|
|
|
|
|
Q: How many casinos at a time did you used to run?
|
Rosenthal: We had four properties: four casinos, three hotels that were under an umbrella of the corporation. Our command post was the Star Dust Hotel, Fremont Hotel and Casino, Hacienda, and the Marina.
|
|
|
Q: So you know a little something about how to run a casino.
|
Rosenthal: I've had a lot of experience.
|
|
|
Q: Do you gamble?
|
Rosenthal: Occasionally; not as much as I used to, but on occasion I might.
|
|
|
Q: Do you enjoy it?
|
Rosenthal: I enjoy the combination of the gamble and the sporting event,
Superbowl, NFL playoffs; that would be about it.
|
|
|
Q: Explain to me. What is it that is entertaining? What is fun about gambling?
|
Rosenthal: The only part that's fun about gambling is when you win. Other than that, people might say the challenge is interesting, and most people enjoy the challenge, but the name of the game is win.
From my experience, as far as being able to win in any gaming environment,
casino, race track, dog track, etc., 99.9% of the public, including myself, have
two chances: one is slim, the other is none and slim's out of town.
|
|
|
Q: So you don't think that winning is a very common thing?
|
Rosenthal: Winning is virtually impossible. If you want to speak about getting lucky, anybody can get lucky, but if you're attempting to sustain yourself over a period of time and take money out of a casino or a race track or a dog track, you're better off climbing Mt. Everest by yourself.
|
|
|
Q: You described the whole process of winning as the winner's actually borrowing money.
|
Rosenthal: Well, yes, you are in a sense. You can, as I said, get lucky, but it's just temporary; you're just borrowing or loaning the money. Eventually, if you continue the practice, you'll give that back plus.
|
|
|
Q: Even though they win, it's an illusion. Is that what you
mean?
|
Rosenthal: It's not an illusion at the beginning. What it does is give you a
misconception about reality, reality being eventually, you're going to give it
back; there is no two ways about it. There is no way, legally, to beat any form of gaming, gambling--take your choice of words--that I'm aware of. I've been gambling most of my adult [life] and even before that. I've been gambling since I was 17-years-old, and I've never known anybody, with the exception of maybe one or two people throughout my life time, who have been able to win on a consistent basis, and that's the word: consistency. Anybody can get lucky, but can you sustain yourself.
|
|
|
Q: Gambling is the number one entertainment for adults in this country now. Does that make sense to you?
|
Rosenthal: I don't agree with the premise or the concept that it's entertainment. I think gambling is probably the largest industry in the world, or nearly approaching it. I know of no industry in our country that can equal the amount of interest and volume and handle what legalizing gambling is doing throughout this country today. That would include General Motors, IBM--you name the corporation.
|
|
|
Q: If you were able to operate that table out there, one poker game all year round, how much money do you think you could make on just that one poker game?
|
Rosenthal: I can't count that high.
|
|
|
Q: Explain what you mean.
|
Rosenthal: The general public doesn't understand the strength of gambling,
gaming, whether it be a poker table, a slot machine, black jack or craps. It just
has such enormous potential, the number is sky high. Owning or having access to
the majority of the profits of the poker table could become astronomical over the
period of a year, 24 hours a day.
|
|
|
Q: Just one poker game?
|
Rosenthal: Just one.
|
|
|
Q: What does that say to you?
|
Rosenthal: It's the only industry that I'm aware of in the world where the
player really has virtually no chance, and the only industry in the world where
the [pre-]requisite need not be knowledge competency; the only pre-requisite is the
license. Again, you need not be a Rhodes scholar or rocket scientist to win on the right side [of] the counter--the right side of the counter being on the inside, and that's the key to success, and you have to admire the Wall Street and major corporations recognizing the potential, or the fact I should say rather than the potential of legalized gambling, and they recognize it, they bought the properties up, and they're just laughing all the way to the bank.
|
|
|
Q: What's changed to make it okay for Wall Street to get into gambling?
|
Rosenthal: Wall Street and the major corporations, ITT, Hilton, MGM, etc. have invested and it places an air of respectability. Gaming today is no different than going to the Metropolitan Opera. Twenty years ago, gaming was a no-no. The people in the industry, including those who worked in Nevada, were looked upon, somewhat, as less-than-ideal citizens. Today it's legal. You have the power and the influence of respectable major conglomerates, and that's the big difference today versus 20 or 30 years ago.
|
|
|
Q: Is gambling good for America?
|
Rosenthal: That's a very difficult question to answer. My answer would be somewhat ambiguous. I could say yes, and I could say no. It would depend on how it's structured: the taxation, what happens to the money. As I said, you're probably going to break everybody that seeks the entertainment part of it or challenges gambling. If you're foolish enough to challenge it--if you go to Las Vegas, Nevada with the idea that you're going to come home with more than you went in there with, you're going to get a very rude awakening, and if you continue to challenge it, you'll probably wind up in a shelter home. So I say that to you on one hand; on the other hand, if the industry were more balanced, tax-wise, if the state and the local and federal government played a bigger role and recognized the disproportionate taxation on that industry, recognizing the fact that, yes, free enterprise, still the public doesn't understand. The people that frequent the casinos throughout the country do not understand the power of the inside, the centaurs, meaning the one-arm bandits. They cannot be beat. The public is naive, but if there were better structured taxing, and if more money were put back into public use, federal, state use, I think gambling could be in the best interests of everyone.
|
|
|
Q: But right now?
|
Rosenthal: Disproportionate and very unfair.
|
|
|
Q: What is?
