Book Review: The Last Trials of Clarence Darrow

Donald McRae. The Last Trials of Clarence Darrow. New York: William Morrow, 2009. 422 pages.

Clarence Darrow was one of the most polarizing figures of the early 20th century. He was at the forefront of several of the era’s most widely publicized trials, including the McNamara brothers’ 1912 trial for allegedly bombing the LA Times building, the 1924 defense of notorious Chicago thrill killers Leopold and Loeb, Tennessee’s famous 1925 “Scopes Monkey Trial,” and the 1925-6 Detroit trials of Ossian Sweet and others, black men accused of killing a white man in defense of Sweet’s home.

In this book, McRae looks at the last three of those trials, with a new spin: he brings in Mary Field Parton, Darrow’s lover. Parton and Darrow had an affair from 1908-1912 and rekindled it, though Parton was happily married.

McRae portrays Darrow as an eloquent, complicated warrior for justice, and makes good use of existing accounts of his career and personality. We see a man devastated by his 1912 trials for alleged jury-tampering begin to rebuild his reputation with the Leopold and Loeb case. The two men had already confessed to murdering a 14-year-old boy as an experiment, and their conviction and execution was widely considered a done deal. Yet Darrow, through ingenious legal footwork and emotive argumentation, was able to spare them the electric chair.

Here lies one of the unspoken contrasts of the book. Darrow is constantly lauded by his admiring contemporaries and the author as a brilliantly logical lawyer. Yet most of his triumphs came as a result of his openly emotional rhetoric and oratory. Several times in the book, Darrow ends an hours-long summation in wiping away tears, along with members of the jury and even the judge. It’s just one of the complexities of Darrow that is hinted at here.

It’s an unvarnished, though largely uncritical portrait, of one of the major legal and political figures of the period, and a introduction into that time.

Cocaine and free gambling in Florida

Following up on yesterday’s post about Nevada regulation, here’s a story that demonstrates the need for strict internal controls in Florida, from the Miami New Times:

For some employees, Gulfstream Park was a hell of a place to work, full of cocaine and free gambling. When the scheme was finally discovered in 2007, hundreds of thousands of dollars had been stolen from the casino and taxpayers, and now the “family-friendly” racetrack is left with a potential public relations nightmare.

A state investigation is just about finished, and it paints an ugly portrait of Gulfstream. According to investigators, the parks employees and their friend, a cocaine-slinging ex-con once convicted of murder, ripped off nearly $289,324 in slot winnings. The Florida Department of Law Enforcement determined the Hallandale Beach casino now owes $144,662 in taxes on that ill-begotten money.

The ring of employees, which included highly placed supervisors, clearly acted in rogue fashion. The investigation also revealed that Gulfstreams sloppy management might have allowed the crime to occur. One example: Auditing of the casinos computer system was turned off, presumably by ring members, and nobody noticed.

Gulfstream executives were shielded from investigators by the parks politically connected attorney, Marc Dunbar, and the casino was slow in producing crucial documents.

via Miami News – Cocaine and Free Gambling at Gulfstream Park – page 1.

It’s a pretty sordid tale, but it shows just what can happen without proper oversight.

Prive investigation and gaming regulation

There’s a great article by Liz Benston in the LV Sun today about the investigation that ultimately deprived a nightclub of its license:

Managing a Las Vegas nightclub requires the deft and daring skill of operating a party environment that almost crosses the line into illegal activity. Anything less would be considered too tame to generate a buzz.

Planet Hollywood knew its tenant, the Prive nightclub, was crossing the line but didn’t stop it, and gaming regulators pounced.

Last week Planet Hollywood agreed to pay a $500,000 fine to the Gaming Control Board after acknowledging it knew of illegal and illicit activities occurring at the club, which operates on the mezzanine level above the casino. On Thursday the county denied the club a permanent liquor license, forcing its closure at midnight Tuesday, when its temporary liquor license expired. The club opened less than two years ago.

As a result of the unprecedented enforcement action against Planet Hollywood for allowing a nightclub to run wild, contracts between hotels and their nightclubs are now being rewritten to give the hotels greater authority to lay down the law with nightclub managers.

via Is the party over for Prive? – Las Vegas Sun.

