Growing Popularity : Beating the Slots: Some Cut the Odds

Doug Coots wanted to win a jackpot. He wasn’t greedy about it. All he asked, the 46-year-old Sacramento carpenter would recall, was to “take off a small jackpot.”

On April 10, 1982, Coots went to Harolds Club, a casino in the glitzy neon gulch of Reno’s Virginia Street. He went to a certain slot machine that certain people had strongly recommended that he play, and he started to pump in quarters.

“Pretty soon,” Coots told a federal jury last week in his slow, almost lilting Dutch accent, “a fellow to my right said, ‘Will you move over a little please?’ I said, ‘Yes.’ Then he said, ‘Put in three quarters and don’t pull the handle.’ I did. And pretty soon the reels were jumping backwards and forwards. And in a few seconds all the sevens were lined up, and the bells started ringing.”

8 Accused of Rigging

Coots testified about the $20,185.90 jackpot with the promise he would not be prosecuted for his part in a caper allegedly engineered by what has been called the most prolific slot machine cheating ring ever. Eight defendants stand accused of rigging 11 jackpots worth more than $700,000 in Nevada and New Jersey.

In addition, a document filed in the case says that investigators have attributed more than $8-million worth of “numerous cheating incidents” to the ring. Counts related to a single $1.7-million jackpot were contained in the original indictment but dropped when the trial began earlier this month.

While slot cheats--usually casino outsiders with an insider’s knowledge--have been around Nevada gaming houses as long as the one-armed bandits themselves, the numbers involved in this case are remarkably large, and they point to a significant transformation taking place in the casino industry.

Big Money

Slot machines, long the province of grandmothers on a budget, girlfriends of big spenders and losers seeking one last shot at fortune as they stagger for the door, have become big money, for casinos, gamblers--and, apparently, cheaters--alike.

Slots and electronic poker and blackjack games accounted for $1.6 billion--or 52.6%--of Nevada’s total casino revenues of $3 billion in the last fiscal year, while traditional table games such as craps and roulette generated 44%. By comparison, in 1976, machine games brought in only 31.8% of total casino revenues, with gaming tables bringing in 68.2%. At the same time, gaming industry experts estimate that cheating on slot machines has grown to an estimated $40-million-a-year criminal enterprise.

There are many reasons for the slot surge. Most simply, the casinos in the 1980s began to push them like never before, offering higher winning percentages on the premise that greater revenues can be achieved by taking less money from more players, and video gambling games that allow players to do more than merely tug at a handle, and, most important, astronomically higher jackpots.

In the process, a different, more middle-class clientele has been drawn into casinos, changing both the feel and function of many of the gaming houses--to the dissatisfaction of those accustomed to the old days of tuxedoed high-rollers and big-name shows.

Atlantic City Blamed

Atlantic City’s new gaming houses also are blamed for changes in Nevada casinos, but casino consultant Donald McGhie, a partner in the Reno accounting firm of Kafoury, Armstrong & Co., disagreed: “I personally feel that they just rationalized and said, ‘Atlantic City took our high rollers.’ I don’t think they did. If you go to Atlantic City, it’s turning into a slot arcade, too.”

Evidence of the trend toward slots abounds here. Along freeways leading into Reno, billboard upon billboard holds out the promise of “hottest slots in town.” In the casinos themselves, digital scoreboards routinely advertise six-figure progressive pots; organized tour groups and blue-collar conventioneers--newcomers to the gambling scene--arrive by the busload to pitch dollars into the new machines.

Perhaps the ultimate indicator of the slots’ rise to prominence is that some casinos are now said to bestow upon big-spending slot players a mark of distinction previously reserved for only the highest rollers of the card or dice games--”the comp,” free room and board and whatever other whim might arise.

“We now have people who come in with hundreds of dollars in their pockets,” said Norm Nielson, director of advertising and marketing at the Club Cal-Neva here, “and all they play is the slot machines.”

Marketing Trend

McGhie credits new corporate ownership of many casinos for the changes. The new owners, McGhie said, “have brought in management more in tune to marketing to the masses. Rather than being trained in the gaming industry, they have been trained in places like Cornell (University).”