|
Rosenthal: When I say "unfair"--I guess a good example would be: there's a tax on liquor. In fact, in this state, in Florida, there's a surcharge which, in fact, means it's a deterrent. The state is telling you, "We prefer that you not buy, or consume, alcohol." In cigarettes, the tax is sky high. In the state of Washington, I believe the federal state tax is approximately 88 cents. In Florida, it's about 48 cents, and the governor wants to go to 58 cents, and I think he's reasonable in his evaluation. Why should gaming be privileged? What is the difference between legalized gambling and legalized alcohol? I don't see the distinction.
|
|
|
Q: You said to me in our first conversation, "Gambling will eventually break the country." Could you tell me what you mean by that.
|
Rosenthal: Yes. What I'm saying to you that gambling has potential and the reality, both, of breaking the entire country. Now, I'm not talking about pie in the sky or a flat earth; I'm talking about the real thing. Gambling today is within range of almost any citizen in this country, whether it be lottery, poker, Las Vegas, Nevada, Atlantic City--floating casinos, open-air casinos, dog tracks, you name it, it's there. Just about every state has it. The public enjoys it. The public continues to build the casinos, the multi-billion dollar casinos. That money is coming from the public. Eventually, if the public continues to engage, remains enthusiastic, keeps interested, eventually you have to break the country. There's only so much money out there and, again, the popularity of gambling today is equal to the circus, and people are being lured, legitimately, by magnificent marketing. I think gambling has learned a lot from Barnum & Bailey; a sucker is born every day, and I would agree with that premise. They're making it more lucrative; they're making it more accessible to all of us. I live in Florida. I can go to Nassau, Bahamas; I can go on a boat, if I'd like; I can go to an Indian reservation if I like. If that doesn't satisfy me, I can fly to somewhere else around the country and get full-scale gaming, and I can't win in any of them, and if someone out there can, I'd like them to contact me.
|
|
|
Q: It's never been this available, has it? This accessible to everyone.
|
Rosenthal: No. In years passed, it was very exclusive: Las Vegas, Nevada; Reno, Carson City. In my early days, I didn't realize the potential of the State of Nevada, specifically Las Vegas, Nevada. I was more into sports gambling until I got an exposure to Las Vegas, Nevada, and once I did, I eventually understood that you can't win, and I quickly understood why they were able to build these giant casinos--2,000 rooms; now we're up to about 6,000 rooms; 15 to 20 restaurants within a property. Today's modern-day casino has something for everyone, and there is no need to leave the casino.
|
|
|
Q: That's what they want.
|
Rosenthal: That's very good marketing and very good strategy, and I would agree with that; we attempt to do the same thing, but today they're more sophisticated. If you want Polynesian food--no matter what type of food you want or what type of entertainment, the State of Nevada will give it to you, with the intent to try to keep you within their property during your 3, 4, 5-day stay.
|
|
|
Q: What does gambling contribute to society?
|
Rosenthal: Not a heck of a lot, quite frankly, not that I'm aware of. It's the only industry that really gives you nothing back in return. Example: if I buy a Sony t.v. set, I get entertainment. If I buy a car of my choice, I have transportation. No matter what industry it might be, you get something in return. I don't know what gambling gives you in return other than a headache and a lot of potential danger. As I said to you, it's just a question of time. If you play fast, you can't last; if you play slow, you gotta go. I didn't coin that phrase, but I'm an advocate of it.
|
|
|
Q: But, I guess it boils down to then, you're saying that it takes money but leaves nothing in return.
|
Rosenthal: If we're referring to legalized gambling in the State of Nevada, which is where most people go to gamble full-scale, no, there is very little that goes back into society that's of any use. I think that it's too one-sided, and I think the enormous amount of money that the public is pouring in to legalized gambling, there is nothing going back, and you have a handful of people, and, again, free society, that's fine. But there's only a handful of people that are reaping the rewards of the millions and millions of people throughout the country, and in foreign countries, that make the contributions and pay for all these hotels and all the new innovations.
|
|
|
Q: So are they being greedy? Is that it?
|
Rosenthal: I'm not sure if it's a question of being greedy or a combination of greed and the fact that the government or the state is unaware of really what gambling is all about. If I were to go out to the race track with the idea and intent that I could possibly win, I'd be a fool. Nobody wins in any form of legitimate gambling, so I'm not sure if it's greed; I think it's a lack of understanding with the exception of the operators. I think our country just doesn't recognize that you get nothing back in return. Las Vegas, Nevada has the highest suicide rate in this nation, and that's to be expected: it's heart-break ridge. I'm not saying that gambling legalized is bad; I'm saying it's disproportionate, and it is not understood by the public or by the people that regulate gambling.
|
|
|
Q: Now, Frank Fahrenkopf, you know, who is the head of the American Gaming Association, he had Arthur Andersen do a big study, and he claims that gambling creates lots of jobs and it's good for the economy. You don't buy that?
|
Rosenthal: Well, no, I do buy one part of it: it does create many jobs; there's no question about it. That's a fact, and I think Mr. Fahrenkopf was accurate, but it goes beyond that. It also creates a lot of broken homes. It puts people on welfare. It makes them destitute. So that sentence ending by itself, creates jobs, is incomplete; it's out of context. Sure it creates jobs, but there's much more to it.
|
|
|
Q: Who are the winners, basically? Is it as simple as the casino operators are the winners, period?
|
Rosenthal: The major casino operators are the winners, period. The state and the local government get a ham sandwich, in my opinion.
|
|
|
Q: What should they get?
|
Rosenthal: How about filet mignon?
|
|
|
Q: You said before that if you put profits back into education or law-enforcement, or something like that, it's okay, but it's too one-sided.
|
Rosenthal: There has to be a cycle of return. Again, it might sound like I'm not for a free society, but capitalism--certainly I am; we're democratic. However, if gambling were to, or the gaming industry--if they were to put money back into, as you just mentioned, education, highways, school teachers, law enforcement, education, then I think gambling would certainly be healthier, but right now it's one-sided--very, very one-sided, and the only winners are the major operators, like an ITT, and nothing against ITT; I think they're extremely aggressive and very brilliant to be in it, but those are your only winners.
