like a freshly-fertilized pasture. I looked at Cook who laughed and led me to an open cesspool. “Please don’t tell me that is the raw sewerage from the casino,” I almost pleaded. “Totally legal here; you are on a sovereign nation,” he reminded me, adding “it is only bad when the wind changes direction.” “Shit,” I said. “Exactly,” David laughed. As soon as we stepped back inside the casino, David pointed me toward two closets near the back door. Each had a series of barn-hinge hasps with padlocks through them. Cook, who had a ring of keys that looked like something the high school janitor used to carry around, did not have a key to these “secure” closets. The NIGC, trying to effectively protect tribal assets, requires that the virtual ping-pong-ball bingo servers are locked away from the general public and requires: “physical security measures restricting access to agents, including vendors, must exist over the servers, including computer terminals, storage media, software and data files to prevent unauthorized access and loss of integrity of data and processing.” These two closets were the “secure sever rooms” for the casino. “Do I EVEN want to see this,” I asked Cook, rhetorically. He called for the “IT Department” to allow us access. I can’t think of the words to describe what I saw in these closets. For my older readers, you will remember the sound of the contents of Lum and Abner’s closet falling out when the door opened. For younger readers, imagine a closet packed with: wires; old computers (working and not working); oily rags; scraps of paper; half-empty soft drink cans; molded coffee floating in months-old cups; broken furniture parts; and even a mousetrap with peanut butter bait. Imagine all of that balanced so that if the door opened too quickly, everything would lose balance and fall out the door. Add to that lovely visual, a spider-web of network cables, unlabeled or otherwise identified, each coming from a network hub underneath one of the banks of slot machines. Approximately 75 cables were strung to one (or both) of the closets, all without conduit or labels. The cables were draped, pulled, looped, and strung seemingly haphazardly and intertwined through each other without organization. I cringed and continued my tour. As I walked across the gaming floor toward a section of the building called the “Nickel” something or another, I tripped on a weak section of the floor (and wondered about slip-and-fall accidents). “Oh that is where the forklift fell through the floor when it was lifting the sculpture to the top of those slot machines,” a housekeeping employee told me, adding “people fall there all the time. We just never got it fixed” Ellis had already told me that the casino had spent $75,000 to buy a solid bronze sculpture from a Seminole leader (who was also a State Senator) as a sort of political tribute. The” nickel corral”, I discovered, was not actually part of the casino structure; rather, it was made of four doublewide mobile-home trailers stitched together and attached to a side doorway from the main casino. The lights had been taken out and replaced with one “black light” tube in every other fixture. The room was so dark that I could see the people at slot machines only because of the glow of the slot machine video screens and not from room lighting. I scanned the room for security cameras. There were smoked-bubbles for them, but I seriously doubted that anyone could see an image through cameras. The room was dangerously dark and the construction of the trailers did not seem solid enough to support the weight of the slot machines; the floor buckled as I walked across it (and I only weighed 160 pounds at the time). I looked at the front of the slot machines and noticed that many of the machines did not have cam locks on the drop door of the belly glass. This meant that an unscrupulous customer or dishonest employee could open the front of the slot machine, and get to the cash drop box…you remember my pictures of how a drop team removes money from slot machines. As I opened the glass, I discovered there was no lock on the cash box either. This meant that not only could anyone reach the cash box, but they could get to the cash as well. I glanced up to the camera covers and again realized that even during a drop, there would be no way to observe cash taken from the machines. I wondered how much had been out-and-out stolen. Since I was already inside the machine, without a key, I checked the meters…or rather I tried to check the meters. There were none. Hence there was no physical record (hard meters) of how much cash went into the machine or was paid out; it was if these machines had been designed to be stolen from. I closed the slot machine, shook my head again, and turned to David to continue my tour. As I slammed the machine shut, I commented, “These are some seriously fucked-up slot machines.” A nearby slot technician ran up to me and warned, “You can’t call these slot machines; you have to call them video machines.” “Horseshit. They are Class II slot machines,” I said. The tech replied, “we were told to never call them that, it is a secret. We have to call them video machines.” “A secret? You were told that by an asshole. What you call the machines does not change what they are or what they are not. They ARE slot machines; just Class II type slot machines.” I explained as I walked to the front of the room. At the front side of the trailers, there was a construction area that looked like it had at one time been the bathrooms for the mobile homes. Workers had installed a bullet-resistant Plexiglas window and were busying themselves measuring for sheet rock walls. Inside the construction area I could see the Cage and Cashier Manager directing the work crew. As I opened the hollow door to step into the room with Cook, the manager asked me what I thought of the new location of their “satellite” cage. Hiding my shock, all I could immediately respond was, “ah…No.” The Federal Register has published (in 25 C.F.R. chapter 500) a detailed set of Minimum Internal Control Standards (MICS) for protecting tribal assets at a casino; these are minimum standards and they are very detailed. It was those standards that had made me cringe at the “server room” closets and the dangling wiring outside the building. This violation, however, was totally absurd. A casino cashiers’ cage is the “bank” inside the casino; however in an average day a cage handles a lot more money than a typical branch bank. There are very specific guidelines (as well as common sense) about how such an area is to be secured. Drop ceiling panels, hollow doors, paper-thin trailer walls, and pressed-wood floors above cinder blocks do not really make for the most secure of banks. Frankly, I thought they were joking when they told me that this area was going to be a bank/cage. “How exactly are you going to protect the Tribe’s cash in this configuration?” I rhetorically asked no one. Years later, when I developed a casino for the Ottawa Tribe of Oklahoma (the diametrical opposite of THIS Tribe in terms of functionality, integrity, and harmony), I personally wrote a set of Tribal Internal Controls (TICS) that was adopted by their gaming commission, approved by the NIGC, is still in use today, and has been copied by me many times over the years for less-regulated casinos. Internal Controls are so essential for legitimate operation of a casino that I have included that entire Ottawa set in the endnotes of this book. I continued my tour through the casino, stopping long enough to admire an indoor rock waterfall with ivy growing through it.“I wouldn’t get too close to that,” a maintenance man warned me, “just a couple of months ago we found a momma rattler had hatched six baby rattlesnakes there.” I turned to Cook, who just shrugged his shoulders as he continued my tour. Our next stop was through a doorway that led to a bar and a racing book; a classic OTB (off track betting) parlor with wide screen televisions, a remote access Amtote machine, and lots of trophy cups, jockey colors, and track decoration (as well as a full service bar). It was, truly, a beautifully designed room. I immediately spotted a guy handicapping races for a number of players and then collecting a percentage of their winnings as a toke. Who is the tic-tac artist,” I asked Cook. “The what?” he responded. “The dude working our room for a cut of the winnings,” I said pointing to the guy. “Oh, that is the manager of our OTB,” David explained. “Get-the-fuck-outta-here,” I heard myself say in Trump-esque slang. Great, the manager of the OTB is illegally handicapping for players. Never mind the ethical violations of that; never mind the MICS violations of licensed employees participating in the outcome of a bet; it is just a sleazy-looking practice. I shook my head and made another mental note. I watched two of the bar maids return “spillage” (that had not spilled at all) and pocket the price of the drink themselves without hitting the cash register. Christ, even the bar was ripe with criminal pilferage. Behind the bar and in a side room I examined the rack and gun system and observed the inventory set-up. I would bet dollars-to-donut-holes that the inventory was being short-reported. (I later learned that not only was that true, but the alcohol distributor was giving cash kickbacks to at least two of my bar shift managers for their orders.) And why in the hell had surveillance not caught that? As we continued the tour, we walked through the main casino through another set of glass doors into the bingo hall. Behind me was a balcony overlooking the room. As I climbed the stairway toward the balcony I could feel each step give a little and I listened to the creak each time I put weight on a step. The balcony itself bowed and bent as I walked across the floor; so much so that I really didn’t want to be up there. This balcony had been built, Cook said, for dozens of VIPS and special guests to sit during concerts that were periodically held in the bingo hall/showroom. I later learned that this balcony was built on one-inch by two-inch support beams (rather than 2x4s) holding sheets of plywood, with no additional support. The carpenter, who had built this substandard accident-waiting-to-happen, was overheard in a local bar laughing about that and other objects of his work, saying “I stole so much money from those Indians and delivered them shit. I hope that doesn’t change with the new guy there.” He was in for an unpleasant surprise. At the far end of the bingo hall was a stage, about 12 to 15 feet above the floor. The bingo hall indeed was designed to double as an auditorium for concerts but rather than looking down at the stage, customers had to crane their necks to look up to see the performers. Those sitting closest to the stage could see nothing at all; and those in the flimsy balcony at the back of the room had the best view. As we walked around the stage we discovered three doors, two in the front of the stage and one behind the stage. David had keys to the two front doors and behind each we found large rooms filled with folding metal chairs, most likely used to convert the room to a concert hall. But David did not have a key to the back door and neither did casino security or the Tribal police. With a sledge hammer, we broke the lock on that door and discovered a plush, carpeted, sound-proof room with couches, beds, refrigerator (filled with beer), televisions, paintings on the walls, and a telephone that did not go through the casino switchboard. The room looked like a giant hotel suite, but contained the stale smell of burned marijuana, warm beer, and assorted musk. Subsequent investigation of the phone revealed that a “secret” phone line had been installed with a separate bill sent directly to the casino (rather than to Tribal headquarters). A review of the past year’s bill show more than $100,000 in long distance charges to locations all over the world. We later learned that the room itself had been furnished for some female members of the marketing staff to “entertain” performers, roadies, and other “special guests” who might enjoy the carnal pleasures of the marketing girls. The casino had it all! Behind the stage was another door…for which, like the secret room, no one could find a key. The solid-wood door had a deadbolt lock and the closest locksmith was two days from getting to us. I made the executive decision to have the door kicked in. Behind that door was the entrance to an entirely different world from the rustic casino.  A hallway led to a private entrance hidden off the north side of the building; apparently a “secret” entrance for entertainers arriving on tour buses or by limo. (The casino’s limo, incidentally, had disappeared and there was no record of it ever existing.) Off of the hallway were two luxurious “dressing rooms”; one obviously for the “star” and one for the “band.” Both were thickly carpeted and had large private bathrooms and showers. They were well-lit, had modern walls, and expensive ceramic tile leading to the carpeted rooms. Thinking about returning to the nicotine-poisoned General Manager’s office, I turned to Cook and one of the maintenance men and said, “welcome to the general manager’s new office”; I quickly gave instructions for cutting a doorway between the two rooms, putting a buzzer-controlled see-though glass security door where we had crashed through, dividing one room into a receptionist room and large boardroom, and turning the other room into an executive office. Ok, now at least I would not have to be detoxed every time I walked into my office. As I walked back through the bingo hall/show room, I was almost overcome with a thick smoke cloud that had covered the room in the short time since I had walked through. The smoke was billowing through a large vent in the back side of the hall, spewing like an open fire and filling the room with a noxious greasy smell. Subsequent exploration revealed that the “hood” over the deep fryer and grill in the kitchen did not work and the smoke had been rerouted into this bingo hall. A close look at the wall, where the vent was located, revealed a fire-hazard of caked grease dripping…or oozing…from the vent. Yuck. Next stop on my tour was the “admin” building; the casino offices. There was no covered walkway between the casino and that building; I guessed that in rain or snow employees just covered their heads and ran from the offices to the casino. I had already seen many people smoking in the two-story wood-frame building (with no fire suppression nor smoke detectors); but it was not until I toured the building office-by-office that I realized how flimsy and “trailer-like” the construction was. The stairway to the second floor shook and creaked like the stairway to the balcony in the showroom; and the second story itself caved and dipped as I walked across it. I could see bows in the floor where file cabinets or desks weighted it. Removed from the general manager and from the casino itself, it was obvious that the occupants of this building lived by their own rules and in their own little world. The marketing department lived and ruled from this building. I immediately spotted a court-required ankle bracelet on one of the marketing employees. As Cook noticed that I was staring at it, he told me that the girl was a convicted felon (drugs and assault) who had served hard time and was now on house arrest. Though she could not “technically” be licensed to work in a casino, she was a relative of a high-ranking Tribal official. I glanced at a charmingly feminine tattoo across her right forearm that read, “Fuck You Bitch”, and continued my tour. The rest of the administration building was a continuation of faulty construction, bad plumbing, coughing-heavy smoke, and nepotism in key positions. The final stop on my property-tour was another out-building; a long Quonset-hut looking storage building. At first glance it looked like a storage building for lawn mowers, ground equipment and various parts and supplies. However a more detailed examination revealed a universe of marketing supplies, two $20,000 go-carts, and a wealth of sorted “prizes” for players. Most notably among the discarded displays and promotional items were banners and stands for several antique Harley Davidson motorcycles. According to Ellis, in later investigation, the former GM had purchased the bikes at auction from the Venetian in Vegas following the closing Guggenheim’s “The Art of the Motorcycle” collection of motorcycles dating from a steam-powered cycle of 1868 at the Venetian. According to Ellis, the motorcycles had been purchased to be awarded in contest drawings for players but had been “won” by the carpenter (who did the questionable work) and the GM himself. Whether Ellis’ allegations were true or false will probably never be known since there was no paper trail for the winners (which by the way is another MICS violation itself). My property tour over, I set about reviewing contracts and relationships with slot machine vendors who were providing machines for the casino; a task I was already dreading because I had recognized the machines during my tour as being ones owned by those South Carolina transplants. Ellis had a hard-and-fast rule against ever purchasing slot machines; he wanted revenue share machines only. The treasure’s thinking was that the speed of technology would make purchased machines obsolete by the time they paid for themselves. An “expensive” new machine sold for about $13,000 at the time; an Oklahoma revenue share (at that time) was about 35% of win-per-unit. Hence if a machine was averaging a win of $100 per day, then the vendor would get a rev share of $35 per day or $12,775 per year. Ellis felt that machine technology changed more frequently than that time frame. Unfortunately most rev-share contracts were for a minimum of 3 years so that $13,000 slot machine actually cost the Tribe $38,000. Further complicating the situation, the machines at Thunderbird were not $13,000 machines; they were (at most) $7,000 machines and would have paid for themselves in seven months. Nonetheless, Ellis was firm on his rule and the property was filled with lease-only machines. I, thus, set about the task of reviewing those revenue-share leases. As I have discussed, in Indian Gaming a typical casino rev-share deal was what we called an 80/20 split; of the “win”, the casino would keep 80% and the vendor would be paid 20%. Typically there were only two exceptions to that standard: (1) a slightly higher vendor share (up to a total of 27% at times) was paid for “premium” game titles (such as themed-games for which manufacturers had to pay royalties for the theme license) and (2) an additional share (again totaling no more than 27%) for certain vendor-paid promotions or advertising. Unfortunately none of the “deals” in this casino’s contracts were “typical”. The first contract I reviewed was for a 40/60 split. Note that is not a 60/40 split; this contract allowed the casino to keep only 40% of the revenue and the vendor was paid 60%. What-the-hell was that all about? I walked the floor seeking out the specific machines covered by that contract, hoping (at least) that they would be very popular machines that had some justification (albeit absurd) for a premium rev share. There was no excuse. Moreover, these were the machines in the “nickel corral” where who-the-hell-knows what is going on. The next contract had a 60/40 rev share — still absurd but at least not upside down. However this one had what we call an “evergreen” clause; meaning that the contract never expired. To be legal in any state (and even in Indian Country), a contract needs to have a consideration (amount of money), an agreement, and a term (start and end dates). An end date can be flexible in that a contract can automatically renew if certain criteria are met. This bizarre contract renewed forever providing that the vendor changed at least one game title ever three years. The contract went on to explain that changing a title literally meant that if the vendor had 50 machines with 25 of one title and 25 of a second title, that they could switch titles in any one of the physical boxes and that would qualify as meeting the contractual rollover. To make matters worse, this contract allowed that the vendor could cancel the contract at any time by giving the casino a 30-day written notice but the casino could never cancel the contract as long as the vendor met its obligations. The one exception to this non-cancellation rule was what the contract defined as “material breach”. Typically material breach of a contract is a violation that is so substantial that it defeats the purpose of the parties in making the contract in the first place. In this case the contract language specifically said: “in the event of a material breach by either party, either party may notify the other party of said breach and either party may terminate this agreement immediately by notifying the other party either verbally or in writing of said breach by either party.” I am not certain who wrote this contract, though I am relatively confident it was not a competent attorney, but I was grateful for their overuse of the words “either party” and their inability to understand a noun clause. I immediately had my secretary call the vendor’s representatives to meet with David Cook and me. At the meeting I informed the vendor, “I want to report a material breach of the contract and we have to cancel the agreement immediately.” “Oh my God, what breach? There is no way” he asked assertively, and followed-up with an arrogance that had clearly been practiced. “Well, I am not going to pay you anymore,” I smirked, suspecting that since the contract was not written by an attorney the vendor would have no concept of the “constructive breach” that I was performing. “You have 48 hours to get your fucking machines out of my casino; after that time I will have them removed from Indian trust land and placed on State Highway 9. Now get the fuck off of Tribal Land you Goddamn thieves. The days of stealing from this Tribe’s members are over; there is a new sheriff in town and YOU are busted.” At the same time, I had Wil Wimmer change the marquis sign at the entrance of the casino to read “There Is A New Sheriff In Town,” playing off of the Wild Wild West Casino theme. The machines were gone the next day and the contract was voided…and the tribe saved tens of thousands if not hundreds of thousands of dollars. And I made a lifelong enemy of the owner of that South Carolina company. The next contract I reviewed revealed that the revenue share was a three-way split rather than a two-way. While I did not know of anything illegal or in violation of MICS about such an arrangement, it still waved a red flag at me warning that something was unusual. The language bothered me so much that I invited the vendor in to meet with me and discuss the contract. This vendor seemed sincere, honest, and very open about the contract. He explained, “Mr. Green, I have never seen anything like this either; let me tell you what happened. We came to see the officials here at this casino to pitch our games and they seemed to love them. In fact the slot manager told me she wanted them on the floor immediately. I thought we had a deal and I told her that I would be back the next day with a contract. When I came back I was told that unfortunately there was no floor space available for my machines because this other vendor —the other name in your contract there— had signed an agreement for all of the remaining floor space. They went on to tell me that the other vendor had not used all of his allocated space and that perhaps he would give some of it up to me if I would call him directly. I called him and he agreed to sell me his floor space for 10% of the revenue of the machines. I had never heard of such a thing so I told the casino that if I was going to do such a thing I wanted it in the contract. That is why your rev share is with two companies; my percentage and the payoff to this other guy,” he explained in obviously frustrated dismay. “I later found out that of his 10% he only kept 5% and the other 5% was paid as marketing fees in personal checks to the casinos marketing director who I think was married to the general manager here,” he added. I am able to so vividly report this conversation, years later, because this vendor became a close friend and eventually a business partner with me in several ventures. He reminds me of the details constantly and has told the story over and over to industry operatives. Russell Ellis later confirmed that part of the story, after he obtained copies of cancelled checks as well as a contract between that third-party vendor and the GM’s wife. The “other guy” who orchestrated this scam, as of this writing is a multi-millionaire financier of Indian casinos with several currently-active “exclusive floor space” deals under his belt. In bidding for various development deals in recent years, my main competitor has been that company…which never misses the opportunity to give their version of how I sabotaged Tribal funding by thwarting that and other contracts. The next contract I reviewed had a clause that excused that vendor from providing paper for their machines. These were all Class II machines; there was no TITO payout available and the machines did not pay in coin. When it was time to cash out, the machine would print a receipt ticket for the player to take to the cage and exchange for cash. Each vendor’s machines used a different type of paper, often different sizes of paper. Typically paper, maintenance, parts, etc. are part of what the vendor provides for their portion of the rev share; but in this contract the paper was specifically excluded by contract. Again, I called for a sit-down with the vendor. He explained to me that he had offered to provide the paper, of course, but was told “by the casino” that his paper would not be accepted and that he should exclude it from the contract. When I asked him where the casino got paper for his machines, he cited a printing company in Nashville Tennessee. A call to that company revealed that their contract was with a third-party company which they revealed to have the same name and address as the company partially owned by the GM’s wife and that other vendor who had “sold” floor space at the casino. One vendor, when I questioned their contract, warned me that if I questioned their percentage, the way they heard that I had other vendors, they would close the casino by repossessing the building. It turned out that their company that had purchased the double-wide trailers that became the Nickel Corral (or whatever it was called). They were threatening to take away the trailers. Apparently, they had been promised that their machines and only their machines would fill those trailers forever at whatever contractual arrangement they dictated. Equally apparently, these geniuses had used the same legal scholars that had developed the “either party” language for that other contract; they overlooked the issue of Tribal sovereignty. I am guessing they never read Bryan v. Itasca County and had no clue that the original sovereignty issue that gave rise to Indian casinos in the first place was an issue over trying to remove a mobile home from Tribal land. I called Russell Ellis and told him that I was about to go to war with a white-owned slot machine company trying to remove a building (actually four buildings) from Tribal trust land. He, in turn, notified Tribal Police, the Bureau of Indian Affairs, and the United States Marshall’s office (I think he threw in the latter just for good measure; there was no jurisdiction that I could think of). David Cook’s reaction was even stronger with a very direct, “yeah, them and whose army is going to TRY to take our buildings?” Sometimes it is very cool to have an “old boy” super-cop on the payroll. Eventually after a couple of nasty letter exchanges between the company and our attorneys, the vendor backed down and realized they didn’t have a leg to stand on. A really funny footnote to that little adventure is that I ran into the owner of that company, some 5 years later, and he feigned never having heard of the incident. In the regular bingo hall operation, I discovered mark-up on bingo paper and supplies contracts through a third-party vendor (rather than directly with one of the bingo vendors) that would have been laughable if it had not been costing the casino so much money every week. A contract with a bus company provided that the casino pay the company $600 per trip to drive the 37-miles from Oklahoma City three times a week. Additionally, the casino paid the bus operators a bounty of $10 per person delivered to the casino. The casino also reimbursed the bus company for fuel (from presented diesel receipts) and provided each bus rider with $20 in free Bingo play. Finally, the casino was required to pay for advertising the bus trips in the Oklahoma City newspaper (though no one I talked with had ever seen one of the ads). I later learned that the “players” were picked up from homeless shelters in Oklahoma City and were required to split their winnings with the bus driver 50/50. Governor Blanchard told me that he witnessed a bus driver chase an elderly homeless woman through the parking lot and tackle her to the ground to collect his half of the $50 she had won one night. Another vendor’s contract had a revenue share of 37½% going to the vendor. The fine print explained that the actual was revenue share was “only” 32½% and the additional 5% was paid into a marketing fund which was spent at the vendor’s discretion and not the casino’s. A phone call turned into one of the most paternalistic (if not racist) explanations I had heard in a long time: “you know, Mr. Green, a lot of these Tribes really aren’t smart enough to know how to use marketing money, so we set this aside to make sure something gets done right.” Beyond the paternalistic nonsense, I was outraged that a slot machine company THOUGHT they were going to tell ME how to market a casino. Maybe they had heard of Donald Trump; maybe they had heard of the only profitable casino in his chain; maybe $100-million-a-month coin-in had some meaning to them. Naw, probably not. The scariest part of THAT conversation was the speaker was himself Native and as of this writing is the general manager of a very large casino for his Tribe. Not a single contract had the standard 80/20 revenue share. Moreover, not one of them had a rev share of less than 30% going to the vendor. (I later learned that no one in Oklahoma had “normal” rev shares.) None of the vendors were what I would have called “top-tier” slot machine companies (no IGT, Bally, Aristocrat, WMS, and so); and though IGT had not yet entered the Class II market there were plenty of legitimate vendors in the space; though most of these were those very companies bred in the bowels of South Carolina and written about by the scholars and journalists. Unfortunately, this casino seemed to have a lot more “questionable” vendors than legitimate ones. Even the top names in Class II (VGT, Rocket, etc.) were missing from the floor of this casino; presumably not willing to pay the kickback/extortion fees to the third-party company. The floor was plagued with machines from companies that existed only for Oklahoma and in two cases only for this one casino. More dubious than the “third tier” companies that shark-infested the gaming landscapes of South Carolina, Alabama, Mexico and other “third world” jurisdictions, the companies that dominated this casino were on the surface at least quasi-criminal operations and at worst probably Racketeer Influenced and Corrupt Organizations. I turned my orientation focus from the facility and the contracts to the staff; to human resources. Like the melodrama of corruption I had seen in the building and in the contracts, I found the staffing to be (at best) below the acceptable Minimum Internal Control Standards, despite the fact that David Cook had already fired more than 100 employees. Nepotism was rampant; but that is often the case with Tribal casinos and there is little that can be done about that given the small size of most Tribes and the large families within them. However this casino was plagued with sibling supervising sibling, “untouchable” disciplinary problems protected by political connections, husbands supervising wives, and a really not-funny problem of the old cliché “they are all in bed together anyway” (in this case literally). There were employees representing opposing Tribal political factions who held their positions to report to their outside political bosses. There were employees still loyal to former managers and were sending daily revenue reports to those fired managers. Even in the Human Resources department, personal files and background investigations (including my own) were forwarded to former employees. Vendor kick-backs to employees continued even after David Cook’s initial house-cleaning of staff because the threads of corruption had been sewn so deeply into the fabric of the organization. My staff and I were offered cash, sex, alcohol, drugs, and gifts to “protect” peoples’ jobs, guarantee certain vendor contracts, and look the other way when family of fired employees came into the casino to play games under the control of close friends. The head of my drop team was a convicted drug, prostitution, and extortion felon. The head of my cage and vault had pled nolo contendere to charges of embezzling from a national bank. One of my shift managers was a convicted armed robber. The manager of my valet parking had been convicted of man slaughter. The number of DUI, drug, and prostitution convicts on my staff was too numerous to keep count. In addition to the activities I spotted in the OTB and the bar during my walk-through there on the first day, I came to observe a whole menu of unacceptable (if not criminal) behavior that, at very least, was ripping off the Tribe. The beer and wine distributor actually asked me who he should give the cash kickbacks to after we fired one of the bar managers. A player told me that she had come in on a particular day because she had been promised she would win a random drawing if she split payout with the employee conducting the drawing. One of the Bingo managers was loan sharking a large portion of casino employees. He held titles to their cars, got first dibs on their paychecks, and was running some serious vig on them. A local hardware store manager asked me if he still needed to increase his prices for goods sold to the casino to cover the cash he was required to kickback to casino employees. Several customers asked me if they would still be required to tip departmental managers in order to cash out from a slot machine. I observed two different employees on two different shifts actually removing money from cash register drawers and putting it in their own pockets; when questioned about it, one denied it and the other admitted that it was routine. Two different women (one married) vying for the position of one of my manager’s secretary spontaneously (and unsolicited) undressed during his interviews with them. Hand-pays from slot machines (bypassing the printed ticket and the accounting system) always increased at night …until I started requiring management verification of every hand pay; a sure sign of fraud. One of the valet cart drivers (we had golf carts pick up patrons in the parking lot and deliver them to the front door) sopped up the engines in the golf carts and was running (and betting on) drag races nightly between the carts. On one particular night security cameras recorded two girls removing their shirts and bras and riding on the back of one of the golf carts for over an hour. (That sort of outlandish behavior was not so unusual in casino parking lots; one time at the Trump29 property we caught a clown (literally a guy we had hired for a party, dressed in a clown costume) having sex on the hood of a car with one of our cocktail waitresses (while he was in full clown costume. I am not sure which of them was stranger.) But clearly the incidents in this valet department were symptomatic of the property-wide problem of each little fiefdom running out of control without policies & procedures or strong management. And just to top off the lovely image of the staff that I was getting, one of the first rules I had to enforce was that the female members of the staff should not spit their chewing tobacco juices onto the casino floor (most of the males apparently knew better). This, by the way, was a rampant problem at the casino I opened for a Montana Tribe as well. As I said, David Cook had already fired (or listed to be fired) more than 100 people and he had hired a former district attorney’s investigator to do background checks on the remaining employees. Even without David’s police work and preliminary firings, the normal turnover at the casino was abysmal. A typical employee lasted three months and had been employed by the casino at least three times. On the flip side there were some outstanding employees. When I asked marketing employees “who are your best customers?” no one could give me a straight answer, but a housekeeper popped up “well my best customer is Mr. Walker from Norman but he is only good on Tuesdays because his wife doesn’t come with him. He usually plays $5 a spin for about six hours. Probably the next best is Verna Jackson, she…” THAT was rattled off like a marketing person should do. (For years I have argued that the most important customer service people at a casino are the valets, housekeepers, slot attendants, cashiers and security guards; because those are the only employees most customers ever see.) There were great employees too. The blind girl that supervised the receptionists and telephone operators was one of the best customer-service reps I have ever seen in a casino. The gay cross-dresser that managed the “procurement” department was a former army quartermaster and was a brilliant supply organizer. The slot analyst (who David recommended for promotion to slot manager) was a paradigm of integrity. The young girl who managed the gift shop was meticulous in following instructions. The three housekeepers were phenomenal. The internal audit/accounting supervisor was amazing; both a bastion of integrity and a paragon of reliability. There was hope. I quickly promoted all of those employees to management and positioned my Trump defectors in key spots. Wil Wimmer became my Director of Operations; Yuri, the Trump telephone operator, became my Customer Service Manager; Frank, of course, became the CFO; and Iram, the Trump valet guy, became my manager-on-duty when I was away and the go-to guy for covering any missing department. I brought in Tom Trimble to gain control of the computer systems for the Tribe and a brilliant network engineer from Boca Raton to administer the networks for Tom. I assigned Frank to have absolute management of audit, accounting, cage, cashiers, vault, drop, count, IT, human resources, and administrative offices. In fact, I refused to ever enter the cage, vault, or drop areas. I asked David to have surveillance watch the drop and even if I entered the area, security should stop me just like any other employee. I entered the audit and accounting departments at will, but I never discussed business with anyone from those departments. I had decided on this unusual removal of myself from anything fiscal because I knew that I was planning on making major personnel changes as well as equally major marketing expenditures; I did not want any possible cloud of impropriety over these major changes that were on the horizon. With a good understanding of the situation, and not running back to Trump, I dug in for the job ahead: untangling this mess for the Tribe and trying to turn this dog into a money maker. Foremost in my mind was that the casino was still borrowing money to meet payroll. Using my bag of Trump tricks, I had Tom Trimble create a manual player-tracking system, similar to what we had used at Resorts International in the 1980s but with a technology spin to the database. Since none of the South Carolina transplanted vendors allowed actual casino accounting and player tracking systems to be attached to their slot machines, Trimble had the daunting task of creating a manual process to create a customer database and a methodology for tracking player value. I called Bunky Boger and within a few weeks Ginger and her sisters were playing chicken tic-tac-toe and the majority of casino players were joining Tom’s new players club in order to challenge Ginger for the $10,000 top prize. Under the first-ever compact with the State that Blanchard had signed, Thunderbird was the first casino in Oklahoma to offer legal blackjack (though a number of Tribes had been offering illegal blackjack for years). Under the provisions of the compact, Oklahoma-sanctioned blackjack was required to take a “rake” from the pot (just like poker) and establish a players’ pool. The funds from that pool were to be redistributed to the players rather than kept by the tribe, though neither the compact nor the legislation defined how that was to be done. Thunderbird’s blackjack games, again the only legal ones in the state, were so financially successful that in very short order that fund was several hundreds of thousands of dollars. To comply with the compact I decided to redistribute those funds through the creation of a blackjack tournament, somewhat akin to the World Series of Poker or the World Poker Tour. It turned, because of the sheer size of the players’ pool, that I created what was at that time the world’s largest-pot blackjack tournament with the top prize being $250,000 cash and an absurdly gaudy 25 karat gold winner’s bracelet that I designed with a local jeweler. The tournament generated national news, including national cable television coverage of the event.   Late Night Legend Ed McMahon with Gary Green at the launch of Ed McMahon-themed MGAM slot machines. Continuing into the proven bag of tricks from the Trump property as well as from my commercial gaming experiences, I reached into a portfolio a celebrities with a propensity toward casinos and brought Johnny Carson’s sidekick Ed McMahon to meet players…and draw in new players. I began a direct mail program from Tom’s database and launched a massive (for Oklahoma) branding campaign. Saturating, first Oklahoma City and eventually most of the state, with billboards, I again became the cartoonish image of casino. This image was reinforced in a series of television commercials with the same theme: “I am stealing Las Vegas and bringing it to Oklahoma.” The television spots, produced by Jan Talamo and Frank    Above left: A page from the storyboard for the award-winning television sports. Above right: A cartoonish Gary Green bobble head distributed to players. Below: One of the series of themed billboards that peppered the State of Oklahoma.