These bottom-line believers have pursued two types of gamblers previously left out of most casino marketing strategies: Young gamblers weaned on video games and intimidated by table games, and lower- to middle-income retirees with a lot of time and a little money to spend.

Both groups have been shown in market surveys to prefer machine games over table games, especially the new video poker and blackjack slots that allow them to make card-playing decisions without actually sitting down at a table with other players and a dealer. For casino managers, the video slots offer the appeal of being less labor intensive than table games.

“In 1978, video was only 1% of the population of casino machines,” J. George Drews, president of the Reno-based International Game Technology, said last year in a report to shareholders. “Today, they account for approximately 23%. We expect that in a three- or four-year period video could go up to 40% or 50%.”

Conventioneers Courted

Casinos attempting to lure new slot-oriented gamblers have employed other strategies as well. Conventions are now aggressively courted. Room rates have been lowered and economical weekend travel packages are offered through tour groups. Many major casinos have added camper parks to attract caravans of the rolling retires known as “snowbirds.”

Casino layouts now place more emphasis on the machines. Slots often are aligned in circular patterns, rather than the traditional straight lines; this is believed to make the machines less anti-social and also create what one expert called “an atmosphere of frenzy.”

Dollar machines are more prominent. Aluminum trays collect the large coins as they tumble out, a detail designed for maximum clatter. “It sounds like a million dollars,” one casino executive said.

Moreover, machines have been geared to pay off more frequently as casinos have reduced their take, the so-called hold percentage. “In the mid-70s,” said Bill Eadington, an economics professor at the University of Nevada at Reno who has made casinos his speciality, “the hold percentage was 15% to 20%. This has probably come down to an average of 5% to 10%.”

Jackpot Size Soars

Finally, the size of jackpots has soared. Not too long ago, a $20,000 jackpot was considered news by the Nevada media. In the 1980s, however, the advent of progressive games, in which the jackpot keeps growing until someone hits it, made anything less than $150,000 a unnoteworthy payoff.

Nielson likens the marketing around the big jackpots to “something like a gas war.” Casinos promote their biggest slot winners on billboards and in press releases. Public relations experts have had to be at their creative best to come up with an angle good enough to plant a jackpot story in the press.

For example, a four-paragraph story in the the Reno Gazette-Journal in 1982 made much of the fact that the winner of a $188,885 jackpot at the MGM Grand Hotel was named John Paul Jones, just like the Revolutionary War naval hero. Another story was built around the rags-to-riches elements involved when a 56-year-old disabled war veteran and widower from Seattle hit a $400,000 jackpot in Las Vegas. And a small item about a $122,834 jackpot at the Club Cal-Neva centered on the winning couple’s insistence that they be paid in cash.

These three jackpots, not coincidentally, are all now alleged to have been rigged by the ring that is on trial in federal court here. The publicity surrounding giant jackpots, it would seem, did not escape the attention of potential cheats.

Assessing the Risks

“If you were, for instance, going to hold up a bank, and if you knew the most that bank held was $200, you might think twice about it,” said Michael E. O’Donovan, an agent with the Nevada Gaming Control Board. “But if you knew the bank held $1.7 million, you might be more willing to take the risk.”

Slot cheats have gone to extraordinary lengths. Some have wrapped automobile coils around their waists to give electric slots a 40,000-volt blast and knock free a jackpot. Magnets have been slapped on the sides of machines to freeze their mechanisms. Cruder operators have attacked machines with power drills, wires and jimmies. Slugs have been used to play for free, and simply jiggling the slot handle a certain way has been known to work.

It is legal for individuals in Nevada to buy slot machines, and slot cheats often spend a good deal of time honing their talents in their garages. Also, people employed as slot mechanics have been known to later apply their knowledge to criminal pursuits.

The trial now under way in the courtroom of U.S. District Judge Edward Reed stems from an investigation that began after Gus Econopoulos, a 51-year-old warehouse worker from San Francisco, hit a $1.7-million jackpot in 1983 at Harrah’s Tahoe--at the time a world’s record. Suspicion was aroused by Econopoulos’ hasty exit from Nevada.

