David Johnston
302 pages
Doubleday, 1992
I generally don’t like to discuss Las Vegas. That’s not for any lack of excellent operators or world-class casino resorts in town, of course; it’s just that the Strip is so unique that the lessons from there seldom translate to the rest of the country. But once each year, the entire gaming world descends on Las Vegas for G2E, and, given that that happened just a couple of weeks ago, there’s probably no better time to talk about Glitter Gulch and its infamous history than now.
Last December, I reviewed what I consider one of the best books on the history of organized crime in Las Vegas, The Money and the Power, by Sally Denton Smith and Roger Morris. It documents organized crime’s activities from post-WWII onward. Interestingly, the last short chapter in that book is called ‘Shadow Capital.’
That’s almost the complete subject of David Johnston’s Temples of Chance: How American Inc. Bought Out Murder Inc. to Win Control of the Casino Business. Published in 1992, the book delves into some of the same territory covered so well by Denton and Morris.
But Johnston adds more, such as Holiday Inn’s 1979 takeover of Harrah’s, along with some additional tales about Benny Binion’s Horseshoe and Caesars’ early days. He seems to cover this as context for his main theme: the junk bond financing of casinos in the 1980s. While both Las Vegas and Reno are featured in the book, some of the most fascinating chapters deal with the machinations in New Jersey amongst Donald Trump, Steve Wynn, Michael Milken and Merv Griffith.
Johnston is a Pulitzer Prize-winning beat reporter who has worked on both coasts with the LA Times, Detroit Free Press, Philadelphia Inquirer and NY Times, specializing in financial reporting. He hit the front page himself two years ago when he released Donald Trump’s 2005 Form 1040 tax return (he says he received it anonymously in the mail). He also wrote The Making of Donald Trump, an examination of the then-candidate, in the summer of 2016. Clearly, he’s not a fan of the current president; perhaps his reporting here may explain some of that viewpoint.
While all of Trump’s casino operations eventually ended in bankruptcy despite his father’s questionable influxes of cash, you might be surprised at the amount of money the author says the future President made on his casino financial transactions. The battles between Trump and Merv Griffith are also enthralling. The book seems to indicate that, despite his show-business acumen, Griffith was naïve about casino financing, and Trump constantly got the better of him. At least until Trump later lost it all, in the process causing considerable harm to others. In reference to the workers who finished building the Taj Mahal for Trump,
Johnston says, “In the end, the contractors would get about twenty cents on each dollar owed.” It was a total, the author estimates, of $580 million in debt.
While this book is not as well-documented as The Money and the Power, it’s a much better read and often feels like a detective novel. It’s hard to put down as the author drops name after legendary-gaming name, and one can’t help but reflect that these questionable financial transactions of the ‘80s largely laid the foundation for today’s super casino resorts – far more, at least, than the often-credited Bugsy Siegel did with his Flamingo.
There are many lessons in this book that have shaped our industry today. Perhaps, none is more obvious than that owning a casino is no guarantee of riches. The largest fortunes can quickly be erased by bad management. Likewise, good management – as Johnston cites was the case at Harrah’s Marina – can’t overcome convoluted financing.
You’ll also understand why Title 31 money laundering requirements are so rigid and pedantic about determining a player’s source of funds. The tales of questionable high rollers and their unpaid debts are almost unbelievable.
Finally, the early Atlantic City state gaming regulators’ reputations for strict compliance are shattered when it comes to dealing with big names: “… a citizenry… that actively examine(s) and criticize(s) those entrusted with the duty to regulate casinos are essential,” Johnston writes. “As the history of the New Jersey Casino Control Commission has shown, no law can make officials see problems and wrongs they do not want to see.”
I highly recommend this book. It neatly fills in the gaps in that gaming transition period between mob control and corporate or Native American ownership. Of all the characters covered, only Steve Wynn comes off as a true master of junk bonds and casino construction. However, long before his recent #MeToo problems, you can learn about Wynn’s other shortcomings in John L. Smith’s excellent 2001 book Running Scared. I’ll take a look at that one after G2E 2020.
You can find Temples of Chance on Amazon from $4.99 used to $28.44.
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Note: Johnston acknowledges countless sources for this work from operators, regulators, brokers and fellow journalists. Included in that latter group is CDC Gaming Reports’ own executive editor Howard Stutz during his time at the Las Vegas Review-Journal.