Palmieri’s Media and Marketing Group went on to win a national award for their creativity. Those spots (to which I retained title, ownership, and copyright) are available on YouTube or at www.GaryGreenGaming.com. Since the Thunderbird experiences, I have used variations of those commercials at various casinos around the country, where it would be appropriate to have an over-the-top cartoonish branding. These are the TV spots I talked about earlier that included filming an Elvis spot on his stage and in his jumpsuit. The 26 hours without sleep or break, filming those commercials in Las Vegas, was itself a series of adventures and exploits that ranged from my pants catching fire during a sequence shot on the Vegas Strip to one of our actors being arrested for impersonating a police office because we forgot to get the right permits to having to wake up Mayor Oscar Goodman at 3:45am because did not know that the Freemont Street lights would be off at the time we were filming. Thunderbird had become the first casino in Oklahoma to have professional casino management, marketing, mainstream games, and by-the-book internal controls and regulation. David Cook was tapped by the State to help train the new compact-required regulators. Without any debate, discussion, or misrepresentation, within one year the casino was profitable and able to pay every man, woman, and child member of the Tribe their first ever distribution of income from the casino. For the first time in its 13 year history, the casino was a money making operation for the Tribe. As reported in Indian Gaming Business Magazine, the Tribe’s revenue increased by $30-million. The majority of the exploitive South Carolina slot machine vendors were out and the first Class II games produced by giant IGT were shipping to Thunderbird; and for the first time in the Oklahoma casino industry, professionals from the industry were providing their expertise to Tribal government.   Cover Story Of Indian Gaming Business Magazine Highlighting Gary Green’s Success At Thunderbird Casino Unfortunately for the Tribal membership, the supporters of all of those fired employees and kicked-out vendors spent the next two years marshaling their political forces to oust Blanchard, Ellis, and the other crusaders for a legal and profitable casino. After a bitterly fought election and charges and counter-charges, the Blanchard team was defeated in the election. The FBI approached me and forewarned that they had been monitoring Blanchard’s chief opponent for years in drug and embezzlement investigations. “You can’t let this guy win the election,” the agent warned me. But it was too late; despite my best efforts to help Blanchard, including writing him a campaign plan, he was out. The campaign against them revolved around the charge that Blanchard had turned the tribe’s casino over to “Las Vegas mafia greasers” (that would be me and my team) who had pocketed millions of dollars that used to go to the tribal members (through personal deals, kickbacks, and “other methods”). The charges against Blanchard, Ellis, and other ousted Council members expanded to take my television spots literally and accused them of hiring a Las Vegas gangster to steal parts of Las Vegas and hide it on Indian land. Even I, personally, was targeted in the campaign against Blanchard with death threats, being followed to and from the casino, and posters produced claiming that there was no Bunky Boger and that I secretly owned a chicken farm that raised Ginger and the other chickens. One series of fliers proclaimed that I never worked for Trump and that he had obtained a court-order to have me stop from making that claim. Another flier claimed that I was an operative of an organized crime “family” that had decided to use Thunderbird as a stepping stone to syphon enough cash to buy Las Vegas. As evidence of that plot, they cited my employment contract and its very lucrative bonus structure which by now was in fact into seven-figures. The ousted South Carolina vendors, one of which had hired the former General Manager (that Cook had fired), joined with Blanchard’s opposition to provide their “expertise” in explaining how “the new slot machines” were designed to cheat the Tribe. Publically traded IGT, the largest slot machine company in the world, was accused of paying $90,000 to buy my racing Jaguar and millions in kickbacks to me in exchange for ousting the “honest” companies from South Carolina. The new Tribal government filed a bevy of criminal charges against Blanchard and the other former government officials and forced them all into Tribal court to answer to judges and “attorney general” appointed by the new government. After months of stomach-churning drama, all the charges were eventually dropped. Meanwhile the new government reinstated the fired employees; reinstated the removed vendors; removed the IGT machines; fired me and my staff; turned casino management over to the new Tribal governor (whose first “official” act was to reinstitute the smoking policy); and in less than a year the casino was once again losing money and was in debt. At one point the newly elected government’s ferocious attacks on Blanchard spilled over to accusations against Cook, Haas, and my team. The newly-elected governor immediately announced that his “personal police force” was conducting a criminal investigation —a claim he quickly withdrew when a local newspaper reported that he had been charged with perjury and fraud two days earlier relating to his allegations against Blanchard. The nastiness continued for a couple of months, putting a cloud over Blanchard, my staff, and me. As personally painful as all of that was to me, it was totally alleviated by one of the National Indian Gaming Commission’s three commissioners telling me to “ignore it; everybody knows that guy is crazy” and FBI Special Agent who visited me to again tell me that the “Bureau” had a long-term investigation into the activities of the newly elected governor. That agent also told the leader of another Tribe that “you can’t go wrong with Gary Green”. The vindication of the Blanchard government (and my team) continued with an investigation by the DEA into the new government’s allegedly diverting of oxycodone from the Tribal clinic to the casino; the disbarring and commitment to a mental hospital of the legal advisor to the new Governor; and Casino Journal magazine’s assessment of the situation that “it is hard to argue with a strategy that increased casino revenue by 59.1%” Still it was a rough few months through Tribal politics and if I had not been so steeped in Indian culture, I might have freaked out or taken it more seriously. Certainly most of my colleagues in the commercial gaming world would have freaked out over such things. And, sadly, Blanchard’s reputation has still not recovered and for at least every two years during the next eight years he ran for re-election and was defeated time and time again. While the Thunderbird debacle and the Trump29 eccentricities are great anecdotal adventures into Indian Country, they are neither typical nor atypical. They are just another day in Indian casinos…in Indian Country.   Casino Journal’s Cover Story Proclaiming Gary Green a casino marketing “Magic Man” In Conjunction With His Departure From Thunderbird Casino

After those two Tribal adventures I went on to work with dozens of other Tribes and almost none were as drama-filled as those two. The Ottawa Tribe of Oklahoma and the creation of their High Winds Casino in Miami Oklahoma was not only drama-free but was a true joy of Tribal functionality and success-story. Working with my good friend developer and financier Bill Caughey, Frank Haas and I were able to create that casino which Frank still manages today. Caughey went on to develop dozens of other Tribal casinos working hand-in-hand with Tribal leadership across the country in some of the most successful and creative financing that I have ever seen. My escapades with the Ho Chunk Nation in Wisconsin, the Akwesasne in New York, the Yakama in Washington State, and about 19 other Tribes all carried their own anecdotal adventures, though few carried the level of drama that compressed widespread long-term Tribal experiences into such compact little boxes as Thunderbird and Trump29 had done. The closest escapade to these adventures was my stint on behalf of the Blackfeet Tribe of Montana. These once-feared mighty Algonquin warriors of the plains from the Great Lakes to the Northern Rockies, had been rounded up by U.S. imperialists and regulated to the slopes of what is now Glacier National Park —some of the harshest land in the continental United States. Clearly someone in the Department of War wanted to punish these legendary fighters even more than they had done when the story (true or false) of smallpox-laced blankets were deliberately distributed to the Tribe and wiped out half of the population. To understand the scale of the Montana project you need to understand the geography and natural surroundings of the new casino I developed there. It is located on the northern realm of Glacier National Park, northeast of the town of East Glacier ― more than 50 miles from the closet four-lane highway; 60 miles from an Interstate Highway; two-and-a-half hours from the closest Airport or even a Wal-Mart. During much of the time that casino was under construction it was accessible only by a 20-mile stretch of dirt and gravel road through open range; and the one highway south was closed for months due to snowfall (as it was every year). The million-and-a-half acres of reservation land are populated by 8,600 people; but there are only 360 households and 254 families in the town. The annual per capita income was about $8,900 and 30% of the town was below the federal “poverty level”. During the winter months the sun rises around 10 am and sets as early as 2:30 pm. On some evenings aurora borealis can be seen. The town of Browning, itself, is 30 miles northwest of the coldest spot ever recorded in the continental United States and during the one December (of the total 10 months) that I spent there, the warmest day I experienced was -11˚ (minus eleven degrees) below zero. The nearby town of Cut Bank holds the world’s record for the largest temperature drop in one day: from +44˚ down to -56˚in a 24 hour period. “White outs” are common occurrences during much of the year (a terrifying high-wind situation where no objects cast shadows, the horizon is not visible, only dark objects are discernible, and visibility is no more than a few inches). Most cars are equipped with electric block heaters as well as a glove-compartment stash of chocolate, matches, candles, and space blankets (for the expected (not “possible” but rather “probable”) stranded times). Winds, trapped in the mountains, can reach hurricane-force with little or no warning. And with global warming, the area has recently been victim of uncontrolled wildfires and flash flooding. Such a harsh climate was typical of many Indian reservations around the country; Tribes were forced to locate on callous, uninhabitable lands that white settlers did not want or could not tame. Such was clearly the case with the once warlords of the plains, the Blackfeet Nation. They must have really pissed off someone to be sent to such a place. According to the American Indian Studies Program at the University of Arizona, this town, Browning Montana, of only 360 households sees at least 50-60 street drunks present every day and alcoholism there is twelve times the national average ―in one way or another affecting 100% of the population. From my personal observation, that is an under-estimate. According to the regional Budweiser distributor, one convenience store / gas station in town sells more beer in a month than any five other sales outlets combined anywhere in the State of Montana. Following large holiday celebrations, I have personally witnessed the main street through town littered with beer cans more than a foot-deep along the curbs. I will spare readers any more of my pent-up lectures on the tragedy of Native Americans and how white abuse, degradation, exploitation, piracy, and attempted genocide have forced the quality-of-life to this stage of unraveling and deconstruction. Less than a melodramatic calamity, the physical situation and the mental state of the people in the situation are byproducts of the last two centuries of white American expansionism. Sadly and painfully, this has manifest in hostility, anger, prejudices, and despair. Combined with the genetic predisposition to alcoholism, the behavior and living standards are disastrous.  Against that charming, if not tragic, backdrop, I was hired to supervise the completion of construction, hire & train staff, outfit the casino, and get it open. Remember those vendor-provided “floor placement fees” (and kickbacks) that I discussed earlier? As you recall, those fees are actually paid (ultimately and over time) by the casino itself…many times over the actual cash value. Those rev share plans to pay kickbacks and fund casinos are, then, positioned as loans but paid back from revenue; hence avoiding taxes and are in the purest sense of the term a skim from the casino; especially if the money is paid to an individual. If a machine wins $100 per day for the casino and the vendor takes $35 a day of that, over a year that is $12,775 average; the game was paid off (if it was $8,000) in eight months and at the end of five years there would be a $56,000 profit or an investment return of 800% in five years. Good work if you can get it. Aware of those inequities, I used a legal version of that very kickback scheme, myself, to benefit the Blackfeet’s bad planning and duplicity with their original financing source. The original funding group did not provide enough money for basic casino supplies, payroll for staff during training, or even enough to do some of the finishing work on the structure. There was no money budgeted for signage. They did not even have money for staff uniforms or food and beverage supplies for the restaurant and bar. To further complicate issues, the architect chosen by the business committee designed the casino with, frankly, some absolute absurdities (and financial nightmares) in the plans. Though lights and light poles had been designed for the muddy parking lot, there were no plans to run electricity to the lights. The roof was not designed to handle the weight of the HVAC (heating, ventilation, air conditioning) system necessary for the property and when that flaw was discovered, apparently the designers decided “what-the-heck” and added an un-planned second floor to the casino to have a place to put the unit. (And of course, each time it came on it shook the entire building, like a small earthquake on the second floor.) A server room, housing for multiple heat-generating computer servers for the Class II bingo, had neither ventilation nor air conditioning. (Measured heat levels in the room eventually reached more than 115˚.) No study had been made of the water supply system and the well that fed it. When the water was turned on, large chunks of minerals (some over two-inches in diameter) rushed through pipes and instantly destroyed portions of internal plumbing of the building. A huge lobby center-piece fireplace faced the cashier cage so that if any long lines developed there, the customers would be rotisserized by the flames. The cashier cage itself was strategically positioned as near as possible to the front door, making it easy for customers to cash-out and not have to be “bothered” by walking by slot machines to spend their winnings; as if it was designed to keep money from going back into slot machines. At the same time this location of the cashier cage also made it convenient for any would-be thieves to easily exit the casino without hindrance. And, with no “panic button” or alarms in the cage plans (and being only a few miles from the Canadian border), the cage location was really an asset to any potential robber(s). A floor-to-ceiling “two-way-mirror” in the General Manager’s office looking onto the casino floor had the serious problem that if the lights were on in the office, then the occupants could not see the casino floor but all the customers on the floor could observe whatever might be going on in the office. In-floor wiring conduit was set in concrete rather than in a duct system, so once slot machines were placed on the floor the only way they could be moved was to cut through concrete and redirect wiring. Enough kitchen equipment had been ordered to outfit a large high school cafeteria (vast overkill); but no dishwashing equipment had been ordered; nor ice machines or pumping stations for the bar. Additionally there was no storage space for food and supplies in this remote area where all deliveries halt during several road-impassible months. A number of planning-related violations of the Federal Minimum Internal Control Standards included: No way to securely lock away Bingo paper (which has a cash-equivalent value); A cashiers’ vault that could be entered through an unprotected drop-ceiling; The “vault” was constructed with solid kitchen cabinets, allowing for no view of assets (by surveillance cameras) when the doors were closed; No controlled access to gaming servers; No controlled access to surveillance equipment (which itself was below minimum requirements for the projected income of the casino, and had selected, provided and installed by the business committee-owned cable television company without competitive bid; and a host of other Federal violations. The planning did not take into account the high winds common in the town and within a few weeks of opening, large metal sheets of roofing were flapping freely and flying around the parking lot like Frisbees thrown toward windshields. (Yes there were insurance claims by several car owners.) Within a month the winds had also destroyed the large freestanding outdoor sign. On top of these construction-related nightmares, the project was equally plagued with organizational problems. There had been no planning for a players club, for a location for employees to take meals, for lockers for employees to store purses and coats, nor for almost any of the back-of-the-house operations (like slot techs, casino audit, alcohol storage, a surveillance room, etc.), as well as many more lack-of-experience omissions. The original project manager, a Tribal member who had been identified to me as the COO, was fired in the two-week time frame between when I flew up to meet the business committee and then started to drive up from Florida. Apparently though, that did not resolve the problems. In fact, the casino secretary (and first employee of the new entity) told me that her observation was that the fired COO had tried to correct the problems and that is what had cost him his job; conflicts with the business committee’s CEO.    ABOVE: Gary Green (center in first picture; left in the second one) in hard hat surveys and discusses the Montana construction site in the packed-mud parking lot and discusses work-around solutions for the Tribe’s planning shortfalls. BELOW: The casino sign shortly after installation and then several weeks later after a wind storm.

The whole project was under the auspices of a national-award-winning Tribal business committee, but was wrought with an amazing jumble of incompetence, lack of planning, and desperation to get funding. With an apparent long history of defaulting on project loans, the business committee was required to find a co-signer or underwriter for the loan to build the new casino. This was not an unusual requirement for Tribes with little or (in this case) a bad credit history. In fact there is an entire cottage industry of white millionaires “underwriting” syndicated loan guarantees for tribes (in exchange for a variety of payback schemes). In reality these underwriters have credit at risk but no actual cash in the loan; they merely co-sign like a parent would for his son or daughter’s first car. If the Tribe were to default, the co-signer would have to make the payments. Since property on Indian lands cannot be seized to pay debts, the co-signer could potentially be left holding the bag with no collateral for his guarantee. Hence these cottage-industry loan-signers often charged usury-like fees or devised other quasi-legal kickback schemes to compensate them for their risk. In a blatant violation of Federal regulations, one of the slot machine companies agreed to co-sign the loan in exchange for the verbal agreement that they would be the only company with slot machines at the new casino. Had such a violation been committed to paper, the National Indian Gaming Commission would have instantly nullified it; so it was shrewdly kept as a verbal “unwritten” agreement. As if this shopping list of troubles were not enough, the HR (Human Resources) department, like finance, was kept separate from the casino and controlled exclusively by the business committee. HR positioned itself more as employee advocates than an entity to protect the casino. Consequently there were no job testing policies (other than in-house conducted drug testing by a convicted drug felon who recently had been released from prison); and people were offered jobs literally based on judgments like, “You look like a cashier.” Among the gems that HR mandated the casino to hire were the cashiers and supervisors from the previous small bingo-casino who, a week earlier, had accepted a $5 bill from a customer and given the guy change of two twenties and a ten. The excuse was that the five dollar bill had been mistaken for a fifty dollar bill.  I will let you be the judge; following is a photo of the actual bill accepted by the cashier. This is NOT a facsimile that I created later; this is the bill that was actually accepted.   ABOVE: This is the actual $5 bill (not a later-copied facsimile) with “50” written with a marking pen and was ACTUALLY accepted and cashed as a fifty-dollar bill by cashiers and supervisors. Think something might have been up? In almost any other casino in America this would have set off all sorts of red-flag warnings in the mind of any stable casino boss. Most would have thought this was a criminal activity with the cashier and her supervisor being “in on it” with the perpetrator. In some casino jurisdictions, I might have had the employees taken to the back room and “interrogated”. But at THIS casino it was just another of the regular daily HR issues. These employees really and truly were that oblivious to their jobs; they really did not notice. Hmmm. Let’s see; 600 slot machines projected to win $100 a day each, with an average hold of about 9%… that means about $1,111 would pass through each machine or a total of about $666-thousand dollars in and out of the casino that would have to be accurately counted every day. Oh yeah, this was going to be fun with the HR mandated hiring. Though I had submitted an FTE (full time equivalent employee) projection of 110 employees, the Human Resources department insisted on hiring employees from the now-closing smaller casino as well as dozens of other unemployed tribal members. Based on their insistence, the employment list climbed to 308 before the casino even opened. I was not sure where the cash would come from to support that kind of payroll. For a number of reasons, the Tribe’s business committee did not make these failings known to their financial syndicator; in fact, they kept them hidden. Moreover, there was a border-line deceit (in my opinion) going on in a very conscious effort by the business committee to hide the specific spending and at the same time use the loan money to prop up other Tribal businesses, pay salaries and at least mislead (if not defraud) the funding syndicator when it came time for various construction-related draws. These and other sordid absurdities (such as the aforementioned relying on the Tribally-owned cable television company to provide surveillance cameras and a piece-mill video surveillance system) left the business committee severely short of funds to finish the casino. It was against this backdrop that I began looking for sources to bail the Tribe out of their financial calamity. So, on their behalf, I approached one of the slot machine vendors with, basically, this proposition: “Hey, you know that kickback you give casino managers for placing your slot machines on the floor? Well I have never taken one but I will tell you what; I will let you put 300 slot machines on this casino floor if you will kickback $1,000 per slot machine. But I want you to pay it to the Tribe and not me. They need money to finish the casino.” The slot company responded that they would pay the kickback and increase the revenue-share percentage. However, since payments were going to a governmental body (the Tribe), rather than as bribing a General Manager, they wanted a loan guarantee document for the funds. I, in turn, suggested that if there were to be a loan-guarantee, then the increased revenue share would continue only until the “loan” were paid back, and not in perpetuity. Surprisingly the slot vendor agreed and hence the loan was absolutely legal and enforceable. Having no fiduciary authority whatsoever (not even the ability to sign a contract), I presented the proposition to the business committee which not only jumped at the prospect (and approved it) but also asked me to approach a second vendor with a similar proposition (without notifying the first vendor). Moreover, before a conference call with the original lender I was instructed not to mention the $600,000 in loans from slot machine manufacturers. Hence we finished the funding of the casino. I positioned the grand opening as the biggest event to hit Montana since Little Big Horn. After talking with the business committee and its hired president, I began positioning this crapulent, remote, and icy perdition as the Las Vegas of the Northwest. It was my plan to bring the wealthy white tourist from Glacier National Park to the casino and avoid catering to the local population. I genuinely believed that building a glitter-place casino for no reason other than taking money from the already down-trodden local population would be both a viciously genocidal aggression and a financial disaster. How could we possibly justify creating a casino to cater only to people whose annual income was less than $9,000? So I convinced the business committee that we would go after the tourists and not the locals; we would be a miniature Vegas. I would reuse my Thunderbird television spots and duplicate the formula that brought that casino from losing money to profitability. This approach brought support from the business committee but met more than mere resistance from others. It was instantly denounced by the one slot vendor that had co-signed the loan with plans of an exclusive lock on the government relief checks of the reservation residents. (The ferocious inhumanity of that slot machine company would ultimately further imprison the local population and lead to my own departure from the frozen hell.) Then there were the absurd assaults of “we finally build something nice and its gets shared with white people allowed to come; only Indians should be allowed to play here.”  These attacks were ultimately followed by the more sanguine “we should operate more in line with the actual demand for business rather than high expectations.” Nonetheless, the business committee supported my change-in-direction for them and I moved forward with bringing Vegas to Montana. For the grand opening, I hired the legendary Flying Elvi (also known as the Flying Elvises) a team of precision paratroopers dressed as Elvis impersonators, born from the film Honeymoon in Vegas. Since the movie, the Elvis paratroopers had become famous for hundreds of appearances nationwide, including television spots on American Journal; Anthony Bourdain “No Reservations”; Best Damn Sports Show; British Broadcasting Corporation; CNN News; Current Affair; Dinner & A Movie; Donny & Marie; “E” Entertainment;  ESPN; Fox Family Channel Promo; Fox FC Channel Promo; Good Morning America;  Hard Copy; History Channel; Hoosier Lottery Commercial; Inside Edition; Jerry Lewis MDA Telethon; Nickelodeon;  Real TV; Regis Live; The World (Japan’s 31 Game Show); Travel Channel; Weddings Of A Lifetime; and many others. Such a dazzling display of Vegas hokeyness was exactly the kind of start I needed to announce to the great Northwest that neon lights had arrived to compete with aurora borealis. I also exploited some bastardized (and possibly-illegal) “class II” versions of blackjack, craps, and pai gow; games not available anywhere in the area (or, at time, anywhere in America in the versions we invented). I trumpeted “Vegas Style” games on television in nearby Alberta Canada and as far south as Great Falls Montana. In interview after interview and thousands of dollars in paid advertising, I touted the 600 slot machines, Vegas table games, and even bingo along with free food, live music, and party-party-party. Even by the accounts of those opposed to the strategy and some anti-Indian conservative press, the grand opening was huge. The one-street was lined with more-thousands of people than the casino could hold or the town of Browning had ever seen. As I discussed earlier, there was no doubt that the cash-flow situation was going to be a disaster; we would definitely run out of money. Five-thousand dollars that had been set aside by the lenders for the cage would not last the first hour; and if someone hit one of the progressive jackpots, I would be fucked. I discussed this situation in an earlier chapter, but nothing could touch the crowning disaster looming. The flying Elvi thrilled the masses by jumping from a plane and soaring over the heads of the crowd to land in the casino parking lot. Then, in the midst of the grandiose spectacle, the music was cut and the happy-go-lucky MC stopped his banter as one of the dozen parachuting Elvis impersonators, Paul Moran, came in too fast and hit the pavement at 50 mph.

LEFT: one of the Flying Elvi approaches safely over hundreds of cars lining the street. ABOVE: Gary Green (leaning back in white dinner jacket) and others watch the sky divers jump above the parking lot landing area. BELOW: Paramedics and other Elvi work frantically to move the dying jumper

Moran was a Stockton California building contractor with a passion for water skiing, snowboarding, and unfortunately, sky-diving.  News and amateur videos on the internet showed Moran crashing into the pavement on his right hip and immediately buckling with his head hitting the pavement as his Elvis wig/helmet bounced across the parking lot and his green glider-parachute fell over him like a too-foreboding shroud. The wig/helmet probably prevented a concussion, but the impact crushed his heel and broke his leg. More dangerously, a sharp broken bone fragment sliced his femoral artery and his body began filling with internal bleeding. Other than an Indian health clinic, the practically inaccessible town of Browning had no medical facilities and no place to land a plane to fly Moran to a full service hospital. Transferred by ambulance to an airport two hours away, and then flown to HarborView Medical Center in Seattle, the flying Elvis died from the injuries. Meanwhile, the national media made light of the tragic story announcing (in hundreds of newspapers and on television) “Elvis broke his Pelvis” and overlooking the heartbreakingly tragic death. Every editor in each medium thought that he or she was amazingly original and clever in penning the phrase…which was cliché-mimicked hundreds if not thousands of times by other “creative thinkers.” I, of course, in full-spin mode, did not announce his death and gave comments saying that he was taken to the Indian health clinic (which was initially true) and was expected to recover just fine. My spin was supported by television interviews with the founder of the troupe announcing, “He will be back; nothing can keep him out of the sky.”

The London Daily Mirror’s webpage announcing the parachuting accident in Browning Montana.  Our spin-control announcements, unfortunately, only contributed to the media’s comfort level of making light of the whole tragic affair. The Associated Press as well as several of the national television sensationalist magazine shows turned the entire affair into lighthearted Elvis story that also served as publicity for the casino. The story went international. The London Daily Mirror, among other papers worldwide, put the “funny” story on their front page.  In fact, as we watched the next day’s national coverage we were disappointed that some of the stories only said “a casino” rather than using the casino name and location. I put my Atlantic City based press agent to work correcting that oversight; by-god I used to work for Donald Trump and we believe that ALL media is GOOD media! I wanted our name in those stories. Even after I successfully raised funds to pave the parking lot, buy advertising, and cover a number of the shortfalls, the business committee (unfortunately) elected to use none of the $600,000 to address that opening-cash shortfall that ultimately caused emergency drops and unbearably long lines at the casino cash cage for months to come. While I was not privy to exactly how the funds were used and never had the authority to either bind the business committee to funding nor to directly spend the funds,  a few months later when I left the casino that committee did announce that Gary Green had put them hundreds of thousands of dollars in debt. Alas, they never explained how I performed this deed since only the business committee had that power. In fairness to the business committee, a spokesman for the committee, discussing my departure, did give press statements saying “Gary Green did what he could for us to date and he brought us to where we’re at now,” and his departure “was not based on any monetary issue of theft or anything of that nature.” As a final explanation, another business committee member reflected on the experience a year later, “Our business plan had been predicated on a local market, but then we hired Gary Green and he brought Las Vegas to us.” Gotta love Indian Country. I look at these anecdotes as testimony to the dysfunctional state that hundreds of years of “Indian Policy” from the United States have inflicted. Add to that dysfunctionality from the existence of sovereignty exempting Tribes from many State laws and allowing for Tribal Nation’s own court systems, and there is clearly a recipe for confusion. Pour into the mix years of poverty, poor education, and a never-ending chorus line of white exploiters and profiteers and the stage is set for the trials of operating Indian casinos. Nonetheless, for every three dysfunctional anecdotes like these, I have days…or years…of perfectly functional and, in fact, stellar models for casino operations. The greater issue here is the thread of commonality that non-Indian operators share in our own adventure stories operating in the world of Indian Gaming and on the reservation.

•    Chapter Fifteen. Grey…illegal…Gambling

“We’d hear it from the people of the town They’d call us Gypsys, tramps, and thieves But every night all the men would come around And lay their money down”  — Bob Stone’s “Gypsies, Tramps And Thieves” as sung by Cher

M y favorite question to ask my Las Vegas colleagues in 2009-2010 was “Where is the largest non-Indian casino in the world?  None, not one, zero of my contemporaries  …nor the dozens of other “gaming” industry wags I sprung this on… ever answered correctly. Answer: Alabama . No, seriously… Shorter Alabama with a population of 367 people. More than six thousand slot machines; that is 16 slot machines for every man, woman, and child in town. Oh, and according to the Governor and Attorney General of Alabama…casinos were then and still are illegal in their state. “Grey area gaming” is a tidy little euphemism that at its best means “unregulated or under-regulated” gaming and at its worst means illegal gambling. They grey area exists in every state, most countries, and has forever. A close look at this kind of gambling is important because, as I have discussed here, in many cases that grey area has been the foundation of legal and regulated gaming. The founders of modern Las Vegas were all from the grey area. Gum-vending slot machines were created from the grey area.  The foundation of games in Indian casinos began in grey area states. The amount of money generated in unregulated, under-regulated, and criminal gambling is almost unimaginable —even in the face of the gigantic revenue numbers we have talked about in legal casinos. That kind of money draws every element from the out-and-out criminal to legitimate publically traded companies. In 2010, after the Alabama State Police finally shut down that gigantic casino, slot machine giant IGT, a publically traded company, took a $53-million write off on their investment in Alabama and then paid a $375,000 fine in Missouri for failing to notify that state’s gaming commission of a warning letter of illegal activity from Alabama authorities. (How a large publically-traded company invests $53-million in an apparently illegal business is just the beginning of the “grey area” story.) As the Alabama example indicates, this is not backroom, hidden-away, bookie-like activity reserved for some B-movie stereotypical degenerate gambler. This is big business. That illegal Alabama casino with IGT’s millions also boasted a 300-room gilded luxury hotel, a mass-appeal buffet, and a steady stream of daily buses. The euphemistic genre is so vast and has so many permutations that it would take a full length book to just list and define the offerings in each state. That is certainly beyond the scope of this book. What I will try to do is briefly describe the most pervasive of the grey area schemes and how they become somewhat legal. Indeed the complex yarn-ball is worth unwinding to see how the pattern of these unregulated markets morph into full-fledged gambling markets in multiple states. The cash-flow is so massive that the genre attracts the sleaziest con men and criminals and at the same time large publically traded corporations (like the IGT example), and an entire universe of a middle world between the two. Even that middle world is filled with extremes from live-out-of-a-suitcase gypsy-like impresarios to entrepreneurially-driven businessmen and women to take-the-cash-and-run schemers. I will also try to briefly describe some of these characters as well. Some are decent well-meaning people who operate on the fringes on the casino world because they lack the resources and wherewithal to buy or operate a regulated casino; others are just chasing fast cash. What the entire genre has in common is the legal status that allows it to gestate. Generally gaming is outlawed in the venue, whether out of fear of Las Vegas history being repeated, moral opposition to gambling, a desire to protect certain elements of society, or some other perception of noble principle. Where it is not overtly outlawed, gambling is usually under-regulated or poorly thought-through. In most jurisdictions for a game to be considered “gambling”, there are three requirements: (1) Consideration: players must pay cash or “something of value” to be eligible to participate; (2) Value: the prize must be money or ANYTHING of value; and (3) Chance: the outcome of the game must be determined by chance rather than any application of skill. In order for a game to be determined GAMBLING, it must meet ALL THREE of these criteria. Find an exemption from any one of these criteria and the game is not gambling…according to most laws. Even in jurisdictions that have expanded those three requirements, in almost every case the “new” language outlawing gambling (or minimally regulating it) is at best anachronistic in the face of ever-changing technology. The history of “Class II” gaming —the bizarre evolution of invisible bingo balls— is the template for the business model; loopholes and technology. And the very vipers who created that template —and a new generation of their successors— have continued to flourish in these new frontiers.  “Alabama in 2007 was exactly like Oklahoma ten years earlier,” assessed Joe Hight, the much-maligned and controversial founder of slot machine companies NexGaming, Penguin Gaming Systems, Kodiak Games, SlotMetrix, and a long-time supplier of slot machines to Indian casinos in Oklahoma, California and elsewhere. The gypsy-like Hight, who often lives in the office of a temporary warehouse or in his car taking baths in the swimming pools of easily-accessible hotels, is not terribly abnormal in the behind-the-curtains dwelling grey-area impresarios. One of the earliest of his genre to swoop into Alabama, his assessment was certainly accurate in terms of the types of slot machines and vendors —as well the level (or lack thereof) of casino management, marketing, floor design, tracking, and sophistication. I think I would take Hight’s assessment a step further and say that Alabama in 2009 mirrored South Carolina in 1993…flip back to my chapter on the evolution of Class II Bingo games and the list of machine vendors there. RIGHT: Logos from a few of the Class II companies active in Alabama at the time: Gateway, Nova, AGS, Rocket, SED, Cadillac Jack, Centurion, Capital Bingo, Synergy.                   *logos used for Journalistic purposes to identify companies and not for commercial purposes  Initially, before IGT jumped into Alabama, the largest supplier of games in Alabama (in terms of number of machines) was Gateway Gaming (founded by Bob Mosley, former owner of South Carolina-based Nova Gaming).  In fact, all the “usual suspects” from early Indian Country and/or South Carolina were sprinkled through Alabama liberally: Nova, SED, AGS, Multimedia, Rocket, Cadillac Jack, and whatever the latest incarnation was from my friend Hight’s seemingly shady world. Other Class II companies, notably led by VGT (the dominant Class II vendor in Oklahoma) took a more cautious and ultimately much wiser approach, waiting until the landscape was a little more clearly defined . On the other extreme, Joe D. Hight and his many gaming incarnations make for an interesting study of the prototypical live-out-of-the-car entrepreneurs in that one niche on the fringe of the regulated and licensed gaming industry; he also makes for a case study of the dysfunctional vendors in that third tier of games and their history of leaving a string of enemies in their wake. (And I saying that lovingly toward my friend Joe.) Almost a stereotypical nerd-geek, were it not for unfettered ambition, Hight was the only weight-lifting computer geek in his high school computer club in Georgia. Joe and his Commode VIC-20 soon ran the computer club and he was planning entrepreneurial adventures while most of his contemporaries were debating the breast size of various female science fiction characters. His first venture was in 1989 as co-owner of an auto shop diagnosing car repairs by computer; by then Joe had become an ASC certified master car mechanic. He rose from being an Atlanta computer-driven grease-monkey to developing an intriguing knack for getting small non-gaming investors (the less-than a-million-dollars variety) to plunge into the grey area of gambling. Along the way, he created a long string of bitter enemies and vocal detractors gunning for him; but an equally long list of allies, supporters and partners. His decisively non-business-like approach and style, his wild-and-free spending habits, his appetite for Crown Royal, and his general contempt for social convention have all served to make people either love or hate him; there is rarely a middle ground with Joe. And in that latter regard, he is absolutely 100% typical of that particular ilk of grey area vendors.

