Reno Eyes Vegas Import
The Other Side of Bob Stupak

  by Steve Miller
  copyright 1996, Electric Nevada

Who is Bob Stupak?
The Las Vegas entrepreneur, and author of plans for a carnival-like 300-foot up-and-down "Big Shot" ride at Reno's long-closed and down-at-the-heels Riverside Hotel, is himself quite likely to go up and down.
Last Monday, with the opening in Las Vegas of the $550 million Stratosphere Tower, casino complex and resort, Stupak was up. More than 8,000 invited guests were attending the premiere party, and thousands more lined the streets outside, waiting to get in. It was the culmination of years of work by Stupak and his partners and he was being touted throughout Glitzville as a genius and a visionary.
"This tower," panted Lt. Gov. Lonnie Hammargren, "will be the symbol of Las Vegas for all time. What Howard Hughes didn't do, Bob Stupak has finished off."
It was a far cry from six years ago. That was when Stupak was scrambling to even keep his state gaming license, in the face of Gaming Control Board charges that he and his companies Vacation Club and Vegas World had engaged in "materially false, misleading and deceptive advertising" nationwide - advertising, the board said, that had damaged the entire industry.
"Vegas World's deceptive advertising," said the control board complaint, "reflects discredit upon the reputation of the State of Nevada and its gaming industry and undermines 'public confidence and trust that licensed gaming is conducted honestly and competitively .. and that gaming is free from criminal and corruptive elements.'"
While Stupak was advertising that patrons would receive "$400 in dollar slot machine action good on dollar slot machines located throughout the casino," said the board, "In fact, patrons receive five dollar tokens that may be used only on approximately twelve slot machines that have a hold percentage far above the industry average."
Other Stupak ads, said the board, were promising "$400 LIVE ACTION - 400 one-dollar chips to gamble with as you wish. Each chip is good for ONE PLAY, (win or lose), on all even money bets for any table game (craps, blackjack, roulette, etc.) That's 400 chances to win, and you may wager from one to as many chips as you like on each wager."
In actual fact, said board investigators, "patrons received $25 promotional chips that in some cases they were not allowed to change, and in all cases, Vegas World took the promotional chip and did not replace it with regular chips, regardless of the outcome of the wager.
"For example, if a patron places a $25 promotional chip on the blackjack table and wins, Vegas World takes the promotional chip and gives the patron $25, not the $50 that a patron would end up with if he played a regular $25 chip and won.
"If the patron loses," said the board, "he loses, and if he wins, he breaks even.
"Therefore, the $400 live action is really only equivalent to $200.
"Additionally, patrons may only play craps on specially alterned crap tables with the promotional chips."
Another deception, said the board, was that "Vegas World advertises that it is located on the Las Vegas Strip and uses a photograph that makes it appear that Vegas World is located right next to the Stardust, Frontier, Sahara, and Desert Inn."
Stupak's Vegas World also advertised, said the board, "that its patrons will receive
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one of five free gifts valued between $189 and $1500, which is chosen at random by their computer. In the vast majority of cases, the free gift received by patrons was either a diamond ring that could be purchased for far less than the retail value stated by Vegas World, or a '6 day, 5 night Hawaiian vacation' that requires that you purchase a maximum price airline ticet through a designated travel agency so that the overall price of the vacation is nearly as much as it would be without the 'free gift.'"
Finally, the Gaming Control Board said, Vegas World had illegally modified the slot machines used "for its various promotions so that they have a theoretical hold that far exceeds the industry average." Under Nevada gaming law, any significant modification of gaming devices must be approved by the control board, and these changes, said the board, had not been.
The board recommended that Vegas World be fined $300,000 and that the company's "license be revoked, suspended, conditioned, or limited."
The next February, Bob Stupak entered into a stipulation with the board that settled the complaint. The terms of the settlement were that Stupak would pay a $125,000 fine and that his gaming license would thereafter be conditioned as follows:
"The licensee shall, subject to the administrative approval of the Chairman of the State Gaming Control Board or his designee, establish and thereafter at all times maintain a customer complaint resolution committee."
That committee, while to be chaired by Stupak, was to "have at least two other members who possess the unconditional authority to resolve complaints and issue refunds [italics added]."
The purpose of the committee, said the agreement, was "to review and resolve complaints from both individuals and governmental agencies relating to [Stupak's] vacation club packages."
How much did this settlement cost Bob Stupak? After he sold his Vegas World hotel-casino to the newly forming Stratosphere Corporation, Stratosphere went public in 1995.
According to the Intial Public Offering for the Stratosphere Corporation, "The liabilities retained by Mr. Stupak in connection with [Stratosphere's] purchase of the Vegas World Assets were principally comprised of accounts payable and accrued expenses and obligations for presold vacation packages consisting of goods and services (cash, casino chips and slot tokens, hotel room nights, beverages at casino bars, show tickets, admissions to the Tower upon opening and certain other goods and services).
"As of January 31, 1995, Mr. Stupak's obligations for presold vacation packages was approximately $25.6 million. The Nevada Gaming Authorities have required that an independent public accounting firm perform certain agreed upon procedures with respect to the amount of such obligations."
Sources within the Gaming Control Board tell Electric Nevada that Stupak's obligations for the vacation packages now have been reduced to about $17 million.

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