If you haven’t already, I encourage you to click over and read the whole thing.

The goings-on at Prive bring up a deeper issue that I alluded to in a story about Randall Sayre’s 7/21 Industry Letter (pdf). Here’s most of the letter:

Recently there has been a great deal of attention focused on nightclub operations affiliated with Nevada licensees. Clearly, this is an important issue which, if
left unattended, can lead to serious regulatory ramifications. In addition to nightclub operations, there are a number of other areas where
regulatory concerns have surfaced. Either through lack of knowledge or apathy, licensees are creating regulatory challenges in areas requiring corrective action. Following are just a few examples of these areas of interest:
• The conduct of promotions;
• Approval and conduct of tournaments and charitable events;
• Race and Sports Book Operations;
• Intellectual property theft; and
• Questionable or misleading advertising
The vast majority of this State’s licensees attempt to “get it right” and any indiscretions are typically addressed in a non-disciplinary fashion with the cooperation
of the licensee. The Board recognizes these are hard economic times and licensees are facing increased competitive pressures. This does not mean, however, the Board
can allow a reduction in the regulatory standards governing licensees’ operations. In order to reduce disciplinary actions and foster open communication between
the Board and gaming licensees, the Board is proposing informal seminars covering our collective areas of concern. These seminars would allow the Board to identify some
common pitfalls frequently seen and provide an opportunity for the industry to voice their challenges and concerns. The process will also provide any needed clarification of
governing statutes and regulations.
This would be an operator’s workshop, not a formal seminar on law. The appropriate audience would be mid-level supervisors and program managers. It would
be property individuals that are responsible for following and enforcing policy and legal/regulatory requirements.

I hope that Sayre is successful in getting the casinos to send their managers to these workshops. This is the kind of program that they should be thankful for. Here’s why:
Imagine a homeowner throwing a party. During the course of the night, things get a little loud. The police are called. Should they break down the doors and immediately rest everyone for disturbing the peace, or knock on the door, ask to homeowner to keep it down, and see what happens?

The first option preserves public order and minimizes the burden on law enforcement–imagine if they had to arrest, transport and book everyone in the house, instead of policing the rest of their jurisdiction. Of course, if things get loud again and noise complaints continue, they would have to take “corrective action,” but usually, a little reminder of neighborly courtesy is enough.

This is essentially Sayre’s approach. Some parts of the regulations casinos operate under–the Minimum Internal Control Standards–are completely unambiguous. You’re either in compliance with them, or not. Others are more nebulous. Take, for example, NRS 463.0129, the backbone of gaming regulation in Nevada:

NRS 463.0129 Public policy of state concerning gaming; license or approval revocable privilege.

1. The Legislature hereby finds, and declares to be the public policy of this state, that:

(a) The gaming industry is vitally important to the economy of the State and the general welfare of the inhabitants.

(b) The continued growth and success of gaming is dependent upon public confidence and trust that licensed gaming and the manufacture, sale and distribution of gaming devices and associated equipment are conducted honestly and competitively, that establishments which hold restricted and nonrestricted licenses where gaming is conducted and where gambling devices are operated do not unduly impact the quality of life enjoyed by residents of the surrounding neighborhoods, that the rights of the creditors of licensees are protected and that gaming is free from criminal and corruptive elements.

(c) Public confidence and trust can only be maintained by strict regulation of all persons, locations, practices, associations and activities related to the operation of licensed gaming establishments, the manufacture, sale or distribution of gaming devices and associated equipment and the operation of inter-casino linked systems.

(d) All establishments where gaming is conducted and where gaming devices are operated, and manufacturers, sellers and distributors of certain gaming devices and equipment, and operators of inter-casino linked systems must therefore be licensed, controlled and assisted to protect the public health, safety, morals, good order and general welfare of the inhabitants of the State, to foster the stability and success of gaming and to preserve the competitive economy and policies of free competition of the State of Nevada.

(e) To ensure that gaming is conducted honestly, competitively and free of criminal and corruptive elements, all gaming establishments in this state must remain open to the general public and the access of the general public to gaming activities must not be restricted in any manner except as provided by the Legislature.