 

RIGHT: Joe Hight at the grand opening of Gary Green’s Lil Vegas in Florida, 2008.  He began his gaming career as a slot technician for Atlanta’s World Touch Gaming — one of those companies that migrated from South Carolina to Indian Gaming and later to the Sweepstakes grey market — but after four years of being a combination technician, repairman, installer, salesman, customer service representative, route jobber, and slot machine builder he decided he could do better on his own; pissing off World Touch in a series of accusations back and forth and beginning a pattern of burning bridges rather than creating alliances. In 2001, with $35,000 from one of those non-gaming investors, Joe started one of those dubious middleman companies distributing Mike Pace’s stalwart Pot-O-Gold slot machines (the aforementioned Leisure Time Technology) to Indian casinos. In relatively short order he expanded his line to also distribute Cadillac Jack  games (a Georgia-based South-Carolina-to-Indian-Country company that, as of this writing, is Russian-owned and operating primarily in Mexico and few US markets). Within a year of entering gaming, Joe Hight had begun developing his own slot machine games; games with outside-the-box creativity that could have only been created by a former nerd-boy geek. His “Cookie Dough” machine featured a smell-a-vision function that sprayed the scent of baking chocolate chip cookies when the player hit a bonus round. His “Twister” game, based on Oklahoma’s history of tornados, featured a bonus round with fans blowing a hefty gust of wind and an electronically-vibrating chair to give the “twister” effect. His “Big Ben” game featured a three-dimensional hologram of a slot machine that resembled something out of Star Trek’s holodeck; players could reach out to floating three-dimensional reels, view them from all angles, and literally stand in the middle of them as they spun all around. He took the Class II concept of video-representation of payouts based on virtual bingo ball draws, and replaced the video representation of slot reels with a rotating roulette wheel and with over-sized spinning dice…thus creating Class II Roulette and Class II Craps games. Even his themed slot machines “boldly went where no man had gone before” when he had the guts to offer a Pete Rose themed slot machine. Endorsed by the baseball legend that was denied Hall of Fame admittance for gambling, Joe’s machine celebrated the Baseball great’s legacy though…of course… a slot machine; And I am personally partial to his creativity because he created and marketed a “Gary Green” themed slot machine. On the “behind the scenes” side, unknown to players, Joe created some of the first downloadable games and structures by which a game could be changed in a physical box by a few software controls from casino staff, rather than radical hardware changes by company technicians. This, like many technology innovations, was created in the grey-area markets by the third-tier small operators long before the large publically traded companies decided downloadable games would be the next great thing. The few hundreds of thousands dollars (as opposed to millions) that Joe raised for his slot machine ventures primarily came, as noted, from non-gaming investors; people who had made money in a variety of ways outside of the casino world. Of course that is the pattern for the majority of these vendors that could or would likely never be licensed in more legitimate venues like Nevada, New Jersey, or any of the Denny Gomes inspired venues. Consequently, some of the eccentricities of the casino world that are examined in this book are lost on most non-gaming investors; especially the ones on the ladder rungs of Joe and his contemporaries. Generally speaking, less gaming-oriented investors expected to see business models, structures (and returns) similar to the industries they knew (real estate, retail, banking, etc.). The typical lack of diplomacy, tact, and investor management by the grey area companies (and taken to extremes by Joe) does nothing to comfort such investors; in many cases, his departure from various investors was at best hostile and adversarial. It is important to understand that this pattern is more-than-typical for those third-tier wanna-be companies, least some readers interpret my words as an attack on Joe rather than a critique of the processes. As a consequence of all that drama, Joe and his contemporaries have spent a half-decade bogged down in closing companies and starting new ones, crafting joint-venture agreements, filing and responding to lawsuits; and chasing more funding…all amidst the brilliant innovations Joe and these characters brought to gaming. Remember, these are the cats that invented “electronic bingo” and virtual/invisible balls, and created that entire methodology that started “class II” universe; these are some VERY smart people. These are people who IF (notice the big “if” there) IF they could ever pass the licensing scrutiny of the real casino world, would probably choose not to do so because of all the restrictions that come with that licensing. Hight is a typical of these off-the-books entrepreneurs; a man with a vision and energy. He has chosen an industry, though, dominated on one extreme by fly-by-night con men and schemers and on the other extreme by amazingly impersonal corporate America. Unfortunately in an industry as small and as incestuous as casino gaming, there is very little in-between the two extremes. Creatively-driven entrepreneurial firebrands inevitably have an uphill battle in the casino industry — especially in the shark-infested waters of slot machine vendors; hence they often deliberately choose the unregulated or grey area fringes of my industry. Another vivid illustration of the characters that make up that grey-area world is the absolute opposite end of the spectrum from Joe Hight, my friend Luc Marcoux. When I began writing this book I knew of Luc only by reputation; but during the course of time for rewrites, proofs, and edits of this book I have had the time to come to know him well and to work closely with him as he explored the possibilities of breaking out of the grey area into regulated gaming; a prospect he later abandoned at least in part based on my input. As noted, he is the polar opposite of my friend Joe Hight. Joe lives, from time to time, in his warehouse and bathes in a nearby Marriott swimming pool/hot tub when he is not living in hotels; Luc has penthouse condos in south Florida and in Montreal and commutes in his private jet. Yet both men are in the same business and have enjoyed the same financial successes and failures, likely to the same degrees. With the tastes and class of a stereotypical “Frenchman”, Luc is a French Canadian living in South Florida and heading a mini-empire of grey gaming that has been vastly successful in a series of ups and downs. From the hands-on struggles known by many of these entrepreneurs, driving trucks, assembling games, wiring the boards, painting and trim, Marcoux has evolved his business into a world-class operation by sheer force of will. Unlike the scores of grey-area characters that make you feel like you need a fumigation after meeting with them, Marcoux leaves you with an understanding that you are dealing with success and reliability; reality or not. Since 1996 Luc has owned Electromatic International and for the ten years before that he owned Industries Electro-Jeux in Quebec. Well known as a guru of the amusement, redemption, and sweepstakes gaming industry, by his mid-50s Luc had lived a highly successful (and profitable) career providing games and operating mini-casinos in the most notable grey-area locations: Georgia, Texas, Puerto Rico, Utah, the Carolinas, Ohio and anywhere else where legal loopholes allowed placement of those kinds of games. The success of his game rooms, routes, and distribution network revolved around his keen eye for design, and an unrelenting drive for the next market; sometimes he was dead-on right and sometimes he lost his ass…just like Joe Hight and any number of other grey-area guys. Marcoux entered the business as a young man in Canada continuing and expanding his father’s jukebox and pinball route business there; the same pattern as many of the South Carolina vendors. From his base in a small asbestos-mining town outside of Montreal, Luc turned those routes into a highly successful network of unregulated mini-casinos (“game rooms”) across Canada and provided games for a score of rooms he did not operate. When the Canadian government decided to nationalize (or province-ize) gaming and operate their own casinos, they shut down Luc’s businesses and he packed his family to headed south to the United States. In the USA, Luc’s life was an intense series of hands-on gypsy-like adventures…as is the nature of the unregulated gaming markets. His gypsy existence, however, was punctuated by a high-flying style and shameless personal spending; even if his business was based on “get in to a jurisdiction, make your money, bring out lots of cash, and get out before the law changes or the regulators catch up.” Right: Luc Marcoux circa 2010

Below: (left to right) Gary Green, Alabama gaming attorney and former State Senator Bob Wilson, Luc Marcoux, Luc’s son Pierre Marcoux, and casino regulator David Cook at Las Vegas’ executive airport in front of Luc’s private Citation II jet.

One of the primary tenets of that rung of the gaming ladder is that those markets are at best tenuous and at worst temporary. Typically, a grey area will “open up” — meaning a particular court ruling or a newly-found loophole in a state law will become general knowledge — and the swarms of grey-area vermin will infest the state like a biblical plague of locust putting slot-machine like devices in bars, convenience stores, and mini-casino/arcade/game rooms in 2,000 sq. ft. strip mall storefronts. The vendors, route operators, and owners would flood the state with whatever device the loophole would allow, but always cloaked as a slot machine designed specifically to mislead consumers and players into thinking they were playing a Vegas-like device.  Usually far more insidious than even the invisible ping-pong-balls of Class II devices, most of these “games” operate on Taiwanese-built computer boards with built in “cheats” (as Luc calls them) that allow the operator to reset the payout cycle at will and with holds as high as 35%. None of this-level of game could ever be approved or licensed in Nevada, New Jersey, Mississippi or any of the regulated gaming states. Though the specific type of loophole exploited changes as quickly as legislators and Attorneys General can adapt, several game types re-skin and reemerge again and again like the 13-year cicadas surfaces from the muck, sheds its skin, and begins its cyclical plague. As of this writing the flavor du jour impersonating slot machines is the sweepstakes machine. You go to McDonalds® and buy an order of fries; attached to the fries is a sweepstakes entry to participate in the Monopoly® sweepstakes with the potential of your winning thousands of dollars or a free order of fries. No purchase is necessary. You buy a bottle of Coca-Cola® and underneath the bottle cap is a My Coke Rewards® entry for a sweepstakes to win all sorts of cash and prizes. Again, no purchase is necessary. Clearly the reason for these sweepstakes is to sell more McDonalds food or Coke products. The sweepstakes is an age-old marketing scheme, proven successful for decades. In most jurisdictions in order to GAMBLE there must be some “consideration”; meaning that you had to put up some money to participate in the game. That is why all of these sweepstakes have a “no purchase necessary” disclaimer. McDonalds can run their Monopoly sweepstakes in the most conservative anti-gambling states where casinos are absolutely outlawed. Clearly, there is no connection between buying a Big Mac® and getting a sweepstakes piece and putting money into a slot machine. McDonalds uses the sweepstakes to get you to buy the Big Mac rather than run over to Burger King or Wendy’s for your burger fix. Simple enough; and certainly not gambling…right? Remember though, we are dealing with the mad genius entrepreneurs who gave us electronic Class II Bingo. This time around they outdid themselves; even surpassing their technology schemes around Bingo. First they needed a product like French Fries or soft drinks. The easiest was “internet time”. Renting a store-front in a strip mall, these entrepreneurs would open a “business center” that had rows of folding tables lined up like a family-style restaurant. Each eight-foot table had four touch-screen computers on each side of the table; eight computers on each table. Or, as the operations manual for one of these store-fronts instructs: Each location has been selected based on a specific target market that we have analyzed and researched. The demographic study that we have done on this location concludes that it is potentially a profitable location. The factors that go in to the selection of a location are the laws within the given state, traffic, demographic composure of the surrounding area, relation of certain living facilities and retail locations, and the size and shape of the building or space we have selected. We also look at price and parking to be able to accommodate our needs. The minimal size of any location is 2,000 square feet.

It is necessary before we select a location, to research the legal parameters in each state to find out if our business is an acceptable practice within that state, county or city that we want to operate. Once we determine that our business is an acceptable practice within that state, we will move forward to secure a location. A customer comes to the location and purchases “internet time”  (time at the computer terminals ostensibly to surf the Internet) . Typically twenty-dollars purchased of 30 minutes. The business would have a high-speed internet connection so other than its monthly internet charge, there is no cost-of-goods for the time sold in the internet model (and only a cost of a few cents per minute for the long distance card).But for each minute of on-line time purchased (at $1 per minute) the customer is given 100 “free” sweepstakes entries. Now comes the brilliant loophole. To reveal whether each entry won or lost, the customer sits down at one of the internet computers and touches an icon that says “reveal entries.” The screen transforms to a slot-machine looking display with five reels (or three reels) and on-screen buttons that correspond to a slot machine’s buttons. What resembles one slot machine spin is a typical 25-line game with each line requiring one credit (or sweepstakes entry) and each line taking up to nine credits; so with each spin of the reels, up to 225 sweepstakes entries are revealed. The symbols on the screen are facsimiles of the actual reveal of wins. The sweepstakes software works exactly like the McDonalds paper sweepstakes in that there are a finite and limited number of entries per sweepstakes. For example, let’s say there are one-million entries possible in “Sweepstakes Number 101”; in that sweepstakes we know that each entry is equal to one-cent in sales of “internet time” so one-million entries equals cash $10,000 in sales. Typically these games hold about 35% so that means that there is a net profit of $3,500 from those one-million entries and $7,500 will be paid out. Depending on the game math, that might be paid as one “Grand Prize Winner” of $5,000 Cash and 2,500 winners of one-dollar…or any other variation of paying out the $7,500.

 

At Right: Screens of electronic “sweepstakes” games; very slot machine looking, no?      The flaw in this system, from a player standpoint, would seem to be that once a player —I mean internet customer— revealed the winning grand prize, the sweepstakes would fizzle out and no one would play (or buy additional Internet Time) beyond that. However, our mad scientists covered that as well. Remember we are using relatively high-powered computers for these sweepstakes. So rather than just one sweepstakes (that example “Sweepstakes Number 101”) the software is simultaneously running hundreds (or thousands) of different sweepstakes games (numbers 101 through 999 for example). And your “revealed” entries could be from any of those sweepstakes at any time during your play. Now you get it! The customer keeps buying more and more internet time and, of course, never using it but revealing sweepstakes entries on the slot-machine-like machines. The employees of these “internet cafes” are carefully trained to deflect law enforcement officials who might send undercover operatives in to determine if illegal gambling is taking place. Again, citing the training manual from one of these operations: This is an Internet Café. What we sell is internet time. Our internet time will give each customer FREE Entries into our sweepstakes. This is the Game Promotion aspect of our business. We do not allow gambling, gaming, or any type of wager, or betting in our facilities. We provide FREE Drinks, FREE Snacks, and FREE Meals for our customers and we also have promotions which give our customers FREE Internet Time.

It is very important for the employees to understand that when the internet time is purchased, the sweepstakes are given at NO COST to the customer. The customer can sit at a machine and reveal their entries one by one, up to 124 each time, or they may reveal all of their sweepstakes entries at once. The sweepstakes winnings are determined at the time of purchase not during the process of revealing the sweepstakes. Each day, our customers can receive 100 FREE sweepstakes entries. Each player is issued an Internet usage card when they become a new customer. Think of this card as having three separate readable components within the card. • Internet Time: This is the service that customers can purchase. • Sweepstakes Entries: This is the FREE entries that we give with the purchase of internet time. • Prizes: This is the prizes that the customer has revealed. Alternatives to the internet time scheme have been telephone cards (the customer purchases a card for long distance telephone time), discount coupons for an inflated-price on-line store, or any other “products” that can be purchased and are not expected to be used by the customer. One vendor told me candidly that only about 3% of their “sold” phone time is actually used by customers. Playing the game was just an exercise in purchasing the phone card, or internet time, or discount coupon. At first glance this might seem totally absurd; but when we remember that the original Vegas slot machines were just ways of purchasing flavored chewing gum, then the scheme becomes diabolically clear. This sweepstakes scheme is actually an outgrowth of another very similar legal loophole to anti-casino laws: pull tabs. A number of states allow charities and other entities to sell pull tabs to raise money. In a traditional (non-electronic) pull-tab game, multi-layered paper tickets hide various combinations of symbols behind perforated “tabs”. Certain symbols are designated as “winning” symbols. For example, three cherries may win the Jackpot; three bells may win Second Prize; three bars may win 3rd prize, and so on. If a “roll” of tickets contains, for example, 3,192 tabs, typically a casino will sell the tickets for a dollar each. In this example, that gives a gross income of $3,192. Typically, and for this example, there will be 15 “jackpots” in the role —winning $100 each (total $1,500 in payouts); four second prize tabs at $50 each (total payout of $200); four $15 payouts (total of $200); four $15 tabs (totaling $60 in payouts); twelve $5 tabs (for a total of $60); and 225 two-dollar tabs ($450) that double the player’s one-dollar bet. This gives a total payout of $2,470 against the $3,192 gross or a net profit of $722 in this example. This translates to a casino hold of 28.88% or players odds of 1 in 12.28 of winning something. Not exactly what I would call good slot-machine odds for a player. From that $722 the operator of the pull tab had to buy the roll of tabs; which might cost $300, leaving a total net-net profit of only $422. As I said, this methodology is not at all unlike the winning prize pieces attached to the side of the McDonalds’ soft-drink cups or fry containers. In fact, it is basically the same deal: a pull tab is a form of a sweepstakes; add the element of allowing “no purchase necessary” for free play, and quite possibly the pull tab becomes a full-blow sweepstakes. The purveyors of these games tried to revisit Indian Country with them, hoping to duplicate their successes with Class II before the big boys and regulations squeezed them out. Since pull-tabs are legal under NIGC definitions of Class II, the grey boys thought they could sneak the sweepstakes games in as well. The workings of these sweepstakes games work was best described by the NIGC (National Indian Gaming Commission) in an “opinion letter” dated October 17, 2003: “The devices are stand-alone units that offer a patron the opportunity to play a video gambling game. Each device contains a bill acceptor, and for each dollar paid, the patron receives credits to play the “phone-card sweepstakes,” a spinning reel game on a video screen. Typically, the player receives 20 credits for each dollar paid. The devices have the ability to accept several bills and will issue game credits based on the amount of money inserted. The player can win or lose credits while playing the game. The player wins by aligning similar figures on a pay line; in some versions there are eight such pay lines available depending on how many credits are applied. Some machines offer progressive prizes and special bonus features. All of the devices have common features including buttons to operate the game being shown or played on the video screen. Winners are paid in one of two ways. Some machines dispense a ticket that is equal to a specified number of credits. In the version reviewed, the player can receive a ticket worth one dollar for every 20 credits, the same value paid for the credits. When the ticket is dispensed, the credits available to the player on the device are reduced corresponding to the value of the ticket. Other machines provide receipts that are printed at the request of the player when the player decides to “cash out.” Players redeem the tickets or the receipt for cash with the store operator. “In addition to the game-play opportunity, the patron will also receive either a separate horoscope card or a phone-card when the player inserts money into the machine. The horoscope card contains a phone number to call for a recorded horoscope reading. The phone-card contains a number for a patron to call to obtain a two-minute long distance phone call. “The argument that some players can play for free by requesting a voucher for a free play from the vendor may be useful to evaluating the individual transaction played with the free voucher but it does not serve to control the characterization of the device generally. Each transaction, or game, can be viewed independently. The free voucher method of play is seldom used, and may not be available for every device, depending on the vendor placing the device. When this free voucher is available, it is for a single game or for a limited number of credits, and must be obtained by sending a self-addressed stamped envelope to the gaming device vendor; the vendor will return only one voucher per request. Thus, it costs the patron two stamps ($.74) and two envelopes to obtain a $1.00 voucher, hardly a savings. This alternative method for obtaining play of a single or a limited number of game plays is intended to be difficult for the patron so as to discourage its use. Common sense suggests that the alternative method is made available merely to allow the argument that consideration is not required rather than to actually facilitate game play using the alternative method. We understand that virtually all of the games are played in the traditional way: a player pays by inserting a bill into the bill acceptor on each machine; the player seeks to win a prize; and the player wins through the application of an element of chance.” As Far back as 2005, the Appellate Court in the State of North Carolina ruled: “Prepaid phone cards that had an attached game piece were not an illegal method of gambling, a lottery, or a game of chance, because: (1) the purchase of the phone cards is made to obtain a valuable commodity, the sale of which is promoted by a process that is common in many promotional and sweepstakes type contests; (2) plaintiff’s phone card provides the purchaser with a long-distance rate that is not merely competitive, but one of the best in the industry; (3) plaintiff’s prepaid phone card is sufficiently compatible with the price being charged and has sufficient value and utility to support the conclusion that it, and not the associated game of chance, is the object being purchased; (4) consumers may receive free game pieces without purchasing the prepaid phone card via written request, which is some evidence that those who purchase the phone cards are doing so to receive the phone card and not the accompanying promotional game piece; and (5) states that permit lotteries do not give out free entries upon written request.” Pull-tabs, Sweepstakes, whatever one chooses to call them, they are just one more example of the brilliant madmen versus lawmakers who refuse to regulate and try to outlaw. In 2008, the Florida Department of Law Enforcement recruited me to be an “expert witness” to help them determine if sweepstakes games as well as a number of “AWP redemption” games met the exemptions from the ban on slot machines and an exemption defined in Florida’s Chuck E. Cheese law. Working with them, I discovered firstly that each game has to be examined individually to determine what settings or grey-area nuances may have been applied to skirt certain regulations. Secondly, I discovered that law enforcement is (at best) ill-trained and ill-equipped to deal with the constant onslaught of technological challenges brought by the third-world grey vipers. The other widely-distributed slot machine knock-offs are games called AWP:  “Amusement With Prizes.” Designed for the grey area markets like Florida and Texas, these games a dominant where lawmakers chose to “outlaw casinos” by making it illegal to pay cash winnings. And like Class II bingo games and electronic sweepstakes machines, AWP is another example of the devious brilliance of the grey area cockroaches. Looking at the national amusement chains of Chuck E. Cheese and Dave and Busters, the same “usual suspects” of vendors/developers watched people play “amusement” games at those restaurants and “win” prizes from free pizza to blenders and portable televisions. Customers (children in the first example and twenty-somethings in the latter) would pay to play electronic games (video games), or physical games like skeeball and would win tickets or credits, which they could redeem for the prizes. And the model is/was totally legal because the games generally are skill-base. From observing this business model, an entire industry of AWP mini-casinos was born. Not for nothing (as my Jersey friends would say) I, being part of the more legitimate (or at least regulated) casino world, was oblivious to these fringe casinos. In 2007 I first heard the operators of the racinos in Broward County (Ft. Lauderdale) Florida, near my home, whining that these mini-casinos were siphoning away their customers. At very least I wanted to know what sort of siphoning a mini Chuck E. Cheese could do from full-blown 2,000-game casinos; to me it sounded more like the excuse of bad management than the brilliance of Pac Man machine operators. So in 2007 I began to look at these little casinos. I knew they existed but never took them seriously because, I understood, they could not payout their customers in cash. Instead, I understood, “winners” would get tickets redeemable for near valueless prizes; I imagined the process to be like the old Bingo halls of the 1960s, where I could find the hot cards and win as many ashtrays, lamps, and stuffed animals as my heart desired. Little did I know that operators of these arcade-casinos (and the State of Florida) have construed these “noncash” prizes to include non-cash redeemable gift certificates from merchants; and the courts have supported that interpretation. Okay, fair enough…that just meant that the operators didn’t have to maintain a merchandise inventory, thus making the cost of entry to the business considerably less than I had expected. A paper certificate with a store name on it was my (like many of my readers, I suspect) idea of what constituted a gift certificate. I had no idea that the gift certificate world has evolved into a billion-dollar business of gift cards with magnetic strips on the back, like ATM cards. Hence these redemption gift certificates offered as winning from these AWP machines were these plastic “gift cards” from scores of national merchants and gas stations.   Above: A sampling of the gift cards offered as payout for Florida (and other States) redemption casinos. Note the top example is a VISA debit card. Also note the disclaimer sticker on the back of the VISA: in order to conform with the law the sticker says “THIS GIFT CARD CANNOT BE REDEEMED FOR CASH OR ALCOHOL; a disclaimer that carries no enforcement whatsoever. Once operators, legislators, and the courts had made the leap from prizes to prepaid gift cards, it was a short hop to include prepaid “gift cards” from American Express, MasterCard and Visa. Those debit cards could, of course, be exchanged for cash, making these AWP games almost as good as slot machines. It was probably a tip to some of these entrepreneurs to see that Dave & Buster’s advertises for new employees in such places as CasinoCareers.com under the heading of: Category Casino Games & Slot Technology Operations; giving at least the impression that the company considers itself to be in the casino business in one way or another. While Chuck E. Cheese addresses the children market, and Dave and Busters addresses the young adult market, these mini-casinos usually go after the senior/retiree market that has proven so lucrative for the casino gaming industry in general. To further complicate the AWP landscape, the Florida law (as well as those of several other states) enables: “amusement games or machines which operate by means of the insertion of a coin and which by application of skill may entitle the person playing or operating the game or machine to receive points or coupons which may be exchanged for merchandise limited to noncash prizes, toys, novelties, and Florida Lottery products, excluding alcoholic beverages.” The Florida legislation is written as an addendum to the outlawing of slot machines in the State (with the exception of counties that have legalized machines at pari-mutuel facilities). Once again, after outlawing slot machines and casinos, Florida (like MANY states) slammed the door on legitimate gaming businesses and invited in the sleazebags, hangers on, under-funded, and wanna-bees. In an effort to keep these arcades from becoming full-blown gambling halls, the Florida legislation specifically excepts from the prohibition on slot machines: • Nothing in the (slot machine) prohibition language applies to an arcade amusement center that meets the following criteria: 1. Machines operate by inserting a coin; 2. Application of skill allows player to receive points or coupons. • Points or coupons can be exchanged for merchandise only, excluding cash, alcoholic beverages, or lottery tickets; • The value of a prize awarded for points cannot exceed 75-cents per game played (this becomes very important in skirting the intent of the law); • Any “arcade amusement center” must have a minimum of 50 games. A number of bewildered law enforcers across the state (some genuinely unclear on the law and others under the direct political influence of either anti-gambling forces or the racinos feeling the competitive heat) have tried to close some of the arcades. As of 2012, in the 16-year history of these arcades in Florida, there had never been a successful court-upheld closure. In every case that actually went to trial, seized games were returned and arcades were ordered reopened…except in the cases where the operators got scared and pled guilty without a court battle. Among the more absurd law enforcement arguments presented to the State Legislature was the assertion that the 75-cents-per-game-played payout limit was being presented by arcade owners as 75-cents worth of plastic in a Visa card loaded with hundreds of dollars. If such were the case, then of course it would violate the law; but the fact is the machines themselves limit the number of credits that can be exchanged. Through the use of a game-counter built into the software of the game, even $100 “winnings” requires the player to spin 134 games before they can collect. This technical subtlety is lost on some operators, some law enforcers, some legislators, but almost no players… and certainly not on those mad-genius vendors like Joe, Luc, and others.   Above: A Florida-legal AWP slot machine. Below: Florida players in one of the AWP “game room” mini casinos.   Additionally, the anti-arcade forces argued that the “application of skill” requirement of the games allows the player to somehow push a “stop” button to rapidly stop the spinning reels to a winning combination and that such a “skill” is humanly impossible. Of course that assumption is true; it would be humanly impossible to stop the reels to a winning combination. Firstly, as we have seen with bingo machines or video slot machines, the video spinning reels do not determine the outcome of the game; they are merely a representation of the outcome. Stopping the reels based on observing the speed of the movie would have zero outcome on the game. However, no one in their right mind asserts that to be the skill. The skill, rather, is in recognizing patterns of game outcomes and symbols on the screen and then determining which symbols to “hold” for various re-spin options or in what order to stop reels. The skill is about patterns not hand-eye coordination (as is the required to be designated “skill” in North Carolina and some other states). Nationwide this AWP redemption model has been around for years, especially in neighborhood bars and a number of small fortunes have been made by distributors, vendors, and route-jobbers who offer bar owners a revenue share in exchange for placing their machines in the bar. In States or jurisdictions that do not have the quagmire of Visa card and gift-card redemption options, route jobbers have created a number of creative payout schemes that generally last long enough for local law enforcement to crack down. As soon as that happens, the jobbers find another scheme to entice gamblers. One Georgia owner of a dozen or so convenience stores recently told me, in flagrant disregard for the law, “I have three machine in each store. You are not supposed to pay cash just merchandise. But you know who your regular customers are and you can always pay them cash.” Not unlike “sweepstakes rooms”, the typical arcade is located in a rented storefront in a strip shopping center in a community with a large retiree population. An average store is approximately 45 feet by 30 feet (2,250 square feet) and has the minimum 50 sit-down (slant top) machines arranged in banks from two to 15 long, and back to back (2 and 30). A typical arcade space also includes room for a snack bar, a “desk” (which would be a cage in a normal casino), and restrooms. The “nicer” arcades also have a lounge area with a large-screen television surrounded by over-stuffed couches and chairs; some also have meeting rooms used as a dining room for buffet lunches, special parties, and community meetings. The properties are usually non-smoking and do not have alcohol licenses (though nothing prohibits that). Generally these games have a hold of about 35% and if there is a revenue share with vendors that rev share is has high as 50/50. In most of the arcades, the walls, floors, and fixtures are bland to bleak and do not resemble a “casino” atmosphere at all. In the busier properties, the interior is designed to look like the clubhouse of a retirement neighborhood or a community center. The machines themselves are generally pressed-wood (MDF) slant tops (sit down units) with old style CGA monitors and that 1980s “board” technology that allows the games to “cheat”. One notable deviation from that norm has been the entrance into the American AWP market by Brazilian slot machine giant Ortiz Gaming. Ortiz operated more than 40,000 bingo-based slot machines (sort of Class II like) in Brazil until they were outlawed in 2005. The multi-billion-dollar company moved in Mexico and then into the AWP market here. While AWP games (called “777 Games” in some states) and Sweepstakes Games dominate the latest incarnation of the “grey area” some notable exceptions have generated millions (if not billions) of dollars in gross revenue. Notable among those exceptions are non-Indian versions of electronic bingo; what would be Class II games in Indian Country. This is where the Alabama behemoth was created. So far in this “grey area” I have talked about what may sound like the fringes of the gambling business and what casually may seem to be of very little financial significance. That brings us to Alabama. One year of revenue from Alabama’s illegal casinos was equal to the revenue of the entire automobile industry nationwide. Meyer Lansky had once famously boasted, “We are bigger than US Steel.” Now he had been topped: one year of illegal gambling in Alabama, alone, was bigger than General Motors, Ford, Chrysler, and all auto sales in the entire United States. THAT is why I am spending so much time talking about Alabama. Can you even imagine what the state would have made had made if they had regulated and taxed gaming? Alabama’s bizarre story is a great amalgamation of all the different contingencies that contribute to a proliferation of grey area gaming. No other jurisdiction, in my knowledge or experience, has brought together all the key elements the way Alabama did; most jurisdictions will contain only one or two of their elements in their intrigue. Okay…so the largest casino in the world was in Alabama AND casinos are totally illegal in Alabama. That absurd contradiction pretty well sums up Alabama in most realms, not just gaming. It is a state where the former sitting governor of the state led a morality-based campaign against gambling expansion… funded by rival casinos that wanted their Alabama competition closed . It is a state where a white man who grew up taking his childhood naps on the Governor’s couch and calling George Wallace “Uncle George” was the close friend and partner in the casino business with the first African American Congressman elected from Alabama since reconstruction. It is a state where a “Master Trustee” for the Superior Court contracted with me to take control and legally operate one of the illegal casinos that the court had seized and kept open …even though casinos had been outlawed. It is the state where, in furious anti-gambling ranting, a State Senator (and 2012 Republican candidate for U.S. Congress) denounced African American supporters of Alabama casinos as “aborigines, but they’re not Indians.” Historically along those sad lines, it is the state where Rosa Parks refused to go to the back of the bus, where Bull Connor was a police chief, and where I visited the “White House of The Confederacy” on the grounds of the Alabama State Capital only to be given the tour and cake for Robert E. Lee’s “birthday party” by an African America docent for the museum. It is Alabama: a microcosm of the kind absurdities that allow the grey area of gambling.  Rural, bible-belt, Southern, and arguably in a culturally different world than the gaming industry, Alabama was not only the home of one of the largest casinos in world, but it was home of at least 60 other casinos as well. Victoryland Greyhound Racing Complex in Shorter Alabama (24 miles east of Montgomery on I-85) with its 6,400 slot machines earned a reported net profit of about $1½-million per day. Approximately 125 miles north, in Walker County Alabama were another 10,000 slot machines in 30 or so casinos, earning a total net of about $2.5-million a day. Those dollar-numbers were not total revenue; they represent total net win for the casino: a combined annual casino win of $1.4-billion in Alabama…where most people thought there were no casinos. And, there were another ten or fifteen casinos dotted around the state in other locations…as well as three Indian casinos. Total gross revenue (before payouts) for Alabama’s illegal casinos was somewhere around $11.6-BILLION per year…EXACTLY what the entire Automobile industry made in gross sales nationwide for 2010 . THAT would explain why Joe Hight, Luc Marcoux, Bob Mosley, and publically-traded IGT all rushed to Alabama. Big money. These Alabama casinos sprung from 17 State constitutional amendments (yes I said 17 different amendments) which expanded “Charitable Bingo” beyond its typical position in most states. Most importantly, the various constitutional amendments did not legalize gaming in a blanket across the state, but, rather allowed various local jurisdictions (select cities and counties independent of each other) to make their own legalization and rules. In fact, there was not one state-wide law legalizing charitable bingo; rather there were a series of these constitutional amendments that were specific to each individual county jurisdiction but following the nationwide example of charitable bingo laws. At 357,157 words, the Alabama Constitution is 12 times longer than the average state constitution, 40 times longer than the U.S. Constitution, and is the second longest still-operative constitution anywhere in the world. (Only India has it beat; but Alabama’s is still growing.)  Amendments are plentiful and new ones are passed by the state legislature every year, similar to how “private acts” are passed by most other state legislatures for individual towns or counties. Once the legislature passes an amendment it then must ratified by the citizens of whichever specific jurisdiction it impacts (for example if the amendment is only for Birmingham then the voters in Montgomery would not have a vote on it). This is how the bingo constitutional amendments were passed. Beginning in the late 1970s and continuing into the 21st century, various Volunteer Fire Departments, VFW halls, and other civic groups and charities across Alabama began to need funding that local governments or membership fees were not providing. Group leaders asked their state legislators to pass laws that would allow them to raise money the way their sister charities did in other states: through Saturday night bingo games once a month; the age-old staple of the Catholic Church and volunteer fire departments nationwide. Most states have some version of a “charitable bingo” law, even if most are somewhat sleazy-feeling. Across the country, typically, a Bingo “operator” rents a large retail space in an inexpensive-rent shopping center and furnishes the shell bay with a bunch of eight-foot folding tables, a ball blower, lighted wall boards, bingo paper and equipment, electronic daubers (like those 1980-ish very legitimate and legal T.E.D. machines we discussed), and a grill/restaurant operation. The operator then acts as a landlord “sub-leasing” the space and these “improvements” (by the hour) back to a licensed charity. Typically in these state laws a charity is allowed to raise funds by playing bingo a limited number of hours per week. The hourly “lease” from the operator is usually at “banquet facility” rates; meaning hundreds or thousands of dollars per hour rather than the low-rent monthly rate the operator pays. Alternatively, the “rent” is based on a percentage of game revenue. To fill a 12-15 hour day and seven days a week, the “operator” will “lease” to several different charities during a day. For the player it looks like one seamless Bingo hall operation; for accounting purposes each day of the week or time of day is leased to different charities. Generally state laws prohibit the “operator” from having employees run the game or profit from the game, so the employees all join the charity and become “volunteers” for their charity du jour…or du heure. They are “paid” only in “tips” from the players; tips which just happen to equal a salary when subsidized by the operator. The charity keeps all the proceeds from the bingo games and pays their expenses (the rent) from those expenses. Rent amounts generally increase based on the handle of the sessions (if the rent is not already based on revenue). Typically this model will net the operator between $150,000 and $250,000 a year, depending on the amount of play and number of charities involved. It is not a big money-maker but it beats flipping hamburgers at the local burger joint. And one “operator” rarely runs only one “charity bingo” hall; they usually run three to ten such operations, making a decent income for their trouble. In addition to revenue for the operator, the bingo equipment itself is usually leased and the paper, daubers, etc., have to be purchased; so often otherwise legitimate companies will list among their businesses “supplier for charitable bingo.” That is more often than not a code-phrase for being involved in a conspiracy to operate otherwise illegal gambling houses. Alas, such is the nature of that grey-area. Besides making a livable income for the operator/local gambling impresario, the bingo operation generates a nice revenue stream for the fire department, VFW hall, or other charity. Moreover, the charity gains this income without having to invest in a hall or equipment, and without needing the expertise to run the games and the required bank. The problem with implementing such a statewide law in Alabama was an existing statewide ban on lotteries and many courts viewed bingo as a form of lottery. Additionally, a state law to legalize charitable bingo would not work in Alabama because of those eccentricities of their constitution. Hence, when over the three decades 17 different cities and counties wanted laws for their charities to raise funds with bingo, 17 separate constitutional amendments fattened up Alabama’s guiding law.

 

The Alabama Attorney General’s opinion letter approving electronic bingo.

