William O'Donnell died July 11th in Palm Desert, California at age 72. The Rocky Mountain News mentioned it in their national obituaries on July 21st, giving him a single paragraph as someone "who turned Bally Manufacturing Company from a one-product pinball game manufacturer into the world's largest maker of slot machines" and who "started with the Chicago-based company in 1946."
Not reported were O'Donnell's later-in-life problems which are a perfect example of how a smart business can turn someone else's misfortune into their own good fortune, and screw the people of Colorado at the same time.
Colorado voted in November, 1980 to permit a lottery by amending the state constitution. A lottery instant game manufacturer, Scientific Games, Inc., paid for the campaign, spending $90,000 of the $95,000 used to ensure passage. There was no organized opposition.
Scientific's lobbyist, former Connecticut lottery commissioner Paul Silvergleid, was an effective presence during the 1981 legislative interim study that drafted a lottery law. By October of 1981, Scientific became a wholly-owned subsidiary of Bally Manufacturing Company.
Scientific hired several local lobbyists to ensure passage of the bill in the 1982 legislative session. The new law made the lottery division part of the department of revenue. Alan Charnes, revenue director, liked to tell people " In the department store of state government, the lottery is the toy department."
Next, Scientific was hired as a consultant to the "toy department" to prepare original specificiations for bids on the lottery contract. When the lottery bids were advertised, Scientific was the only bidder, and won the contract. Scientific then charged Colorado a higher rate than was being charged by the corporation in other states.
So how come Scientific was the only bidder? Credit has to go to personal problems faced earlier by the late Mr. O'Donnell.
Bally had sought a casino license in New Jersey, but the state attorney general, John Degman, had urged N.J. Gaming Commission to say "no", alleging Bally's earlier formation by organized crime. Degman gave the commission an 87-page report on Aug.4,1980 to back his assertions.
The N.J. Gaming Commission refused to follow the attorney general's advice. Instead, they allowed Bally to have a casino (l) if it posted a $1 million bond, (2) if it fired company president William O'Donnell for his ties to organized crime figures, and (3) if it provided personal financial information and three years of tax returns for its officers and directors.
Bally complied. O'Donnell had resigned as president and chairman of the board by the middle of December, 1980 and placed his company stock, then valued at $30 million, in a voting trust. Bally received its casino license.
During the 1982 debate in the Colorado House Finance Committee on the lottery measure, Scientific's lobbyist presented, and the committee accepted, two amendments to the bill.
The first required anyone who received the contract for supplying lottery materials to post a bond of around one million dollars as security. The second required a current personal financial statement and individual federal and state tax returns for the past three years for each officer and director of the supplier and parent company. Those amendments became part of the 1982 law.
Since Bally already had to disclose tax returns and have a heavy bond, it didn't cost them anything to do the same for Colorado, which is why the clauses were added to our statute. Other potential bidders didn't have a million dollar bond on hand, or have a need to disclose individual tax returns to obtain other contracts. Other bidders would have had to spend additional funds and force officers and directors to disclose the information in order to bid on the Colorado contract. So they didn't bid.
Ray Clark, president of Glendinning Company, an instant game manufacturer, was quoted in one Colorado newspaper, Sept. 6,1982 as saying "After receiving requirements of the bids, we believe that many of these requirements are unfair, are inconsistent with industry practices, and favor one supplier, Bally/Scientific Games."
While the legislature was debating the merits of the lottery bill, I contacted Robert Blakey, author of the federal organized crime control act (RICO), who was very familiar with Bally. At my request, he testified before the House Judiciary Committee in 1982 on the lottery bill. This is what both he, and the New Jersey report to the Gaming Commission had to say:
(2) Additional new financing came from a corporation called Emprise, which was subsequently convicted in federal court of having a funded pool for hidden ownerships in casinos.
(3) Bally Manufacturing overseas sales representative was a man named Dino Cellini, who was manager of the gambling concession that Meyer Lansky (an original member of Murder, Inc.) had gained in Cuba before Castro's revolution.
(4) Major stockholders of Bally had included William O'Donnell and Sam Klein, who were also officers and directors. Mr. Klein, at the time of the N.J. investigation, had already been forced out of Bally by the Nevada Gaming Commission because of his association with organized crime figures.
O'Donnell and Klein were both gone from "positions" with Bally by the time Colorado was considering the lottery bill. But, as the New Jersey attorney general's office informed me, the new president of Bally was Robert Mullane, who came into Bally through his prior employment by AVA Vending, one of Sam Klein's companies.
Another document I obtained was an earlier "Report on Eligibility of Bally to hold Florida Gambling Licenses" written by the staff of Florida's department of business regulation. It said Klein continued to get money from Bally, $576,000 to be spread over an eight-year period, including $72,000 in 1983 and $72,000 in 1984. Bally's Scientific Games held Colorado's lottery contract those two years and long after.
The money from Bally went to Klein at Boca Raton, Fla., where Klein, Jerry Catena, and Abe Green, another major Bally founder and an associate of Cosa Nosta underboss Catena, had retired. Who says crime doesn't pay!
One thing to be learned from Mr. O'Donnell's troubles is to always check your files BEFORE the attorney general does. The N.J. attorney general found letters to O'Donnell from O'Donnell's agent in Kentucky which dealt with the successful 1968 bribery of the Kentucky House of Representatives. Excerpts from pages 50-51 of the investigative report:
"Last night I gave the chairman of the committee which the bill is in $500. That is what he wanted. It seems as though word got out that we have given him some money. Now the other members of the Kentucky legislature are trying to put me on for more money."
Three days later, the bill came out of committee and the agent wrote to O'Donnell:
"The only thing we are now worried about is being able to have enough money on hand to get it through the House, but we are happy we will be able to get a lot of representatives with less money than they are asking for."
A fitting epilogue for an obituary?
"We will be able to get a lot of representatives with less money than they are asking for."
Jerry Kopel writes a column for the Statesman based on 22 years past experience as a state legislator.
Copyright 2012 Jerry Kopel & David Kopel