The key here is the requirement that licensees “protect the public health, safety, morals, good order and general welfare of the inhabitants of the State, to foster the stability and success of gaming and to preserve the competitive economy and policies of free competition of the State of Nevada.” Technically, a casino could have its license revoked for a kitchen worker forgetting to wash his hands after using the bathroom–that is, after all, endangering the public health. Should that happen? No, because no one would be willing to build a multi-billion casino if their license rested on such a slender thread.

I’m aware that there is some disconnect–some might call it hypocrisy or at least confusion–in the idea of casinos as watchdogs of “morals” when the bulk of promotion for Las Vegas in the past few years has been geared towards proving that the city is a place without morality. But it’s clear that, in the minds of the industry and its regulators at least, that there is immorality and then there is immorality. Gambling more than you should is OK; cheating on your spouse with a consenting adult is OK; engaging in public sex or, if you a prostitute, soliciting clients in casinos is not. I’m not saying that drawing the line between these things is logical, or even rational; I’m just saying that it’s there, and everyone in the industry knows it.

A lot of things that Sayre makes reference to blur that line between permissible and impremissible immorality. The letter is the Control Board’s offer to work with the industry to clarify exactly where the line is, to explain what will put licensees in clear violation of NRS 463.0129. With this letter, the GCB is saying that, regardless of what’s been going on until now, here’s how things are going to run from now on. They’re doing this without staging intrusive raids or indiscriminately levying fines for things in this gray area.

If the operators don’t take the Board up on its offer, they will be out of excuses if they are tabbed for “corrective action.” They have an out–”I didn’t know that was a violation”–and if they don’t take it, they’ll only have themselves to blame.

NBA and Delaware

Interesting editorial piece about the hypocrisy of the major US sports leagues when it comes to gambling from the KC Star:

Late last week, the four major professional sports leagues NBA, MLB, NFL and the NHL, along with the NCAA, filed a complaint against the state of Delaware in federal court in Wilmington, seeking to stop the state from offering single-game betting on pro and college games.

The leagues and the NCAA assert that the state's recently-announced decision to offer single-game betting as part of the 2009 Delaware Sports Lottery violates federal law.

To the rest of the world, Delaware is known as one of the 13 original states to participate in the American Revolution and the first to ratify the Constitution of the United States. To those of us who live within driving distance, it's the home of tax-free shopping.

In corporate America, despite its diminutive size, the state is a true heavyweight, loved for its friendly laws designed to lure big business. In fact, if you look closely you will often see the term “A Delaware Corporation” next to the names of many large companies. Over 50 percent of US publicly traded corporations, and 60 percent of the Fortune 500 companies, are incorporated in Delaware.

To be blunt, most major corporations love Delaware and its tax policy, save for David Stern's monopoly and his compatriots, who have always remained more than hypocritical on the betting issue.

The daily point spreads you see in your local newspaper are an obvious deference to games of chance, but the NBA and its cohorts have always had plausible deniability in that aspect since the spreads are compiled by various Las Vegas casinos and sportsbooks, not the leagues themselves.

Of course, daily press releases announcing injuries are clearly designed to even the playing field for the gamblers who fuel the popularity of all the various sports.

via Gambling is NBA’s latest hypocrisy – Kansas City Star.

This is a point that I’ve made before. If the leagues really wanted to slow down action on their games, they could do a few easy things, like discontinuing pre-game injury reports or even denying press credentials to media outlets that publish point spreads.

It’s also strange that many casinos are high-profile advertisers in stadiums and arenas in the US and Canada, but the leagues that play in those arenas insist that legal sports betting in those casinos would ruin the integrity of the sport. The numerous point-shaving scandals of the past sixty years have all been connected to illegal gambling; many of them happened before Las Vegas had a sizable sports betting industry.

Professional and amateur leagues in other countries seem to be doing a better job of dealing with sports betting.

AC invaded

Here’s something to remind us that an oceanfront view can be great, but an oceanfront smell isn’t always the best. From the AC Press:

Local beach patrols reported spotting mussels along area beaches Sunday, but so far there have been no problems.

Atlantic City Beach Patrol Chief Rod Aluise said there were some mussels on the beach by Albany Avenue near Ventnor, though it was not a big problem.

The problem in the city, Brigantine and other beachfront communities Saturday was clam worms, also known as jelly worms or bugs.