Most states’ charitable bingo operations are limited to traditional paper bingo; however, in Alabama, a December 2003 opinion letter from the state’s Attorney General provided an official interpretation to further define the intent of those constitutional amendments. The Attorney General argued that the electronic bingo –defined in his opinion letter as “media bingo”— was legal under the Alabama Charitable bingo amendments. That letter sparked a wildfire of newly opening micro-casino and a firestorm of anti-gambling furor. Friendly local governments welcomed the tax dollars and jobs being created while conservative local prosecutors filed reams of legal pleadings demanding that the State Supreme Court define bingo and prohibit the evil slot machine like Class II machines. After avoiding the red-hot political issue for another five years, refusing to address the issue, eventually the high court took up the question. The politics of Alabama bingo were clearly polarized by party lines and even as the court finally took up the general issue, the justices were too smart and too polarized themselves to risk the unpopularity of ruling for either side in such a publically divisive issue. The court ruled that bingo is a lottery and while gambling is illegal, a lottery is not and equipment / devices uses to play a lottery are not illegal if operated for and by a charity in one of the constitutional amendment venues.  Then to further complicate the issue, in an appeal from a Circuit Court case, the Supreme Court, without the benefit of gaming experience or expert witnesses, took it upon itself to define Bingo. Without actually addressing whether or not “electronic bingo” is (in their opinion) actually Bingo, the court wimped by issuing six “guidelines” allegedly defining bingo: What Supreme Court Said: Class II Application Of Guideline Each player uses  one or more cards with spaces arranged in five columns and five rows, with an alphanumeric or similar designation assigned to each space. A true “class II” machine displays this card ON THE GAME SCREEN (not on another screen, not invisible, not “hidden” or “virtual”). Alphanumeric or similar designations are randomly drawn and announced one by one. The electronic balls appear on the screen one at a time…not all at once; as in the NIGC’s most recent Class II regulations. Certified Class II machines have this functionality in their “true bingo” setting. In order to play, each player must pay attention to the values announced; if one of the values matches a value on one or more of the player’s cards, the player must physically act by marking his or her card accordingly. This is the “double daub” feature that has been so controversial in Indian Gaming. This requires the player to hit the DAUB button to match the bingo card to the balls drawn. This function was a requirement of the 2005 third draft of the NIGC’s current Class II regulations and all LEGAL Class II machines should have this functionality. A player can fail to pay proper attention or to properly mark his or her card, and thereby miss an opportunity to be declared a winner.  This is also a function of that “double daub” feature. If the player fails to daub the marked card (i.e. fails to hit the daub button when there is a matching pattern, then that player does NOT win even though the matching pattern is a “winner”. In order to win the player MUST daub (“properly mark”) their card. A player must recognize that his or her card has a ‘bingo,’ i.e., a predetermined pattern of matching values, and in turn announce to the other players and the announcer that this is the case before any other player does so. All LEGAL and properly installed Class II machines provide this functionality by ringing a bell and flashing the “candle” light on top of the winning player’s machine — IF the player has properly daubed the winning pattern. This announces to other players that a bingo has been one on that ball draw. The game of bingo contemplates a group activity in which multiple players compete against each other to be the first to properly mark a card with the predetermined winning pattern and announce that fact. All LEGAL Class II machines REQUIRE two or more players in order for the game to be legitimate. Moreover, no two machines side-by-side should be operating from the same ball draw (thus preventing one person from playing two machines in order to operate the game).

Apparently by design, the state’s Supreme Court failed to say NO or say YES to electronic bingo, to Class II games. Instead, they listed these six rules and left it up in the air to determine if they covered electronic and paper bingo. As you can see from my chart, the “Class II Application” is my editorial explanation of how those items apply to electronic bingo. My assessment was the prevailing thought of the pro-bingo forces; the anti-bingo forces said that the six rules are so limited that ONLY paper bingo can meet the requirements. My interest in Alabama began in 2008 when, at Joe Hight’s prodding, I visited the state to assess the situation at Victoryland and north in Walker County. I observed Joe’s interpretation of the status being an early version of Oklahoma gaming and began my own inquiries into the legalities and potential. Once I realized that I looking at a totally unregulated market, I passed on the State; apparently around the same time that Luc Marcoux, VGT, and several others decided to pass as well. On that first trip I met with two of the state’s best-known movers-and-shakers: five time United States Congressman Earl Hilliard and former State Senator (and prominent attorney) Robert T. “Bob” Wilson.   Former Congressman Earl Hilliard with Gary Green in Birmingham in mid-2009.

Earl Hilliard was the first African American elected to the United States Congress from Alabama since Reconstruction. Born in 1942 he matured and was shaped by the civil rights movement of the early 1960s in his native Birmingham … the Bull Connor world. Jet Magazine quoted him as noting that “if it hadn’t been for Martin Luther King’s march across the Edmund Pettus Bridge in Selma, I wouldn’t have been a congressman.” According to one biographer, Earl gained a reputation in the Alabama legislature “as a sharp floor tactician, once marshaling the votes for a pension bill while the bill’s opponents had gone out to eat dinner”. At least 20-years-ahead of his time, Hilliard ran his first congressional campaign on the primary issue of nationalizing health care. The winner of his last election without a clear majority, he was forced into a runoff election that resulted in a little more than a 3% loss and his retirement from Congress. Earl later joked to me, “that meant all I could do was become a Statesman.”  By 2008, when I met him, Congressman Hilliard was a leading proponent of gaming in Alabama, seeing it primarily as an economic development tool to do for his state what it had done for Mississippi. For decades Mississippi ranked the lowly number 50 among the states in education, highways, infrastructure, pay, and social safety nets; After an influx of tax dollars from legalized gaming, Mississippi rose to the top ten in each of those categories. When I met him, and Senator Wilson, Hilliard was deep into his search for economic development partners that could help him transform the crumbling Alabama infrastructure, the sinking economy (especially for his African American constituents), and the poor quality of life into a vibrant future with real prosperity for an otherwise backward state. Despite our immediate affinity, given my background and his, my pockets were not deep enough to become the development partner the Congressman needed. Instead, he was approached by an entrepreneur who had made a small fortune from FEMA government contracts, clearing land and debris on a massive scale following hurricanes and other natural disasters. Wishing to personally own a large casino in Birmingham, the way the owner of the giant Victoryland had near Montgomery, this developer rented a 100,000 square foot building and began renovations for a 5,000-machine casino near Birmingham. He appointed the Congressman to his advisory board. About the same time I was visiting Earl and Bob, my friend Luc Marcoux was looking at Walker County Alabama as a possible new market for his businesses, and despite taking the option on a property there, he opted (like myself) not to get involved in the highly-volatile market. At G2E (the Global Gaming Expo) in November of 2008, Luc’s Synergy Gaming had taken their first booth in the regulated gaming world and was searching for business. Bob Wilson was wandering the floor of the giant gaming trade show looking for partners for his and the Congressman’s economic development. One of his operatives stumbled across Synergy’s booth and a week later Luc, his son Pierre, and some of their staff were in Alabama meeting with Bob and Earl. Robert T. Wilson Junior is a great southern character that if he did not exist he would have been created by Faulkner, Tennessee Williams, or any one of the great Southern writers. His father was a stalwart of Alabama politics, a highly regarded populist Democrat, and the floor leader in the State Senate for Governor George Wallace. Bobby (Robert Junior / Bob) grew up calling Wallace “Uncle George”,   Alabama Attorney Bob Wilson taking his afternoon naps on the Governor’s couch, and riding in the back seat of the Governor’s car. Bob Wilson, by that very pedigree is the last person on the planet that I would have predicted to become friends with Congressman Earl Hilliard; let alone become his very best friend…which he was. In adulthood Bob Wilson, by then an attorney like his father, became a major player in Democratic Party politics both on the state level and nationally. In addition to winning his father’s old State Senate seat, he became a candidate for a U.S. Congressional seat, and once out of the Senate a major lobbying force in the State. Though fiscally conservative and a darling of the business community, Bob was also a liberal Democrat and politically aligned with the seemingly-radical (especially by Alabama standards) Hilliard. With the mannerisms, poise, and charm of an almost fictional representation of a “Southern Gentleman”, Bob Wilson became a real life model of integrity, play-by-the-rules, and old-style Southern genteel honor. His friendship with Hilliard was sincere, genuine, personal, political, built on respect and admiration, as well as genuinely caring. By the time Luc Marcoux and Wilson/Hilliard decided to follow-up on some economic development ideas for Alabama, I had teamed up with Synergy Gaming. Apparently Bob was a little surprised when Pierre Marcoux told him that I had become involved in the Synergy project and wondered why I was needed in the mix, since my role would have been little more than another middle man in the process between the master vendor and the charities. Apparently Bob’s initial understanding was that Synergy had contracted with me to open doors for them in Alabama; a role for which he and Earl were infinitely better suited. Once he understood that my relationship with Synergy Gaming was that of a paid consultant to help move Synergy from the cheat-board games to something that could compete with IGT, our relationship began to flourish and we became fast friends. It was Wilson who first devised a legal working model for the charities to make money and at the same time have a developer create a true economic development model. Such a model was essential if gaming in Alabama was to be regulated, the public protected, and the casinos actually becoming a tool of economic development. Without such a model, the state had become twisted with operations scams. One of my favorite of those scams was a sleaze-bag operator who opened a small casino —ten Class II bingo machines— in the city of Birmingham. As soon as he opened what was being called an illegal operation, he anonymously called the police to report that his location was operating an illegal casino. A police raid followed and he was, of course closed down and forced into court. In court his attorney argued that since it had not been determined if these types of games were legal then it was not clear that his operation was illegal. Moreover, he argued that the location he rented had been operated by a particular charity as a paper-bingo hall for a number of years before he installed his electronic machines. He petitioned the court for an injunction against the City Police to halt them from closing his business until the State Supreme Court could resolve whether their guidelines included electronic bingo. The court gave him a 30-day pass, not an unlimited one. He immediately rented a 60,000 sq. ft. space and moved in a few hundred slot machines. For 30 days he could operate the slot machines without police harassment…making hundreds of dollars per machine per day (at $300 per day 500 machines would net him $4.5-million in those 30 days; even at $150 a day he would net more than $2-million). By my personal observation, his machines appeared to be winning more than $300 per day. At the end of the 30 days, he had to close…darn. Another fraud that Bob Wilson was fighting (and is typical of an unregulated jurisdiction) was demonstrated by one of those South Carolina companies operating in Alabama; the owner told me “our machines are actually real slot machines; the Bingo card and balls are not server-based.”  He confessed to me that since Alabama did not require independent laboratory certification and there was no state gaming regulatory agency, then his games were a complete sham. “Who in Alabama is going to know the different,” he laughed. The bingo battles dominated the evening news with new casinos opening daily and State Police raids occurring almost as frequently. As one gaming industry magazine summed it up “E-bingo, in essence, was illegal in Alabama … except where it wasn’t.” It is germane to understand some part of the then-Governor’s motivation to fight the casinos. As far back as 1999 convicted wheeler-dealer Indian Casino lobbyist Jack Abramoff admitted to hiring Christian Coalition founder Ralph Reed on behalf of the Mississippi Choctaw Indian Tribe to defeat any legislation that would have legalized casinos in Alabama. According to Abramoff’s testimony before the Senate Indian Affairs Committee (then headed by John McCain), the plan was to energize church-goers, pastors, and extremist religious groups to defeat Alabama gambling…on behalf of Mississippi gambling. The plan was that the religious right would be blind to the hypocrisy of being funded by gambling interests to halt gambling and lost in sanctimony would not even ask the motives of their benefactors. Mississippi gambling forces could protect their market by having the Christians halt competitors; sneaky huh? For conspiracy theorists out there, add to the intrigue that the Alabama Governor’s press secretary was Michael Scanlon, Abramoff’s partner who turned state’s evidence against Abramoff, Grover Norquist and Ralph Reed in various state and federal grand jury investigations related to the defrauding of Indian Tribes and corruption of public officials Then in 2006, McCain’s committee released a report citing a tribal chief’s testimony that Abramoff told him that the Mississippi Choctaws spent $13 million to get the governor of Alabama elected to keep down the expansion of gambling in Alabama so it wouldn’t hurt their market in Mississippi. When the Abramoff plan failed to stop the casinos (because of the eccentricities of those constitutional amendments), Milton McGregor, the owner of the Victoryland dog track, began working on new legislation that would grant his county autonomy from the state laws. Not far from Victoryland, in Dothan Alabama, a country music promoter, Ronnie Gilley, partnered with McGregor and convinced a Baltimore-based hedge fund to put $86-million into the development of his Country Crossings casino project. The city government of Dothan wholeheartedly endorsed the project and the television airways were flooded with testimonials from Gilley’s roster of country music stars, including George Jones, Randy Owens (of the group Alabama), Lori Morgan, and others. The outraged Governor told the newspaper in Birmingham, “Any community out there being enticed by organized gambling to bring in casinos and slot machines ought to take a close look at the law and these recent rulings. The law is clear. Only organized gambling and their allies will tell you otherwise.” When the State’s then Attorney General refused to back the Governor’s interpretation of the Supreme Court’s rules, the Governor hired a former prosecutor to head “a special task force against gambling” and conduct raids. A week later a McGregor-hired private detective photographed that task force leader playing at the slot machines in a Mississippi casino. The Governor embarrassingly removed him and appointed a more pliable dilatant as he set a deadline for all the Alabama casinos to close. None complied and the Governor announced that he would raid them, seize and destroy the games, and arrest the gamblers. His first target was the Country Crossing complex where more than a hundred state troopers and several dozen tractor trailer trucks planned a 5 a.m. raid to seize the machines. Country Crossing owner Gilley told MSNBC, “If that’s what it takes to get this before a jury of my peers, by all means arrest me. Tell them to come put the cuffs on me.” Meanwhile, as a registered lobbyist in the state on behalf of Luc Marcoux, I attended the 2009 and 2010 legislative sessions with Hilliard and Wilson, meeting regularly with the Lieutenant Governor (who supported electronic bingo) and other friendly legislators to try to pass statewide legislation that would have legalized and regulated Class II games in the state. As I noted earlier, the issue was clearly separated along party lines with the Republican majority under the Governor’s control. McGregor, Gilley, and the various operators all launched their lobbying efforts as well, though they were more focused on a statewide enabling law than on the regulatory and taxation economic development bills that Bob, Earl, and I were proposing. The revenue numbers that brought giants like IGT and Bally into the state seemed to justify the risks of trying to pass legislation. The largest population center in Alabama is greater Birmingham (the City of Birmingham is an independent jurisdiction surrounded by Jefferson County Alabama). The 2007 census estimate gave greater Birmingham a population of 1.6-million; nearly one-fourth of the population of Alabama. Additionally, Birmingham is a two hour drive from Atlanta Georgia, which has a population of 5.2-million; Birmingham is three hours from Nashville Tennessee, which has a population of 1.5-million. Alabama is the closest gambling destination to either (compare the two-hour drive from Atlanta to Birmingham to six hours from Atlanta to Biloxi or eight hours to Tunica Mississippi). By further comparison, Southern gambling Mecca Biloxi/Gulfport Mississippi has a regional population base of less than 150,000. Demographically, Birmingham is an ideal match to a Class II Bingo machine market, based on comparable figures from other Class II jurisdictions (specifically Oklahoma). IGT ranked number 717 in the Fortune 1000 that year and between them and the other publically traded companies lobbying in the state,  the likelihood of fully regulated gaming looked promising; especially since the Democrats had controlled the Legislature for almost a century and a half. The real lobbying was about lining up enough votes to override a gubernatorial veto. To try to head off that eventuality, the governor needed to get the big boys out of the picture. He responded to the lobbying effort by sending a letter to the CEO’s of IGT, Bally, and Multimedia (as well as six smaller companies) warning them: “While several local constitutional amendments have authorized “bingo” in certain counties, no constitutional amendment has authorized slot machines…   Above: Governor’s warning letter to manufacturers  “The Court held that the term “bingo,” as used in local constitutional amendment, means nothing other than “the ordinary game of bingo” … Given the force of these controlling judicial opinions, a company in this business would be taking an extraordinary risk of criminal liability were it to conclude that the Alabama Constitution’s “narrow exception” for “the ordinary game of bingo” somehow authorizes the use of machines that are slot machines or gambling devices… As Governor, I am deeply concerned that many manufacturers, providers, and business operators may have a mistaken impression about the legality of certain activities… I fully intend to carry out my constitutional duty to faithfully execute the laws of Alabama.” Hence the line was drawn in the sand to chase the legitimate manufacturers out of the state and leave the door open for those who wish to defy the Governor’s understanding of state law. The regulated companies were put on notice. The definition of bingo was still being debated, notwithstanding the State Supreme Court’s failure to define exactly what their six rules addressed. So the on-the-edge-of-legality grey boys launched a full scale invasion of Alabama with thousands of games of their own in the state. In response to McGregor’s hiring the private detective, political opponents targeted McGregor and the world’s largest casino and devised plans to end the controversy once and for all. The governor’s campaign manager, who had overseen the Abramoff $13-million casino industry donation, was married to the United States Attorney for Alabama. The prosecutor charged McGregor, Gilley, their lobbyists, and a handful of democratic legislators with felonies. Equivocating over the difference between a campaign contribution and a bribe, the prosecutor had sent wired-wearing Republican legislators to visit McGregor to ask for campaign contributions; no Democrats were wired. A bribery, vote-buying, and corruption trial was scheduled. The governor called the charges “proof” of the “corrupting influence” of gambling. The governor was term limited from seeking re-election, but rejoiced that the scandal would tip the balance of power in the Alabama Legislature to the GOP for the first time in more than 135 years. Jess Brown, professor of political science at Athens State University told the Montgomery Advertiser the indictments were “an early Christmas present to Republicans.” He was right; the Republicans seized the statehouse in the fall elections. The anti-gambling forces were on a roll. Next, the governor’s task force set a deadline for all of the state’s casinos to be closed and the majority complied, including McGregor’s and Gilley’s. Meanwhile, in Birmingham, the FEMA-funded casino, where Hilliard was on the board, closed its doors and the developers were photographed loading cash into plastic trash bags as they fled hours before an expected State Police raid. Dozens of vendors were left unpaid and hundreds of employees were suddenly without jobs; and the assets had “disappeared.” Hilliard immediately took the issue to a Superior Court Judge who issued a court order to seize the casino and locate its assets. The judge appointed a “Special Master” who hired a forensic accounting firm to follow the money and the judge ordered that the casino remain open during the investigation. The Special Master ordered the accounts to pay back vendors and provide the jobs from the revenue of the casino.   Above: “Bamaco” casino near Birmingham, operated by the Superior Court. Despite the governor’s order to close all the casinos in the state, the “Bamaco Bingo Casino” remained open under the order and protection of the Judge and the Special Master. In March of 2010 the Special Master and the Judge appointed me as their trustee and General Manager to try to make some sense of the looted casino and operate it under regulated guidelines. Meanwhile the governor launched his raids. At four o’clock one morning, more than 100 State Troopers arrived at McGregor’s Victoryland with a convoy of tractor trailer trucks to seize the games. By six a.m. McGregor had obtained a temporary restraining order to keep the Troopers out. At Country Crossing, Gilley refused to allow the troopers access because they lacked a warrant. And in Greene County Alabama the sheriff stationed snipers with high-powered rifles to repel any of the governor’s agents that might attempt to close the casino; they never showed up there. After a two-day standoff, Gilley decided to close Country Crossing with the statement, “With state troopers surrounding us, we’ve decided not to subject our customers to possible harassment by the police. We’re not reopening until we get some (legal) protection.” McGregor was able to extend his standoff for months, but after a series of opening and closing and reopening, IGT sent trucks from Nevada to remove the majority of the 6,400 slot machines and for all practical purposes the world’s largest non-Indian casino was dead. I was still operating the only regulated casino in the state (regulated by MICS that I had submitted to the Superior Court) I hoped that the example (and the power of the court) would rub off on the other casinos. The court’s regulations were word-for-word the Minimum Internal Control Standards (MICS) that I had written years earlier for the Gaming Commission for the Ottawa Tribe of Oklahoma (if you recall, they are contained in the endnotes of this book). Additionally, I had the Special Master and the Judge implement Nevada Regulation 6.150 for minimal bankroll. (I have mentioned that regulation several times throughout this book; it is such an essential part of how I operate a casino that it is worth printing in its entirety in the endnotes. While it might better-fit (continuity wise) in the next chapter, it is also appropriate to include it here.  You remember what happens when there is not sufficient cash for the cage—emergency drops). Besides internal control standards, and in addition to a strong minimum cash rule (like Regulation 6.150), the third important control that I require (and actually is required by Federal law) is a strong adherence to Title 31 of the United States Code. Any casino that generates more than a million dollars in annual revenue (which is almost any casino) is required to report certain currency transactions to assist the Financial Crimes Enforcement Network of the Internal Revenue Service. Title 31 is the Bank Secrecy Act but because of the massive amounts of cash generated in casinos, the regulations also apply to out transactions. Consequently, at all of MY casinos, I institute a stringent Title 31 training and compliance program. The outline of my typical Title 31 program, specifically modified for Alabama bingo, is in the endnotes of this book. I cannot stress enough the extreme importance of having regulatory controls in place; operating without them is an open invitation to corruption and a formula for loss of control. Our having the court endorse this first-in-the-state regulated casino was landmark, but unfortunately not precedent setting. Nonetheless, since all of the cash had been carted out by the developer, there was no money for the cage or any expenses. Congressman Hilliard was working feverishly to find funding for the court-controlled casino; so intensely that his health was starting to fail. Bob Wilson was working equally zealously to alter state law and to find other jurisdictions that would be willing to adopt the Court’s (and my) standards. Despite the court protection and the regulatory controls, the governor’s task force was eyeing us. The pressures increased on one of the last casinos standing and there was no source of investment funds. The few individuals who had provided investment funds were not happy with the stringency of the Internal Controls and insisted on the most absurd of nepotisms. My bringing in super regulator David Cook to oversee the controls severed to create more tension and David’s law enforcement contacts warned that a raid was imminent. As the governor’s revenge trial of McGregor began, I approached the Court’s Special Master and Congressman Hilliard about the future of the Court’s casino. I recommended that until the laws could be clarified, the governor had calmed down, and funding could be located, that we close the casino. That would leave open, in Alabama, only the one casino in Greene County which was under the armed patrol of the County Sheriff and his snipers. As of this writing, the Alabama Superior Court still owes me $160,971 for my last 10 weeks operating their casino. The governor’s prosecution began with quibbling over recordings of McGregor indicating that he always supports lawmakers who are good for his business and would not support lawmakers that would be bad for business. The governor’s campaign manager’s wife had her prosecutor argued that McGregor’s statements and attitude constituted bribery. Country Crossings co-owner Ronnie Gilley pled guilty to the charges and testified that he worked closely with McGregor in an illegal vote-buying scheme and that McGregor bankrolled his efforts and coached him with what to say before meeting with a senator. In relatively short order, jurors returned multiple not guilty verdicts on some of the counts but said they were hopelessly deadlocked on some counts. Nine months later the prosecutor went back into court to retry the group on the deadlocked charges. This time the defense team attacked Gilley’s motives and credibility and confronted the wire-wearing legislators, saying prosecutors had “embraced in this case political manipulators, racists and crooks.” The latter was at least surface confirmed when one of the prosecution’s key witnesses was heard on the undercover tape talking about economic development and the more than three-thousand jobs created by the casinos: “That’s y’all’s Indians,” one white legislator said; “They’re aborigines, but they’re not Indians,” the second legislator replied. (This same legislator, a candidate for U.S. Congress, was on the racial hot seat again in 2012 when during a GOP meeting he suggested that the party should “empty the clip” and do what it takes to control illegal immigration.”  After seven days of deliberation, in March of 2012 the second jury returned 27 not-guilty verdicts against McGregor, two lobbyists, and two former State Senators, and one sitting Senator. The jury agreed that was no direct quid pro quo, or explicit offering of a contribution for a vote. Gilley, who had pled guilty and testified against McGregor was sentenced to six years and eight months in prison while two other lobbyists who had pled guilty received four and five year sentences. By this time, a new governor and new attorney general had been elected; but in the bingo-fueled Republican seizure of the State Legislature, the new team was as fervently anti-gambling as their predecessors Commenting on the political climate, IGT announced, “The legality of electronic charitable bingo in Alabama continues to be under challenge by the state’s governor. The legal and political climate in Alabama has further deteriorated, and therefore we have determined that the recoverability of our assets in this market has been impaired.” Their $531-million write-off on its Victoryland investment sealed doom of any regulated companies operating in the state. Though the new governor abolished the special “anti-gambling task force” of his predecessor, during the next few months several small casinos opened and were immediately raided by the new Attorney General. Several Alabama courts jumped onto the anti-slot machine bandwagon and ruled that “electronic” bingo was not “real” bingo and was therefore illegal. One judge righteously pontificated, “I don’t care about this new-fangled technology but if it walks like a duck and quacks like a duck, so whatever you want to call it, it is a slot machine and not bingo.” Even the armed encampment casino in Greene County modified their offering from Class II machines to a modification of table-top sweepstakes type machines with no bill acceptors or other accoutrements of Class II games or typically associated with slot machines. Attorneys in Alabama were unable to recreate the brilliance of the arguments given a decade earlier in Indian Country by Chickasaw lawyer Jess Green. (It was his arguments that convinced the federal government that Class II machines were in fact bingo and not slot machines per se.) The gambling industry which two years earlier had generated more revenue in that one southern state than the entire automotive industry generated nationwide had all but disappeared. Victoryland remained closed. Alabama’s gambling offerings are limited to clones of those storefront sweepstakes style “game rooms” with flat screen monitors lined along folding tables. In place of that once ready-to-be-regulated industry, the state successfully drove out legitimate business and left the door open only for those companies who don’t mind the legal dodging. Between the last rewrite of this book and the time it went to press for the first edition, I was approached by an intermediary for one of those less-scrupulous Alabama operators, offering to sell me a charity, a license and a lease for a bingo casino in Birmingham. Un-fucking-believable! Meanwhile the South Carolina boys, the Joe Hight genre, the Luc Marcoux genre, and the Cher-esque “Gypsys, Tramps, and Thieves” moved on to the next grey area venues. Many of them zeroed in on Mexico which had some interesting loopholes that allowed a version of Class II slot machines; but by 2010 the shootouts and violence over control between the operators/vendors and the drug cartels had many of them longing for the nice safe days of the Alabama governor’s task force. Most of the grey area operators moved on to the sweepstakes racket and began an unregulated infestation in new settings. So what is the harm in “unregulated” gaming? Why the big deal? Is it really making THAT much money? I have repeatedly pointed out the comparison of Alabama’s gaming revenue to all car sales nationwide. Well, of course the big gaming vendors like IGT and Bally would come into the state. Of course the early-adopters like Joe Hight would think they found financial nirvana. But is that any reason to be concerned? Isn’t that just business? Consider that in 2011 the net income for the five-sisters of the U.S. oil industry was $132-billion. That is a pretty serious industry. Meanwhile, according to NBC news, in the same year (2011) the net revenue from illegal gambling (not including Las Vegas, Atlantic City, Indian casinos or any regulated jurisdictions)…ILLEGAL GAMBLING… was $380-billion; triple the oil companies combined. But again, is keeping that money unregulated anything other than libertarian laissez faire capitalism? I have many friends who would debate on the global level that this money should be tax free, regulation free, and unaccounted. By refusing to set state-regulations for gaming, Alabama (and the other jurisdictions) open two doors: Firstly, they tacitly invite the schemes and scams that circumvent prevention laws through a never-ending series of innovations, creations, and loop-holes; and secondly, without licensing individuals and setting standards for games, consumers are not protected from the unscrupulous, illegal, and out-and-out rip-offs. It is, at very least, one of the great paradoxes of the gambling world that the laws and regulations that allowed all of these seeming-scams to exist…were all borne of anti-gambling forces trying to halt gambling rather than legalize and regulate it. Rather than halt gambling, they encouraged the most unregulated, (many times un-licensable), unscrupulous elements of the gambling world to find ways to circumvent the restrictions. Unaccounted for money (especially this much money) and the process of concealing the source of money is clearly money laundering. On that global level we can debate all day about the social consequences of not tracking that much money. Corrupt public officials need to be able to hide bribes, kick-backs, etc. Organized criminal groups need to be able to launder the proceeds of drug trafficking and commodity smuggling. Terrorist groups use money-laundering channels to get cash to buy arms. There is a viable argument that, on a policy level, the lack of regulation of this much cash can cause an actual deterioration of the national currency from money launderers easily moving their currency from one country to another, threatening the state’s reserves of foreign exchange. This threat will force the government to demand foreign loans to cover the external financing gap resulting from the smuggling of funds abroad. In any case, money laundering threatens the investment climate as investors lose confidence in the economic system and its regulatory legislation. All of that aside, the lack of regulation directly impacts the players. There is nothing that requires that winner are paid the proper amount; or paid at all, for that matter. There is nothing that requires that the machines pay out competitively or even fairly. In Nevada, New Jersey, and other states there are strict regulations governing the minimum payback a consumer can expect from a slot machine. There are strict guarantees of what a player can expect to win (or lose) under those regulations. Without regulation, there is nothing in place to protect consumers. Look at just the AWP market. Titles like Queen Bee, Crazy Bugs, Fruit Bonus, Fruit Genie, and even the venerable old Cherry Master and Pot-O-Gold  are not slot machines as we know them, despite the look and feel. The majority of these games rip off players/consumers. Most of the games (regardless of the vendor or manufacturer) operate from one of those aforementioned dedicated software board produced by one of a handful of Taiwan-based companies (Astro, Dyna, ICS, etc.). Similar to the old barroom standby eight-liner games (Cherry Master, Pot-O-Gold, etc.) but with updated Asian technology; these games are indeed “cheat games” (as Luc calls them). Frist, typically, the hold on these games is as high as 35% and can be reset at closing every night. Let’s suppose for example the operator has a game set to pay out 65% (keeping in mind slot machines generally pay out in the 90%+ range). By now you understand that the payout level is over a long period of time — many plays of the game. These boards are designed so that the theoretical payout is 65%… over a few thousand plays; but they are also designed that during the first few hundred plays the payout is much less —perhaps as low as 25% payout in some cases. That means that to get up to the 65% figure, at some point after a few thousand plays the machine will have a large payout that will make up the difference. However, the “cheat” feature that Luc points out is that the operator of the game can reset that board every day so that the 65% figure (via a large payout) is never reached and in fact the game always pays only about 25% (and holds 75% or more). I have actually had operators of those games complain to me that some of their games were “only” holding 80% on some days; imagine how they would feel with a REAL slot machine that only holds 4% to 6%! These are NOT casino gambling devices. These are sucker games and they masquerade as slot machines disguised under the pretext of “amusement games,” “sweepstakes machines,” and other legal loopholes through which they can slime. The unscrupulous and lack of regulatory control is certainly not limited to AWP and sweepstakes. I am no fan of Class II games; as is probably clear from my insistence on calling Class II “invisible ping-pong balls”). Even under the best Class II regulations (and I have written some and participated in the NIGC’s rewrite of theirs), I still believe that these games are bullshit. But that is not to say they need to be outlawed. If the law is going to allow an “electronic facsimile” of bingo, then clearly these games are legal. My issue is much more global: I think all games should be regulated, protected, controlled, and fair. I think consumers should have expectations or fairness in gambling. If you go to the store to buy a product …say a computer for example… you expect it to be a computer. It has the HP logo on it; it is in an HP box; and it has what appears to be Microsoft Windows on it. As a consumer, you have every reason in the world to believe it is a computer like you would buy anywhere else. But what if, when you get the computer home, you find out it is a “special Class II computer” that doesn’t really run Windows, won’t run your e-mail program, doesn’t do word processing, and doesn’t compute anything? There was no sign on the box or the computer warning you of this and from looking at the product you had every reason in the world to believe it was the brand name computer you were seeking. Hold that example and let’s step back into this one aspect of bingo-based slot machines and the player experience. You walk up to an IGT Wheel Of Fortune® brand slot machine. For all the world it looks to you like the same IGT machine you played in Las Vegas last year; but this one is at the Class II casino in your neighborhood (or in Alabama). It’s cool though, because the advertisements for the casino tell you about “Vegas style games” and “real slot machines.” The lights are there, the glitter is there, there are even showgirls. And the machine itself looks exactly like one you played in Vegas; the design of the machine, the logos, the sounds, everything. It even operates the same way…you push a button and spin the video reels. There is some little numbered card up in the corner of the screen that says something about bingo, but you don’t even have to look at that; you are focusing on the spinning reels of the machine. Just like the example with the computer, you as the consumer, have every right to expect that machine to behave just like the machines you played in Vegas. But guess what? Just like the phony computer above, these slot machines are phony too. You, my friend, have just been ripped off whether corporate American admits it or not. Firstly, your expectation of chances of winning is totally wrong —no matter what you expect. This is because you are not playing against a slot machine with a random number generator churning the odds like you played in Vegas. Rather you are playing against the other players in the casino. You are playing against their pool of money, against virtual bingo cards that they have on their machines, and you are not trying to get “three bars” at all but are trying to get a “bingo” before your neighbor does. That is a major difference and totally changes the outcome of the game. Read the National Indian Gaming Commission’s technical standards for Class II machines and 25 C.F.R., part 547; the basis of the play of Class II machines is that the player is competing against other players (as opposed to against the casino). This is a fundamental difference in the nature of the game and hence in the payout structure.   In fact, mathematically speaking, bingo is an entirely different universe than slot machine math. With a slot machine, the payout schedule can be anywhere the mathematician designs it to be. With bingo, the payout schedule is necessarily a bell-curve (caused by the nature of the game). Since the minimum winning bingo pattern requires four balls to be drawn (with the “free space” providing one of the five spots for winning), then it is impossible to win with the first three ball drawn. By the time the last ball is drawn there is a near-certain chance that some bingo card will have already matched four spaces and a free space. At each end of that spectrum, the chances of winning are less than the chances after a substantial number of the balls have been drawn. This is in sharp contrast to the random number generator of a Class III machine where winning is determined at any point, rather than only within the bell’s parameters. Within the parameters of that bell curve it is possible to create different payout peaks and valleys thus artificially altering the nature of the play; frequency and volatility. Some game manufacturers have tried to compensate for this finite curve by having their games pay out in non-standard bingo patterns. Besides serving to confuse players, this method only complicates the calculations. However, ultimately,  it does not alter the fundamental mathematical difference between bingo and slot machines. If you examine the earlier bell curve illustration you will see that (for example) by the time the 27th random ball is drawn the winning cards begin to show up. However, that curve is based on the assumption of an even availability of the 75 number spread on various cards. What many manufacturers has do is withhold the availability of certain numbers showing up on cards until after a fixed number of balls have been drawn or certain combinations have occurred. Balls Payout For example, the table at the left is taken from the actual payout table of one of the most popular Class II manufacturers.  Within the parameters of that bingo bell curve, this manufacturer (and many others) was able to change the frequency of winning combinations 26 10  27 800  28 40  37 5  40 2  by limiting the correlation between the number of invisible balls drawn and numbers available on players’ virtual bingo cards. This is really diabolically sneaky. If a virtual bingo is won when the 26th ball is drawn, then the payout is 10 credits. Now comes the complication of a random numbers generator within the parameters of the bell curve. Let’s consider just the range of “B” numbers available, 1 through 15. Every player’s card has five of those numbers, seemingly at random. Just for this example, let’s assume that four of those numbers are truly at random but one of those numbers is B-8. Now let’s say that the likelihood of any of those numbers except B-8 coming up is equal after the 26th ball has been drawn. In this pay table, if a match is made, the player wins 10 credits. If, however, no one has won by the 26th ball then that could mean that the bingo cards in play have number B-8 on them and in order to get that bingo win, it requires that B-8 be drawn. However, for this example, the programmer has made the probability of B-8 being drawn before the 28th ball to be extremely unlikely. So if someone has a card on which the combination with B-8 is a “bingo”, then on the 27th draw the payout is much higher; 800 credits. By the time ball 28 has been drawn, the odds are more likely to obtain a bingo in another column or pattern, so the payout for a “B” column bingo is only 40 credits. By the 37th ball the pay is 5 credits; and by the 40th ball being drawn, the payout is only 2 credits. With invisible bingo cards and virtual balls, it is an easy technological step to repeat this deception for each of the five letters in “BINGO” and for all of the hundreds of permutations of winning patterns (which include shapes, letters, etc. rather than traditional straight lines or four corners). With the Vegas machines (and Class III machines in Indian Country) you are playing against the machine and such duplicity is simply not feasible. But with “virtual bingo” you are playing from a “common ball drop” and against the other players competing for that drop. When the server computer picks the invisible ping-pong balls for a round of bingo, the card on your machine goes up against the cards on every other machine where a player has put in money. That particular selection of invisible balls remains until either you or one of the other players gets a “bingo” from that selection; the session does not “end” until then. The odds of your winning then are, in part, based on the likelihood of your bingo card having more matching numbers than your neighbor’s bingo card earlier in the game. To a mathematician this variable skews the odds so much that it makes the game vastly different from a slot machine. Yet the game you are playing is designed to look like a slot machine and to hide this difference from you. You cannot even play on these machines unless at least one other player is playing at the same time (so that you can have the required bingo ball drop against other customers). In that regard, it reminds me a lot of the counterfeit drugs, baby formula, designer clothes, and even machinery pawned off on the third world. It is as if it these games were created to be substandard look-a-likes of the real thing; a cheap imitation without the substance of the real thing. The percentage of payback that you might have come to expect in Vegas does not exist in the same manner with Class II. In Las Vegas, Mississippi, and Atlantic City, slot machine players are extremely aware of the payback of various machines in each casino. Casinos compete by offering higher paybacks than the casino down the street and players constantly switch properties to get the best payback. In Class II casinos, you won’t see those big neon signs they put up in Vegas that announce “98% pay out”. In fact, the paybacks are nowhere near the Vegas odds. The odds for Class II casinos are set by the manufacturers of the machines and not by marketers in the slot department. While you can expect Vegas machines to payback from a high of 98% to a low of about 91.5%, you can expect average Class II machines to payback 96% to down to a little as 75%, depending on the manufacturer. It is not totally unheard of for the machines to payback as little 65% (though as I noted earlier some of VGT’s Class II machines do pay back almost 98%). With Class II games, there is no legal minimum payout of any of the games. In Atlantic City no machine can pay back less than 83% and in Nevada it is 80% though in either jurisdiction the payback rarely runs below 90% even on the very “worst” machines. But Class II machines could be set to pay out 1/10th of what a Vegas machine might payout; you have no way of knowing the payout and there is no law compelling anyone to tell you. There is zero consumer protection on that front. In that “consumer” regard, the machines are indeed akin to the redemption and sweepstakes games. The myth that one Indian casino’s Class II machines are “looser” or “tighter” than another’s is just that: a myth. In Oklahoma, Southern California, and a few other jurisdictions where there are clusters of Indian casinos, the marketing myth is often that one casino has more winners than the one next door. As I just said, the payback percentage is determined and set by the manufacturer/owners of the games. It is the same everywhere; the Class II machines pay the same in every casino. Competition on that front does not exist. My complaint is about the inherent deception, dishonesty, deceit, duplicity, and fraud of cloaking these slot machines in a loophole. My argument is this: in today’s world, with technology ever changing, it is impossible to stop high-tech gambling. So whether it is electronic bingo, sweepstakes, AWP, or Internet Poker; I want it regulated. As a consumer, as a player, I want to know the games are fair and have a standard. The refusal of state governments (like Alabama) to regulate gambling leaves the door open for all sorts of schemes to circumvent laws that ban gambling. With technology constantly changing, there is just no way to anticipate the potential loopholes in even the best-crafted anti-gambling laws…given the level of pure genius, cunning, determination, and resilience of the grey area entrepreneurs (remember these guys invented virtual/invisible bingo balls!). As I said, the nature of that rung of the gaming ladder is short term. The loophole opens, the snakes move in, the loophole closes, and the snakes move on to the next loophole state. In the meantime, they make a lot of money with minimal investment. And, if they are closed down or their games are seized and destroyed…well it is just the cost of doing business and there is another state waiting down the Interstate. •