|
|
|
Q: So in the end, do you think gambling is not good for the economy, at least as it's currently structured.
|
Rosenthal: I don't think it's very good for the economy as is currently structured, but it could be balanced out better if there were an understanding at the higher level of those who really regulate gambling, but I think that's really--there are only a few people probably in the country that understand what the balance should be. Right now, I think, as I mentioned, it's too one-sided, but it could be regulated where everybody makes a profit and the public isn't fleeced and there is a return in society to help everyone: school teachers, education, law enforcement, doctors, lawyers, you name it.
|
|
|
Q: So the public's being fleeced now?
|
Rosenthal: The public's not getting what we call a square shot for their money. I don't believe they are, no.
|
|
|
Q: If Fortune 500 companies are coming in, with ITT, the Hiltons, the MGMs, why is it they don't fear that they are tarnishing their reputation, as they used to be for so long? I mean, Wall Street would never even lend money, but now they do. Why is it okay now?
|
Rosenthal: The name of the game is cash. That's the name of the game, bottom line, and as I mentioned to you earlier, the fact that those that are considered to be immaculate, reputation-wise, have ventured into the industry and invested. They bring that credibility to the industry, and then society is forced to accept it as being very clean, very legal, but again, they do not understand the adverse side of it.
|
|
|
Q: When you were a kid, how was gambling viewed?
|
Rosenthal: When I was a kid growing up in Chicago, if you walked around with a...card in your hand, you were subject to be arrested or harassed, at least, and you were certainly not very well thought of. On the other hand, if you want to go to Las Vegas, Nevada, you can do the same thing and be quite respectable. Today there is a greater degree of tolerance from both law enforcement and the public. I don't know of a newspaper in the country that doesn't, on a daily basis, not predict but print the odds in virtually every sporting event in this country. Now, the paper recognizes the public would like to know, and they're servicing their customers. I look at it every day, whether it's USA Today or my local paper. Every paper has what is the price in any event that there is.
|
|
|
Q: So what's changed from the time you were a kid to now?
|
Rosenthal: Society--the only thing that's changed is that the growth is enormous; it's probably uncontrollable. People enjoy gambling, whether it be your Super Bowl, the Kentucky Derby or a riverboat; they enjoy it. The public has recognized the fact that it is no longer sinister or illegal. I think television has created a tremendous amount of interest in gambling--tremendous. I think the media in general, whether it be your local networks, national networks. The word "gambling" is equal to that of Coca-Cola or southern fried chicken or any other popular word in this country, including McDonald's.
|
|
|
Q: Back to companies again, is it your feeling that the ITTs of the world understand the business? Do they need to know the business to make money?
|
Rosenthal: No. It's the only industry, to my knowledge, where you need not know anything--nothing; zero. You need no knowledge. We used to say back, years ago, as a book maker, you need a pad and a pencil, and that's true. And years ago, I learned the hard way. A good friend once told me--he said, "Frank, in the winter time the book makers fly to Miami, and the players eat snow balls," and I was that ate the snow balls, so my friend was right. That hasn't changed at all: the players eat the snow balls, the ITTs, the Hiltons, the MGMs--they bask in the sun and, again, they just bundle it up and bale it off, and it's just not going to stop. They recognize what I'm talking about, is that you can't win. The expertise factor is not even to be considered. Again, I know of no industry where you don't need technical knowledge. You need knowledge to build automobiles, to run a hospital, the difference being, probably, that someone that's more sophisticated, technically speaking, will get 16 ounces to the pound; the neophyte, or the amateur, will get less, but in the long run he will still capture enough; it's a question of what are you satisfied with.
|
|
|
Q: So even a fool can make money.
|
Rosenthal: I would go beyond it--even an idiot could.
|
|
|
Q: You know, if you make a bad car, people know. If you make a bad t.v., people know. If you run a sloppy casino, do people know?
|
Rosenthal: No. No, the public, in general, is very uneducated about percentages and what their chances are. To say they're at the mercy of the casino might be--well, I take that back. I think they are at the mercy. The casinos--there's some mystique to the casinos. Yes, today they offer you some of the finest shows in the world entertainment-wise--top entertainers, and they offer you free drinks, and occasionally, if you're a high roller, they might buy you a dinner, maybe, if their computer tells them to, but, again, they're giving away peanuts and popcorn, and they're receiving a tremendous amount of cash flow. It's a big sponge or blotter; I recognized that when I first went to Las Vegas, that you can make mistake upon mistake--just take that sponge, or blotter, and wipe it up. Again, I know of no other industry that you can do that with without going broke.
|
|
|
Q: You mean make mistakes.
|
Rosenthal: Correct.
|
|
|
Q: Should governments be in the gambling business, do you think?
|
Rosenthal: I'm not sure if I'm qualified to answer that question. I think if the increase, the boom in gaming, gambling continues, I think the government may be forced to regulate; however, in order to regulate, you must have an expertise; you must have knowledge of the product. Whether or not the government today understands the product and the potential, I'm not sure if they do or not. The operators certainly do, whether government does or not; I'm not sure about that. I guess an example would be the Indians, the Pequots in Connecticut--Foxwood--the largest casino in the world. My understanding is that the state of Connecticut allowed Native Americans to open up a casino, and they received 25% of the slot win. The slot win, by recollection, in the year 1996, was approximately $600 million--over half a billion dollars, so the state of Connecticut is receiving in excess of $100 million. Maybe they should be receiving more. Maybe if they had a chance to evaluate it or understand the strength--the enormous strength-maybe they would have done things differently.
|
|
|
Q: Is there a connection between the heavy promotion of state lotteries and the explosive growth of gambling in the last few years?
