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October 20, 2014

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Board grills oddsmaker

Two of his biggest gambles may backfire on a sports-betting wizard and his boss.

Zacharie Franzi's $55,000 money-line bet on the San Francisco 49ers in the 1995 Super Bowl won him $11,000.

And he recently gambled on getting a new hearing before state regulators who'd voted to deny him a gaming license because of alleged ties to the so-called "Kosher Boys" betting ring.

But "Jack" Franzi may now be regretting both victories, for they could end up costing him an 18-year career as chief oddsmaker for the Barbary and Gold Coast casinos.

They'll also probably cost Coast Resorts Inc. Chairman Michael Gaughan more than a few sleepless nights.

The 53-year-old Gaughan, scion of a well-respected, longtime Las Vegas gaming family, was clearly shaken by the implications of a State Gaming Control Board grilling Thursday of several current and former Barbary and Gold Coast employees about Franzi's activities.

After the hearing, Gaughan declined to comment on the Control Board's investigation or its possible impact on Coast Resorts. But he told the regulators he was unaware that Franzi was doing anything wrong and defended the overall operation.

"All I can say is, if you compare what my book has done over the years, it's way above the industry average," Gaughan said. And he denied ever making any bets at his company's casinos, an action prohibited by state regulations.

"Were there any owners betting?" asked Control Board Chairman Bill Bible.

"No. I'm booking it, not betting it," replied Gaughan.

Gaughan's attorney, Donald Campbell, while acknowledging that "mistakes do happen," said Gaughan never had in-house legal counsel until last year and that there was "nothing sinister" about the activities.

So did Franzi, who told the board his betting patterns were nothing more than an attempt to balance the Barbary Coast's action on certain sporting events.

But it appears likely the board's probe into suspicious betting and shoddy accounting procedures at the Barbary and Gold Coast may well result in disciplinary action against the company.

What particularly concerned the board were instances in which Franzi apparently dictated line moves, bet into more favorable numbers available only to him, then changed the odds back.

"Was the line ever changed to accommodate you?" asked Bible.

"No, but to get a wager on the other side," Franzi replied.

Board members were skeptical.

"People who are paid for being suspicious would scratch their heads over this transaction," board member Steve DuCharme said of the $55,000 bet, one of several that raised regulators' hackles.

It was Super Bowl Sunday morning and Franzi had set a line making the 49ers a $6 money line favorite over the San Diego Chargers in the Barbary Coast sports book.

That meant a gambler wanting to wager on the 49ers to win the game without laying any points had to bet $600 to win $100. While the 49ers were a heavy favorite -- eventually winning 49-26 -- many sports gamblers were leery about risking so large an amount for the relatively small return offered by betting on San Francisco.

At 11:56 a.m., casino records show, a "marker" was issued indicating Franzi received $55,000 in chips. Less than two minutes later -- at 11:57.56 a.m. -- the money line odds changed to $5.

In the next few seconds, two money-line bets were placed on the 49ers -- one for $50,000, the other for $5,000. At 11:58:25 a.m., the line changed back to $6. Twenty minutes later, it moved again, the 49ers jumping to a $7.50 favorite.

"Do you recall this?" DuCharme asked Franzi.

"No, sir. It's a large amount, but I don't recall it," Franzi responded.

"Did you bet the 49ers in the 1995 Super Bowl?"

Franzi hesitated, then explained, "We were extremely high on the dog" -- the Chargers -- "and were trying to entice a bet on the favorite."

The oddsmaker said the late Gene Mayday, a noted gambler and bookmaker, had offered to bet the 49ers at the $5 money-line price, "so I got chips for him and enticed him to bet at that price and then changed (the line) back."

He did so, Franzi said, "because once we got a bet on the favorite, we could cover our losses on the dog."

"Mr. Mayday is not available to corroborate this story, is he?" noted Bible.

Franzi said he wasn't responsible for the line change, but that any shifts in betting odds were handled by the sports book manager.

Former sports book supervisor Lee Heider said he didn't recall the incident.

"If Mr. Franzi came up and told you to move the line, would you do it?" asked DuCharme.

"Yes," Heider said.

Another sports book supervisor said he approved the line change, but didn't remember seeing Mayday make the bets.

"Why were two wagers ... made within seconds?" DuCharme asked Burt Osborne.

"I don't know," Osborne said.

The board suspects the two bets were made to avoid an internal accounting procedure designed to create a paper trail on winning payoffs of $10,001 and higher.

The $50,000 bet paid $10,000, the $5,000 bet $1,000. Each payoff was under the threshold that would trigger the report.

Questioned about scores of similar, albeit smaller transactions, Franzi said he was making the wagers "to get more of a balance" in the betting action.

In one instance, he said, Arizona was a three-point favorite over Utah in a college basketball game posted at the Barbary Coast.

"We'd accumulated about $12,000 too much on Arizona," Franzi said, adding that Gaughan didn't like so much "exposure."

To encourage more betting on Utah -- thus reducing the sports book's risk -- the supervisor wanted to raise the line to Arizona minus four points. If the number drew action, Franzi said, "I wouldn't have to make a bet, that was the end of it.

"But if it didn't get any action, I'd make the bet."

"You're just a normal bettor?" asked DuCharme.

"True."

"With the ability to move the line."

"Yes."

"I wonder if there are other bettors in this state who would like to have the line move in their favor so they can bet into it."

"I'm not ashamed of anything I've done," Franzi said. "That's not really a strange thing. But they do it a lot in order to get comeback money."

"But it's different when you're making a wager and the line immediately changes," said Bible.

"If you saw the line changed 22 seconds before a $55,000 wager was made and changed back 22 seconds later, would you look closely at that?" DuCharme asked former Barbary race and sports book auditor Greg Farina.

"Yes, normally," Farina said. "But sometimes you'd miss it with subtle point changes of half or 1 point."

Franzi was also questioned about phone bets on a UCLA-Oklahoma State game allegedly made at the Barbary Coast while he was attending an NCAA Final Four basketball tournament in Seattle. Such interstate calls are prohibited by federal law.

"I didn't call from out of state to make a bet," Franzi said. "I may have called my son and asked him to do it.

"I could have called my son and had him call the Barbary Coast, or he may have been there, and I may have told him if we're high on this side, to bet UCLA."

Franzi and Gaughan will be back before the Control Board Tuesday, when Kosher Boys ringleader Danny Kramer and New York police investigator Frank O'Hara are expected to testify that the Barbary Coast oddsmaker wasn't laying off bets for the betting syndicate.

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