Chapter Sixteen. Marketing Donald Trump

“I’ll tell you, it’s Big Business. If there is one word to describe Atlantic City, it’s Big Business. Or two words – Big Business.” ― Donald J. Trump

G od, I love Bunky’s chickens. I think the Flying Elvis promotion is incredible. Fully decked out showgirls wandering the casino floor and mingling with players absolutely rocks (assuming the girls don’t have a plug of chewing tobacco in their cheeks). No one can dispute the crowd-drawing power of shows from top rockers, country singers, and even the Chippendales. Car giveaways, postcards offering a premium of the week, in-casino interactive contests and promotions, all are incredible. All of these creative marketing devices are tools for generating and responding to data. Remember: the real purpose of the tic-tac-toe chickens was to increase player’s club card usage so I could gather more data about the customers. Once I had that data, then I could kick those formulas into play and created “offers” that could motivate players to come more frequently, stay longer, and spend more money. Most casinos use some combination of these and other creative devices to attract new customers, to retain existing customers who might defect to competing casinos, and to increase the amount of time that they play. In order to adequately use the data a number of casino factors must be totally symbiotic. Marketing and IT must be in sync; in fact, they need to be in love with each other. The casino marketers need to be well-trained in how to take the raw creativity of something like tic-tac-toe chickens and turn that into value. Casino operational management needs to be on board and understand the value of this kind of marketing. And the owner/operator needs to “get it.” It might seem that this synergy of internal casino forces would come easy when the track record of success is up to a 40% increase in revenue by applying a few simple marketing tracking, analytics, and targeting rules. Unfortunately, the combination of such hyperbole-sounding dramatic increases and the seemingly technical mumbo-jumbo of how those rules work are hard to swallow by hotel operators, general business accountants, and other top management that does not come from either the marketing world or the casino world. Though advanced personalized marketing methodologies had been used by direct marketers and the catalog industry for decades, in the late 1990s when I began tossing around words like “RFM targeting”, they were completely alien to casino operators. Harrah’s was winning marketing awards following the business direction of Harvard business professor Gary Loveman; but at that time Loveman was a consultant brought in by hotel boss Phil Satre. Today, Loveman is CEO of Caesars Entertainment Corporation, the successor to Harrah’s; but even then he and his protégé, Booz Allen Hamilton alumnae Richard Mirman, were apparently more interested in their own academic formulas than my catalog-industry methodologies. After Bill Bennett’s death, it was, at very least, challenging to find an operator willing to allow my hocus-pocus sounding methodology a live lab for development. I needed an operator who breathed, eat, and shit marketing and branding. I needed an operator who lived marketing, not from the Harrah’s academia-to-live lab that Loveman was creating, but from a street-fighting “let’s do it” attitude. I needed an operator who would “get it.” Enter Donald J. Trump. In 1987 or 1988 when Donald Trump’s Art of The Deal came out, I absolutely hated it and hated him. I saw him as a real-life incarnation of Michael Douglas’ Gordon Gekko pronouncing, “Greed is good.” I read the book as a cliché of every absurd byproduct of the trickle-down-generation and a tome somewhere between Robert G. Allen’s get-rich-by-buying-my-books, one of those “how to negotiate anything” books, and Michael Milken’s 98 counts of racketeering and securities fraud. Not that Trump smelled of either Milkenesque crimes nor Allenese get-rich-quick schemes; but his book and his persona reeked of the zeitgeist of that epoch…at least to me it did…that that was not an appealing spirit. On my list of top 100 people I would like to meet, Donald Trump was probably number eight-billion down the list (keeping in mind there are only 6-billion people on the planet). When his financial empire collapsed, for me it was not important enough to jump for joy; but it did cause me to note, in passing, that what goes around comes around. And ten years later when Art of The Comeback was released, I merely noted that some things (no matter how un-pleasant) just won’t go away. In 2000, when I kept an apartment in New York as a consultant to real estate mogul Bruce Ratner (who by the way developed the original concept for Vegas’ Venetian), I actually met Trump for the first time at an upscale east side restaurant. He was sharing a private dining room with us; at his table was, among others, author Tom Wolfe (decked out in the white-suite and white fedora Tom Wolfe costume). I was bemused that Trump, while cordial, would not shake hands (I later learned he was a Howie Mandel style germaphobe). At that time Trump’s casinos were going through one of their periodic financial crises. (I cannot even remember how many GM’s the Taj Mahal has had; and I wonder if Donald can). It had not been that long since a Trump corporate helicopter crash had killed five people including three of his top casino executives: Steve Hyde, Mark Grossinger Etess and Jon Benanav; he definitely was suffering a brain-void in his casino empire. At that dinner, I thought it was a damned shame that he was not out of his seat begging for my advice; god knows I would have given him a free-of-charge earful. Nonetheless, he was THE Donald Trump, pre-Apprentice, but celebrity-like nonetheless. I would have never, in a thousand lifetimes, predicted that I would either work for Trump or actually like the guy; hell most of the people that work for him don’t even meet him. But experience and maturity do strange things to people (and they certainly did for Donald Trump). The one thing at which Trump became brilliant —not just good, mind you, but brilliant— was (and is) branding. He turned the Trump name into a BRAND. Even more difficult, he turned it into a brand of prestige, quality, and upscale value. Regardless of whether these perceptions were in reality 24-karat or merely plated gild, the brand awareness was identified with the BEST. Never mind what those “tell-all” books written by any of his “insiders” purport to “know” to be “the truth,” the Trump brand is iconic. Love him, hate him, or ignore him, there is no denying that the positioning of the Trump brand has been absolutely brilliant. It is that brilliance that I came to like about Trump…and learn from him. Don’t get me wrong. I disagree with almost everything Donald Trump says and does. That “birther” insanity of the 2012 presidential season was really over the line; and anyone who litigates as much as he does…well you get my point. Nonetheless, there is no denying that he is a marketing machine. In the 21st century, who would have thought that some huge percentage of Americans could name a famous real estate developer? Incredible. When I was offered the job with Trump, I had already accepted a position with a casino in Washington State; in fact, I had already passed the background check, been issued a Washington State gaming license, and given a date to report to work. But who in their right mind would turn down an opportunity to be a marketing Vice President for Donald Trump? Not only did I thrive in the job; not only did I increase monthly gross revenue by more than $60-million; not only did I create the only “successful” Trump-branded casino at that point in time; but I also got to learn branding from an undisputed grand master of the science: Donald J. Trump. And it gave me my much needed laboratory to fully develop the methodologies that Bill Bennett had encouraged. The culture of Trump Hotels and Casinos, either unfortunately or fortunately, was transient with that succession of General Managers and CEO’s at the casino flagship Taj Mahal in Atlantic City. Every time a new CEO would take the helm, there would be a series of departures of top managers in various departments. It seemed that less than loyal to Trump, many executives were part of the team that traveled with the innumerable GM’s. I entered the Trump universe during the reign Mark Brown (rather than that of Nick Ribis, or Denny Gomes, or Jim Perry, or John O’Donnell (at the Plaza), Mark Juliano, Kevin DeSanctis, Rosalind Krause, Scott Butera, or…frankly I can’t remember even a portion of them or what actual titles and positions they held). The Mark Brown epoch included Lou Creseenzo (slots), Vince Mascio (tables and casino management), Steve Gietka (entertainment), and in California Rich Williamson (finance), Rich Smith (F&B), and a handful of other key players. Through a soap opera series of events (from that tragic helicopter crash killing top management, to general incompetence, to corporate power plays) the cast of characters constantly changed at every level in the organization. Complicated into that menagerie, out in California, we had the power struggle between the Tribe and the Trump-ites and then internally within the Trump group another struggle between those loyal to the THCRM (Trump Hotels and Casino Resorts, Management Services, LLC) and those who thought independent management (dumping Trump) would be better for that Indian property. Absurd as it sounded and as much denial each of those then-“factions” might feign, the fact was the mere constant turnover of management staff indicated something was up. Most managers have chosen to say that the “something” was the quirks of Donald Trump’s personality; but, frankly, that is such a ridiculous straw man copout that it makes me want to throw up. The truth is that Trump has consistently been Trump; good, bad, or indifferent, any of his various operatives and inner circles over the years should have been bright enough to recognize that fact. Even the stock-price-increasing departure of Nick Ribis and the strain on their longtime friendship was not a “quirk” but a Trump-analyzed business decision. Through all of the turmoil, much of the glue and stability in the Trump gaming organization had been from an unassuming and deceptively brilliant attorney named Robert M. Pickus. At least since 1985 Trump had relied on Bob Pickus to guide him through the gaming universe. Apparently happy in the background of the larger-than-life Trump, Pickus brilliantly directed the ever-changing cast of characters in the Trump gaming drama. Even in the days of the Ribis’ taking-the-company-public moves, Pickus was there as Trump’s eyes and ears on the ground. At various times he filled roles of Chief Administrative Officer, General Counsel, Corporate Secretary, of Trump Resorts Funding, Trump Hotels and Casino Resorts, Trump Entertainment Resorts Holdings, Trump Casino Holdings, and whatever the Trump company of the day may have been. To my knowledge, he ran legal, H.R., risk management, government affairs, and development. He was successfully in charge of the two big restructurings of the Trump debt, 2005 and 2010 (reducing the 2010 debt by a billion-and-a-half dollars). He was in charge of compliance, training, the management contracts, trademarks, and licensing the Trump brand. He arranged the financing for Trump29 as well as the Trump riverboat casino in Gary Indiana. Bob Pickus is one of those things that took Donald Trump (at least in my mind) from that Gordon Gekko paperback bookseller to a serious business leader. Though I did not work directly with him or really know him very well, I found him to be meticulous in detail (one of his many employment contract addendums guaranteed him the right to have his laundry done in the Taj Mahal’s laundry room). During the Mark Brown heyday, those of us in the field knew that talking to Pickus was the same as talking to the Trump organization itself, somehow bypassing Mark; hence most of us avoided Bob. The cast of characters aside, the genius of Donald Trump’s branding stands alone to move him from an “also ran” to a mogul with a brand-able hair style and then to a true icon. But even with that under his belt, there is a much more intense genius that is Donald Trump: the financial instruments guru that he became from his years of New York real estate finagling. From the in-your-face (he likes to call it “brash”) disco-era asshole who fast-talked his way into the sweetheart Grand Hyatt tax abatement deal in New York, Donald J. Trump became a genuine guru of financially structuring deals that seem impossible. That lower-key genius rivals even his branding genius. His use of multiple companies’ mortgage bond issues was at least dazzling…and a decade ahead of the hedge fund wags of the early 21st century who “invented” this technique. With debt sold in order to finance or expand casinos, Trump issued artificially low coupons (designed to sell considerably below par) for investors to profit from the difference between the purchase price and the value at maturity. His use of “leverage” permeated throughout the organization; even slot machines were revenue-share rather than purchased. Beyond just usage of these instruments, Trump’s management of them is viciously enlightening. Consider that much-publicized battle with entertainer Merv Griffin over ownership of the Resorts International Casino and Hotel. As I discussed earlier, Trump used these types of instruments to buy Resorts in 1987 but two years later sold it all … including the bond OBLIGATIONS to Griffin. Touted as a battle between two titans (as I discussed, Griffin’s holding included the Beverly (Hills) Hilton and a substantial interest in IGT’s Wheel of Fortune slot machines), the publicity raged like a Saturday-night wresting card set for your local coliseum. One covenant of the final sale —in which Merv “won” Resorts and “kicked Trump’s ass” (as he put it)— was that Trump would be “burdened” with ownership of the unfinished Taj Mahal project with its delays and cost overruns. I discussed this battle in an earlier chapter, but to recap, Trump promptly financed the Taj with a new bond offering and other bondholders’ monies. Merv, meanwhile, still had the Trump-created debt obligation at Resorts, but without the promise of the to-be-completed Taj on the horizon as a temptation for investors. Consequently, Griffin’s Resorts had to file for bankruptcy-court protection, leaving the Resorts investors with a fraction of their original investment, the bonds virtually worthless, and Donald with the largest and newest casino resort in Atlantic City…with built in equity. Take that kind of financial manipulative mastermind and meld it with the high-end branding machine that he has become… and you have a portrait of Donald J. Trump and his magic. When I stepped into the Trump world, the casinos were on one of their periodic downward spirals, more a result of debt structure than the economy or operational issues. In Palm Springs California (actually Coachella), where the Trump name should have been the perfect tie-in, revenue was stagnate at about $40-million to $45-million a month; where it had been for months on end. Something was just…not working. And it was there that my marketing methodology was front and center. The “magic” number that the Trump organization was looking for was a Saturday with gross revenue (coin-in) of $5-million. With that benchmark, the general feeling amongst the accountants was they could show growth with the property. That magical $5-million day had happened only once: during the grand opening. Since then, it had been elusive. A “really good” weekend would bring $4.2-million to $4.3-million. Once, in conjunction with a two-set concert by comedian George Lopez, a Saturday night grossed $4.8-million, but the casino suffered during the following week and thus monthly revenue remained flat-lined. The magical $5-million number seemed just impossible to repeat. Of course, from this build up, you obviously know that I turned that situation around. I consistently had every Saturday a $5-million day, along with many Fridays and Sundays as well. I moved the monthly gross revenue (“coin in” for the casino industry) from averaging $45-million to consistently at least $100-million. The “secret” for doing so was, again, formulaic, methodological, and executed from planning. And the success followed long after I left Donald Trump — as long as the formula was followed. The marketing success was rooted in data; in the methodology that Bill Bennett and I had honed from my basics. The Trump property finally afforded me a replacement live lab; but there was no data. Hence the introduction of the tic-tac-toe chicken.   Hundreds of pages of Trump data analysis reports As you will recall from previous chapters, when I arrived at the property only 17% of the players were using their club cards. Consistently, the casino could not identify anything about 83% of their players. We had no data. By the end of the chicken promotion, 74% of my players were using their cards; finally a measurable base of my players. Before I could begin using that player information, I needed to know exactly what it is that we had collected. I wanted to know really esoteric details like, how much money did white women age 45-50 from one zip code spend on the average; what was the average daily worth of customers, by demographic; what was the length of the relationship between those customers and the casino; what was the ratio between spending and mileage radius from the casino; and so on for (literally) several hundred pages. That would me a starting point from which to work. Despite the fact that this data is available to every casino with a basic player tracking system, most good marketers (an all wanna-be marketers) often overlook a plethora of tangible and measurable revenue sources as well as the ability to attract new customers, to increase loyalty amongst existing customers, and increase purchases from existing loyal customers…all hidden in that data. Johnny Cash sang the powerful lyrics: “It is dark as a dungeon way down in the mine.”  I always thought that imagery applied just as well to a data mine. All of that data they player tracking system collects player spending behavior was pretty worthless if it was idle in a dark bottomless pit somewhere in the process. All good marketing preaches the use of data; and most CEOs and COOs are trained properly with the right buzzwords to feign grounding in data marketing. Almost all casinos have those frequent-player cards for recording and tracking customer behavior. Of course, there is some kind of mining of this behavioral data. In the 15 years since I began preaching my methodologies at trade shows and to a few selected clients (like Bill Bennett, Mandalay, and Wynn), every marketing consultant and agency has begun offering data analysis work. Most are using all the right buzz words of CRM (customer relationship management), Hybrid Marketing, Segmentation, Benchmarking, Customer Centric, Organic Campaigns, KPI (key performance indicators), Brand Loyalty, Integrated Marketing, Consumerization, and the ever-popular Technology Fragmentation. At Trump, as I began the creatively over-the-top promotions (like the chickens) and then the mind-numbing process of sorting through the new data, Frank Haas (as comptroller) would immediately hammer me with “how much incremental revenue did you generate with that.” Frank wanted to know how much more money the casino made with the promotions than it would have made without the promotion. Frank, and most of the people who review casino revenue, knew that, sadly, most marketers had no answer to that question. Sure all competent marketers look at their numbers following a promotion and compare to the same date last year or last month or whatever. But that sort of superficial accounting does not consider hundreds, if not thousands, of contingencies that could have impacted player behavior. In most cases there is no pro-forma in advance of a promotion; just accountant-driven post-forma reports. He was in for a surprise; typically I would have not only pro and post forma (which then were rare enough) but I would also require a pre-event assessment for every promotion, mailing, or event. That way we surgically projected, evaluated, and analyzed the marketing function. For example, at the right you see the front cover of the eight-page monthly calendar I mailed to customers for January 2004. Below you see one of the inside pages actually listing the daily events for that month. Many casino marketers would creatively visualize the events, giveaways, promotions, entertainment, and so on for the month and simply mail the calendar and see what happens. That kind of haphazard shotgun approach just didn’t work for me. I wanted to know in advance what I could expect from these month’s calendar promotions.     More specifically, I wanted to very specific measurable criteria for every promotion in the calendar. I wanted to project the start and end dates of the project; the measurable response that I WANTED (that could later be weighed against actual response); the number of test (or seed) mailings sent; the total number of pieces mailed; what method I would use to track the response to the calendar. This would allow me to take the pre-event data and create a dollar-amount pro-forma of costs of the promotions versus expected revenue.

Moreover, I segmented even my calendar mailing the way catalog companies segment the catalogs they send out. Think about cataloguer L.L. Bean. They produce a nice paper catalog (at least as of this writing they still do) which they mail out all over America. The catalog is made of somewhere between 50 and 150 pages of their merchandise which is useful all over the country. The key to getting the customer to flip through those pages, however, is the front cover of the catalog. Now, let’s think about what they can put on that front cover to get us to open the book and look at the merchandise. In their winter catalog, customers in Montana (for example) may be really excited about heavy coats, snow boots, and other cold-winter gear. But I live in South Florida where the temperature in February is 80-degrees rather than some degrees below zero. The snowbound catalog isn’t going to excite me to open the catalog; though the pages inside have merchandise that may well appeal to me just as much as it appeals to the Montana well digger. (As I type this page, I am wearing a nice cozy pair of L.L. Bean slippers which I put on right after I got out of my pool.) To solve that problem, catalog companies send different front covers to different constituencies; in this example based on geographic location. If they are going to go to all the trouble to create different versions of the catalog cover based on zip codes, then there are probably other common factors they can add in. For example, as a past customer who they want to encourage to reorder, I am be offered a 10% discount for returning customers and they may print that in huge read letters on the front of the catalog. My next door neighbor, right here in Florida, may have never ordered from them or have done so rarely enough that they are not considered regular customers; so to entice them they may offer free shipping, printed in bright colors on the front of the catalog. Using this method the catalog company is able to target customers on multi-dimensional levels. That also means that they have an entire selection of different covers for that winter catalog. Just in this example we know they have the northern and southern versions and within those versions they have regular customers and not-so-regular customers. Just in that simple example there are four different covers for that winter catalog. Every customer can be grouped into one of those categories. In the casino world, we typically use players club membership to segment players by something called “ADT”; Average Daily Theo.  ADT is the average theoretical WIN the casino makes from that customer’s visit (remember from an earlier chapter the casino and players’ juxtaposing the word “win”. Well-marketed casinos then add to the ADT a second segmentation: how recently a player was in the casino. I add a third dimension of how often the person comes in. That allows me to generate a three-dimension picture of an individual customer: how much I make when they visit; when they last played; and how often they come in. Below is the actual pre-event report for that January 2004 Trump calendar mailing.

Let’s look at what we created, line by line: Project Name January 2004 Calendar Goal Retention Start Date January 1 2004 End Date January 31 2004 Project Description TRUMP 29 JANUARY 2004 CALENDAR HAS THE FOLLOWING PROMOTIONS: • Promotion 1: CHICKEN TIC-TAC-TOE, $10,000 CHALLENGE – every day from 12 noon to 8pm guests get a chance to challenge Ginger the chicken at tic-tac-toe. If they beat Ginger they win $10,000. • Promotion 2: SCRATCH CARD TUESDAYS – January 6, 13, 20, and 27, from 9am until Chairman’s Club closing. Guests trade their coupon for a scratch card to win a share of $30,000 and are guaranteed to win a cash prize up to $1,000. • Promotion 3: APPRENTICE VIEWING PARTY – Premiering Thursday, January 8, at 8:30pm then showing the following Wednesdays in January: 14th, 21st and 28th at 8:00pm, in the Blue Bar. Weekly cash pool and series cash grand prize if guest picks who gets fired by Donald Trump, and who becomes the Apprentice. • Promotion 4: CHINESE NEW YEAR CELEBRATION – January 31, at 12 noon in the Spotlight Showroom. Festivities include a D.J., Karaoke, Lion Dance and more. • Promotion 5: COUPONS – 30,012 members received coupons that are valid through the month of January for the following: 2 for 1 Buffet, Free $5 Cash, 2 for 1 Showtickets and $5 Matchplay. • Promotion 6: FOUR CASH COUPONS MEMBERS REDEEM WEEKLY o 3,850 members received $5 coupons o 1,891 members received $10 coupons o 1,603 members received $15 coupons o 1006 members received $25 coupons o 329 members received $50 coupons o 103 members received $100 coupons. Desired Outcome 7% Drop Date of Mail December 23, 2003 In-house date January 1 Mailing Type Monthly Calendar Number Mailed 38,794 Test (seed) mailings 15 Response desired 2,715 players Geographic Target CA, AZ, NV, & UT Criteria for targeting • Minimum $15 ADT • Minimum of one visit in last 12 months • Minimum of 2 visits during previous four months Additional criteria for Promotion #6 cash coupons: • ADT of $25-$49 receives $5 cash per week; • ADT of $50-$74 receives $10 cash per week; • ADT of $75-$124 receives $15 cash per week; • ADT of $125-$249 receives $25 cash per week; • ADT of $250-$499 receives $50 cash per week; • ADT of $500 or greater receives $100 cash per week; Additionally, the report contains: a project ID number; a project reference number; any RSVP’s required; any events that allow a player to bring a non-member guest; event codes; a succinct description of the offer; additional information identifying the tier segments; and the database operator/report generator’s name and ID (in this example it was my aforementioned friend Steve Sohng). The targeting criteria for this particular mailing also segmented players by ADA (Average Daily Actual casino win)weighted against the ADT. This measure came about from that debate between Steve and myself (that I talked about in Chapter Eight). My insistence on an Actual win number was based on an extreme example that had happened to me, as a player, and later was reported to me as having happened to a number of players. I walked through a casino on my way to a conference at the hotel. On my way across the floor, I stopped at a slot machine, put in my player’s card, and played $20 before going on my way. My THEO for that brief play was a mere $1.70 because the casino hold was 8½%. The problem was that I lost the entire $20 without winning a damned thing. My ACTUAL was $20 despite what the system reported as my theoretical. The next day I did the exact same thing. At the end of the conference, five days later, I had a few hours to kill and I gambled about $1,500 total. My theo was $127.50 for that day. But like my previous days, I was very unlucky and I actually lost $500 instead of $127. For measuring my play for that multi-day casino visit was $130.90. In reality, the casino had earned $540 from me; a little more than four-times my theo. Mathematically the odds were that I would eventually level-off and my theo would be near the 8½% of what I gambled. Also, this simplistic explanation did not take into account my “reinvestment” …which the actual player tracking system does. For example, even though I lost my entire $20 on my first session, it probably was not on one spin (though it could have been). More likely, as we have seen in previous chapters, I won a little and lost a little and continued that pattern until eventually I lost the entire $20. But the theo data did not differentiate between whether I lost it all at once or through reinvestment play. From a purely customer service standpoint, this sort of sucked for me as a player. The casino viewed my theo as $127. To be comped free meals at their restaurant during my stay I needed a theo of $150 and to get my hotel room free I needed a theo of $400. I was told by the players club that I was, basically, shit out of luck. Had the casino measured my ADA in addition to my ADT, then there would have been no problem. Moreover, the player tracking systems all track ADA; but marketers weren’t using it. The casino world revolved around ADT. Hence, my introduction of ADA into the mix. The calendar offer in the example here is more advanced than the average casino mailing at the time. Most casino offers segmented the database by ADT and by most recent trip to the casino. For this mailing, Steve used my methodology of adding a third dimension (of frequency) to the mixture as well as a balance between ADT and ADA. I had wanted to use that January 2004 calendar as a transitional test mailing. Traditionally a casino calendar was not segmented; it was sent in a sort of “one size fits all” package. I wanted to segment. Also, traditionally, segmentation of letters or postcards involved two dimensions and not three (and certainly not ADA and ADT). At the time, most casinos that had begun experimenting with customer segmentation were slicing their database into two to six segments; very similar to the way my January calendar was sliced for the cash coupons. Meanwhile Harrah’s casinos were winning database awards for using a reportedly 80 different segments in their direct mail letter offers; though according to one of their IT managers they were not using anything like my RFM patent-pending formulas. I had devised a methodology with 250+ segments and that January calendar was the first transition. While on paper that reads as possible mind-boggling excessive, in reality it is merely a function of computing power. It was my methodology that had excited my friend and mentor Bill Bennett. Long before my Trump foray, casino super-company Harrah’s began applying that rudimentary (albeit effective) modeling from their data. They were able to increase response to their direct mail pieces from 3% to 8% (as early as May 2000, according to the Wall Street Journal). Much more importantly, annual earning and the P/E ratio had a direct correlation to this “new kind of marketing”. Imagine what the last ten years could have added to that mix had they possessed the tools to take their modeling to the next steps. Several times in this book I have talked about standard customer targeting models usually measuring customer behavior with demographics charted in two dimensions: usually recency of spending and amount of spending. Except in the aforementioned paper catalog industry, the model of R.F.M. measurements (recency of visit, frequency of visits, and monetary value of visits) were almost never matched as a trio against geographic data, basic census data, demographic data, and basic behavior data for those groups. Hence rather than target highly-specialized offers tailored —almost personally— for each individual potential customer, customers are shot-gunned with a barrage of offers that may or may not hit the mark. However the combined elements of Recency, Frequency, and Monetary value (RFM) of a customer have driven the traditional paper-catalog direct marketing for years. Beyond the simple L.L. Bean example I cited, the RFM method has allowed the testing of new products, new pricing, and targeting specific offers to match specific types of customers. It also has allowed highly accurate analyses and projections of profits. RFM has moved into that collection of buzzwords mimicked by casino marketers, agencies, and consultants. But back in 1999 when we published my little booklet on the subject and started speaking at the casino trade shows, it was an unheard of concept. Since then it has crept into the assemblage of buzzwords and in some cases the methodology of casino marketers (though it is questionable as to how many have actually understood the application of RFM). Recency. This is when a player last gambled in our casino. The knowledge of how recently a customer gambled gives us the beginning ability to project the value that customer has (to us or to other casinos, if we chose to sell that customer’s name). It does not reveal, however, if this is a repeat customer; an important factor in venues where tourism, foot traffic and convention traffic are in play. Frequency. This is how often a player comes in. We should be able to measure the frequency of casino players as either one-time visitors or as repeat players. (It can also factor in hands-per -hour at tables or (more likely) handle-pulls (or button pushes) per quarter-hour of slot play). However, this measure does not identify the last time player visited us. They may have played 5 times last year; or once a month for five months. These different behavioral patterns are VERY important for creating a marketing offer that will attract additional betting from different types of players. These two measures, together, give us two of the axis we need to plot a customer’s value. If we consider the left axis to be Recency, then we should be able to begin a simple chart of repeat customer activity that looks like the chart below:       Played Today      Played Within A Week      Played Within 30 days      Played this Quarter      Played within a year      If we consider a top axis (I use top rather than bottom for reasons that will make sense shortly) to be Frequency, then we should be able to put together a full graphical analysis of two dimensions of our customers. (For the purpose of this basic illustration, we will exclude the plays-per -hour portion of the Frequency plotting … though in real application of this technique it is an essential element for accurate projections.  Played 5 times or more Played 4 times Played 3 times Played twice Played once Played Today      Played Within A Week      Played Within 30 days      Played this Quarter      Played within a year      Having established two axis for customer plotting, let’s identify each of the positions where we should be able to enter data to plot customer behavior. In each block we should be able to insert the number of (or the names of) customers who match the criteria for that block. To simply this example, for illustration, I am using casino players but you could replace them with any type of customers. Likewise, for the purpose of illustration I am only including 25 possible plotting positions for our customers; in reality that number (for me) would be a minimum of 80 to 100, depending on the total size of the database. To visualize the plotting for this example, we will identify each block with a letter of the alphabet.  Played 5 times or more Played 4 times Played 3 times Played twice Played once Played Today A B C D E Played Within A Week F G H I J Played Within 30 days K L M N O Played this Quarter P Q R S T Played within a year U V W X Y In this example above, customers in block A played 5 times (or more) and played one of those times today. Likewise, customers in Block F played 5 times and one of those times was this week. Continuing the plotting, customers in Block Y played once last year. Customers in block U played 5 times, but not in the past year…and so on. This example-charting allows us to examine the behavior of our best customers…either by number or by name (thanks to the miracle of database technology). This within itself is a powerful tool because it allows us immediately to tailor different offers to different customers, based on this little bit of data.  In short, we can contact those customers (for example) in Block U who spent with us five times but not recently. We can launch a marketing campaign to (a) determine why they have not been back, and (b) create an offer to entice them to come back. (That gets a little complicated, as we will see.) Again, for the purpose of simplification in understanding the processes here, let’s merge some of these blocks into quadrants so that we can easily see our best customers, our worst customers, and our borderline customers. Even though we are using simple charts here, remember that in reality a computer is keeping track of all of this data for us and sorting the players into our categories. In reality, these seemingly time-consuming and expensive models are instant and virtually cost free.  Played 5 times or more Played 4 times Played 3 times Played twice Played once Played Today A, B, F, G, K, L C H M R W D, E, I, J, N, O Played Within A Week    Played Within 30 days    Played this Quarter P, Q, U, V  S, T, X, Y Played within a year     Customers in grid ABFGKL are our best customers; while customers in grid STXY are our worst customers (in relative terms, of course). The other grids have varying values to us as good or bad customers. Now if we also modify our axis to match our grids, we get a simplified chart that looks like this:

Played 4 times or more Played 3 times Played once or twice Played Today to 30 days ago A, B, F, G, K, L C H M R W D, E, I, J, N, O Played this Quarter to one year ago P, Q, U, V  S, T, X, Y

