Making Book In Jersey

What the Mob Can Teach Chris Christie About Gambling.
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Nice town you got here. Shame if something happened to it.

Photo by David Roth.

When the Borgata casino first opened in Atlantic City the poker room was the talk of the East Coast. It was huge; it was elegant and comfortable; it promised major action at all stakes. It was the closest thing to the Bellagio you’d find anywhere outside of Las Vegas. Those early days at the Borgata were exciting. The poker rooms of NYC, the Taj, Foxwoods, Turning Stone, and all the VFW halls up and down I-95 seemed to have emptied out. Every degenerate gambler on the East Coast was in Atlantic City that summer, and it often seemed like most of them were in the Borgata poker room.

The Borgata poker room had a giant digital board on the wall that displayed and updated the betting lines of the day’s games. I’m not sure what its stated purpose was; sports betting was still illegal in New Jersey, as it was in every state other than Nevada, Delaware, Oregon, and Montana. But lots of things that happen in Atlantic City aren’t technically legal, and sometimes these things are advertised, or implied, by a giant digital board. One night in 2005 the people in the poker game I was in started debating the line on the Lakers game that was about to tip off on the screens all over the poker room. One guy asked if anyone wanted to “get down on it at three and a half.” Soon everyone at the table was shouting out their bets to the guy. He waved over a guy in an Ed Hardy shirt who was hanging out in the high limit room near the “big game,” which on that night was $300-600 game. He whispered in Ed Hardy’s ear, the guy ran back to the big game, and we were all told that we had a bet.

After the Laker game wrapped up the losers and winners settled up with the guy in chips, chips that he handed over to the guy from the high-limit room, who then went to the window to cash in. It was incredible. All over the Borgata poker room there was a full-service sports book that let you bet in credit from the comfort of your chair. Las Vegas didn’t have shit on this outfit. In Vegas they actually expect you to give them the money before you had a bet!

***

Last month, the New Jersey non-binding referendum to legalize sports betting passed by a huge margin, paving the way for Chris Christie to sign House Bill S3113. The ballot measure had support from the racetracks and casinos that, in the past, had always opposed attempts to expand legal gambling. The governor had also flip-flopped: Christie was initially opposed the measure but has pledged his full support since the vote. The state now has to argue in court that the Federal Government’s ban on sports betting is unconstitutional. Signs point to this being a difficult, though not impossible, hurdle to clear. If this happens, casinos and racetracks will be allowed to process bets on sporting events.

The supporters of the bill tout the tax on gambling earnings as an important new revenue stream, throwing around a $200 million projection of expected wagers. The tax on gambling earnings in NJ is 8%, which is higher than Nevada’s 6.4%, but is only applicable to the amount that casinos take in after winners and losers are settled up with. That amount is typically around 10%, leaving the state around $16 million a year. That’s not going to make a dent in the $10.5 billion deficit projected for 2012.

Studies have put the yearly amount that Americans gamble on sports anywhere from $80 to $380 billion, the vast majority of it bet illegally, either online or with local bookmakers. Jersey seemingly “missed a bet” and left too much money on the table. At Governor Christie’s suggestion, the supporters of the referendum removed language that would have made it possible for New Jersey residents to place legal sports bets online and with their smartphones, thus dramatically increasing the amount of money bet on sports in New Jersey.

The thinking behind this modification has been around ever since online gambling took off. In theory, if bettors had to go to a casino or track to bet it would bring more money in to those businesses and help the overall gaming industry in the state. This isn’t a new argument, and it is one that has been disproven time and time again. Las Vegas, which used to oppose efforts to legalize gambling in other states, today sees it as a way to increase their customer base. The gaming industry originally opposed online poker as a threat. Now companies like Harrah’s are actively lobbying to overturn the UIGEA. Maybe they’ve noticed that ever since UIGEA made it almost impossible for Americans to play poker on the internet, their poker rooms have seen attendance drop, instead of increase as it did in the early part of the last decade when online poker took off.