Aluise said the clam worms are harmless, but swimmers and beachgoers are bothered by them because of the “icky factor.”

The clam worm problem only happened Saturday.

Margate Beach Patrol Lt. Joe Cincotta said a lot of mussels, about a foot deep, washed up by Washington Avenue, and to a smaller extent on Monroe and Quincy avenues.

“It's pretty heavy, the heaviest we've seen in a few years,” said Cincotta, adding that it smells, but there have been no complaints.

Ventnor Beach Patrol Lt. William Ferry said the mussels were around New Haven Avenue, and they haven't gotten any complaints about the smell. Ferry said they got clam worms on Saturday, too.

via Mussels invade area beaches – pressofAtlanticCity.com : Breaking News.

I figured this article would be a fun break from the usual doom and gloom around here because it’s got such a small-town charm.

Plus I used to work on the beach in Ventnor, so a few years ago I would have been one of the guys cleaning up those mussels at Newport Ave (you’ve got to click through and see the photo).

Never. Recession. Proof.

Here’s more evidence that Las Vegas never was recession-proof. This is taken from Parry Thomas’ biography, Quiet Kingmaker. As the most important banker to the gaming industry from 1955 to the 1980s, he knows what he’s talking about:

In my first twelve years here in Nevada [1955-1967] we went through at least three depressions locally in Las Vegas. Things got really tough and it was very hard to keep some of these places going…there were only two hotels on the Strip by the mid-1960s that didn’t have to go through some financial restructuring, and those were the Desert Inn and the Sands.
from Jack Sheehan, Quiet Kingmaker, page 161

The idea that Las Vegas is recession-proof is a myth that people started selling in the mid-1970s, just as corporate investment was starting. While the rest of the US was in bad shape, gaming revenues kept on rising. So everyone figured, “Wow, casinos are recession-proof!” It sounds really good when you’re making a pitch to investors, I guess, so it keeps cropping up, even though people in the industry have been admitting that it’s not recession-proof since the late 1970s.

I’m not even convinced the industry was recession-proof in the early 1970s. Part of the reason that revenues were rising, I suspect, is that skimming was slowing down. For all we know, Las Vegas casinos actually made less in the early 1970s, but their reported revenues just kept climbing. It’s frustrating that this can never be proven, since evidence of the skim is, by its very nature, non-existent.

Claiming that the events of the past 18 months have, for the first time, made people realize that Las Vegas isn’t recession-proof is like saying that, before Columbus, everyone thought the world was flat. Some people did, but those who cared to study the problem already knew the world was round, long before Columbus sailed. The evidence has been there, if we had cared to look.

Book Review: Quiet Kingmaker of Las Vegas

Jack Sheehan. Quiet Kingmaker of Las Vegas: E. Parry Thomas. Las Vegas: Stephens Press, 2009. 346 pages.

Wow. That was my reaction to finding out that a biography of Parry Thomas was coming out. Thomas, the man who it said said “flipped the switch that turned on the lights in Las Vegas,” is easily one of the most important figures in the city’s first hundred years. Thomas was the banker to the casino industry during its most formative period–the 1950s to 1980s–and one of the guiding forces in the city’s philanthropy.

Let’s try to imagine Las Vegas without Parry Thomas. From the mid-1950s, no banks lend money to casinos, so they can’t grow any bigger than two or three hundred rooms. Mainstream financiers aren’t interested in investing in such dodgy joints, so its possible that, in the 1960s, there’s no influx of outside capital into the business. Without Thomas’ intervention, it’s possible that Howard Hughes doesn’t choose to stay in Nevada after Moe Dalitz tries to evict him from the Desert Inn in December 1966. Steve Wynn still comes to Las Vegas in 1967 at the Frontier, but without Thomas’ encouragement it’s entirely possible that he and Elaine decide that they’re going to return to the East Coast and try their luck in another business. At the very least, there’s no Roger Thomas to help design Wynn’s resorts (Roger is Parry’s son). In the late 1960s, there’s no one to champion the corporate gambling acts, or to persuade Bill Harrah to drop his opposition to them, so you don’t get publicly-traded companies owning casinos. UNLV is likely either crammed into 55 acres on Maryland Parkway (instead of the 400 it currently operates) or divided into several campuses throughout the valley.