This over simplification very easily shows us how we, conceptually, should be able to rank customers based on “R” (recency) and “F” (frequency) data. We can also see how easy it is to start targeting specific offers to customers based on their behavior (and therefore to what they are most like to respond). This model holds true, unless we consider the possibility that each of the customers in grid ABFGKL played 5¢ slots while the customers in grid STXY each played $5 slots …then suddenly our two dimensional graph is seriously skewed in any plan to use it to measure “good customers”. And it is herein that a lot of marketing fails in its striving for accuracy. Fortunately, the Greek philosopher and mathematician Euclid taught us that the world is not two-dimensional. Equally fortunately, neither is the understanding of customer history. The third dimension for us is Monetary Value. Monetary Value. Pure and simple, this is how much money a customer spends (or a player gambles). Generally, for analytical purposes, this figure is the average spending for a repeat customer. Let’s first consider the monetary value of customers as a standalone chart. We will chart average bets placed in three per-session categories: $1 to $100, $101 to $500, and $501 to $1000. This will be our left axis. The top axis, then, is a little more complex. If we rate the values as big spender, average spender, and worse spender, then the marketing task will be to determine what steps we must take in each category to increase a lower player to become a bigger spender. The top axis then is the category of spending:  Big Spender Average Spender Worse Spender $501-$1000 A  B

C $101-$500    $1-$100    In the A block, all the players are already spending in our top (over simplified) segment, so no movement is necessary; however retention IS a major issue. In the B block, players must be retained AND move one level to become our best spending players. And in the C block the customers must be retained and move two levels to become best…and move one level to even become average. The Big Spender category, then, should receive the most attention in attempting to retain them, to get them to play more times and more often. The ones who spend almost nothing should have fewer resources dedicated to moving them toward spending more often and more times. This is one of many possible basic marketing strategies that most good marketers already deal with on a daily basis. NOW…If we superimpose this model onto our “R” and “F” chart from above, we should be able to quickly see that a player who spends the most AND has recently played and plays often is our very best customer. Likewise the player who spends the least, has only played once, and has not played in the past year…is the worst customer. Everyone else falls somewhere between in a (vastly over simplified) three -dimensional graph of this RFM data.   Among the magical formulas that direct-marketing gurus talk about are rating formulas for customers…using the RFM history that we keep for each player (or customer). Without taking the time here to teach an entire RFM rating systems (and thereby lose the focus of this look at Marketing Donald Trump), let us assume that we have developed a rating system that gives us 10 different categories of players, ranking from 0 to 9. For this simplified example: Category 9 players are those very best customers who play often, gambled recently, and spend a lot of money; Category 0 casino visitors played twice, haven’t played in more than a year, and their average spending was a mere $2; Categories 1-8 all fall mathematically between those two extreme poles. With this method of sorting the player data, we now have a powerful personalization tool to add to our existing arsenal of explicit user ratings, observed behavior, and demographic/psychographic information: we can create an highly-targeted offer based on this RFM table. Of course, this table is vastly simplistic for the purpose of example; however it does illustrate the general technique. For example, if I am a player who ranks in category 9, I might warrant personalized attention from a host, some outbound telemarketing, and a series of incentives that match other players like me. My offer would point me to specific games and even days of the week to visit (all based on my history as well as on my behavioral data). It would push up-sells and cross-sells to me based on casino activity issues and cross-sell histories. It would provide me with a personalized experience for my next visit based on my history and predicted behavior (measured against others in category 9). Creating an offer personalization with all the bells and whistles associated with suggestive selling is a monstrously complex process but, it is a process well worth the effort; and it can be further fine-tuned. As I developed this methodology, I wanted to know how it stacked up against that award-winning Harrah’s methodology that had Bill Bennett’s attention. For the research to try to reverse engineer (or at least create a regression-analysis of) the Harrah’s algorithms, I visited Harrah’s in Tahoe twice, Harrah’s in Las Vegas five times, Harrah’s Las Vegas Rio Casino property twice, and Harrah’s New Orleans’ property once. In each case I deliberately played low-end 25¢ slot machines for a time-period of from one hour to up to three hours (the proliferation of penny machines prevalent today had not begun in 1999). My profile (which I filled out during my first Harrah’s visit to get a “Total Rewards” player tracking card from them so they could rate me) clearly identified me as an executive with a high six-figure annual income who lives in a zip-code geo/demographic that is among the 5% most affluent in the United States. After several hundreds of dollars of play at their properties across the country, my mail box was empty until the next quarter-year arrived. Mental note number one: no instant letter generated to welcome me to their player’s club. Finally, Harrah’s mailed me ONE offer (and only one): a FREE BUFFET in New Orleans valid only if I returned to play there. Where did their analysis came up with the supposition that I would (a) stand in line for a buffet anywhere, (b) visit New Orleans again (seeing as how 70% of my action was in Vegas), or (c) be enticed to fly from Florida to New Orleans for a free $7.95 meal? The source of those mis-targeted was actually clear: They used typical limited dimensional analysis. They compared only certain elements of my behavior and not the full gambit of information that SHOULD have been available to them to target me with a more suitable offer. Clearly they used geographic data and the subdivided that by theo; there was no other excuse. This one direct mail piece offering the buffet, instantly revealed the great failing and limitation of many so-called “state-of-the-art” systems. Without analysis, the personalization of offers is little more than an attractive toy. It is for the analysis, projections, budget management, marketing examination, advertising decisions, and a host of other operational considerations that we create offers rather than just random advertisements. Moreover, we need to be able to track the effectiveness of each offer targeted to each segment; this allows us to plan future offers. At a bare minimum, an offer should analyze the cost per Promotion as well as the actual number of customer visits driven by any given offer. We should have projected spending from the offer,  as well as projected number of plays. Far beyond merely running reports on these areas, an offer should be incredibly configurable so that each personalized or suggested-sell has the availability of intense analysis and projection. Unfortunately, only a handful of marketers (even the ones using personalization and suggestive selling techniques) even now have learned how to target using these powerful formulas…or, alas, for that matter, even that such formulas exist beyond buzzwords. Equally as important as calculating the formulas and creating offers, is the subsequent analysis of effectiveness and adding the follow-up analysis to the data mix (which also allows us to further segment and target customers for future offers). There are a number of ways to do this, but for myself, I attach a “source code” to each offer.  I strongly recommend assigning a meaningful unique tracking and analysis number for each offer. A structured code for each offer will allow easier statistical analysis of an offer’s variables; this is especially useful when dealing with dozens or scores of offers. If you look at a mailing that I send (or that most direct mailers send), you will notice a short code number above your name and address; that is the source code. Typically I use a 16-digit alphanumeric code with the first eight digits identifying the offer itself, and the last eight identifying the use of that offer. The meaning of the distinction in these two terms will become apparent once we look at the structure of an offer itself. I begin the code by identifying the purpose of the offer (increase spending, increase visits, increase loyalty, acquire new players, retention, create a list, etc.). Next I need to know how the offer reached the player (direct mail; emails; advertisements; outbound telemarketing, junket affiliate networks; and so on). On the calendar pre-event analysis, you saw that we listed the time frame that the offer would be available or repeated (including start date and stop dates of any particular offer).   Some offers may have required spending levels (or “price points”); that needs to be tracked. An offer should be able to specify which unit within the casino is responsible for the offer (players’ club, entertainment, F&B, etc.). We need to code a general description of the offer itself. In many cases my offers are tied to an analytical rebate (cash-back) table determined by either a percentage or a monetary amount.  A well-constructed offer should allow us to set up automatic promotional chains of subsequent events that help provide the ability to obtain an optimum conversion percentage. I say “optimum” because the largest conversion percentage may not be the most profitable to obtain. As we become able to define a virtually unlimited number of automatic promotional sequences, a good marketer should be able to test how many efforts or the contents of efforts yield the most profitable conversion percentage. Our source code should tie in up-sells (and cross-sells) tied to an offer at each player level. In our source code, we need to track exactly what games or amenities of the casino are promoted for any specific offer. For pro forma analytical purposes, we should be able to specify expected revenue for each offer and then with post forma compare budget versus actual sales on an offer level. This too should be keyed to that source code. Moving to the next eight digits of my typical source code, I focus on the use of the offer. A use might be an RFM segment of the existing player base, or it might be the location and run of a particular advertisement, or the time slot for a TV spot. Think of a use as the distribution of the offer; what drove the customer to that offer….how did the offer get into that player’s hands. I include a code for when the offer begins and ends. My use code defines the date of the initial budget or when it is to be established and how often the offer ran. Beyond my RFM data, the use can allow additional segmentation clusters with criteria like average bet, game played most frequently, and, of course, demographics. I also use this portion of the source code for analytical purposes, so I track cost of the offer here as well as well as the date the last forecast was produced (as it relates to this usage). Another operation of the use code can be to measure the “quantity” of that use, measured in player sessions or customer visits per each one-thousand offers sent or viewed. The rest of the use portion of the code may reflect advertising buys, junket affinity programs, bus programs, total impressions that reach the targeted market, etc. Finally, if the casino is supplementing their targeting with CRM type data, I attach that data to the “use” portion of my code. The combination of powerfully and flexibly configured offer and use codes together make a total source code that in turn can allow us to begin applying those magical formulas. I was stunned at the number of major casino operators that were not then (and still are not) using even this most simple customer targeting methodology. At the same time that I was testing the Harrah’s award-winning techniques (that had sent me an offer to stand in line at a New Orleans buffet) I wanted to know how the rest of the industry was stacking up. I already had a good picture of Mirage Resorts, but I was curious how the other mega-operators were doing. I decided my next target would be Park Place Entertainment’s system. (Park Place, if you recall, was the spinoff of Hilton/Bally and has since been absorbed by Harrah’s / Caesar’s.) Over a three-month period I visited several of their Las Vegas casinos to play $1 slots for two to four hours per session with eight sessions during each visit. Painfully to me as a marketer, I discovered that any one casino did not recognize me as having ever played at any of their other casinos because (as I was told) “our computers do not talk to each other.” Even among their own brands I could not be identified as a rated player. It was the Steve Wynn problem all over again. Most amusingly, I presented my Caesars’ Las Vegas players’ card to Caesars’ in Tahoe and was informed that I needed a different card to play in Lake Tahoe (even though the cards themselves listed all of the Caesars’ properties on them). Get this: the Tahoe plastic card actually had old-style computer punch-card holes in it so that it could be read without magnetic tape. I can’t emphasize enough that this was in the 21st century…not decades ago. In the left photo is the Tahoe card (check out the computer punch-holes); the bottom card was the Vegas card …and look at the graphics on that card: the “Emperors Card” logo was haphazardly (and crooked) stuck on top of the background as if designed by a seventh grader.    To make matters worse, even though I had (by relative slot standards) a pretty high handle, when I asked the Las Vegas Hilton (at that time the flagship of the chain) to comp a room for me based on my play over several weeks at their other properties, they quoted me a per-night rate that was more than the rack rate I could get booking the room on the Internet or through AAA. This is the way to retain good customers? Nonetheless, beginning the next quarter the Las Vegas Hilton did start (and continued to even though they have changed ownership twice) mail to me almost every month a discounted room rate that is in fact a little less than rack. No wonder Harrah’s system was considered the industry’s best; even with its absurdities it was heads and shoulders above the rest of the industry! Even the most rudimentary suggestive selling methodologies …the Harrah’s package… would indeed bring more visitors to a casino, convert more of those visitors to players, increase the number of returning players or additional play, and increase the average size of play. Even falling far short of a full targeting strategy, it was revolutionary for my industry.  Alone, this type of personalization, cool as it is, allowed no means for analysis of the results…and especially no accurate method to forecast revenue. The technology just was not plugged into marketing. A leading technologist for one of the major Nevada slot machine manufactures recently wrote to me: “Every day I see how ‘caveman’ gaming is now. The simplest things ― like using real TCP/IP STANDARD networking, NICs, CAT5 cable, routers and hubs you can buy at radio shack. NO they all have to invent their own bad systems of communication.” It is indeed noteworthy, revolutionary, and a giant leap forward to have the best horse in the race at the county fair; but when everyone else is running Formula One race cars, that award-winning horse looks more and more like an old nag. The “state of the art” CASINO data-mining and marketing example is indeed THE best horse in the race. Unfortunately, this is a high- performance auto race in business and not a horse race. In another example, a recent employment advertisement posted by giant MGM/Mirage (MGM Resorts International) warned potential marketing candidates: “Must have ability to learn and master THREE DIFFERENT Computer operating systems (hotel, slots, and casino).” And this was for a Marketing Manager not for a computer technician! Yet no one stopped to ask, “Why?” Bizarrely, in the casino industry this kind of nonsense is routine and doesn’t raise a single eyebrow. In any other industry it would be laughable. Personally, I can’t decide if I should laugh or cry. A few years ago when Steve Wynn built Wynn (and later Encore), he spent millions of dollars to develop in-house a system that solved many of the multi-system technology issues; but still did not address the marketing issue. With the exception of adherence to some basic business rules and decisions, the entire casino industry is saddled with these kinds of out-of-date methodologies…and not just in technology. When I initially addressed the management prong of the equation I began by creating case studies of the management philosophies of the then-significant operators in the industry. As a went through the early stages of formulating my methodology, Bill Bennett’s former company, The Mandalay Resort Group gave me unprecedented access to their internal structure and organization. Now folded into the MGM giant, at the time they were the operators of Mandalay Bay, The Luxor, Excalibur, Circus-Circus, Slots of Fun, and several other properties. Mandalay’s corporate strategy at the time focused on what they called the New Model vs. the Old Model.  Their “new model” revolved around earnings (EBITDA) being driven by a plan to link together their customer information from all of their properties and then segment that mega-database into the largest segments. The plan was to focus those segments on “must see” destinations: Mandalay’s various brands along what they called the “Masterplan Mile”—the stretch of the Las Vegas strip where their properties were all next door to each other (with the exception of Circus-Circus. Specifically, Mandalay’s written corporate strategy was “focusing on revenue management rather than unit group”. Their loyalty program was designed to identify the long-term value of those targeted customers by group (rather than CRM-type focus on individuals). Consequently, their focus was on rooms rather than on play (this is congruent with Glenn Schaeffer’s ferocious argument with me over concentrating on hotel average daily rate). Their focus stood in sharp contrast to Harrah’s focus on relationship marketing. Harrah’s corporate focus was on nine specific corporate goals:  play card data collection, data mining, direct mail, telemarketing, yield management, internet functionality, slot management, e-commerce, and labor efficiency. One remarkable thing about these contrasting philosophies was the year of these stated goals: 2001—a significantly forward-looking strategy take by Harrah’s versus an very 1980-ish “new model” from Mandalay. As dramatic illustration of these differences, consider the charts below. In each group, the first slide is from Mandalay Resort Group’s internal management presentation and the following slide is from Harrah’s investor presentation the same year and month. Mandalay Management Presentation:   Harrah’s Investor Presentation:

Mandalay Management Presentation:

Harrah’s Investor Presentation:

Neither approach was particularly right or wrong within the context of their corporate goals at the time. Disappointingly, neither even began to touch the real issues missing from such a customer centric business; the personal level of marketing that I was developing. The Mandalay model began on the right track but their own internal conflicts (including a power struggle to wrangle ownership away from my old mentor Bill Bennett) prohibited them from implementing the fundamentals that would allow the philosophy to translate to tangible operational procedures that would permeate through every level of the organization and have positive impact on the customer base. Meanwhile, our friends at Harrah’s, on the other hand, were focusing on the player experience and dictating company culture from the top down, but were doing so within the retail model of CRM rather than from the eccentricities of the world of gamblers. That troublesome void became even more alarming when we realize that this was the “state-of-the-art” amongst large public corporations like Caesar’s (Harrah’s), MGM/Mirage, and the former Park Place Entertainment, Mandalay Resorts Group, Trump Casinos, etc. The smaller operators (second and third tier) were working in the 19th century compared to the rest of the business world and a good decade or two behind even the rest of the casino industry. This would not be so bad if it were not for the size of the existing consumer market. During that time period, Harrah’s reported 300+ million casino visits a year. A decade later the market had grown incredibly larger. Even though the Las Vegas Convention and Visitors Authority reported that the prototypical Las Vegas visitor in 2011 was a 49-year-old, white, married, Southern California man who had a college degree and earned $100,000 a year or more, that is clearly not the demographic nationwide for visitors to hundreds of “local” casinos. In 2011 there were more than 956-million casino visits; Harrah’s reported 40-million members in their player’s club. The scary thing is that the nuts-and-bolts of the marketing methodologies, the philosophy of top management and operators, and the relationships between technologists and marketers and operators have all changed very little in the past decade. Those intermediate steps from traditional segmentation to even rudimentary RFM targeting —basically the same methodology I used for the January 2004 Trump calendar— represent “advanced” casino targeting almost a decade later.

What has changed is the technology itself. With the exception of large segments of the Class II universe, various casino management systems, accounting systems, and slot machine “backend” systems, all communicate universally. This has been primarily though the tireless work of a non-profit group called the Gaming Standards Association (GSA), its visionary president Peter DeRaedt and farsighted operators like Gregg Solomon. The simple technology “solution” that I had sketched on the back of a napkin for Steve Wynn was equaled, expanded, and far-surpassed by their brilliantly forcing the industry into technological common sense. Their work was so successful that the initial problem of systems communication disappeared. My marketing issues, however, were beyond the scope of their mission. I had begun trying to address those marketing deficiencies with that appearance at the World Gaming Congress where I laid the ground work for my widely-distributed white paper “Casino Executives Meet 2 1st Century Technology”. That paper became one of the driving factors for many casino operators’ move toward more advanced (and more profitable) player-tracking and decision-support systems. It also sparked my subsequent direct and indirect consulting for a half-dozen of the major Las Vegas strip operators and became the basis of that little booklet on the subject. In the more than a dozen years since that seminar, gaming technology guru Tom Trimble and I even went so far as to create an automated system that would provide the marketing support and management decisions outlined in my RFM model. Tom is widely known in the industry as a highly skilled senior executive who has headed a extensive range of technology-based projects from casino management systems to slot operations. Combining that with a deep understanding of database structure and database marketing, in order to increase player loyalty and database productivity, Tom tackled my parameters from a technological standpoint. Tom is trained and certified Project Manager and experienced with casino operations from the smallest location to a major Las Vegas strip resort. He managed the software  development  and  consulting  team  for Steve Wynn’s aforementioned move to incorporate financial management, analytical reporting, and data  warehouse,  a  player  value  analysis  marketing  system  and  an  integrated  web-based reservation system. He was also a VP-level distinguished member of the technical staff at Bell Laboratories. Tom took my marketing management formulas to technology and created a management system called LogicComps. Our goal was not only to automate my RFM methodology for hundreds of segments but also to automate the comping process based on surgical formulas.  Since we began that project, several systems have created automated comping based on accumulation of points and assigning a point-based price tag to various casino amenities (meals, rooms, show tickets, gifts, playable credits, etc.). While those improvements in players’ club technology have been more akin to an automated shopping list, Tom’s innovations were light-years ahead by taking traditional casino-host functions to a highly personalized targeting. Specifically, his methodology and business system involved the use of internet-type ”Cloud” technologies, fed by real time communications between disparate point of sale software and hardware systems through a “third party” server. His data collection was based on DeRaedt’s GSA standards. He took an amalgamation of the combined data from multiple systems into one coherent, light weight and manageable database accessible through a web based interface (that required only minimal training to use). His system’s automated creation of customer offers, comps, and incentives was based on my RFM data combined with behavioral, psychographic, and demographic targeting and matching in real-time player activity, point-of-sale, and other data. In short, the system automated the entire process so that any clerical employee could implement what otherwise was expensive, time-consuming, manual, and management-heavy operations. Keep in mind that when we manually implemented this methodology for Trump29, it rocketed revenue from $45-million monthly to a consistent $100-million monthly. Remember earlier when I talked about casino the housekeeper in Oklahoma who was the only staff member able to identify the best customers. I pointed out that the average visitor to the casino only sees valets, housekeepers, slot attendants, cashiers and security guards; No General Manager; no Marketing Director; and certainly, no Owner. The few people that the visitor does see are, regardless of their job title, are THE representatives of the casino; they are marketers. For those employees to be successful, top casino management must understand that marketing begins at that level. Beyond general management, the operators and owners need to “get it”. You will see why, shortly. Fortunately, Donald Trump definitely “got it” when it came to marketing.

•   Chapter Seventeen. How To Manage, Finance, and Market Casinos

“Because a thing seems difficult for you, do not think it impossible for anyone to accomplish.” ― Marcus Aurelius

