Outside The Box

Go Big Red

           “That’s the dumbest idea I’ve ever heard in my life” I said when it was suggested I submit a bid to conduct the Omaha municipal lottery. But I remembered a fierce battle over the contract two years earlier between Alan Baer and Ak-Sar-Ben. Baer was heir to a department store fortune and Nebraska-spelled-backwards was the State’s largest horse track. I knew they wouldn’t be squabbling over peanuts. Their squabble ended in 1989 when the City Council selected Baer, and the mayor, owing more favors to the ponies, vetoed the choice. It was now 1991, and the contract was being re-bid.

           The Nebraska legislature had empowered cities and counties to conduct local lotteries as an alternative to a state lottery. In a bizarre twist, one form of “lottery” was a Las Vegas-style keno game, conducted by private contractors in centralized keno parlors. The game was run every five-minutes, with authority to broadcast the game to bars.

           I obtained the bidding packages from 1989, which were public information. Lo and behold, they were just like prospectuses! They were descriptions of new business ventures, and how they would be run. I decided we needed to update the 1989 models to a better version. There were five bidders on the Omaha/Douglas County contract.

           We engaged Bill Eadington, a professor at the University of Nevada Las Vegas, and the leading consultant on gambling in the United States. At his recommendation, we hired Doris Walker, former keno manager of the Sands Hotel in Las Vegas as our manager, subject to winning the contract.

           After our bid was submitted, a County Commissioner paid me a visit. His message was that we may have the financing, we may have the management, but one thing we needed we didn't have: political connections. His mission was to discourage me, but it only made me more aggressive.

           We determined through him and others that another bidder had the votes necessary to get the bid, and that we were wasting our time. I could have given up, but I didn't. I focused on a clause in the bid documents that said that the City reserved the right to designate two contractors. It was a clause that had been put in to avoid another stalemate between the Mayor and City Council.

           I did two things. I brought Bill Eadington to Omaha, and I took my campaign to the media. In the meantime, the City Council narrowed the number of bidders from five to two. They were mine and the person who had the win “wired.”

           Bill Eadington wrote an op-ed piece for the Omaha World Herald arguing that two operators were better than one, because it fostered competition. The other side wrote a piece in response, and the battle was joined.

           I challenged the other side to debate the issue on a television news program, and the program agreed. Bill Eadington came to Omaha and spoke to the City Council. We won over one councilman by agreeing to establish a main keno location in an African-American neighborhood. We won over two additional councilmen through logic and persistence. We didn't know where the fourth vote would come from, but we engaged former US Senator David Karnes to talk to them on our behalf. On the night of the meeting, we had no idea how the vote would go.

           Our opponent received seven out of seven votes. It was now time to consider whether we should be designated as the second operator. We received three out of seven votes. When all seemed lost, one of the Councilmen announced that he was changing  his vote from Nay to Yea. We had won the second slot.

           We performed our contract with excellence. We determined that the real potential for keno was broadcasting it to bars. The technology did not exist, and we entered into an agreement with a keno company, Gamma International, to develop it. Millions of dollars later, we had a workable broadcast keno game.

           Over the years we continued to successfully develop and improve the software, and with this innovation and a good reputation, we won the contract to conduct the keno game in Lincoln. Eventually we won the contracts to conduct keno games in many other cities and counties. We drove the other contractor, who had it “wired,” out of Omaha.

           The game grew until we were accepting over $1 million a week in bets at over 150 bars in Omaha. State-wide, Big Red Keno is accepting bets at a rate of $80,000,000 a year, and has about half of the municipal lottery business in the State. Big Red Keno operates three sports bar and grills. It has generated over $60,000,000 in revenue for the City of Omaha and Douglas County.