There’s still a city there, and it probably has a casino industry, but it’s going to look much different, and probably not for the better. That’s the impact that Thomas had.

Onto the book itself: it’s not a biography in the usual sense, but rather a combination autobiography and oral history. Basically, Thomas talks about his life, and friends, family members, and business associates chime in. Sheehan, as an author, yields the spotlight to Thomas and the others. It’s hard to imagine that there was a better way to do this book. Thomas, like Steve Wynn, is a master storyteller, with a keen recall and an eye for detail that will gratify the reader.

There is introductory material about Thomas’ youth and young adulthood in Utah, and closing material on Thomas’ family life, but most of this book is a personal history of Las Vegas 1955-1995 or so, as told by Thomas with others adding their perspective when appropriate. As such, it might be one of the most important books about Las Vegas history that you’ll ever read. Thomas sets the record straight on many fronts and is candid about his battles with the IRS and his dealings with alleged organized crime figures.

Without Thomas, Las Vegas as we know it would not exist. It’s fortunate that he was persuaded to share the story of his life and career, both so that his contributions are not forgotten and so that students of history have a better idea of what really went on in Las Vegas as it grew into prominence.

Casino fetish

I saw this back on Sunday in the LVRJ and thought I’d share it:

The Vegas Club has introduced a new low-limit “Fetish Pit” beginning at 7 p.m. every Thursday through Saturday. Dealers are dressed as “naughty nurses,” “sexy school girls,” “risqué female cops” or “leather-clad biker chicks” while pole dancers perform on a raised platform.

via PLAYER’S EDGE: M Resort offers free slot tournaments; Orleans has Christmas in July – Neon – ReviewJournal.com.

Sounds fun, doesn’t it? As fetishes go, those might be the ones most in keeping with the “Sin City” image and the Nevada Gaming Control Board’s ideas of what should and shouldn’t go on inside a licensed casino. I’m surprised they let the “sexy school girl” thing go, what with pedophilia not exactly being the sort of thing that tends to promote a law-abiding image. But since the age of consent in Nevada is 16, I guess they could be theoretically be older high school students. Still, it’s creepy.

Volatility in practice

Interesting story on the M resort a few days ago in the LV Sun. My eyes lit up when I saw this bit, because it answered a crucial question: what’s been going on with the Boulder Strip’s roulette hold percentage since March?

Marnell says he doesn’t shy away from volatility because he knows the casino will prevail in the long run. At the M, a single player’s multi-million-dollar win at roulette has been offset by millions lost at blackjack and craps in recent months, Marnell says.

via M Resort’s trial by fire – Las Vegas Sun.

In 2008, the annual average for roulette win percentage on the Boulder Strip was 21.21%. The statewide average was 20.13%, which is in line with previous years. Across the various reporting areas, roulette hold percentage tends to bounce between 17 and 22%.

In February 2009, with 34 locations reporting, the Boulder Strip casinos had a combined hold percentage of 20.85. Again, that’s well within the normal parameters. Together, the casinos lumped into the Boulder Strip reporting area won about $431,000 at their 24 roulette tables.

But in March, with 27 tables in 35 locations (that’s the M opening), Boulder Strip roulette had a mind-boggling win percentage of -63.19%. That’s right–a beyond-double-digit negative win percentage. Instead of winning about $400,000, Boulder Strip roulette tables lost nearly $1.9 million. If we assume that the rest of the area won its usual amount, that means that Marnell’s casino had a player win about $2.5 million in roulette in a single month. How is this possible? High bets, with lots of volatility.

But what about Marnell’s claim that the casino made up for the roulette loss with better-than-expected play at craps and BJ? We can take his word for it, or we can see if the numbers back him up.

The opening of the M bumped the number of blackjack tables from 169 to 217, an approximately 28% increase. Year-to-year, BJ win nearly doubled, from $2.92 million to $4.795 million. Month to month, with a 28% increase in tables, the win increased by about 80%, with a slightly lower win percentage. Everything else being equal, it seems likely that someone had a very bad month playing blackjack somewhere on the Boulder Strip. It makes sense that this high-end play went down at the M.