H ow does a casino measure success? How profitable can (or should) a casino be? What return on investment should casino owners expect? How much debt can a casino realistically service? I have spent an entire book, here, tangentially ranting and raving about my proposition that the model for the gambling racket is fundamentally different from other business models. At the same time, whatever the model is, we need a way to project, measure, and analyze the business.  Without a basic understanding of these seemingly intangible metrics, a promising enterprise cannot possibly expect to fuel essential innovation and growth. Without these answers, a business cannot feasibly run smoothly, nor can investors confidently look ahead. For those reasons, and more, I can instantly tell you that, statistically, a casino should expect a minimum 25% of its revenue to be left for earnings. We can call that a thumbnail measure and note that it cost about 75% of revenue to operate a casino. That number will vary wildly based on dozens of variables; however, it is a good concise representation and summary. This is vast generalization is useful for owners, developers, operators, and analysts; but it is also interesting to serious players and patrons. If you are involved with a property not doing at least that, then it is time to make some major adjustments; if you are doing better, then more power to you (though some fine tuning formulas may be useful); and if you are thinking of becoming involved in a property, now you know what to expect. That is the axiomatic bottom line. The actual metrics that answer most of those questions are woven into ownership decisions about what to do with that 25% (or more). In every case, in order to drill down and identify those specific metrics, we need to begin with some fundamental data-gathering and analytical formulas. From those basics we can see where I came up with that 25% number and how we can translate that to a real number for any specific situation. When I talk about valuation of casinos, I prefer to do so in terms of operating ratios rather than the old sum-of-the-parts analysis. Company that have relied on that sort of analysis have habitually been over valued; even in the great recession, consider the price of Vegas of land along the Vegas strip and properties on the market for obscene double-digit multiples of EBITDA (probably as much because of the high beta and preposterous cash flow within casino investments).  Unfortunately, the more “street” traditional valuations have repeatedly gestated company finance and growth plans that have not come to fruition. Even as more and more casino operators focus their operating plans on loyalty cards to track play time, spending, game preference, and frequency of visits, the investment-seekers continue to tout benchmarks like “same store sales” and “business unit distinction” when valuing casinos. This methodology is not helped by the Sheldon Adelson pronouncement that he is not in the casino business. In copycat fashion, many operators have focused investors on non-gaming amenities to drive spending-per-visitor; it is the old debate between Glenn Schaeffer and myself in the transformation from gambling halls to destination resorts. While some of the Vegas properties can accurately report that gambling produces as little as 22% of their revenue, further analysis reveals that gambling also produces at least 48%-to-52% of their profit . Outside of Vegas,  the core Atlantic City demographic (for example) remains the 60-to-65-year-old female bus customer who comes to play slot machines , the reality of which further drives a wedge between operational management and investment-fishing. Outside of Las Vegas, gaming continues to be responsible for upwards of 80% of the revenue. Thus my valuations are casino centric. If we begin with that premise of gambling responsible for 80% of a property’s revenue (with the remaining 20% spread between hotel, food & beverage, entertainment, retail, spas & salons, telephone & internet fees, etc.), then it is incumbent to drill down a bit into the gambling revenue itself. For properties that do not have that full range of amenities, this is even more essential. Within the 80%+ revenue generated by gambling, the majority of that comes from slot machines. In fact, when we translate revenue to profit, only about 4% of a casino’s profit comes from table games , primarily because of the high labor cost, credit expenses, and comp expenses tied to table operations. Only casinos that cater to high-end play (Venetian, Wynn, Bellagio, Caesar’s, and so on) are likely to have a higher percentage of income from tables . Consequently, a more accurate starting point to answer those pressing questions is to begin with some fundamental information about slot machine revenue. Once we have a good handle on some of those basics, we can begin to measure the efficiency of a company’s use of its assets in generating its revenue. From there, once we can determine how effectively those assets are deployed, then we can measure risk tolerance and discuss debt to equity ratios and other metrics that will actually be grounded in hard numbers rather than the ever-popular forward-looking statements. Many important operating, investing, financing, and even player-choice decisions can be projected from some of the key indicators that will be generated from our starting point. The ability of the casino to meet short-term obligations can be easily estimated from expected cash, cash-equivalents, receivables, inventory of owned games, and prepaid expenses all weighed against payables and accrued expenses. If the value of current (or projected) assets is significantly greater than the current (or projected) liabilities, then we have a strong starting point for casino finance. Another important measure is the value of the slot machines (and other assets) weighed against the projected amount of play. This value also includes the costs of leased machines and helps us figure how many machines we can support. Traditional debt management ratios are often misleading in gaming; and especially when financing Native American casinos. An unusually low debt ratio often means that a Tribe’s funds (outside of gaming) may be supporting the property; this was certainly Treasurer Ellis’ situation when I arrived at Thunderbird. Personally, in such cases debt can be better understood if it is assessed against owner equity investment. Ultimately, however, most of the answers to those pressing questions are going to be management-controlled and measurable in looking at the management decisions and plans for post-EBITDA net-net compared to revenue as well as management’s plans and ability to generate profits with its machine and marketing strategies. At the end of the day, this provides a microscope look at the return on actual equity after debt service. So the first things I need to know about a casino are where is it and who will be the players. This information is best provided in an independent and reputable feasibility study or market analysis , but for initial analysis (and smaller properties) many times this can be self-generated. I need these statistics because they ultimately will tell me how many slot machines the property can support and what win-per-unit-per-day I can expect. I need an economic/demographic analysis of the population, growth trends, income, employment, transportation, local attractions, potential traffic interception, and proposed targeted players. I need a really good handle on the competitive environment; to casinos within a 100-mile radius, including win-per-unit at those properties (in jurisdictions where it is available), number of games, types of games, and some measure of market saturation. I need to know the propensity for gaming within the targeted population and the frequency of gaming at those competitive properties. As another sweeping generality rule-of-thumb, I generally posit gambling propensity of a population (excluding special circumstances) at around 40% for Class III slot machines and a little more than half that for a strictly Class II facility (again, barring special circumstances). This discrepancy in propensity between slot machines and bingo-based machines is not so much based on my frenzied ranting about virtual bingo as it is the general nature of Class II properties. Typically a non-compacted or Class II casino is geographically located alone and away from other casinos and without the benefit of property clustering. More importantly the game selection is generally limited in Class II casinos, both in terms of variety and vendors. With the amalgamation of this information we can determine the optimum number of slot machines, denominations, and projected win per unit per day. Okay, let’s start building an example here to begin seeing how all of this fits together. For the purpose of this example, let’s assume the feasibility study (or a comparative analysis of the competition) tells us that we can support 500 slot machines that would win $100-per-machine-per-day. That translates to gross slot machine revenue of $50,000 per day or about $ 1.5-million per month ($18.25-million annually). At this point we can look at our revenue one of two ways; we can stop at that $18.25-million figure and consider table games and the other amenities a “break even” wash that ultimately costs us nothing but sufficiently pays for itself. This model is useful for slot-only houses and for general “thirty-thousand-foot overviews” when looking at a casino. Short of that, we can use my rule of thumb that slots account for about 80% of total revenue (outside of Vegas resort destinations). In that case, the total revenue number for this example would be $22,812,500 (with $18.25-million representing 80% of that). Now let’s see what it costs us to operate the casino. Goldman Sachs and some other investment banking analysts have suggested that the majority of casino expenses are fixed costs. In fact Goldman goes so far as to argue, “The opportunity for meaningful margin expansion is somewhat difficult, as 60% -70% of operators’ costs are fixed .” Goldman cites labor as one of those fixed expenses due to unionization, regulatory issues, room cleaning issues, and intense customer service required. With all due respect to the investment banking giant, that is simply not true; it is prima-facie obvious that, for example, if you have five table games you need less employees than a property with 200 tables and if you have 50 hotel rooms you need fewer housekeepers than if you have 500 rooms. What are fixed, however, are cost ratios which vary according to casino size, revenue, and competitive factors. Even Goldman acknowledges that, projecting maintenance costs at 10% to 15% of revenue and recognizing that marketing and promotional expenses can vary as well.   An excerpt from the 240-page Nevada Gaming Abstract for 2011  To get a good handle on those ratios, there are a number of good sources for comparison. Nevada Gaming Control publishes an annual Nevada Gaming Abstract, which makes a great companion to the Risk Management Association’s Hotel / Casinos, Credit Considerations. Several gaming states publish similar casino reports that, when poured over, can help shape expected fixed ratios of operating costs. I generally add to that mix my own years of casino operational experience and the pundit advice of my various in-casino financial gurus like (the afore-often-mention Frank Haas, and others). I have saved the reader the trouble of having to sort through abstracts and interview thirty-plus-years of operational experience by preparing an easy to follow table benchmarking what percentages of gross casino revenue should be spent on various line-categories. Again, these are generalizations (albeit accurate ones) and are subject to modification based on any number of specific factors for specific properties. Nonetheless, this thumbnail view is a good general overview of costs to be weighed against revenue. Operation costs, excluding labor and rev-share deals for slot machines should come in at around 27% of casino revenue and look like this (in order of largest costs): Marketing & Promotions (including Advertising) 9.20% other G&A 6.70% Comps & Cash Back 4.00% Bank/credit card/check cashing/bad debt 1.98% Supplies 1.06% Telephone/utilities 0.98% Repairs & Maintenance Expense 0.72% Busing Expense 0.55% Training, Travel, Meals & Entertainment 0.51% Insurance 0.36% Over/Short Expense 0.30% Fees 0.25% Printing, Postage, Dues & Subscriptions 0.21% Donations and Sponsorships 0.10% Equipment 0.10% Laundry/Uniform Expense 0.10% TOTAL 27.12% If we throw into that mix the cost of labor, it significantly increases operating expenses to 54.43% or casino revenue. Labor 23.35% Employee Benefits 2.96% Employee Incentives 0.51% Contract Labor 0.49% TOTAL LABOR COST  27.31% Keep in mind that my management philosophy is heavily marketing oriented. In Nevada that marketing percentage only 1.4%, at Trump it was 7%, and the national figures float between 2.68% and 11.20% depending on local-specific factors. For a casino that I am not operating, let’s cut the marketing line down to a closer-to-standard 4%. That reduces operating costs, excluding labor, to 49.23%. Additionally, I calculate expenses with a relatively high labor number (23.35%) and a generous incentive figure (.51% of revenue). I do that because I take into account the propensity toward considerable nepotism and its attendant over-compensation in many Native American casinos as well as (true to the Goldman commentary) regulatory staffing minimum in many jurisdictions. For a more “middle of the road” number, that 23.35% can be reduced to a more standard 14% of revenue and the incentives program cut to 0.30%. With those changes (combined with the marketing changes), total casino operating costs can be posited at 39.67% of revenue. Typically, when I discuss operational costs of a mature and well-run casino, I use the 39% to 42% range. I dramatically increase that number for start-ups that will be marketing intensive during the first couple of years; I also increase it for a variety of other special circumstances. If we go back to my initial example of these valuations, we can take that $18.25-million annual revenue figure and project that it cost approximately $7,338,950 to operate that fictional casino leaving an EBITDA figure of $11,161,050. What this number does not include is the issue of how the casino is going to pay for the slot machines. If the casino makes the decision exclusively to revenue share (lease) the games, then the cost comes of the top as a percentage of casino win. If the casino makes the decision to purchase games, then unless there is a huge cash reserve we are looking at servicing a sizable debt. In this one example 500 games at top-of-line-price $18,000 each would cost us $9-million. As I have discussed elsewhere in this book, the standard revenue share lease fee is 20% of win per unit. Some premium games, as I have discussed, will cost more than the standard 20%; and progressives (the WAPS and LAPS that I have discussed) will require additional contribution from that win figure. If the casino is going to lease slot machines, the initial revenue number must be reduced by 20.06% to cover the leases and contributions. This means actual operating costs are 59.73% to 74.49%. The latter number takes into account my higher marketing number, my higher labor number, and leasing games rather than purchasing them. In short, you go back to the beginning of this chapter where I began, “I can instantly tell you that, statistically, a casino should expect a minimum 25% of its revenue to be left for earnings.” The big variables, then, are: (1) how the casino pays for the slot machines; (2) what the casino spends on marketing and labor; and (3) how well operational management conforms to and meets those budgetary formulas. Therefore the answers to those questions, where we began, are all tied to management capabilities, competence, and ultimately management philosophy. It comes down to following the formulas and sticking to them. If that can be done then this is a highly-predictable and formulaic business; if it is not done, then the business is not so predictable. A decade ago when I left Trump29, my parting words were “don’t change my formula; stick to it and you will continue to grow at this rate”; and, for almost a year after I left for Oklahoma, they continued with my formulas and the indisputable successes they generated. It wasn’t until some wag came along who decided that “instinct” was somehow better than scientific formula that the numbers began to drop … dramatically. That critical determination of how to pay for the slot machines has such a dramatic impact on all of those key metrics that we need to make a detailed analysis of that management decision, before we tackle those other two issues. In fact, all three of the determinant factors are functions of management. In recent years more theme-licensed slot machines have been introduced and promoted; every casino industry trade show touts a bevy of new titles or themes. Most of the new games are the same platforms (the same math, the same winning patterns, same hold, same par sheets, etc.), but the pictures and sounds change to the new pop culture themes to make them in consumer (player) demand. Recent years have brought us slot machines themed with Batman, Michael Jackson, Dolly Parton, the CSI television franchises, Family Guy, Judge Judy, Sex and the City, the Hangover movie, and the list goes on and on…and on. More importantly for this discussion, revenue per machine has increased dramatically in recent years. In mid-2012, when doing due diligence for the purchase of the Trump Plaza in Atlantic City, I was pained to find the majority of the machines at the casino to be three-coin 25₵ stepper-reel old-style slot machines. Those games have a maximum bet of 75₵ and statistically a maximum of 7 spins per minute, 420 spins per hour, and 10,080 spins per day. The maximum daily possible win per unit with an 8½% hold was $642.60. Let’s compare that to the modern games that I would replace them with at Trump Plaza. Consider penny video slots; 25-lines with a maximum of nine credits per line and thus a maximum bet of $2.25 per spin. Video slots have more bonus rounds and video “things” going on the screen and hence they are a little slower in play that their stepper-reel predecessors. A video slot machine is good for only about 6 spins per minute, 360 spins an hour, or 8,640 plays per day; basically 14% fewer plays with a video slot. However, because of the increased maximum bet, the maximum win per unit at that same 8½% hold is $1,652.40 — two and a half times more earning potential than the older games. Moreover, the average bet on a 25₵ three-coin stepper is 57₵ where the average bet on the penny games is 83₵. (This, by the way, opens a marketing opportunity to increase that number.) In addition, the technology itself has begun changing at a faster pace than in previous slot machine versions. For example, today server-based games are permeating the Class III market to allow downloadable games and the changing of themes on-the-fly. No matter how you stack it, it is absolutely necessary to have the latest-and-greatest in machine technologies; and the ability to swap-out machines quickly and easily. You remember the constant debates I had with Shawnee Treasurer Russell Ellis over lease versus purchase of machines; in the long run Ellis was right about at least the constantly changing games. In short, the life-cycles of slot machines have become shorter and shorter. Remember, too, that some games are simply not for sale. As we have discussed in this book, many royalty-based themed games are for lease only because the manufacturer’s deal with the theme copyright holder is for a percentage of win per machine. Other games are not for sale because they are part of WAP networks, while still others are not for direct sale because they are co-owned by various third parties. That means that if the decision is made to purchase games rather than lease games, still at least some portion of a fully-competitive floor cannot be purchased. All of these factors, together, make the decision of lease contrasted with purchase even more critical for management. Purchasing a new slot machine cost (as of this writing) between $7,500 and $18,000 (varying so much because of vendor, theme and title, popularity, and other variables). Let’s contrast that price tag to the cost of a revenue-share lease agreement. We will assume the rev share to be the basic 20% of daily win per unit being paid as the lease fee. The first line of the chart below shows daily win per unit from $100 to $350. The second line of the chart below shows what the casino pays over five years of a lease agreement: Amount paid for leased game over five year period: win per unit per day $100  $200  $250  $300  $350 20% rev share for 5 years $36,500 $73,000 $91,250 $109,500 $127,750 If we take the purchase price of a machine and subtract that from the lease payments over the five year term, we can chart how much more, per machine, the lease costs the casino over purchasing the games: Amount paid over and above retail price of machine: win per unit per day $100  $200  $250  $300  $350 at purchase price $7,500 $29,000 $65,500 $83,750 $102,000 $120,250 at purchase price $18,000 $18,500 $55,000 $73,250 $91,500 $109,750 Of course this simplistic comparison does not take into account the cost of ownership of the games. These costs include parts and servicing, depreciation, various conversion kits to update the games over the five-year lease term, machine down time, and so on. At the same time, my revenue share chart only shows one type of revenue share: the 80/20 split. There are uncountable variations of leases ranging from daily fees to coin in fees to combinations of fees. In any scenario, the daily operating cost per machine needs to be calculated into management’s formula for the decision is made to lease or purchase. Let’s revisit the difference in revenue between purchase and lease, but this time let’s look at that difference per year and per day: win per unit per day $100  $200  $250  $300  $350 lease cost per year $7,300 $14,600 $18,250 $21,900 $25,550 Lease cost per day $20 $40 $50 $60 $70 This is where experienced management becomes essential. In the third or fourth year of ownership, with a win-per-unit of only $100 per day… $20 a day might be worth it to the casino to be able to reduce some of those operating costs and have the latest-and-greatest titles and themes through no-cost lease change outs. At $70 per day, though, it might be a tougher pill to swallow. On the other hand, by the third or fourth year that $350 win-per-unit machine might not be competitive with the hottest theme and cutting-edge technology, so what may have been a $350 win-per-unit machine in the first year, by the fourth year it may be just a $100 win-per-unit machine. In this case a diminishing returns report kicks in and a complex calculation can determine the actual value of the machine. A good slot manager should be able to produce a P&L for each individual game so that future management decisions can be based on the total cost of operating the machine, the revenue to per square foot of casino floor, hour performance, and a full accounting of the age of the game (as opposed to the age of the cabinet in which the game is housed). In deciding between a lease and purchase, decisions have to be about such issues as whether the casino or the vendor will cover the costs of changing themes, converting denominations, refurbishing cabinets, changing location on the floor, marketing specific games, and dozens of other related decisions. Additionally, policy management and financial management needs to determine the cost of money the casino will have to pay to borrow funds to buy the machines and then the depreciated value of the machines as an asset (as well as the tax value of that depreciation.) I offer one more set of slot machine decision tables. Let’s make some basic assumptions of buying the most expensive machine, having a WPUPD of $100 (though most new machines perform considerably better, this is good for the math), and a 20% yearly decline in win because of new technologies and other aging factors. PURCHASE IRR 1st year 2nd year 3rd year 4th year 5th year Total Price of machine  ($18,500) $0  $0  $0  $0  ($18,500) Annual win $36,500  $29,200  $23,360  $18,688  $14,950  $122,698 Net Profit  $18,000  $29,200  $23,360  $18,688  $14,950  $104,198 Even with declining win per unit, the net profit on the machine is more than $100,000 or an IRR (internal rate of return) on the investment of 176.90% An IRR metric is standard for helping management decide they should make an investment; it is a standard indicator of the efficiency or quality of an investment. Where this becomes complex is when comparing that IRR to and IRR for leased games —assuming the lease terms and conditions are negotiated favorably by casino management and not just accepted as a form lease from the vendor. With the right terms, the casino can require the vendor to replace the machine (without charge) whenever a new latest-and-greatest is released or when, over time, the machine’s WPUPD falls below a pre-determined minimum. Lease IRR 1st year 2nd year 3rd  year 4th year 5th year Total Price of machine  $0  $0  $0  $0  $0  $0 Annual win $36,500  $36,500  $36,500  $36,500  $36,500  $182,500 20% lease fee $7,300  $7,300  $7,300  $7,300  $7,300  $36,500 Net Profit  $29,200  $29,200  $29,200  $29,200  $29,200  $146,000 From these two tables, leasing a machine actually gives the casino $41,802 net revenue more than buying the machines would provide. The lease model provides some incalculable IRR (something like 292,000% if we posit the casino’s price of machine at $10…though actually there is no price for the casino). The lease model, then, benefits both the vendor and the casino more than the purchase model benefits either —again, if and ONLY if management has the skills, ability, wherewithal, and experience to negotiate a contract with those favorable terms. In short, while on the surface lease versus purchase may seem like a no-brainer, clearly the decision has such a major impact on the business model itself that the “no-brainer” becomes a complex key indicator of the soundness of the business. The decision involves performance, value, negotiations, availability of finance and cash flow options of the casino, and a headache-giving myriad of other management assessments and actions. Those complexities of slot management decisions are indicative of the cosmos of issues relating to how well operational management conforms to and meets the budgetary formulas established by policy management. Every venue of casino management, finance, and marketing is equally (or more) complicated as the slot decisions, though not always as palpably so. To answer those pressing questions for operators, then, we need to explore the rest of the equation: what the casino spends on marketing and labor; and how well operational management conforms to and meets those budgetary formulas. That brings us to a series of management necessities that unequivocally determine the outcome of those issues. Paramount among these, I have discussed repeatedly throughout this book the dangers of unregulated or under-regulated gambling. The very integrity of a slot machine is a function of the regulatory process; a process designed to assure the machines are fair, secure, and able to be audited and operated correctly. Remember the “Tribal Internal Control Standards” that I wrote for the Ottawa Tribe of Oklahoma? Such standards, usually mandated by law, provide not only slot machine standards but guidelines for surveillance, drop and count, security, employee and vendor background checks (approval, and licensing), and a dozen other areas. Remember that nightmarish adventure of my first walk-though at Thunderbird Casino with David Cook?  Without management enforcement of such regulations then there are no guarantees that the calculation of WPUPD is accurate; that the person counting the cash is not a convicted thief; or that there are cameras actually trained on the cash (or even on slip-and-fall accidents). With a strong regulatory compliance process, that five-dollar bill that was marked to look like a fifty at Glacier Peaks Casinos could have never been passed. The only way to avoid such horror stories is to institute strict internal regulatory policies and procedures (P&P’s), whether or not the jurisdiction requires them. Compliance P&P’s are absolutely necessary to ensure that casino assets are safeguarded; financial records are accurate and reliable; and that all casino transactions are performed only in accordance with management’s authorization. Without such P&P’s, there is no assurance that the casino can provide proper reporting of gaming revenue, fee, or taxes. Further, P&P’s are necessary to assure that appropriate action is taken for any discrepancies in the accountability of assets (and to compare actual assets at specific intervals). Compliance also assures obedience of regulatory laws, and defines employee functions, duties, and responsibilities. In short, in order for any of the management policies or operational decisions to take effect, there must be a foundation level of confidence and relative assurance that the premises of the business model are sound, protected, and verifiable. Hence, the very first step in the casino business is to create a strong compliance organization. That is exactly why the first phone calls I make for a new casino is to a cadre of regulatory consultants, agencies, trainers and advisors (the universe of David Cook, George Joseph, and others). I also make certain that written P&P’s are in place and that every employee gets (and signs for) a copy of the policies and procedures that affect their jobs. P&P’s are so essential that I have included a complete set of Tribal Casino P&P’s in the Endnotes . Once compliance is in place, the next issue is staffing. After either reading or flipping through these pages, it should be obvious to the reader that one sure formula for disaster is the appointment of inexperienced operational managers without a mentoring or training program in place. Either experienced or mentored staff is unequivocally key to the success of a casino. I walked into one casino (with almost 2,000 machines) whose marketing director’s only experience was that he had sold real estate and worked in several political campaigns; I met a general manager of another casino whose solitary experience was that he had been a general manager at a Best Buy store; and one tribe appointed a cage manager because “she looks like she could do that.” There are two ways to go with staffing: either mentoring the uninitiated or hiring experienced experts (or a combination of the two). Sometimes the decision is more political (at Tribal casinos or in ownership nepotism issues) and in other cases it is financial. To hire a General Manager for a mid-sized casino-resort in Atlantic City I had to pay about a $500,0000 a year; the General Manager at a similar size (in terms of number of games) Indian casino near Tulsa Oklahoma was recently hired at $80,000. Such a dramatic disparity is not a simple function of marketing difference; it really is a matter of “you get what you pay for”. I am a big fan of mentoring and providing training for employees who have potential to grow; this prevents me from having to require the manager “unlearn” mediocre or poor training. Remember that the majority of the casino woes I have talked about are related to what have euphemistically called bad management. Probably nine times out of ten (as the cliché goes) that bad management is more a function of poor (or no) training and mentoring than it is actual incompetence. Not to sound like product placement (which it is not), but to succor that mentoring process, there are a plethora of really good consulting companies that train casino staff either on site or through a variety of seminars, conferences, and workshops. For marketing, companies like Dennis Conrad’s Raving Consulting is almost unmatched; for table games it is hard to beat the expert training provided by Vic Taucer’s Casino Creations; the aforementioned George Joseph’s Worldwide Casino Consulting puts a lid on most casino crime (internal and external); and a list can go on and on. Typically, I like to augment third-party training by personally mentoring managers for most departments. From a general HR standpoint, I tend to lean toward a more intense involvement than the ludicrously superficial approach of “team members” or “one big family.” I recently saw an interview in which Steve Wynn proudly told Piers Morgan that he tries to cultivate a “very familial kind of organization.”  In a business generating a very visible $100-million-month or more cash flow, it is hard for a $9-an-hour employee to seriously feel like they are part of the “team” with a General Manager making a half-million-dollars-a-year  and the CEO making $4-million  annually. Write it off to my years inside the American labor movement or to my 1960’s acceptance of labor-value theory of capital, or accept it as a more productive methodology of human resources management, but I lean more toward the Google-esque democratic decision making styles with true profit sharing, bonusing, and day-to-day involvement in the success of not only the property but their own lives. Many companies are better at pushing employees to be a great rather than telling them how to be a great. With a deeper and more thoughtful employee relationship, actually caring about the quality of life of the employees, the casino can be seen by employees not as locations where people go to work, but rather as an extension of their lives. Complex and “touchy-feely” as it sounds, that approach actually ultimately saves money and increases revenue. I was called into one casino where the average hourly-employee tenure was two week (through the first paycheck). I cannot even begin to calculate what that cost was to the casino in terms of lost productivity, training, uniforms, and so on (though I suspect a good HR person could do so). One of the tasks I assign my marketing department is to market to a different constituency; the internal constituency of employees. Few things irk me more than walking into a casino and asking a random employee about some casino promotion and getting the response “I dunno”; THAT, dear reader, is not a bad employee —it is bad management. In situations in which budget, policy, expediency, and necessity decisions allow or require hiring skilled professional staff, I lean heavily toward top industry professionals. I compensate them well and I hire them under contract. In the Endnotes/Appendix of this book I proffer a good sample of such a contract: Bob Pickus’ now-public-record employment agreement with Trump .    Once the major policy decisions have been made and compliance/HR protocols are in place, we can focus on the amenities that make up the remaining 20% of revenue outside of Vegas and 55% in Vegas. It is far beyond the scope this book, even as long as this book is, to provide operating manuals for the casino, for restaurants, hotels, entertainment and the other amenities to the gambling racket. Nonetheless, each of these areas has its own career-length operational specifics for optimal performance. To get a flavor of that intensity, spend an hour watching my friend Anthony Melchiorri (another Trump alumnus) on his Travel Channel television series, Hotel Impossible or its Food Network cousin Restaurant Impossible with celebrity chef Robert Irvine, or my and Tom Trimble’s development project creation Casino Impossible. For the purpose of this book, I will simply argue that each of these sectors has its own intense disciplines that, just like casino operational management, can never be haphazardly operated. We can illustrate the revenue impact of each of these amenities by charting the typical or average contribution of each to that remaining 20% and to the total percentage of revenue of the property. Amenity percentage of remaining 20% Percentage total revenue Table & other Games 20% 4.0% Hotel 40% 8.0% F&B 22% 4.4% Entertainment 8% 1.6% Retail 5% 1.0% Other 5% 1.0% However, those revenue figures do not necessarily reflect a degree of importance of the amenity to the casino. For example, even though food and beverage typically only contributes to 4.4% of the property’s bottom line, the property cannot possibly succeed without some sort of F&B operation. Just as we know that casinos which cater to high-roller players will have a greater percentage of revenue from table games, we know that all of these percentages are variable to the particulars of the venue. Just as one examples of location based eccentricities, we measure table game hold by the drop; the amount of money gamblers exchange for chips. However in international markets, Macau specifically, table game hold is measured as rolling chip hold. (Rolling chips are non-cashable play-only chips that are sold at a discount rate or given to high-rollers; when they win from those chips they are paid in full value chips. It is part “playable credits” and part “rebate on losses. Rolling chip hold is a percentage of all bets made, including “reinvestment” from rolling chip wins. Hence the hold is lower.) Gibberish as this reads, the distinction actually makes a huge difference in the table games are managed: Table Game Hold Calculation Normal Casino Rolling Chip Casino dollars spent on cheques $10,000  $10,000 total amount wagered (with reinvestment) $60,000  $60,000 base cash volume for hold calculation $60,000  $10,000 Casino win from play $1,700  $1,700 Hold 2.80% 17% And that draws a perfect example of the specific types of variables that I am talking about that impact both the management and the calculations. Managing the casino within these tightly defined formulas and parameters is really not a simply a matter of saying “okay I have this percentage of my revenue to spend on uniforms so order me that many dollars’ worth of uniforms.”  Far more complex are the countless of judgment calls, on-the-fly analyses, and formula modifications called for on a day-to-day basis. In my tirades on good and bad management, at the end of the day what I am preaching is that good management is based on a combination of knowledge, experience, accurate formulas, and especially a philosophical base of what the business model is. Despite how formulaic the business is, there countless examples of fiascos (I have quite a few of my own); but in almost every case of botches, the root is in one of those failings of philosophy. Failure to address the competition, theft, under capitalization, facility issues, and the other typical explanations are all a result of policy management decisions. The September of 2012 federal of Sheldon Adelson’s  Las Vegas Sands executives violating money-laundering laws; the April 2012 revocation of Foxwoods’ casino license in Pennsylvania; the December 2007 revocation of the Tropicana gaming license in Atlantic City; the absolute collapse of  Donald Trump’s casino empire; The May 2011 shutdown of the Sahara in Vegas; the August 2012 bankruptcy of Jerry’s Nugget in North Las Vegas; the 2009 financial calamities of Harrah’s 2009 request to draw down the $740 million remaining on its credit line after doubling its dead load when it was taken private Apollo Management and TPG Capital (and their subsequent off-again-on-again going public again); Stations Casinos 2009 Chapter 11; the enormous failure of Colony’s casino properties; —are all just recent manifestations of management decisions at the policy management/ownership level. What is remarkable about these decisions is that they are all from very large, some publically-traded, successful casino operators. Either “shit happens” or the cycles of the national economy made Sands allegedly launder money or there is some widespread fundamental failing to act on what this business is all about. What do you think? All of my bitching about what business we are and are NOT in comes down to the twin issues of casino finance and operation. Even really good operators like Stations and Harrah’s found themselves in 2008 enmeshed in CMBS and RMBS (commercial mortgage-backed securities and residential mortgage-backed securities) as an integral of their financing. And we all know what happened to the mortgage backed securities world. Don’t get me wrong, there are some brilliant people involved in the management of many of these organizations, especially Harrah’s, Stations, and even the last incarnation of Trump. But, seriously, what the fuck are casino operators doing in the credit default swap and mortgage securities racket? Despite the pundit pronouncement that Wall Street is a giant casino, what-the-hell are casino operators doing gambling in any “game” where they do not own the odds? As I said back in Chapter Nine when I contrasted Doc Holliday and Meyer Lansky, “THAT is not gambling”. It is not my intent to write a primer tome on casino financing methodologies. Almost every conceivable approach has been tried, between Parry Thomas’ and the “Mormon mafia’s” Valley Bank, Michael Milken’s junk bond bromance with Steve Wynn, and the Teamsters Central States Pension Fund. Some of them were even legal. Funders have triad a library of alternative financing schemes from the NIGC rebuked MGAM floor-space deals to traditional real estate mortgage financing. I was even involved in one deal where the $55-million purchase price of a casino was paid by selling the land to an investor who then in turn leased the land back to the casino operator for some usury-like rental rate. A couple of “barriers to entry” in funding casinos are regulatory roadblocks. In most jurisdictions any equity owners of a casino are subject to heinously intrusive business and personal background investigations; in some jurisdictions that requires the licensee to produce record of every cancelled check written for the past two decades and a detailed explanation of source of funds and all expenditures for all those years. I know of at least one jurisdiction that sends agents to the investor’s home town to interview neighbors, acquaintances, and even school teachers. Meanwhile in Indian Country, as I have discussed, the biggest barrier is the inability to secure funds with ownership of any real property on trust or reservation land (remember Minnesota’s Bryan v. Itasca County from an earlier chapter). Consequently every few years new popular financing methods spring up. Consider the management contract arrangement. The bar for management contract fees nationwide has been pretty established by the NIGC’s rules for Indian Country. There, the NIGC allows a maximum of 30%-40%  of net revenue of the casino. They go on very specifically to define net revenue as “gross gaming revenues of an Indian gaming operation less (a) Amounts paid out as, or paid for, prizes; and (b) Total gaming-related operating expenses, including all those expenses of the gaming operation commonly known as operating expenses and non-operating expenses consistent with professional accounting pronouncements, excluding management fees.” In short management fees are 30% to 40% of EBITDA(M). Now, let’s think about that model. Remember our example earlier in this chapter of the casino that has 500 machines winning $100 per machine per day? After we apply the known operational formulas to that example, the casino has annual earnings of $11,161,050 (without slot lease). A management fee of 40% of that is $4.46-million a year or $22.3-million over a five-year contract period. Now since that fee is after operating expenses, that means that the salaries, etc. are paid before that fee; so the $22.3-million is a simple fee for management expertise. Now if the casino needs to borrow say $9-million to buy 500 of the newest latest-and-greatest slot machines or needs $10 for expansion, then I will be happy to loan them that money at a very low interest rate and unsecured (hence overcoming that barrier to entry in Indian Country). The security on my loan is that $22-million management contract. Think about it: I loan you $10-million which you pay me back at 3% simple interest for a total of $10,781,214 plus a $22-million management contract. I will finance deals like that all day. There are, however, a few restrictions on such a seemingly simple deal. Under NIGC regs there is much debate over whether or not a slot machine rev-share lease agreement is included or not included in that “net revenue”. Additionally, the NIGC puts restrictions on adding that additional 10% (above the 30% rate) if we are also going to position the $10-million financing as a loan. Outside of Indian Country, the regulations for management contracts vary by jurisdiction. In New Jersey, for example, the management company must buy a minimum of 5% equity in the casino to be managed, regardless of the fee charged. In Nevada, any entity that receives payment based on a percentage of casino revenue is subject to the same background and licensing requirements as the actual owner; not a less-intrusive key license like an employee manager, but an actual owners’ license. Other regulations are determined jurisdiction-by-jurisdiction. Even debt financing (rather than equity deals) generally require the loaning party showing source of funds and the receiving party showing proof of credit worthiness (for a billion-dollar casino?). Another popular current funding method is a floor space deal. Let’s look again at my example casino of 500 slot machines. Let’s suppose that casino ownership decides to sell us 100 of those games and then least them back from us at a standard 80/20 rev share for the maximum period of time allowed by NIGC (less than 7 years, so 6 years and 11 months). We ask for, and receive, a certified report of the floor average win-per-unit-per-day and that number is $215. The math seems to look really good: $215 per machine per day translates to $43 for our 20% fee; that is $1,308 per machine per month or $108,557 per machine for the six years and 11 months of the contract. Multiply that time 100 machines and the net revenue is $10,855,708. Okay, these are used machines so we can buy them for the “bargain price” of only $10,000 each or a total of $5-million to the owners. Over the course of six years and 11 months we get back $10.8-million on our $5-million investment for a profit of $5.85-million. Seems like a no-brainer, doesn’t it? Whoops. Let’s look at a few problems with this very common kind of deal. Firstly, consider the floor average win per unit. Remember my discussion of the new penny games versus the older 25₵ stepper reels at the Trump Atlantic City property? Let’s assume the certified $215 win per unit floor average number is correct. That is the good news. The bad news is that 400 of the 500 games are new state-of-the-art penny games but the 100 we are buying are older games. The 400 new games are winning $250 per unit but our 100 games are only winning $75 per unit each. That still gives a floor average of $215 per unit. But over the term of the contract we only make a total of $3,786,875. For our $5-million investment we lost $1,213,215 rather than make a profit of $5.85-million. Whoops. For years I have argued “what is better than owning a casino; owning the slot machines inside the casino.”  That syllogism only holds if the games are competitive. If they are not competitive then it smacks of a scam. Again, there are more casino finance techniques than I could possibly list here; but what all the legitimate ones require is a solid business model balanced against viable metrics. And those things, yet again, are a function of management philosophy.  Success or failure of casinos, machine deals, and financing is all formulaic; I cannot say that enough. Even the over-the-top marketing that had Casino Journal call me a “marketing magic man” is purely formulaic. I have talked a lot about marketing in this book; and spent an entire chapter talking about the importance of data and how to use it once we have it. Just as Tip O’Neil once said, “all politics is local,” so too is it true that all marketing is local: one-on-one (or the semblance thereof) contact is the most effective tool for generating customer play. When I teach marketing seminars I almost always tell people that Marketing 101 is very simple: find out who your best customers are and go get a lot more just like them. Any marketer worth her or his salt — whether they are marketing slot machine play or Cheerios — lives and dies by data. Customer information: who are the customers; where are they; how often do they spend; how much will they spend; what is their behavior. Obviously you cannot target an audience, even with a brand as strong as Donald Trump, unless you know who is turned-on by that brand and what it represents (and conversely, who is turned off by it). You can’t find more of the good customers unless you know who the good customers are, how they spend, and what excites them. While casinos share many tenets of traditional marketing, there are many eccentricities to casino marketing. In casinos we have neither products with shelf-life nor a particular service. We don’t have sales channels, price points (except game denominations), or many of the other standards of the marketing process. As I noted in Chapter Two, casinos have the same slot machines with the same price points and payouts. Competing casinos all have similar buffets, high-end restaurants, interchangeable cocktail waitresses, entertainment, players clubs, staff, and even the same ugly carpet. Casino marketing is, of course, part branding, part market-positioning and part customer maintenance and expansion. Casino marketing is promotion-driven, event-driven, and incentive driven. I am a fan of effective bus programs, weekly premiums, and highly-targeted cash-back programs. I think high-end advertising programs (like the genius campaigns produced for me over a decade by companies like Frank Palmieri’s Media and Marketing) are absolutely essential to branding and can (and should) be entwined with the direct mail programs. Though I could certainly write a casino marketing manual (and someday may do so), that is not the intent here. What I can say though is that marketing is all about that player relationship. It is very personal. It is all about customer service. As I have preached, lectured, begged, and demanded since before publication of that 1999 World Gaming Congress presentation, every single employee of the casino is a customer service employee; every single employee is a marketing employee. Casino operational management must absolutely be marketing-driven management. So, as I began, how does a casino measure success? How profitable should a casino be? What ROI should casino owners expect? How much debt can a casino realistically service? The answers to all of these questions is in the formulas I have talked about since the beginning of this book and detailed in this chapter. But beyond merely the right formulas, those answers require the right operational management and the right policy management. To get management and ownership to the point that all of this makes sense requires a process-oriented focus on profitability, return on investment, and assuring a favorable ratio of assets to liabilities. For every $1-million in casino debt, I want to see on-hand a lot more money than that million. For every $1-million of equipment or building the casino owns, I want to see the casino owing only a tiny percentage of that. For every $1-million in slot machines and other assets the casino has, I want to see the casino generate a lot more every year than the value of that equipment. And these are all the functions of the management processes I have been discussing. Things happen very fast in the casino world where so much money is transacted so quickly; where, as Elvis sang (and Mort Shuman and Doc Pomus wrote) there is “a fortune won and lost on every deal”. Sometimes management needs to react faster than many can normally react. When I first went into Southern California I ran into an interesting culture shock. I would ask an employee to do a task “right now” and they would perform it superbly but not necessarily “right now” in my timeframe. This happened repeatedly with several employees and it bothered me more and more. One day, in the office of the players’ club, I overheard two employees talking. One was saying, “I was talking to my cousin right now and she said…” I interrupted, “excuse me, where is your cousin?” The employee responded, “I don’t know, I think at home.” I did not see a cell phone. “Then how can you talk to her right now if you are not on the phone,” I asked. “You don’t understand anything, Mister Gary,” the employee told me in a frustrated tone. Perplexed, I sat down to ask for help from my friend (and employee), Yuri Dominguez (who later followed me from Trump to Oklahoma to work for me there). “What does ‘right now’ mean to you?” I asked. “Soon. Recently. Today sometime,” she responded. “Hmmmm. Ok. If I want something instantly, at this very moment, what do I need to say,” I asked perplexed. “Oh that is easy, just say ‘en chinga’,” she said. I spoke some French, some German, some Russian, some Italian; but not a word of Spanish. I had no idea exactly what “en chinga” meant, but I did find out that when I added the term to a request, my bidding was carried out immediately. Yuri had been right on target with her recommendation. Later when I took over an Oklahoma, I wanted to change the uninspired lackluster work culture of the employees there. As part of the employee training program I instituted a sense of urgency for customer service and for anything involving players interacting with staff. I called the program En Chinga and passed out embroidered Egyptian cotton polo shirts to staff members who excelled in my En Chinga program. The program and the shirts were a big hit and genuinely helped me brand the customer service program that I was creating. Tribal council members requested shirts, employees competed with each other to provide higher-level customer service to win one of the shirts, and my program was a huge success.   The “en chinga” embroidered shirt with a Tribal logo A few weeks into the program Yuri left California and she and her boyfriend came to work for me in Oklahoma. She took one look at the shirts and scolded me, “I can’t believe you put that on a shirt.” “Why not? It means right now and that is what this is all about,” I responded. “Mister Gary, it means right fucking now,” she explained. Hell, no wonder it worked in Southern California when I would tag it onto a request for action. Despite the inadvertent expletive, the idea was superb and I think very appropriate for most casino issues. In fact, it describes my attitude, requirements, and disposition even today: I want it done right fucking now. Back in Atlantic City at the end of the 1970s, that kid in the alley had asked, “Who the hell are you?” When I answered him, I was just a roving gambler not in a hurry to do anything. Now, almost 35 years later, I am a Gambling Man… en chinga!

•   ENDNOTES / APPENDIX I have elected to use the endnotes in this book a little unconventionally; placing footnotes at the end of the book rather than at the bottom of each page, but also using the Endnotes in lieu of a never-ending number of appendixes. This approach makes the endnotes bulky and difficult to navigate but makes reading the book a lot more manageable. I should also explain that the photographs, documents, emails, and letters contained in this book are all either my personal photos and documents or are in the public domain and are presented here strictly for the journalistic purposes of telling the story. Finally, please accept my advance apologies for the small print in this appendix; some of these documents are absurdly long and while important enough to include here, you may well need a magnifying glass. INDEX

