Stakes High as Louisiana Casino Regulators Consider Bally BanALAN SAYRE , Associated Press
Jan. 29, 1995 2:22 PM ET
NEW ORLEANS (AP) _ Bally Gaming Inc. is fighting to regain the good graces of Louisiana casino regulators, who have banned the gambling-machine maker from some business in the state over alleged dealings with organized crime.
The state casino commission meets Wednesday to take up the issue of whether Bally, which faces losing lucrative contracts with New Orleans' big new casino, could have avoided the mob mess and whether it can stay clean in the future.
For Bally, formerly a subsidiary of Chicago-based Bally Entertainment, the stakes are high. Pending is a $6.2 million contract to supply slot machines and a computer for the New Orleans land casino. A temporary casino opens in April, but the permanent facility slated for next year will be the world's largest.
Bally Gaming, which does business in 17 other states and whose Louisiana riverboat and video poker businesses aren't affected, worries that a failure to overturn the ban could tarnish its dealings with regulators elsewhere.
``There certainly would be some concerns in other areas and we would have to address them,'' said Barton Jacka, a Bally Gaming executive in charge of screening potential business partners.
Wilmore Whitmore, president of the state land casino agency, ordered the ban earlier this month, citing Bally Gaming's involvement in a case that resulted in federal indictments last year against 17 people.
Prosecutors say two Louisiana distributors that Bally Gaming dealt with _ Worldwide Gaming and Louisiana Route Operators _ were front organizations for the Marcello, Genovese and Gambino crime families.
But prosecutors also say Bally was an unwitting victim.
In 1992, former Bally Gaming president Alan Maiss began dealing with the two Louisiana firms, a decision that was reviewed by the parent company, then known as Bally Manufacturing Co. Bally Gaming has since been spun off and has no connection with Bally Entertainment.
Maiss recently pleaded guilty to having gaming-business dealings with an unlicensed person. Former Worldwide Gaming chief Steven Bolson pleaded guilty to a fraud charge. Neither has been sentenced.
Bally Gaming argues that none of its current executives were involved, and the case should not affect any of its Louisiana gaming licenses.
Referring to the current management, Bally attorney Sam LeBlanc III said: ``No one in any report, statement or memorandum has suggested that these are not men of honor.''
Protesting Whitmore's action, Bally's lawyers also noted his own staff recommended licensing the company. They said Whitmore didn't fully review the commission's files on the company. On Friday, two boxes of documents seen by the staff _ but not Whitmore _ were turned over to the commission for review.
In addition, the U.S. attorney's office said in a letter to Bally Gaming that prosecutors consider the company the victim of an illegal scheme. The letter was not introduced as evidence after casino commissioner Fred Cassibry, a former federal district judge, said it was improper.
State police, who regulate riverboat casinos and video poker but not the land casino, have renewed Bally's licenses since the indictments broke.
But Assistant State Attorney General Tom Barbera said Bally Gaming didn't take proper steps to check out its Louisiana partners and failed to act fast enough when it became suspicious. The company, he said, was more concerned with staking out a niche in video poker, which Louisiana legalized in 1992
``Money. That was their business plan,'' Barbera said.
According to testimony, the principals in Worldwide Gaming obtained a $3 million loan and a $25 million line of credit from Bally Gaming.
Bally Gaming chief executive officer Hans Kloss, who took over in 1993, a year after Bally Gaming ended its business with the two now-bankrupt Louisiana companies, said his firm has improved its controls and management and should be licensed for the New Orleans casino.