|
Rosenthal: Why, certainly.
|
|
|
Q: Tell me how.
|
Rosenthal: Well, the more accessible, whether it be newspaper, television--right here in Florida, we have a lottery, like most states do, and as you make that available to the average person--I just saw on t.v. a few days ago a commercial with somebody waving hundreds of dollars of bills and saying that you could become a millionaire, but when? Who? What chance do you really have? The fact that the state is in the business of the lottery, and there's nothing wrong with it, but they are, in fact, promoting gambling. Well, why not go all the way? Why not give the public a chance--at least a legitimate change to win? Why is it okay to go to a race track in the state of Florida? A dog track?...It doesn't make any sense to me, but yes, certainly the state is encouraging, the state is an advocate, and the state is creating the interest by advertising to the public: gamble; make a bet; you can win. You can be a millionaire.
|
|
|
Q: What message has it sent when the government encourages people to gamble?
|
Rosenthal: Well, to me it's very clear. The state is asking you, in a very discreet manner, to take some money and try and become a millionaire. I mean, 2 and 2 is 4 and A, B, C; there is no other possible conclusion that I can draw from it.
|
|
|
Q: Well, evaluate that. What are the chances?
|
Rosenthal: Well, the chances are virtually none. What I think the state is doing inadvertently, possibly, is misrepresenting in an attempt to try to extract the game's revenue for the state, and their intentions are fine, but the public doesn't understand the problematic chance of becoming a "multi-millionaire." It isn't there. It just isn't there.
|
|
|
Q: How do the odds on the lottery stack up against table games or the slots or more of the gambling that you know?
|
Rosenthal: Well, I don't know any game of chance where you're going to win; however, there's a great distinction, a great disproportionate percentage as to what games you might have the potential to win, or last. Again, if you continue--if you're someone who enjoys gambling on a frequent basis, it makes no difference whether you play the lottery or 21; however, your chances of winning at 21 are about 100 to 1 or 1000 to 1 better than ever winning at Lotto. Your chances at winning at a race track are virtually non-existent, so there is a difference, percentage-wise, but regardless of what game it might be, the house always has the edge at all times.
|
|
|
Q: What you're saying is that when the house is the state, they're taking a very, very big edge.
|
Rosenthal: There's no question about that. Their answer would be, "Yes, but we are, and we are making money, and we're putting it back into public service." And, in fact, to a degree, I guess they are; it's a question of how much, and what price is it costing society, and in particular, that particular state and their constituents. How adverse is it? Is it taking the poor and making them poorer? Is it placing people in shelter homes? Is it causing havoc amongst families? Is it a break-down? Just how much of a problem is gambling?
|
|
|
Q: How much of a problem do you think gambling is?
|
Rosenthal: I think the answer to that question is subjective, and you would get a different answer from different people. If you talked to those operators in the state of Nevada, I think you'll get one answer, which would be, "Not much at all." If you talk to someone who is neutral, knowledgeable and honest, I think you'll get an entirely different answer.
|
|
|
Q: Well, give me the neutral response to whether or not gambling is, in the end, a good way of raising revenues.
|
Rosenthal: Quite frankly, I think that gambling--again, regulated properly: full disclosure, the public awareness--I think that gambling has the capacity, the potential probably the leading candidate for a balanced budget. That's just my honest [opinion], and I'm not trying to be humorous or--
|
|
|
Q: So we should have a federal lottery?
|
Rosenthal: Well, that would be interesting.
|
|
|
Q: Let's go back to the promotion again, though. I mean, the whole idea, if you're spending many of those millions that you're gathering to help schools, or whatever, you're spending many, many of those millions in promotion, advertising, print and broadcast. The more exposure you're giving it, the more you're encouraging the growth of gambling, no?
|
Rosenthal: No question about it. Just like cigarette ads or liquor ads or alcohol ads; there's certainly no question about it. You look at Budweiser or any of the breweries. They spend millions and millions of dollars, and the name of the game is advertising, and gambling is being advertised at a tremendous level, and I admire that. I think that's great marketing. They learned well, as I said, from Barnum & Bailey. The states have learned that the percentage of the hold, the win, is so great that they're asking the public, the citizens of this state or other states, to gamble. They're encouraging. It's on free t.v. sponsored by the state of Florida, or Illinois, or New York. So the state cannot say, on the one hand, we discourage gambling and on the other hand say we encourage it. It's somewhat hypocritical in my view.
|
|
|
Q: It's interesting because the woman at the state lottery in California was arguing with me about whether or not she was involved in gambling. She said, "No, no, no. We are not in gambling. We are in the entertainment business."
|
Rosenthal: That's the party line; that's the propaganda. I understand that lady without knowing her name. On the other hand, I would love to debate that woman, that lady I don't buy that at all.
|
|
|
Q: How do you explain the fact that the state offers the worse odds of all gambling. Like you said, nobody wins, but you can win a little bit more in casinos--a lot more.
|
Rosenthal: I think the answer to your question is the state is so under educated in gambling, per se, that they don't have a choice. They don't want to take any chances. It's like an expression I heard many years ago: "This particular person wouldn't bet that a big dog could beat the little dog if the little dog was muzzled." The state doesn't understand the numbers that are involved, the percentages, and they just want to gobble you up, and they are doing a very, very good job of it.
|
|
|
Q: So they're really taking the gambler?
|
Rosenthal: They're taking the gambler, and they're returning a portion of that money into education, into some useful projects, but they're not allowing enough winners. Again, it's disproportionate. In addition to being disproportionate, the public is unaware of what their chances really are.
|
|
|
Q: How would you describe their chances?
|
Rosenthal: Well, virtually non-existent, is my best answer.