Abramoff, Jack, 195, 242, 322, 323, 326 Absentee Shawnee Tribe of Oklahoma, 107, 239, 252, 257, 258, 259, 378 Adelson, Sheldon. 69, 93, 97, 98, 104, 105, 106, 371, 386 Agua Caliente Tribe, 42, 113 Akwesasne, 196, 239, 282 Alabama, 60, 197, 201, 203, 212, 236, 295, 296, 297, 302, 313, 314, 315, 317, 319, 320, 321, 322, 323, 324, 325, 326, 327, 328, 329, 330, 331 Aladdin Casino, 105, 111, 172 Algonquin, 283 Amazon.com, 163 Apprentice, The, 15, 16, 19, 20, 21, 26, 30, 31, 32, 34, 35, 36, 244, 341, 350 Aristocrat, 173, 218, 220, 230, 231, 236, 273 Atlantic City, 1, 24, 81, 87, 88, 137, 138, 139, 140, 141, 143, 144, 145, 146, 148, 150, 152, 154, 293 Atlantis, 85 Augustine, 115, 199, 241 Aztar, 81, 82, 84, 87, 88, 89, 92, 95, 107 Baer, Max, 192 Bally, 75, 87, 105, 107, 111, 124, 146, 147, 148, 161, 174, 177, 188, 190, 218, 220, 227, 230, 231, 236, 273, 324, 325, 331 Baltimore, 10, 16, 137, 138, 139, 140, 143, 144, 148, 149, 150, 152, 194, 209, 323 Bamaco Casino, 326, 327 Bank, 18, 51, 56, 83, 103, 108, 283, 328, 375, 387 Barrack, 74 Beecroft, Tanya, 17, 20, 28, 50, 113, 114 Bellagio, 371 Bennett, Bill, 39, 52, 67, 78, 114, 158, 159, 340, 342, 345, 346, 353, 359, 364, 367 Beverly Hillbillies, 121, 171, 189, 192 BIA (Bureau of Indian Affairs), 201, 203 Biloxi Mississippi, 112, 170, 212, 324 Bingo, 5, 46, 136, 170, 176, 205, 209, 211, 213, 214, 215, 216, 242, 261, 272, 274, 286, 297, 303, 309, 315, 316, 318, 322, 324, 327 Binion, Jack, 9, 18, 45, 51, 52, 69, 78, 175 Birmingham Alabama, 315, 319, 320, 322, 323, 324, 326, 330 Blackfeet Nation, 283, 284, 285 Blanchard, Governor Kenneth, 257, 258, 259, 272, 277, 280, 281 Boardwalk, 1, 18, 85, 143, 147 Boca Raton Florida, 3, 276 Boger, Bunky, 21, 22, 27, 168, 277, 280 Borgata Casino, 7, 64 Boyd Gaming, 9, 64 Brazilian casinos, 313 Broward County Florida , 64, 199, 205, 309 Brown, Mark 3, 15, 18, 19, 49 Butera, Scott, 342 Butler, Rhett, 2, 133 C.F.R, 234, 263, 334 Cabazon Tribe, 207, 209 Caesars, 107, 148, 180, 340, 362 Cahuilla Tribe, 199, 241 California, 17, 20, 31, 43, 48, 56, 57, 90, 111, 115, 153, 159, 163, 198, 199, 201, 205, 206, 207, 228, 241, 242, 244, 245, 246, 251, 256, 292, 297, 342, 344, 367, 391, 392 Campbell, Senator Ben Nighthorse 235 Canadian, 286, 301, 302 Carlini, Trent, 71 Casino Journal, 78 CasinoCareers.com, 310 Caughey, Bill, 282 Cheerios, 389 Chickasaw Tribe, 195, 214, 218, 232, 234, 236, 330 Chippendales, 26, 339 Chippewa Tribe, 204 Choctaw Tribe, 322 Chumash Tribe, 202 Circus-Circus, 76, 134, 153, 158, 364 Claridge, 51, 146, 147, 148, 255 Clark, Wilbur, 56, 61, 65, 66, 67 Clinton, Bill, 211, 238 CNBC, 34, 111 Coachella California, 31, 36, 41, 107, 243, 245, 256, 344 Coca-Cola, 8, 186, 303 Coin-in, 127 Columbia Sussex, 81, 88, 92, 107 COMDEX, 104, 105 Compliance, 382 Cook, David, 47 Cornero, Tony, 54, 56, 57, 58, 61, 65 Corporate Gaming Act, 70 Cosmopolitan, 103 Costello, Frank, 54 Creseenzo, Lou, 342 Curtis, Tony, 76 Daily, Carson 17 Dalitz, Moe, 56, 58, 61, 67, 68, 69 Dalitz, Moe, 9, 51, 56, 58, 61, 66, 67, 68, 69, 70, 71, 76, 100 Daniels, Charlie, 16, 17, 39, 41 Denny Gomes. See Dennis Gomes DeRaedt, Peter, 368, 369 DeSanctis, Kevin, 342 Desert Inn, 51, 55, 56, 58, 65, 70, 75, 107 Detroit Michigan, 111, 141, 194 Deutsche Bank, 108 Disney, 93, 103, 252 Dominguez, Yuri, 276, 391, 392 Drop, 53, 123, 129, 264, 351 Drug Testing, 288 EBITDA, 7, 52, 74, 92, 95, 247, 364, 371, 372, 376, 387 Egyptian, 158, 392 Ehrenreich, Barb, 93 Electromatic, 301 Ellis, Russell, 239, 249, 250, 251, 253, 254, 256, 257, 259, 260, 262, 267, 268, 270, 271, 280, 372, 378 Elvis, 5, 7, 9, 71, 72, 73, 171, 189, 192, 239, 240, 246, 279, 291, 292, 293, 339, 391 Ensign, 158 Excalibur Hotel Casino, 158, 192, 364 Fargo, 18, 85 Faulk, Joel, 20, 21, 26, 27, 28, 31, 32, 37, 38 Faulkner, 320 FedEx, 155 FEMA, 320, 326 Fidel, 155 Fidelis, 254 Flamingo, 58, 59, 60, 65, 87, 106, 134 Florida, 44, 47, 51, 56, 119, 150, 153, 170, 176, 177, 287 Flying Elvi, 291, 292 Folkways Records, 137, 251 Forbes, 104, 158 Ford, 1, 42, 163, 313 Fortune Magazine, 169, 333 Foxwoods, 1, 51, 170, 209, 241, 386 Fr. Lauderdale, 51, 194, 199, 205, 309 Fratianno, Jimmy the Weasel, 261 Fremont Street, 65, 170, 279 Frontier, 105 Gambling, 3, 5, 51, 93, 108, 121, 134, 136, 178, 295, 392 GameTech, 214 Gaming Control Board, 147 Gaming, 1, 18, 45, 64, 70, 71, 74, 78, 79, 80, 81, 83, 87, 90, 91, 95, 111, 147, 155, 157, 162, 173, 178, 187, 196, 197, 201, 207, 208, 213, 216, 218, 220, 224, 225, 227, 228, 229, 235, 236, 238, 240, 241, 251, 252, 254, 257, 259, 268, 279, 281, 288, 294, 297, 298, 307, 313, 318, 320, 321, 327, 334, 368, 374, 390 Gateway Gaming, 297 Gaughan, Jackie, 9 Gekko, 340, 343 Georgia-based, 234, 299 Geronimo, 202 Gilley, Ronnie, 323, 324, 326, 327, 329 Ginger the Chicken, 16, 23, 24, 25, 26, 27, 30, 31, 32, 35, 38, 240, 244, 277, 280, 350 Glacier Peaks Casino, 283, 290, 381 Godfather, 1, 54, 165 Golden Nugget, 81, 148, 150 Goldman Sachs, 74, 75, 85, 374, 375 Gomes, Dennis, 24, 25, 52, 53, 54, 57, 62, 79, 80, 81, 82, 83, 84, 85, 87, 88, 89, 91, 92, 98, 108, 122, 150, 151, 220, 300, 342 Goodman, Oscar, 279 Gore, Albert, 155 Goulet, Robert, 148 Grand, The, 48, 75, 105, 305, 343 Graves, Gordon, 231, 232 Greenbaum, Gus, 58, 59, 61 Grey…illegal…Gambling, 5, 295 Greyhound, 11, 314 Griffin, Merv, 84, 119, 162, 344 Groucho, 49 Gulfstream, 7 Gum-vending, 295 Gypsys, 295, 330 Haas, Frank, 52, 89, 90, 113, 135, 236, 256, 257, 281, 282, 346, 374 Hand-pays, 274 Harley-Davidson, 249 Harrah’s, 48, 87, 94, 107 Hart, Gary, 16 Harvard, 94, 340 Havana, 59, 88 Hilliard, Congressman Earl, 319, 320, 321, 324, 326, 328 Hilton, 53, 65, 71, 72, 73, 74, 75, 80, 84, 85, 87, 96, 100, 101, 107, 108, 122, 146, 344, 362, 363 Hilton/Bally, 362 Hitler, 54, 200 Hobbs Strauss, 237 Hoffa, Jimmy, 69 Holiday Inns, 87, 107 Holiday, Doc, 131, 132, 133, 138, 141, 181 Hollywood, 59, 60, 61, 65, 78, 82, 172, 246 Horseshoe Casino, 18, 45 Hotels, 16, 17, 39, 53, 93, 94, 107, 241, 245, 248, 342, 343 Hughes, Howard, 56, 69, 70, 83 Human Resources, 288, 289 Hyatt, 343 Icahn, Carl 74 IGRA, 207, 208, 209, 210, 213, 214, 217, 218, 228, 234, 235, 239 IGT, 121, 169, 174, 176, 187, 189, 190, 192 Indian casino, 27, 45, 111, 170, 176, 179, 185 Indian Gaming Regulatory Act, see IGRA Indians, 5, 9, 16, 17, 22, 27, 39, 45, 46, 51, 62, 66, 78, 89, 91, 107, 111, 129, 159, 161, 162, 163, 170, 176, 179, 185, 194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 212, 213, 214, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 232, 233, 234, 235, 236, 237, 239, 240, 241, 242, 243, 247, 249, 250, 251, 257, 260, 268, 269, 271, 272, 279, 280, 281, 284, 288, 291, 293, 294, 295, 297, 298, 299, 307, 313, 315, 318, 322, 323, 327, 330, 331, 334, 336, 337, 342, 382, 387, 388 Indio California, 36, 90, 245 Insurance, 375 InterContinental Hotels, 107 Internet, 155, 156, 213, 229, 304, 305, 306, 337, 363 Irvine, Bob 384 Jackpot, 171, 191, 192, 306 Jaguar, 280 Jai Alai, 64 James Bond, 131 Japanese, 44, 105 Jefferson-Jackson Day, 200 Jeopardy, 84 Joseph, George, 111, 152 Junkets, 142, 143, 148, 149, 150 Kanghi, 239 Karaoke, 350 Kassekert, 24 Katzeff, 105 Kefauver, 68 Kennedy, 110, 196 Keno, 12, 46 Kerkorian, Kirk, 52, 55, 71, 72, 75, 105 Kerzner, 84, 85 Khashoggi, Adnan, 154 Kickapoo, 201, 232 Kimmie the model, 17, 19, 245 Kindle, 3 KNBC, 15 Kodak, 10 Kodiak, 297 Korean, 43, 112 Kristofferson, Kris, 160 Labor, 94, 158, 375 Lafarge, Peter, 196 Lanni, Terry, 108, 157 Lansky, Jake, 181 Lansky, Meyer, 1, 54, 56, 58, 59, 61, 69, 78, 83, 84, 132, 133, 134, 150, 152, 181, 206, 313, 387 Larry the High Roller, 16, 42, 43, 44, 112, 116, 117, 133, 134, 136, 160, 174, 176, 230 Las Vegas Review-Journal, 58, 68 Las Vegas Strip, 10, 54, 56, 57, 58, 65, 71, 75, 95, 96, 120, 121, 134, 156, 158, 170, 185, 279 Las Vegas, 7, 8, 9, 10, 12, 13, 39, 42, 45, 47, 48, 51, 52, 54, 55, 56, 57, 58, 59, 61, 62, 63, 65, 66, 67, 68, 69, 70, 71, 72, 73, 75, 76, 77, 78, 79, 82, 84, 85, 86, 87, 88, 91, 93, 94, 96, 97, 98, 100, 101, 102, 103, 104, 105, 106, 107, 111, 114, 120, 121, 122, 134, 141, 142, 144, 150, 153, 154, 156, 157, 158, 161, 164, 165, 170, 171, 172, 185, 192, 194, 207, 209, 210, 212, 213, 218, 223, 227, 228, 229, 230, 252, 267, 277, 279, 280, 290, 291, 294, 295, 296, 298, 302, 303, 306, 331, 333, 334, 336, 337, 340, 359, 362, 363, 364, 367, 368, 371, 373, 384, 386 Laundry/Uniform, 375 Lefever, Mark 24, 52, 53, 55, 56, 76, 77, 78, 98, 109, 116, 134, 160, 167, 256, 257 Legislature, 201, 311, 324, 326, 329 Lerner, Bill, 108 Letterman, Dave, 21, 22 Liberace, 55, 67, 73 Lieutenant, 53, 76, 324 Lobbying, 235 LogicComps, 98, 368 Lopez, George, 39, 345 Lottery, 291, 310 Loveman, Gary, 340 Luxor, 158, 364 M.I.T, 1 Macke, Mike 235 Mafia, 71, 80, 82, 132 Maheu, Bob 70, 83 Maizer, Willie, 52, 148, 149, 150, 151, 152, 206 Management, 5, 7, 8, 9, 53, 101, 107, 342, 365, 366, 374, 386 Mandalay, 95, 96, 98 Mandel, Howie, 39, 341 Manhattan, 203 Mantle, Mickey, 51 Marcoux, Luc, 301, 302, 315, 319, 320, 321, 324, 330 Margaritaville, 87 Marketing, 3, 5, 52, 85, 115, 245, 259, 278, 339, 346, 358, 364, 369, 375, 389, 390 Marriott, 91, 101, 107, 249, 301 Martingale System, 180, 181 Marx, Karl, 51 Mary Carter Paint Company, 80, 83 Mascio, Vince, 15, 18, 41, 49, 50, 244, 247, 255, 256, 342 Mashantucket, 51, 209 MasterCard, 310 Masterplan, 364 Match Play, 350 Maverick, 2, 133, 159 McCain, Senator John, 322, 323 McDonalds, 36, 303, 304, 307 McGregor, Milton, 323, 324, 325, 326, 327, 328, 329 McMahon, Ed, 277 Mcveigh, Timothy,249 MegaBingo, 232 MegaBucks, 160 MegaNanza, 231, 234 Melchiorri, Tony, 384 Mexican, 90, 241, 242, 245, 247 Mexican-American, 90, 242, 245 MGAM, 231, 232, 233, 234, 235, 277, 387 MGM, 45, 48, 55, 75, 108 MGM/Mirage, 75, 108, 364, 367 Miami, 51, 83, 91, 150, 173, 210, 282 Mickey Finn, 154 MICS, 263, 264, 268, 270, 327 Milken, Michael, 55, 340, 387 Minimum Internal Control Standards, 286 Mirage, 55, 75, 84, 106, 108, 156, 362 Mirman, Richard, 340 Mississippi, 51, 221 Mohawk, 196 Mohegan, 87 Money Laundering, 182 Monopoly®, 303 Montana, 27, 46, 47, 283, 284, 287, 290, 291 Montgomery Alabama, 314, 315, 320, 326 Montreal, 301 Mormon, 71, 387 Morrison, Jim, 131, 160 Moscow, 153, 154 Mosley, Bob, 297, 315 MSDOS-based, 229 MSNBC, 324 MultiMedia Gaming (see MGAM) Myrtle Beach, 67, 103, 153, 154 N.J.A.C, 45 NASDAQ, 231 Nashville Tennessee, 238, 271, 324 Native American, 51, 77, 194, 195, 196, 198, 200, 201, 202, 239, 240, 241, 242, 244, 249, 250, 273, 284, 372, 375 Navajo Tribe, 199 NCIC, 250 Nevada Gaming Control Board, 79 New Jersey, 4, 41, 42, 52, 79, 80, 137, 145, 147, 172 New Orleans, 155, 359, 362 NexGaming, 297 NIGC, 208, 228, 230, 231, 232, 234, 235, 237, 238, 250, 257, 260, 261, 264, 307, 318, 333, 387, 388 Nighthorse, see Campell, Senator Ben Nighthorse Norcross Georgia, 224 Norman Oklahoma, 252, 253, 256, 275 Norquist, Grover, 323 North Carolina, 131 Nova Gaming, 224, 297 Obama, Barack, 34, 106, 238 Oglala People, 206 Oklahoma, 22, 26, 47, 89, 90, 111, 113, 170 Omaha, 104 Orlando Florida, 93, 103 Ortiz Gaming, 313 Osage Nation, 203, 232 Ottawa Tribe of Oklahoma, 89, 264, 282, 327, 381 P&P’s (Policies and Procedures), 381, 382 PAGCOR, 155 Palm Springs, 15, 31, 36, 39, 42, 52, 65, 71, 78, 113 Palmieri, Frank, 24, 72, 85, 92, 278, 390 Pareto, Rudy, 97 Pascal, 117, 181 Payout, 26, 28, 45, 47, 118, 119, 120, 126, 168, 169, 170, 171, 172, 174, 175, 176, 177, 178, 179, 182, 183, 184, 187, 188, 189, 190, 191, 192 PBR (Professional Bull Riders), 22 Penguin Gaming, 297 Pennsylvania, 51, 89, 136, 215, 386 Peoria, 232 Pequot Tribe, 51, 209, 241 Philippines, 155 Phoenix, 88, 89 Pickus, Robert 343, 384 Pileggi, Nicholas 261 Playboy, 18, 78, 142, 148 Poker, 51, 121, 159, 170, 277, 337 Policies and Procedures, see P&P’s Pompano Beach Florida, 7 Pot-O-Gold, 224, 230, 299, 332 Price Waterhouse Coopers, 106 Puerto Rico, 53, 301 Pull-tabs, 308 Puzo, Mario, 1, 51, 165 Quarters, 120, 121, 354, 355, 356 R.F.M, 353 R.O.I, 100 Raft, George, 7, 253 Ramada Inns, 53, 87, 88, 89, 96, 107 Random Number Generator, 32, 109, 168, 169, 186 Rashada, Iram, 276 Ratner, Bruce, 340 Raving Consulting, 383 Recency, 353, 354 REIT, 54, 85 Reno, 56, 57, 164, 178, 212, 220, 236 Republican, 54, 314, 324, 326, 329 Resorts International, 72, 80, 82, 83, 148, 150 Ribis, Nick, 72, 83, 85, 100, 342, 343 Rickles, Don, 39, 40, 41, 67 RICO, 53, 250, 301 RMBS, 386 Robison, John, 168, 176 Romney, Mitt, 104 Roosevelt, 65, 66, 196 Rosenthal, Frank “Lefty”, 49, 52, 54, 62, 63, 64, 79, 83, 88 Roulette, 299 Rubeli, Paul, 81, 92, 95, 96, 98 Russian, 153, 154, 155, 234, 299, 391 Sahara Hotel-Casino, 88, 158, 386 Sands, 81, 93, 97, 104, 105, 106, 145, 146, 147, 148, 159, 386 Sarno, Jay, 158 Satre, Phil, 52, 87, 107, 340 Scanlon, Michael, 23 Schaeffer, Glenn, 95, 96, 97, 98, 103, 106, 157, 158, 365, 371 SDG (Sierra Design Group), 227 Seminole Tribe, 48, 176, 195, 196, 199, 204, 205, 207, 209, 231, 257, 262 Shadow, The, 5 Sheraton, 53, 54, 55, 75, 107 Shorter Alabama, 295, 314 Sht Creek, 152 Shumway Bill, 196, 206 SIC code, 94 Siegel, Benny “Bugsy”, 52, 54, 58, 59, 60, 61, 65, 66, 78, 80, 134 Sinatra, 42, 67, 69, 104, 171, 246 Skinner, B.F., 166 Slot Machines, 20, 44, 46, 47, 51, 109, 110, 117, 118, 119, 121, 122, 123, 126, 131, 135, 139, 141, 143, 146, 147, 154, 167, 168, 170, 171, 173, 175, 178, 180, 183, 185, 186, 187, 188, 189, 191, 285, 286, 288, 289, 291 SlotMetrix, 297 Smithsonian, 251 SODAK Gaming, 227, 228, 236 Sohng, Steve, 43, 52, 112, 113, 114, 115, 116, 117, 120, 130, 167, 256, 351 Solomon, Gregg, 368 South Carolina, 56, 67, 131, 149, 153, 154, 162, 195, 204, 210, 219, 220, 221, 222, 223, 224, 226, 227, 229, 230, 231, 236, 238, 239, 268, 270, 273, 276, 279, 280, 297, 298, 299, 301, 308, 312, 322, 330 South Dakota, 194, 195, 227, 236 Sovereignty, 206, 238 Spacey, Kevin, 1 Spade, David, 247 Spanglish, 36 Spotlight29, 39, 40, 350 Star Trek, 168, 178 Stardust Casino, 54, 57, 61, 62, 63, 64, 65, 69, 79, 122 Stations Casinos, 386 Stonewall Jackson, 239 Stratosphere Casino, 74 Streisand, 72 Stupak, Bob, 10, 11, 12, 52, 78, 445 Summa Corporation, 71 Superman, 68 Sweepstakes, 298, 304, 305, 306, 308, 313 Synergy Gaming, 173, 297, 320, 321 T.E.D (The Electronic Dauber), 316 Tahoe, 359, 362 TAIMSG, 239 Taiwan, 303, 332 Taj Mahal, 1, 18, 81, 84, 87, 341, 342, 343, 344 Talamo, Jan, 24, 92, 277 Taucer, Vic, 180 T-bills, 180 TCP/IP, 363 Teamsters, 52, 66, 69, 387 Tecumseh, 202, 259 Tennessee, 87 Texas Hold’em, 111, 131, 135 Thackerville Oklahoma, 232, 233, 234, 236 Theoretical, 115, 119, 120, 129, 135, 348 Thomas, Parry, 387 Thorpe, Professor Edward 137, 138 Thunderbird, 65, 134, 181, 252, 253, 254, 255, 256, 257, 258, 259, 268, 277, 278, 279, 280, 281, 282, 283, 290, 372, 381 TICS, 264 Tic-Tac-Toe Chicken, 16, 17, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 37, 50, 52, 109, 119, 173 Tijuana, 194 Title 31, 182 Tombstone, 132, 136 Toth, George, 81 Trailways, 107 Tribal, 25, 33, 40, 41, 45, 46, 47, 49, 90, 91, 113, 162, 195, 196, 199, 200, 201, 203, 204, 205, 206, 208, 209, 210, 213, 219, 225, 230, 234, 238, 240, 242, 244, 247, 249, 253, 254, 257, 258, 259, 264, 265, 266, 267, 269, 271, 272, 273, 274, 279, 280, 281, 282,286, 287, 289, 294, 381, 382, 392 Trimble, Tom, 98, 159, 173, 276, 368, 384 Tropicana, 24, 81, 84, 87, 88, 107, 143, 148, 386 Trump Hotels and Casinos, 16, 39 Trump —THCR, 255 Trump —THCRM, 342 Trump —The Apprentice, 15, 16, 19, 20, 26, 30, 31 (see also Apprentice, The) Trump, Donald J., 3, 5, 7, 15, 16, 17, 18, 19, 20, 21, 24, 26, 29, 30, 31, 32, 33, 34, 35, 36, 39, 40, 41, 42, 49, 52, 57, 66, 72, 77, 78, 79, 80, 81, 84, 85, 87, 89, 90, 102, 109, 110, 112, 113, 114, 116, 129, 130, 160, 163, 199, 206, 235, 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 251, 254, 255, 256, 258, 264, 273, 276, 277, 280, 293, 339, 340, 341, 342, 343, 344, 345, 346, 349, 350, 353, 358, 367, 369, 375, 377, 384, 386, 389, 391 Trump, Ivana, 18 Trump, Melania, 15, 19 Trump29, 25, 36, 41, 50, 52, 56, 81, 89, 113 Tulsa Oklahoma, 382 Tunica Mississippi, 53, 55, 85, 170, 212, 230, 324 Tuscarora People, 239 UCLA, 159 Udall, Senator Moe 206 University of Nevada, 114, 127, 178 Uston, Ken, 137 Venetian Hotel and Casino, 93, 105, 267, 340, 371 Victoryland Casino, 314, 319, 320, 323, 327, 329, 330 Video Poker, 115, 117, 136, 170, 172, 185 Wall Street, 20, 76, 94, 96, 107, 132, 134 Wal-Mart, 283 WAPS (Wide Area Progressives), 191, 192, 376 Webb, Del, 65, 66 Westerman, Floyd, 239 Wetumpka Alabama, 197 Wheel of Fortune, 169, 189 Whitehall Alabama, 74 Wilkerson, Billy, 52, 59, 60, 61, 65 Wilkes-Barre, 215 Wilson/Hilliard, 321 Wimmer, William, 17, 90, 270, 276 Win Per Unit Per Day (WPUPD), 380, 381 Wolfe, Nero, 175 Wounded Knee, 196, 206, 239 Wynn, Steve, 52, 55, 57, 66, 69, 75, 76, 84, 96, 100, 106, 156, 157, 158, 346, 362, 364, 368, 371, 383, 387 Yahoo, 157 Yakama Tribe, 282 Yield Management, 101 YouTube, 26, 31, 35, 2781

Written by casinogamingbusiness

October 10, 2012 at 2:27 pm

Posted in Uncategorized

another typical day in the casino BUSINESS

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“There’s a hold up in the Bronx, Brooklyn’s broken out in fights.

There’s a traffic jam in Harlem That’s backed up to Jackson Heights.

There’s a scout troop short a child, Kruschev’s due at Idlewild

 

 — Nat Hiken, theme from “Car 54 Where Are You?” (and a typical slow day for a casino executive)

 

On any given day there are a lot of things…a whole lot of stuff… that is constantly juggled through the brain of a casino executive. No day is a typical day; and every day is typical.

We had rented one of those big black stretch limos for Donald Trump’s arrival (with his then soon-to-be wife Melania Knauss —damn she is tall!). Season One of NBC’s The Apprentice had just ended and Donald Trump was a bigger “star” than he had been even in the 1980s with his Art of the Deal fame.

Even I was riding some of the show’s fame because, for the final episode in April, KNBC in Los Angeles did a live-remote from the Trump Casino in Palm Springs with me as their featured color commentator — a celebrity-for-15-minutes adventure (ok, an hour) that had also landed me the gig as the guy who did the countdown for the west coast New Year’s clock on December 31st. (By the way, I had a childhood Times Square illusion shattered by that countdown: there is no “official clock”; the “celebrity” counter just starts counting whenever. There is not even a teleprompter or a big second-hand or a director. I just made up the numbers and if you set your clock by me, then your life may be a few seconds out of kilter.)

Trump’s gaming CEO, Mark Brown, had flown into Palm Springs with the celebrity couple to be met by his Operational Vice President (and my immediate boss) Vince Mascio, who had gone to the airport to brief Trump (and Brown-ie) on the activities I had scheduled for the casino arrival.

Meanwhile, I was pacing back and forth (in my usual style) in front of the red carpet and the elephant-trunk velvet stanchions leading from the porte-cochère to the casino entrance. Out of the corner of my eye I could see the roadie trucks for Charlie Daniels unloading for an unrelated concert that night in my auditorium. At the same time, I glanced back inside the casino toward my high-roller room to make certain that my man Larry from Iowa was obliviously playing those $25-slots at $75 a spin.

Ostensibly (and for the press), “The Donald” was arriving to challenge Ginger, my tic-tac-toe playing chicken, to a $10,000 game for charity; but in reality, he was making a token appearance to appease the thirteen-member Indian tribe that actually owned the casino. Trump Hotels and Casinos had a management contract with the tribe. (That management contract is really important in the big-picture of how Indian Casinos work and the direction I decided to go; and for that reason I have included it in the Endnotes to this book;( it is public record[i]. But at the time, that contract was of very little interest to me.)

When I arrived at the casino, a few months earlier, it was averaging “only” $45-million-a-month in slot machine play (“coin in”), but now that the property was pulling in $100-million in slot machine “coin-in” every month, the Tribe had tired of Donald Trump’s expensive monthly fees. (I will have more to say a little later about that 13-member tribe and the six-member “tribal” ownership of a nearby casino.) But, I wasn’t really concerned about all of that now. I had a casino event to operate.

Since the success of The Apprentice, the press (and especially the paparazzi) followed Trump everywhere ― and I recognized the fame-wave as the ideal time to stage a “media event”. After all, I had a long history of staging bullshit media events. Twenty-one years earlier Time®, Newsweek®, the Washington Post and the Baltimore Sun had all criticized me on the same day for setting up a photo-op event of Presidential Candidate Gary Hart’s daughter making peanut butter and jelly sandwiches for campaign workers. (Although it is most notable that no criticism was ever made of the media legion that showed up to film the sandwich making.) At any rate, I was psyched for a media event to draw hordes of gamblers to our casino. Publicity are us.

I rechecked all of the Trump arrival details: the showgirls were lined up along the entrance; the press was kept behind the ropes; Carson Daily’s mother, Pattie (a noted breast-cancer activist and Southern California television personality) was in front of the ropes for her promised “exclusive” with Don; my lead-showgirl/spokes-model, Kimmie, was waiting on the red carpet in her sequined gown to escort the VIPs; and my then-protégé, Will Wimmer (a former U.S. Border Patrol Agent), was ready to lead the security squadron through the packed crowd and to the chicken cage.

Yes you’ve got the picture: Donald Trump, a tic-tac-toe playing chicken, a couple of thousand gamblers, and a few hundred members of the national and local press corps. Juggled against a Charlie Daniels concert, angry Tribal (13 members) casino ownership, and a high-roller slot player’s $45,000 winning spree. You get the picture so far; just another day in paradise.

 §¨©ª

 The Chicken does WHAT? Enter Bunky and his chickens. My friend Bunky Boger from Lowell Arkansas made an entire life of wrangling all sorts of animals. After an appearance on David Letterman with his lifelong friend Cody the Buffalo (whom he allowed Dave to ride), Bunky’s latest wrangling was with a heard of chickens. Actually, it was a very cool gimmick designed for state fairs and the traveling carnival circuit. Despite initial trepidation from animal rights activists and assorted vegetarians (like myself), it made for a humane, clean, and fun promotion; and as Bunky likes to say “these chickens retire with me in Arkansas which beats the heck out of their cousins that work for Tyson or Purdue and end up in the Colonel’s bucket.”

Though Bunky had performed with Cody at hundreds of state fairs and arenas, his first career had been as a “bullfighter”—which I later learned was colloquial for rodeo clown (as opposed to a matador).  Rodeo clowns, while dressed to entertain, are the heroes (or fools) who attract a charging bull’s attention once it has bounced a rider in less than the eight-seconds to qualify for a rodeo ride. Bunky spent more than 30 years getting bones broken, skin gored, and saving the lives of dozens of bull riders.

Incidentally, I had no idea how long that eight-second bull ride could actually feel until a few years later I was asked to ride a bull for a casino promotion. I was operating an Oklahoma casino that had sponsored the finals for the PBR (that would be the “Professional Bull Riders”; and yes there IS such an organization). As part of the promotion to award the $10,000 check, I was decked out in a full tuxedo and escorted by two statuesque showgirls to a waiting bull. Although the poor Taurus-creature had been well-sedated and was long past his prime in life, it was still a harrowing experience to ride the bovine monster.

Though in his seventies, Bunky Boger was not past HIS prime in life when he undertook chicken wrangling. First, he built a gilded box about 10-feet tall with a glass-front birdcage embedded in the left side of the box. Inside the cage, he built a feeding tray (where food would be sent once the chicken performed correctly) and a metal shield hiding a small light bulb from view outside the cage. Bunky painted, on the side of the shield that faced the glass front, the words “THINKING BOOTH” (with a tic-tac-toe board drawn beneath). Just to right of the cage, also embedded in the box, he placed a computer touch-screen with a tic-tac-toe board.

A player would walk up to the screen, touch a spot where their “X” or “O” would be placed and it would appear on the screen. Touching the screen would also turn on the light inside the cage.

Bunky, his wife Connie, and their son Kelly trained the chicken(s) to understand that when the light came on the bird should look out the window at the computer screen then go behind the “thinking booth” and tap with its beak on a metal switch. When the switch was tapped, it would release a few pellets of food down a tube that led to the feeding tray. The bird would then get to eat.

More interestingly for the player, the bird’s tap on the switch would trigger the computer to calculate the next move in the tic-tac-toe game. For the player the illusion was that the chicken had looked at the screen, recognized the player’s move and entered the thinking both to determine its own counter move. Once the computer…ah, the chicken…made the counter move, it would be the player’s turn to make another move. This would continue until the chicken (computer) beat the player, or the game was tied, or the player beat the chicken.

Though the player saw one chicken at a time, there were actually 14 or 15 chickens with each bird working a three-hour shift before being replaced. Still, the promotion was booked as “beat the chicken” as if it were one chicken named Ginger. Who amongst us can tell one chicken from another, and who would know there were multiple “Gingers”?

As a variation of a less PETA-friendly sideshow of the 1940s, Bunky took this tic-tac-toe chicken on the road with him for the state fair circuit in the 1980s. Unfortunately, at a fair near Philadelphia (in the town of Bensalem) someone stole the entire coup of chickens. Apparently the city of brotherly love was also a city of chickenly love. The Philadelphia Inquirer had a field day with the story and turned it into a wire-service cutesy feed; and poor Bunky was out of business until he could train a new flock.

Meanwhile legendary casino regulator-turned operator Dennis Gomes and his marketing vice president, Vicki Tilton one of the industry’s best spotted the story and wondered how the chickens would work as a casino promotion. They tested it and for years, it dominated the boardwalk at The Trop as the hottest promotion in Atlantic City. As recently as October of 2008 Gomes told Bunky that he considered his discovery of the chickens to be the high point of his career.


Written by casinogamingbusiness

July 12, 2010 at 10:27 pm

Posted in Casino

just a roving gambler

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by Gary Green

(c) 2010 gary green

 

“God help us, this is the life we have chosen.”

 — Lee Strasberg as Hyman Roth, the Meyer Lansky character in “The Godfather Part II” (via Mario Puzo and Francis Ford Cappola)

 

It was one more late night in a smoke-filled coughing-corner of one of Atlantic City’s first glitter-monster casinos; one of the 60,000 square feet of one-armed bandits, Big 6 wheels, and the table pits. Back then, the late 70s or early 80s THAT was a huge casino; and this was the biggest of all of them.

I was sitting at a green-cheque ($25-chip) blackjack table’s third base (last seat) trying to keep a true count as straight as my running count out of an eight-deck shoe. When the old man sat down beside me, slid the ashtray aside and began to give me the once over, I knew it was about time for me to leave.

His eyes started with the Stetson on top of my head, and at first I thought he was trying to read the hatpins — I used to put them in my hat like travel decals on an old steamer trunk. But his eyes followed the cut of my frock coat, the bib of my Victorian shirt, the strings of my tie and on downward to the toe covers of my boots. Then his eyes darted back up to my long brown hair with its Bill-Hickok-style ringlets falling on my shoulders. Maybe he just hated hippies dressed like 1880s cowboys.

“Who the hell would double-down on 16,” he growled at me in the tone of a disgruntled looser missing the third session of a boring convention a few doors down the boardwalk.

“Probably just a guy that knew there were no tens in a shoe that is rich in fives and low cards,” I smirked with my southern accent, trying to sound more like a suave Rhett Butler than a trailer-park Jeff Foxworthy. I had not lived in a trailer park in almost seven years, thank you very much.

I had already realized that he was just an obnoxious old punter and not from the “eye-in-the-sky”, but I also knew I actually had been made when the sweep of my hand brought a five from the dealer’s shoe and he called “shuffle” after that hand.

“Son, there is no Maverick Doc Holiday gamblers no more. Don’t you know you’re living out of your time,” the old man told me. I rolled my eyes and pushed back from the table, thinking that apparently there were no more English teachers either. But he was right; I was theatrically costumed for the role I had chosen in life.

“Where you going, cowboy?” a shill asked me as she put a cigarette in her lips and leaned toward me for a light.

I didn’t even bother to color-up. I just pocketed the stack of porcelain greens along with the others I’d been hording, ignored her too-powdered face and casino-paid smile, and walked past the old man toward the cashier cages. Just short of the cage, I shrugged and rather than cash-out, I walked toward a side door leading to the street (rather than the tourist-infested boardwalk). Outside I took a long drink of crisp air and started to walk.

I was thinking that I’d been on the road so long since the day I was provoked to hit the road when a dissident student in a class I was teaching had said it couldn’t be done in the second half of the 20th century that I probably could never come back in. I had no clue that one day I would be running (and owning) glitter-place casinos twice the size of this one. As I stepped along in the darkness, for one loses track of light and dark when one travels in the glitter jungle, it happened.

I’m not really sure where he came from. I know he was young, Hispanic, and New Jersey tough. My stooped, already small, five-foot and nine-inch frame with its then-only-150 pounds probably looked like an easy hit for him, for in stature I am not the least bit imposing.

I begged him not to do it…at least I wanted to. But he left no time for that. It is much easier now to look back at what happened, to retrace the events and the thoughts, than to examine them in the midst of the action…of the violence…of the near tragedy of this man/boy’s foolishness.

My natural paranoia made me certain that he had given it some thought; there must have been some plan. He couldn’t have just chosen his target at random; he could not be that foolish. He called to me and I ignored him. Perhaps I was in a daze from the glitter, perhaps that’s what he wanted, or maybe I chose to ignore him.

But he crossed my path in darkness, blocked my way and made his demand. He pointed something at me. He might have had a knife and he might have had a gun; and he had no idea that at this point in my life, it really did not matter. And when it was over he had no idea why he had been spared.

My mind halted its racing with card-counting numbers and I felt my body recoil from the inertia of the braking. My reflexes snapped with the energy that had allowed me to survive all these years. I certainly knew what was going to happen before it came to pass and if he had just looked at my eyes he would have seen the hungry gleam spark there; I knew it was there, damnit.

In my stomach I felt a burning acid roll around and start to climb my esophagus to my throat. I felt the muscles in my back flex and my spine stretch me to my full height from my normal half-stooped stand. And I felt my feet lock into the pavement and dig deeper for a firm hold.

The first second had still not passed. Had any people stepped from the casino and had there been street lighting, they would have seen the blur of speed whip from my eyes and guide my body, but HE wouldn’t have seen it. For by the time that first second had passed, he had been frozen by that gleam.

But by then the scrounge of human technology, the implement of no purpose but to take another human life; that which I had often donned during those years — my gun — was drawn from the seeming-nowhere behind my vest and was leveled directly at his head.

Still he couldn’t see that the miles had indeed taken their toll and that neither his life nor my own meant anything to me; he had no idea how many murders I had been around, how many hacked, shot, stabbed, and mangled bodies were in my history.  He looked at my eyes and broke only to look at the gun. Seconds passed that seemed like hours to me. Then he spoke.

“You’re not the police,” he demanded more in a scold for daring to stop his robbery than in question or from fear.

“Face your God, child,” I warned in Victorian melodrama, breaking my own hard-learned survival law of never slowing to allow even motor actions, much less speech. (Years earlier when I had been riding in police cars at all hours of the night as a newspaper reporter, Sergeant Andy Strain had warned me, “never pull a gun without pulling the trigger; never point it and never take the time to talk –just shoot!”)

Yet I could see that he was stunned enough that I could continue and possibly not take his life. Besides, I had slowed now and perhaps 30 seconds had elapsed; maybe we were now on even terms. He was still alive and I had not used my advantage. 

“Your god forgives; I take revenge; CHOOSE,” I offered. I tried to echo-chamber those words as Lamont Cranston might have done before slouch-hatting himself to his The Shadow persona. It probably sounded more insane than threatening, but in either case it served the purpose. (At least I didn’t mock-laugh “who knows what evil lurks in the heart of men”.)

He backed away, slowly, but backing. His own weapon dropped from sight, back into its hidden pouch or pocket or wherever.

“Who the hell are you?” he asked. He backed some more, turned, and then he was gone into the same shadows that had borne him.

He had asked…”Who the hell are you?”

Me?

Hell, I am just a gambler.

 
 
  • §¨©ª
 
 

 

I am a roving gambler, I gamble all around
Whenever I meet with a deck of cards I lay my money down.
 
I've gambled down in Washington, I've gambled over in Spain
I'm goin' down to Georgia to gamble my last game.
 

―Traditional Folk Song

Written by casinogamingbusiness

July 2, 2010 at 9:22 pm

Posted in Casino, Uncategorized

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