Craps, on the other hand, saw a modest bump in overall win, February to March (5%), with a 21% or so drop in win percentage (from 17.17% to 13.60%). This was a bit higher than the state’s average for the month (13.23%), which lends credence to the assumption that someone lost heavily, though not nearly as badly as in February.

Since March, the numbers for the Boulder Strip have bounced around quite a bit. In April, the roulette tables had a 29.52 win percentage, indicating heavy losses outside of the usual range, while craps tables lost $271,000, for a negative win percentage of about 2.6%. In May, the win percentage on craps had soared back up to nearly 30%, with roulette tables again falling into the red: they lost more than a million dollars in that month, for a win percentage of about -21%.

If this is all attributable to the M (and word on the street backs up Marnell’s claims of heavy action there), then it confirms that this is the “sky’s the limit” Horseshoe of Benny Binion’s day, redux. Of course, Benny didn’t pay so much attention to interior design, but these are different times. At the high end, at least, Marnell is running an honest-to-goodness gambling joint.

With his commitment to volatile high-end play, Marnell is at odds with the mentality that’s sought profit certainty. In the past 25 years, slots, which are much less volatile, have pushed out tables as the dominant piece of the gambling puzzle for most casinos. In the past 15 years, non-gaming parts of the resort, which are less susceptible to nightly swings, have outpaced the growth of gambling revenues.

It remains to be seen whether Marnell’s let the chips fall where they may philosophy catches on. I don’t think it will become the industry standard, simply because too many people on the admin and finance sides will think that this is a lousy business model. They want good, solid cash flow that makes shareholders happy. On the whole, they’d rather see $200/night rooms filled to 94% occupancy with less action on the casino floor.

I have a pretty vivid mental image that I’m going to share. It won’t make much sense if you haven’t seen the new Star Trek movie, but bear with me. Jim Kirk and Leonard McCoy have this exchange:

McCoy: Space is disease and danger wrapped in darkness and silence.
Kirk: Well, I hate to break this to you, but Starfleet operates in space.

I’m imagining something like that an a casino executive committee meeting:

CFO: Gambling is disorder and volatility wrapped in panic and fear.
Casino ops: Well, I hate to break this to you, but casinos are in the gambling business.

That may be something else that was funnier in my head than on your computer screen. If you imagine Karl Urban as the CFO, it sounds a lot better.

Eight hundred words later, I’ve said most of what I wanted to say about casino volatility…for now. Seriously, the M will make a great case study for someone’s thesis.

The future

Inspired by Gerald Davis’ Managed by the Markets, I wrote an LVBP column about similarities between gaming companies and other ones. My bold suggestion is that the gaming industry is more like than unalike others:

As big as the companies that run Las Vegas casinos seem in this town, they're really on the small side compared with the corporate giants that dominate major national industries — the ones pundits say are “too big to fail” just as poor management and declining demand push them to the brink of failure.

Casino companies tend to follow the pack, doing what the bigger companies do. So to get a handle on what's coming to the Strip, we should look at the trends that have been shaping corporations throughout the world.

The first is finance: Most of the companies running casinos today have taken on huge debt to finance new construction, acquisitions, or taking the venture private.

Being heavily leveraged isn't necessarily a smart business decision, but many companies have found themselves in similar situations. The reason? Relatively cheap money that banks were lending, plus a stockholder imperative to maximize short-term profits and thus drive the stock price higher. Thus, rapid expansion and debt accumulation became a logical, if not always sensible, strategy.

via Las Vegas Business Press :: David G. Schwartz : For clues on gaming’s corporate future, follow other industries.

You can click through and read the whole thing.

To me, the corporate/financial aspects are the least interesting part of gambling (I’d rank it third, after operations/CCTV and marketing), but the general public seems far more interested in reading about this aspect of the business. Partially it’s because far more people are investors in gaming companies through stocks and bonds than are interested in the nuts and bolts of how casinos operate.

But there are, luckily, some folks who are fascinated by the operational side of things. I’m talking to a few of them at the Player Development Summit today, in a session I’m doing with Bill Zender on research and ethnic marketing.

On Tuesday, there’s a session called “21st Century Casino Marketing Tools That You Probably Aren’t Using Yet” I hope will tie into with Chuckmonster’s discussion of sponsored conversations.