For Amusement Only?

The sign taped across the front of the Dodge City video poker machine read "for amusement only."

It was, federal prosecutors said, false advertising.

Video poker machines have long been a major money-maker for the mob, according to law enforcement authorities, and Wednesday the jury in the racketeering trial of mob boss Joseph "Uncle Joe" Ligambi and six co-defendants got a detailed lesson about the ins and outs of the business.

The testimony from James Dunlap, a retired Baltimore police detective and nationally recognized gambling expert, set the stage for the next phase of the six-week old trial. On Thursday Curt Arbitman, described by investigators as a major distributor ofillegal poker machines in South Philadelphia, is expected to take the stand for the prosecution and discuss his business dealings with Ligambi and co-defendants Anthony Staino and Joseph "Mousie" Massimino among others.


Arbitman's warehouse/garage on Mountain Street in South Philadelphia was the target of a raid in September 2009. Dozens of machines were seized that day at the garage and at several bars in South Philadelphia. The raids were parrt of an ongoing investigation by the Pennsylvania State Police and Attorney General's Office.

Evidence gathered in that probe wasturned over to federal authorities and was incorporated in the racketeering conspiracy indictment handed up against Ligambi, 73, and the others in May 2011.

Authorities allege that Ligambi's gambling operation included a network of video poker machines placed in bars, restaurants and social clubs throughout South Philadelphia and the Pennsylvania suburbs. Staino, the indictment alleges, routinedly made collections.

How much money the machines generate is a topic of debate.

The defense has argued that the machines are "nickel and dime" propositions  and scoffed at the idea that Ligambi and his associates were lining their pockets with profits. But some law enforcement experts have said that machines in good locations can generate profits of $500 to $1,000-a-week.

Those profits, the jury learned Wednesday, are usually split between the vendor -- in this case Ligambi and his associates -- and the owner of the "stop" -- the bar, restaurant or club where the machine is placed.

Jurors also learned that customers play the machines for "credits," allowing the "for amusement only" tag to apply to someone who isn't in the know. But by and large patrons at local insitutions know that they can turn those credits into cash.

"All they have to do is approach the bartender or the bar owner," Dunlap said.

Machines, depending on their setting, would pay from five cents to 25 cents per credit. And like the legal machines that are in casinos, they are calibrated to insure that the  house turns a profit.

Records seized during several raids were shown to the jury along with detailed discussions about payouts, reset buttons and splits.

Dunlap pointed to a notebook seized during a raid at a bar in 2001 where four machines allegedly tied to Ligambi were seized. The records, he said, showed that for a 12-month period the bar had paid cash to 4,300 winners. The total amount paid was $176,786, the records showed. That amounted to an average of about $40 per winner.

And, the expert testimony indicated, the payoffs were only a fraction of the machines' "take" for the year.

Another allegation in the indictment is that, after authorities seized 34 of their machines in that 2001 raid, Ligambi, Massimino, 62, and Staino, 54, formed a company and forced a rival poker machine distributor to "sell" them 34 different machines.

The defense contends the sale was a legitimate business deal and has a sales agreement to back up that claim. The machines -- and the "stops" where they were placed -- were sold for $70,000.

Prosecutors contend that was a form of extortion. They say that Ligambi muscled his way into the business and paid just a fraction of what the business was worth.

The machines, the prosecution will point out, were owned by a company once headed by Anthony "Tony Machines" Milicia, one of the most successful video poker machine distributors in South Philadelphia.

Milicia was shot and nearly killed after balking at paying a street tax to mob bosses Ralph Natale and Joseph "Skinny Joey" Merlino in the mid 1990s. Milicia had made a pickup at Bonnie's Capistrano Bar at 13th and Dickinson Streets when he was ambushed in a drive-by shooting that Natale later admitted he had ordered.

Natale said there was hundreds of thousands of dollars to be made each year in the video poker machine business and Milicia had to share his take with the mob. After the shooting Milicia, who later died of natural causes, began making tribute payments to the organization, Natale said. Prosecutors intend to argue that Milicia's heirs knew that he had nearly been killed for rebuffing an organized crime advance. So when Ligambi, Staino and Massimino came with an proposal to "buy" 34 machines in 2001, they agreed.

It was, prosecutors contend, an offer they couldn't refuse.