***

I’ve made my share of wagers through the windows of the legitimate sportsbooks in Vegas. Often these bets are made when I’m with groups of friends watching a game, and rarely are they of any significance or consequence.  I remember once scrawling about $500 worth of dumb NBA prop bets like, “Will Kobe score more points than Rasheed?” on a piece of scrap paper, going up to the window to place the bets, then returning to my seat only to realize two things: most of my prop bets cancelled each other out, and the scrap paper I wrote them on was one of those “When the Fun Stops” gambling addiction pamphlets. I figured it was a sign from God that I should stick to the straight wagers.

A year later I started betting with a friend’s bookie. He was using accounts on internet sportsbooks to lay off his action, like an offshore “wire room.” A lot of mob families were doing this with their wire rooms—moving them to Costa Rica and getting licenses to operate as legitimate offshore books. Their runners continued to process bets with their customers in the U.S. just as they always had, then used the online accounts to register the wagers. It’s no surprise that the mob figured out the value of online gambling to their business well in advance of the government or the gaming industry. After all, it was organized crime that created most of the ways that Americans now legally gamble, from lottery tickets to resort casinos on the Las Vegas strip.

My last bet with my bookie was a few years ago on an Oscar De La Hoya fight. I think it was around $300 and I’m certain that I lost. I never settled up and when I moved I “forgot” to give him my new phone number. This and the threat of prison are the risks the rank-and-file bookmakers have to take to get a taste of the millions of dollars in less-than-legal vigorish out there. Most bookies today, connected guys and otherwise, don’t resort to violence when collecting debts. For one thing, they know that cutting a gambler off from action is a much more effective incentive than violence. For another thing, they understand that, as Bat Masterson once said, “dead men don’t pay debts.” The problem for bookies is that deadbeats don’t either.

***

The Borgata’s unofficial sportsbook wasn’t using offshore sportsbooks to place their bets, but they were using “pay per head” websites. These sites act as bookie account management software, processing and tracking bets without handling any money. All of the cash changed hands in the poker room, but customers had plenty of ways to get a bet down, including the internet. The ring was taken down in 2007 by a multi-agency sting dubbed Operation High Roller. Dozens of people were arrested for crimes such as racketeering, money laundering and, without irony, “promotion of gambling” for running a betting operation inside a casino. It turned out that the top guys were connected to the Philly mob. The New Jersey Attorney General claimed the group did over $60 million in business between 2005 and 2007. They kept hundreds of thousands in casino chips in a safety deposit box in the poker room cashier’s cage and washed the money by having runners cash chips out through the windows. They supposedly even employed dealers and floor supervisors.

The ring extended credit to their customers at a high cost: a practically unheard of 50 percent interest a week. Stories of guys going deep in to debt on the juice alone were a big part of the government’s case against the outfit. Yet stories about violence against debtors, the kind of thing you see in movies, were conspicuously absent. Rather than taking the bookmakers down on charges of assault or violence, the state was invoking New Jersey’s progressive usury laws, the same laws that protect consumers from predatory lenders and payday loan scams. What could have been a model for how the state of New Jersey could run a successful bookmaking enterprise ended up being brought down (at least in part) by one unforgivable sin—the mob gouged their customers worse than Wall Street could ever dream.

Online books didn’t protect the mob; instead, it made it easier for them to collect, process, and lay off bets. Likewise, the ease of legally betting on a smartphone or computer is far more likely to lead someone who otherwise wouldn’t make a bet at all to do so. The Borgata may take legal bets through their windows, but first they have to get customers in the door. Gambling can be a habit, an indulgence, or an impulse. New Jersey wants to cut out the third and arguably most lucrative option, which is certainly the one that requires the least work.

Those of us who are willing to make a sports bet at the Borgata have never had any problem doing so before, but we were already there. The more access Americans have to gambling—no matter how they think about their betting—the more Americans will gamble. The mob has always understood this. Until the government and the gaming industry figure out how to make it as easy for honest squares to bet on games as it is for them to buy a lottery ticket, mobsters in Ed Hardy shirts and deadbeats like me will remain the largest swells.


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