|
|
|
Q: Talk about that big score of tally that seems to have taken over this country. I mean, ten years ago I don't think it was true, but nowadays, everybody says, "Oh, you can be a millionaire too." This guy just won $30 million in the lottery. Are you seeing that? Is that a change that you have observed? What do you think is driving it?
|
Rosenthal: Well, I think there are, in fact, winners on occasion, and I think the operators, certainly in Nevada, have taken the opportunity to seize upon the infrequent winner who walks over to a progressive slot machine and leaves that casino with $10-15 million; now that happens, but what the state of Nevada and the casino does not tell you is that before the progressive machine paid that particular winner $10-15 million, the machine earned $45 million and, yes, it is good advertisement to show someone from the state of Washington or Oregon--someone who earns a modest salary...
|
|
|
Q: I guess, when you started talking about that big score on the top of--wanting to make that big hit overnight, whatever happened to hard work and the "sweat of your brow" kind of stuff? Today, it seems like everybody is looking for a quick and easy score.
|
Rosenthal: I'm not sure if you're accurate. I'm not sure if they're looking for the quick score. I think it's a little bit of dream land with a combination of amusement, temptation, human imperfection, weakness; we all have it. The average person that goes to a casino, a race track--wherever they might go--really doesn't have an intention of making a big score. They're going there, maybe--well, everyone's trying to win, and occasionally you might get a winner, but the public, being so uneducated, doesn't realize how vulnerable they really are to, what we call, the heat, the heat being you start out very lightly, very small, very conservatively, and then you lose your control, and aside from the percentages being built in for the casino or the open or the casino, meaning the racetrack, it's mismanagement. Most people are willing to leave the race track with a small profit; however, they will also chase--what we call chase--their money, and that's the intangible. That isn't built in, so it's money management, or a lack of it, that increases the huge win of the casino operator, the race track operator. They don't need the built-in percentage. Just the fact that public, 99.9% don't have total control of their thinking. They don't have an understanding for what they're up against.
|
|
|
Q: They're not playing smart?
|
Rosenthal: They don't know how to play smart; no one ever taught them, and even if they were taught, I know of no human being on this planet that can legitimately beat any game in the state of Nevada, or any other state, none.
|
|
|
Q: Let's talk about Vegas for awhile. What do you think Bugsy Segal would think of Vegas today?
|
Rosenthal: Probably think he was a genius. And I would be one that would certainly certify to the fact that he was.
|
|
|
Q: He would be wowed by it I would think. There were some of those billion dollar palaces or things he never even imagined.
|
Rosenthal: One thing he certainly had was foresight.
|
|
|
Q: Why is Vegas the fastest growing city in America?
|
Rosenthal: Because it is the only state within this country that offers you the whole package, as sophisticated as one can be. Atlantic City, while it has more excess population wise, are years behind the state of Nevada. The state of Nevada can lure you to that state with all the little perks and tricks that they offer you. RFB: room, food and beverage free. Complimentary airfares. Luxurious suites. Gourmet dinners.
|
|
|
Q: Are they being generous?
|
Rosenthal: No, they're being very practical and very, very wise. They're not being generous. My experience when I worked in Las Vegas, Nevada, I came close once to attempting to give all our food and beverage away for free because we had enough around us to get all that back plus. I never quite had the courage and time to make that type of a move but if I was there today, I would certainly be looser than the casinos are, that I'm aware of.
|
|
|
Q: So you think that would still work?
|
Rosenthal: I would bet my bottom dollar on it.
|
|
|
Q: That raises an interesting question. If that's the kind of economy a casino creates, how would I open a restaurant in your neighborhood if you have a casino giving away all the food, or a hotel if you're giving away all the rooms?
|
Rosenthal: You could open it up but you'd be in Chapter 11 very quickly.
|
|
|
Q: So, it distorts the economy in some way?
|
Rosenthal: Yes, certainly to a degree. To compete with a major casino in the state of Nevada is a very difficult challenge; however, we're talking about supply and demand. At least as of 1997 in February the demand, the interest in gambling, outweighs the supply factor. Until there is more of a balance, the situation will not change.
|
|
|
Q: Speaking about change, how has Vegas changed from the time you were there?
|
Rosenthal: Probably the biggest change is in the personal treatment of the player, the one on one. Las Vegas used to be a town where they treated you, the public, graciously as opposed to just being a target. That doesn't exist today. They're not willing to be as hospitable, they're not willing to offer you a free drink, a free dinner, so readily. I think the people that structure the different properties--whether it be Caesar's Palace or the MGM--I don't think they're willing to be as liberal as we were. We being the operators, going back into the '60s and '70s and early '80s.
|
|
|
Q: Are they just businessmen as opposed to impresarios, or whatever you want to call it?
|
Rosenthal: Again, I think it's a lack of understanding and lack of fear. Again, certainly I admire the accomplishments of ITT and the MGM and Hilton Hotels, but I do not believe that they understand even today how strong the game really is, therefore, they're not willing to be as liberal as we were. However, there are independent operators aside from the major conglomerates that still continue to offer the customers just about anything they need.
|
|
|
Q: You told me that Las Vegas will destroy--that they will find your Achilles heel. Tell me what you mean by that?
|
Rosenthal: Well I'm speaking from experience when I lived in the state and worked in the state. I was privileged to meet just about every type of being known to man, from presidents--President Reagan, President Ford--brilliant scholars, professors, and when you work in the industry, you work behind the counter and you watch their eyes and you watch their habits. You see someone with an extremely high IQ go down the tubes, you recognize that we all have an Achilles heel and I witnessed that on thousands of occasions.
|
|
|
Q: And something in the nature of the business is involved in identifying that and working on it, or what?
|
Rosenthal: Again, that particular person or persons do not have the knowledge and understanding that they're up against an impossible situation. They're trying to use their intelligence and experience as a great insurance broker in trying to apply it into a game that the game's got a lock on it. You cannot sit down for 24 hours at a crap table or a Baccarat game and hope to be successful. You can hope to get lucky but for how long.
