Tough Times at Compton Casino

When it opened last fall, it was a gambler’s dream. For high rollers who played cards in a cordoned-off area marked “Diamond Edge,” there were free luxury hotel suites, expensive gifts from management, chauffeured limousines and plenty of credit.

And for cash-strapped Compton, the Crystal Park Hotel and Casino held the potential of millions in new tax revenue and hundreds of jobs with good wages for residents.

City officials also saw the poker parlor as the best hope for reviving a once-promising hotel that had gone belly up. The hotel and card club combination--the only one in the state--could cater to groups of big-betting tourists, officials reasoned.

“This was a great opportunity,” said City Manager Howard Caldwell. “There’s a gaming market out there. Why send billions of dollars to Las Vegas?”

But now, all bets are off.

Crystal Park’s owner, Rouben Kandilian, is mired in debt. He has been threatened with eviction, state regulators are keeping him under close scrutiny and his controller has been charged with embezzlement.

Even though the casino initially generated a healthy cash flow, Kandilian now owes the city $1 million in back gaming taxes.

“We were bearing with them to a point,” Caldwell said. “We’ve told them they’ve got to pay up.”

Some casino critics, however, question whether the city would move against Kandilian since the casino employs Mayor Omar Bradley’s wife and Councilwoman Delores Zurita’s daughter.

But Caldwell, who is reviewing a proposed payment plan from the casino, said “it doesn’t make any difference” who is employed there. “If they don’t pay according to the plan, we’ll pull the plug on them.”

Kandilian, who owns Zakaroff Services, a trash-hauling company, and has never run a casino before, hears demands for payment a lot these days. He must repay a $4.5-million bank loan, he says. Hollywood Park Inc.--which owns the Compton property and rents it to him--is trying to evict him for failure to pay his $350,000 monthly rent.

But more is at stake for Hollywood Park than the rent. Along with San Francisco 49ers owner Edward J. DeBartolo Jr.’s Redwood Gaming, Hollywood Park put up the $30 million needed to build Crystal Park.

The casino’s monthly revenue has fallen from about $3.5 million to about $2.1 million, and Kandilian said he has been unable to pay his debts because operating expenses are so high. In an early effort to attract high rollers, he said, the casino lavished gold-plated lighters and other freebies on high-stakes players, and offered $4 million in credit to players who never paid it back.

Even as he struggles with that whirlwind of debt, Kandilian, 43, continues to play the affable host at Crystal Park. At 6-foot-2 and about 300 pounds, he is an unmistakable presence on the casino floor.

He decided to try his hand at the gaming business after the death of his fellow trash hauler, John Mgrdichian, who had dreamed of opening a casino in Compton. But first Kandilian and his partner Mikael Aloyan had to get past potentially strong opposition from Councilwoman Patricia Moore.

Authorities say Aloyan paid Moore more than $12,000 in bribes in 1992 and 1993. Rather than support their bid, Moore did not vote when the issue came up. After having solicited bribes from Aloyan’s company, Moore later led a campaign to rescind the council’s approval of the casino--a campaign financed, in part, by the rival Bicycle Club casino in Bell Gardens, state records show.

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Moore was convicted of extorting bribes from Aloyan and another firm and has been sentenced to 33 months in prison. Aloyan cooperated with authorities and was not charged. Kandilian said he did not know Aloyan was making payoffs to the councilwoman.

For his part, Kandilian is eager to prove the city made a smart business decision when it rolled the dice on him--and that the card club can make a healthy profit.

On a recent evening at Crystal Park, he leaned against a column, stroking his thick gray beard as he chatted with players crowded around a poker table. Across the casino, other players meandered between mirrored columns and beneath colossal crystal chandeliers, sampled the restaurant’s sizzling Vietnamese and Thai fare or eyeballed gleaming pickup trucks parked in the lobby--prizes in a recent promotion.

Kandilian said he sees his casino’s financial problems as short-term, saying he has had a difficult year in a volatile business. He expressed confidence that he will be able to pay off his debts and turn Crystal Park into a moneymaker.

“There are growing pains you go through,” he said.

Some of the growing pains have come from Kandilian’s own gambling at Crystal Park. In the year before the club opened, he said, he sometimes played at the Commerce Club and Hollywood Park’s Inglewood casino “to build a relationship with the players and see how the tables were being run. I didn’t care for playing cards, to tell you the truth.”

After his own club opened, he said, he took out $1 million in credit to play with, another move to drum up interest among high-stakes players. He said he has since paid that debt back.

State Department of Justice officials ordered him in December 1996 to stop playing at his own club. Despite that order, Compton police officers saw him gambling there at least four times over the next month.

Rather than revoke his license, authorities fined him $50,000 and warned him that if he is found gambling at Crystal Park before June 1998, he will automatically lose his license. He must also keep enough cash at the casino and in bank accounts to redeem at least 75% of outstanding chips.

And Crystal Park’s problems don’t end there.

In January, police arrested casino controller Eugene C. Aragon, 33, for his alleged role in an embezzlement scheme. Prosecutors said in court papers that Aragon created a computerized customer account in December with a balance of $320,000. An alleged associate, Jeffrey Platt, 37, later gave casino cashiers a receipt verifying the deposit and withdrew $260,000 in cash and $40,000 in chips, authorities said.

Aragon’s lawyer, William Nimmo, has subpoenaed Kandilian’s personal financial records to support his contention that Kandilian engineered the scheme to pay off a gambling debt to Platt. Kandilian disputes that and said he has never met Platt.

Aragon “flat out took the money,” Kandilian said. “He stole money from the club. That’s the bottom line.”

Aragon and Platt are scheduled for a pretrial hearing today.

Aside from high expenses, Kandilian attributes Crystal Park’s poor performance largely to changes in state gaming regulations. In California, unlike Nevada, players compete against each other--not the house. The clubs make money by charging fees to each player.

Authorities ruled in April, however, that card clubs can charge players for a seat at a table, but may no longer charge fees based on how much a player bets.

That change meant casinos could not increase their fees as players increased their stakes. Lawyers for Crystal Park said that decision had a “devastating” effect on its earnings.

Crystal Park’s revenue did drop when the change took effect in May, but records show that Kandilian’s debt to the city had begun accumulating nearly six months earlier.

Despite their current woes, Kandilian and his camp see better days ahead.

“Expenses have been dramatically cut, and revenue is creeping back up,” said Kandilian’s lawyer, Jerold B. Neuman. “You have the prospect that we’ll see an increase in revenue, and I think we can reach our objective.”