Reputed Mob-Backed Video Poker Machines Under Investigation

A federal investigation of mob-backed video poker machines is now under way in the Bridgeport neighborhood, sources have told the Chicago Sun-Times and NBC5 News. And tavern owners, in whose bars the poker machines were located, have been called to testify before a federal grand jury.

The raids, according to law enforcement sources, began over the summer.

“They hit several taverns, 10 or 12 of them maybe,” confirmed attorney Joseph Lopez, who said the FBI took all the circuit boards out of the machines.

One such raid, according to a knowledgeable source, took place at the Redwood Lounge at 3200 S. Wallace. Reached at home, the bar’s owner, Nick Spazio, declined to comment when asked if his tavern was the object of an FBI raid. “Sweetheart, I can’t really talk to you on the advice of my lawyer . . . we better leave it alone,” he told a reporter.

The bar is now closed.

Authorities believe the video poker machines, which produce illegal payouts, tie back to the operation of the late Joseph “Shorty” LaMantia, a top lieutenant in the 26th Street Crew.

LaMantia, in turn, worked under Frank Calabrese Sr., who was convicted in 2007 in the historic Family Secrets trial, involving 18 unsolved mob murders. Calabrese, Joseph Lombardo and three others were found guilty on racketeering and conspiracy charges.

A jury ruled that Calabrese, 72, took part in seven outfit hits and ran an illegal gambling operation. He was sentenced to life in prison.

At the end of the trial, Robert Grant, special agent in charge of the Chicago FBI office, said his agents’ work was not done. “It’s not the end of the Outfit,” he said. “I would declare to you right now we are actively investigating the Chicago Outfit.”

Video poker machines have long been a staple of Chicago taverns and a rich source of revenue for the Chicago mob.

Currently, it is the state that is desperate for revenue. And so in July, Gov. Quinn signed a bill to legalize video poker as a way to fund state construction projects. But those machines won’t be able to legally make payouts until the Illinois Gaming Board can hire sufficient staff to license them and enforce their operation. A Gaming Board official said the goal is to be up and running by the end of 2010.

The plans call for an estimated 45,000 to 60,000 legal video poker machines in bars and taverns statewide. So far, about 49 cities, town and counties, including Cook and DuPage, have opted to ban them. (The county bans apply only to unincorporated areas.)

The Legislature, according to the Gaming Board, allocated $3.3 million to the board in fiscal year 2009 and $4.7 million in fiscal year 2010, allowing it to double its existing staff. Half of the new hires will be dedicated to monitoring video poker machines.

Critics argue that even with additional personnel it will be a daunting, if not impossible, challenge to wire all the machines to a central location and ensure no criminal influence.

Then there is the question of what will the mob do? Jim Wagner, a former FBI supervisor and past head of the Chicago Crime Commission, believes video poker remains too lucrative for the Outfit to cede its profits to the state.

There’s “too much money to be made with those machines to turn their backs on it,” Wagner said. “They have their own equipment out there and that won’t change.”

The U.S. attorney’s office declined to comment for this story.

Thanks to Carol Marin and Don Mosely