|
|
|
Q: Who runs the City of Las Vegas? Who owns that town?
|
Rosenthal: Right now, I think it's your major corporations. I think they set the standard and I think they're getting bigger and bigger and who's to say how much further they can go, unless other states recognize and are willing to become less conservative, more liberal, and try to solve some of their economic problems. There are three states today, in my opinion, that can solve all of their problems if they were to incorporate casino gambling--not just race track gambling. I've never understood that. Why is it respectable to go out to a race track and gamble and not respectable to walk into a casino. But I'm referring to the state of California who's supplies about 60% of the winning and the earnings and cash flow of Nevada. It doesn't make any sense. That's one state. The state of New York, the state of Florida. If we have budget problems, if we have economic problems, if our teachers aren't making enough money, if we don't have enough law enforcement, give the public a chance to gamble. Not just restrict them to a high lite game, a race track, a dog track or a lottery. It's inconsistent, it's hypocritical.
|
|
|
Q: I'd like to ask you a two part question. Do you think California will likely approve casino gambling one day and if they do, what will happen in Nevada?
|
Rosenthal: The first part of the answer is it depending on the governor and his legislature. A conservative governor, absolutely not. But let's turn it around and say that a governor was a proponent of legalized gambling and decided that he wanted to incorporate within that state. Not just race tracks and poker parlors and dog tracks and harness tracks but casinos, regulated, well-run, honest casinos. They will become the richest state in the world within hours. And probably the state of Nevada could fold up and start selling cactus and have a big bowling alley out there.
|
|
|
Q: They use the name of the state building, this California you're talking about, right?
|
Rosenthal: Well, California in particular because Nevada is so dependent upon it from the north, Reno or Carson City you take northern California and just strip them. And southern California supports Las Vegas, Nevada. And why the state would allow that to happen is beyond my comprehension.
|
|
|
Q: You said a matter of hours they could become rich. If California had legalized casinos in L.A. and San Francisco, for instance, it would get that rich that quickly? Tell me.
|
Rosenthal: If the state of California ever had a referendum that passed by the public to open up casinos, never mind your 1929 stock market crash, you would have corporate executives from the state of Nevada flying out windows like paratroopers without any chute.
|
|
|
Q: It would be bad for Nevada?
|
Rosenthal: Well, it would be like chemical warfare.
|
|
|
Q: Going back for a second, when you were talking about the political. Do the big casino companies, are they very influential in the politics in Las Vegas, in Nevada?
|
Rosenthal: They virtually own the politics in Nevada.
|
|
|
Q: Explain what you mean.
|
Rosenthal: Well, the number one industry, obviously, in the state of Nevada is casino gambling, hotels. Their influence is so great. Without the hotels there would be no Nevada other than cactus and just a desert. It's a desert, I mean actually, literally speaking. So, certainly the major operators are in a position to--I wouldn't use the word dictate--but certainly have a tremendous influence on policy through state government and possibly beyond that.
|
|
|
Q: As gambling grows, do you expect the political influence of these big companies to also grow, as well?
|
Rosenthal: Once there's an awareness at a higher level, possibly incongruous. Again, the casino industry is unique in many senses. One being is that there are only a handful, a few people, that really understand its power and its ability to win. The average person, public doesn't understand that. Until there is more of an understanding I think the operators will continue to just dominate without putting back into society something they should. I have friends of mine that have been to Atlantic City and they say it's a mess. But one just need walk or drive through Las Vegas, Nevada and ask themselves, how could so and so build a casino for $1.5 billion. Where is he getting the money? Who's supplying him the funds? It's you and people like you. And friendly bankers that recognize that the risk factor is virtually non-existent. For a casino to go belly up is almost unheard of regardless of the competency or lack thereof.
|
|
|
Q: Well, what if that political influence keeps growing and a lot of people get word of the more money means the more contributions to politicians which means the more influence over politicians. Where does it ultimately lead? As you were saying before, the game should even up a little bit here. The state should be getting a better cut but if the influence is so strong on the other side, that doesn't suggest that's going to happen anytime soon.
|
Rosenthal: I would agree with your comment. I wouldn't be willing or able to predict when there will be the proper balance, when the country will recognize that. Right now it's two for you, one for me, for lack of a better expression, and probably much more than that. Again, there is nothing wrong with legalized gambling that is regulated. But you've got to give the players a chance. You've got to make them aware. And then you have to put money back into society to have the proper balance. Otherwise, you'll make the public, you'll become, they'll be listed as the species that is endangered. And I'm not trying to sound humorous, I'm just being very honest and candid as I can possibly be.
I don't think we recognize, any of us, how dangerous the growth and expansion of gambling is. Just pick up your local newspaper. I just read in the last two days, the highest priced professional baseball player in this country admittedly says, "we all gamble in the locker room. We bet on everything, everything from A to Z." I think he was very honest in what he did and I think he was very honest in what he says they do. These are professional athletes. Here's a man making $11 million per year to swing a bat and catch a ball. And yet he is intrigued, by his own admission, with college basketball games, the NFL, hockey, dog tracks, horse tracks, every form of gambling. He is not unique. He is not the exception. He is the rule.
|
|
|
Q: And what does that suggest to you? I mean, can we have somebody of that stature with--what does it mean then? Would that have been said ten years ago?
|
Rosenthal: It would probably be more frowned upon. Remember, it's a no-no for professional athletes to be gambling on almost anything. However, if you gamble on an event that is not an event you are participating in, it is legal, not very well received, but legal. What I am saying to you is that all of us have the interest and the lure and the appetite to wager bets or gamble, whatever word you want to use. It's there, all of us. If you continue to place it in front of us, whether it be restricted or unrestricted, whether it be down the street or 90 minutes away by airplane, it's going to happen. The American public enjoys gambling. That's not going to change.
