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.