Thought to Be a Collector

Eventually, investigators came to believe that he had been a collector for a ring of slot cheats. He has not been charged in the case, but he was included on the prosecution’s list of potential witnesses. All but $200,000 of his jackpot has been returned to the casino, because Econopoulos never cashed three $500,000 checks given to him after his big hit. The government did not explain why charges relating to the $1.7-million jackpot were dropped, and a gag order prevents all attorneys involved from discussing the decision. The intriguing question of how a computerized slot machine was successfully rigged has never been publicly explained.

The prosecution contends that the eight defendants were members of a ring that operated out of a Sacramento card room, where people like Coots were recruited to collect jackpots rigged by mechanics. Ring members allegedly plotted the jobs and served as lookouts, and everyone split the loot.

Facing felony racketeering and conspiracy charges in the case are Norm Alvis, Michael Brennan, William Cushing and Dorothy Snider of Sacramento; Stephen LaBarbera, John Vacarro and his wife, Sandra, all of Las Vegas, and Paul Bond of Reno.

Much of the case hinges on testimony from persons who were allegedly involved in the cheating and have since made various deals with the government to avoid prosecution or stiff sentences. The defense contends that one prosecution witness, 25-year-old Ross Durham, was actually the kingpin of the group. He has pleaded guilty in the case and was given a five-year sentence.

Equipment on Display

The trial, expected to last six weeks, has moved slowly. Two slot machines sit in one corner of the federal courtroom, their gay colors in glaring contrast to the somber walls of marble and wood. A table is filled with special keys, slot machine blueprints, jimmies, lock picks and other gadgets gathered in an FBI search of one defendant’s home. One government witness was questioned at length about poker faces, and the jury was schooled in the intricacies of lock-picking.

In their opening arguments, the prosecution attempted to paint the defendants as a slick bunch, able to rig a jackpot in minutes. Some of the testimony, however, has conjured up almost comic images. Coots, for example, had even some defendants chuckling as he told of a failed attempt to rig a pot for his 66-year-old mother-in-law.

The mechanic, he said, was attempting to manipulate the machine: “I seen him stick a wire in there and he worked for a while, and he worked for a while. And then he said, ‘Is the wire sticking out the other side?’ I said no. He said, ‘I lost it.’ ”

Coots said the mechanic then left for 10 minutes and returned with needle-nosed pliers. After failing to retrieve the wire, “he left again and he came back with a small flashlight and he looked in the machine with a flashlight and said, ‘I can’t find it. I can’t find it. Let’s all go home.’ So we left.”

Less Than Diligent

What casino security guards were doing during all this is a question that has been pressed by defense attorneys. They have pointed out that casinos benefit from publicity about big jackpots regardless of who wins them, and have implied that the gaming houses have, as a result, been less than diligent in maintaining security.

Mike Timmerman, manager of a locksmith firm that equips slots with security locks, testified that he hopes the current case “will open up some eyes to this problem we have been preaching” about to casinos about security.

The attitude of casinos, he said, has been, “When you are making good money, why should you worry?”

Many gaming industry executives do, in fact, tend to characterize money lost to slot cheaters as insignificant. They compare it to the losses shoplifters inflict on retail stores--”the cost of doing business,” one said.

Fear Negative Publicity

What casino officials fear most is the negative publicity stemming from this sort of case, wondering what might happen to the new star of legalized gambling if, as McGhie put it, “slot players begin to feel that they can’t get to the big jackpots because the crooks are ripping them off first.”

Officials at casinos allegedly hit by the gang have testified that new measures have been taken to ensure against repeat performances. A year-old directive from the Gaming Control Board requires that any jackpot in excess of $100,000 be investigated by the state before payment. International Gaming Technology’s Drews said much of the $4.5 million the firm spends annually on research and development goes toward offsetting new cheating ploys.

All of this is in keeping with the history of the conflict between casinos and cheaters. It has been one of improved cheating technique giving rise to better security measures, and these better security measures in turn prodding the cheats to come up with even more creative methods.

Said O’Donovan of the Gaming Control Board: “The mousetrap works until the mouse figures out a better way to get the cheese. And once he learns how, he will keep getting that cheese until someone sees him doing it and figures out a way to stop him. And the bigger the cheese, the more the mouse will be willing to risk it. Why break your neck for a morsel?”