|
|
|
Q: Let me shift subjects. Do you think we should stop the Indians from building casinos?
|
Rosenthal: No, I think that would be, I'm not sure about my history but I think the white man has broken about nearly 700 treaties with the Native Americans and to take that away would be number 700 or 800. No, I think the Indians are on really solid ground. Years ago our government promised that they would be exempt from any federal tax and they are. They are just reaping it in. And why not, why shouldn't they? Maybe in years to come, maybe our grandchildren will be on reservations and maybe the Native Americans will be doing the interviewing rather than being sent out to South Dakota somewhere in some isolated area. But no, I think they should be allowed to continue their revival, if I may use that word.
|
|
|
Q: Well, that's pretty direct. You used the phrase "it's payback time" and it really is that.
|
Rosenthal: Well, surely it's payback time. The Indian, the Native American has been depressed for how long? Since how many years? 200 years? And now they're given an opportunity for education, to be independent, to raise families, to increase their literacy rate and to become more in the mainstream of society. Why stop them? They've been depressed for years and years and years. And just because they pose a threat to a few major operators throughout this country doesn't mean that they should, or that what they are doing, is wrong or that it should be regulated more and taken away from them.
|
|
|
Q: In California, the governor and the attorney general are fighting the Indians because they don't approve of gambling. Yet the state runs the biggest gambling operations in the state, horse tracks and OTB. Sound a little hypocritical to you?
|
Rosenthal: I think it does. I think the state is fighting a losing battle and I don't know how the state is going to get congress to reverse the law of the land as it now exists with regard to Native Americans.
|
|
|
Q: How are the odds of the Indian casino stacked up against the state run games?
|
Rosenthal: Basically dead even. A ten is a ten and a four is a four and the odds are two to one you don't make either one. There really isn't any difference between the Native American casino Indians, if you will, or the MGM in Las Vegas, Nevada other than they don't pay any federal taxes; in Las Vegas, Nevada you do.
|
|
|
Q: Do you expect the Indians to become an important political force in the future?
|
Rosenthal:: I think number one, they already are and I think they'll continue to become a super power, if you may, within the next ten years.
|
|
|
Q: Why?
|
Rosenthal: Because of their expansion, their continued growth. Money creates power. Money creates brains and authority and political muscle and the Indians are rapidly recognizing that and on the right track. And I would venture to say that the operators of Foxwood in Connecticut are as strong as any company in this country today.
|
|
|
Q: Suppose they were going to be the first casino ever to make a billion dollar profit. In what year?
|
Rosenthal: I would say they would exceed a billion dollars in the year 1997, as we're talking.
|
|
|
Q: Back to California for a second. The card room industry in California is a $7 billion business and yet there's virtually no regulation. So, some critics claim the card rooms are rife with money laundering and loan sharking and other crimes like that. Do you think that's likely?
|
Rosenthal: Well, my only experience with card rooms, quite frankly, is in the Gardenia area. In other words, I've been there, I know they're lucrative, they were lucrative in my time. I really don't know of any situation about the laundering aspect of it but I think it's, well, there was one particular operation years ago that I believe had sixty tables. We're talking about poker rooms, poker tables. And if my numbers are correct and my memory is correct, I think that particular operation, their bottom line, their cash flow, conceivably, by memory, might have exceeded the Stardust Hotel. So, the strength is there.
|
|
|
Q: The Stardust was pretty tightly regulated by the state of Nevada. What happens when you don't have a regulatory structure or anybody watching? What happens when nobody is minding the store, I guess is my question, with all that cash flow?
|
Rosenthal: The people that are regulated to observe what has jurisdiction over the state of Nevada are clueless, literally clueless. They have nothing to do with the operating of the casinos. It's the integrity of the operator. Years ago we found out that you make more money with square dice--meaning legitimate dice--than you do with baloneys, ie. phoney dice. The operators themselves do not need regulation by the politicians within that state of Nevada. They lend nothing to the regulation. They are neophytes, politically. They have no understanding for the technical aspects of gaming, at all unless things have changed over the last ten years.
|
|
|
Q: Coming back to that card room thing again. California, we're following a bill that's intended to regulate those card rooms. And it seems like a very simple thing; put Nevada style regulations all on industry that needs some kind of oversight. But it's been five years and it hasn't passed yet. For awhile the politicians have gotten millions of dollars in political contributions and the lobbyists have got millions of dollars apiece. Does that surprise you?
|
Rosenthal: No, it doesn't surprise me. I would certainly be willing to respond by saying that I'm not an expert on that situation as you describe it. However, no surprise. No, I think politics are a very, very powerful organization and they dictate a lot of what happens to you and I and our families and their families. No, I'm not surprised.
|
|
|
Q: So, money buys you friends then?
|
Rosenthal: It always has.
|
|
|
Q: When you were running the Vegas casinos, did you find that politicians were anxious to be bound to you?
|
Rosenthal: I found that they were to a point. To a point, they were. It was a question of who you were and what your background was. If you were Mr. Clean. What you must understand is that the derivative of legal gambling is illegal gambling. That came first. And in order to be lily white or Mr. Clean, you had to be born within that state when gambling began. I came from a different state, when it was illegal. But the politicians, there were some that were friendly, interesting, seeking knowledge. And then there were some that were what I would call opportunists, as most politicians are and trying to seek recognition and increase their name by attacking.
|
|
|
Q: There's a federal commission being formed. Have you heard about this?
|
Rosenthal: I know something about it.
|
|
|
Q: And it's supposed to examine the impact of gambling. Terry Lanni of MGM, he's going to be one of the nine members. The head of the biggest union is also going to be one of the members. They'll make the report in two years. What do you think they're going to find?
|
Rosenthal:: Until you give me the names and the positions of the balance of that committee, I know Terry Lanni by reputation, not in person. I know he's very well thought of within the industry. He's extremely capable. But he represents the MGM just like so and so represents the tobacco company. And I'm not sure if Terry Lanni can be objective in total. To be one to determine, to evaluate, to make recommendations that what is in the best interest of society.
|
|
|
Q: You think it's sort of a fox guarding the hen house maybe?
|
Rosenthal: That's a pretty fair description that you just came up with.
|
|
|
Q: Do you think they need two years to come up with these conclusions? Is it going to do any good when they do come up with some conclusion?
|
Rosenthal: My answer would be no, it probably needs about two days if you put the right people in the right position. Instant reply can be handled very easily in the NFL if you know what you're doing. As far as forming a committee to try to regulate and to try to make recommendations to Congress, who are those people? What is their background? What is their expertise? Are they credible? Are the genuine? What's the structure of the committee? Where does their allegiance lie? Do they have any particular self interest? It's a very, very difficult situation I think.
|
|
|
Q: Well, you're suggesting that there could be a stacked desk, in other words.
|
Rosenthal: I'm suggesting that it could be one of either. It depends on who determines who is on that committee.
|
|
|
Q: Do you think, whatever the findings are, do you want to, one way or the other on that city, do you think it's going to change anything else?
|
Rosenthal: Quite frankly, I don't know but I wouldn't think so. Again, who's on the committee? You need someone, they must have some understanding of the industry and I know of no school in this country--Harvard, Yale, Northwestern University--that really has a class, an opportunity to understand gambling from A to Z. You don't learn that in four years. You either know it and have paid your dues or you're never going to learn it. That's not to imply that you need to be super intellectual. That's not the case. But it is a closed society. There are only a few people in that state, literally, that understand gambling.
|
|
|
Q: We're interviewing also for the show an anti-gambling activist named Tom Grey. Interesting fellow, he's a Methodist minister, former Green Beret. But he wins, he says, about 95 percent of the public that he gets involved in to stop gambling. And he told me this, he said, "they can't beat us at the polls but I worry they're going to buy it out from under us." Do you think they will?
|
Rosenthal: When he says buy out?
|
|
|
Q: Well, they're using their economic influence to get what they want anyway in terms of the ability to expand gambling in various states.
|
Rosenthal: My own instincts, gut feeling, tells me that in a short period of time you will see major competition to the state of Nevada, to Atlantic City, big time. I wouldn't be willing or that smart to predict what state. But I think that a time will come, whether it be the state of Florida which is a natural, or New York or California, all naturals, will come to recognize that they are breaking their constituency. They're alarmed when they get in an airplane or get in an automobile and supply the state of Nevada with taxes and profit to the operators where they can be doing the same identical thing. The state of Nevada is not that bright or different. If it's controllable and effective and legitimate in Nevada, why not in the state of Florida, New York or California or anywhere else?
|
|
|
Q: If this happens in the state of California, what would happen to Nevada?
|
Rosenthal: If I own a property in the state of Nevada and California approved legalized hotel or casino gambling, I'd just run for my life. It's inconceivable to me that the state of Nevada could compete with the state of California given the fact of the population and given the climate and the beauty and the scenery the state of California has to offer. And besides, you're talking about the biggest state in our country versus a little desert out there. No comparison.
|
|
|
Q: So, you'd like to open the first casino in San Francisco, I guess.
|
Rosenthal: Well, I'll tell you what. If I could open up the first casino in San Francisco, I'd give them 99 percent and just take one percent and feel like I was the luckiest guy in the world who'd just won the lotto.
|
|
|
Q: If you had the chance to tell the viewer, in one sentence, what would it be? Look right into the lens here. Here's your chance. What don't they know? What do you want to tell us?
|
Rosenthal: If I had one thing to tell the public, it would be that so long as you understand what you're up against, have no fear. The only fear that you should have is what you don't know.
|
|
|
Q: So, in other words if you know that the deck is stacked against you or that you can't beat the table or whatever, then it's OK, it's only a game, you do what you want to do?
|
Rosenthal: I think that's a fair assumption to make. I'll give you a situation that I recall very vividly because while it wasn't unique in the sense that it only happened once, I think it might be interesting to your viewers and to yourself. While I was working in the state of Nevada in the Stardust Hotel we had a promotion where by you can [come] into the hotel at our restaurant. We've got a 49 cent breakfast, complete; two eggs, any way you wanted them, bacon, sausage, ham, toast, coffee, 49 cents. And it was a lure and we didn't put it on a little billboard. We put it on a big neon that costs hundreds of thousands of dollars to put it on and it revolved. And every car that came down that strip could see it. There's no way to miss it. And yet we were soliciting. We wanted you to walk in that casino, our casino, go enjoy yourself and get that 49 cent breakfast.
I remember one situation where by the family--a husband, wife and two children, as I recall--from the state of Arizona that saved up for a vacation to come to Las Vegas, Nevada for three, four days. And they saw the sign, 49 cent breakfast, complete and because of the line that we had to get into the breakfast room the husband decided to venture over to a black jack table for a few moments. When those few moments expired that man, that father, was broke. He had lost $18,000 in a period of about half an hour. He then approached an executive in the casino and they asked if he could be given help to get back to Arizona. He needed gas money because he was low and he had no money.
One picture says 1,000 words. This man and his wife and his children were coming by to try to save some money for a 49 cent breakfast and lost the entire savings that he had brought in and our casino gave him the money to get back to Arizona. That's a heartbreaking story but it happens on an everyday basis.
|
join the discussion / what are the odds? / gambling: pro and con / interviews / timeline / facts & stats / tapes & transcripts / press
explore FRONTLINE
web site copyright WGBH educational foundation
 |
|