The Gambler

by William C. Rempel

  The maintenance man ran back to the vacant cashier’s station, grabbed the house phone, and called hotel security. Speaking with urgency he reported, “We’ve got a fire in the Deli.”

  “Is it bad enough to alert the fire department?”

  “Hell, yes!” Connor shouted. “Roll ’em!”

  The MGM Grand Hotel was more than a big, beautiful building, more than a model of good business, more than a monument to entrepreneurial daring or awesome financial success. It was also the fight in Rifle Right Kerkorian’s comeback from near disaster. It was the bold statement of a shy kid from Weedpatch that he belonged with the world’s elite captains of commerce. It was the gambler’s biggest score.

  And it was Kirk’s baby.

  As the Grand’s morning shift of dealers, desk clerks, cooks, security aides, and housekeepers arrived with the sunrise, his baby was waking to a typically quiet Friday morning. A handful of late-night stragglers in the casino occupied a single craps table, a couple of blackjack tables, and scattered slot machines. It wasn’t much action, but Louis Miranti was monitoring, as usual, from the casino’s “Eye in the Sky”—a remote office on the floor above with a live camera link to the casino floor. Miranti was the house referee, the casino’s integrity cop.

  There were no lines yet at the front desk. Friday was notorious for late sleeping and late checkouts. And at this early hour, the Orleans Coffee House was always more popular than dice or the slots. The all-night coffee shop was at the easternmost end of the casino—the 140-yard gambling floor once proudly christened the “world’s biggest casino.” That was until Kirk’s Reno MGM Grand added ten yards to the record.

  The Orleans anchored Restaurant Row made up of Barrymore’s, Gigi’s, Caruso’s, and the Deli. They were clustered just opposite a central bank of sixteen elevators serving all twenty-one hundred rooms on twenty-six floors.

  The hotel was finishing the week at 99 percent occupancy. The stats were gratifying on many levels, especially supporting the notion that Kirk’s baby was, in fact, everybody’s favorite. His hotels certainly made Kirk proud. And more. Previous year pretax profits for the Vegas and Reno MGM hotels combined had been $33.9 million.

  Harvey Ginsberg had a 7:15 business breakfast scheduled in the coffee shop, and he was running a bit late, wheeling into the MGM Grand’s magnificent porte cochere at precisely 7:15. He still faced more than a football field’s walk from the west entrance to the Orleans’s hostess station on the other end of the casino. He couldn’t wait for a parking slip. He was sixth in line for the swamped valet. Ginsberg left his keys in the car and hurried through the glass doors.

  He was walking fast and wishing he could move even faster without resorting to an unseemly sprint. He couldn’t help noticing something unusual about the atmosphere around him. There was a thin haze hanging over the high-ceilinged casino. The air-conditioning system must have failed, he figured. Not that the 38-degree temperatures outside put much of a strain on the machinery, but air filtration was part of its function, too. It didn’t seem to be bothering anyone. Ginsberg kept his pace.

  Tim Connor, the tile maintenance man who found flames in the Deli and called for a fire department response, had gone to find a fire hose in one of those glass cabinets marked with big letters: “In Case of Emergency Break Glass.” It was supposedly in a hall between the Deli and the also closed Barrymore’s. Connor headed that way, across the empty Deli seating area just as a sudden explosive burst of smoke and heat knocked him to the floor near the vinyl-covered luncheon booths. He gathered himself and kept going.

  The flames were still confined to the walls and interior of the Deli. The adjacent coffee shop remained unaffected and its patrons unaware—until a hotel security man entered and got everyone’s immediate attention: “There’s a fire in the Deli.” He asked everyone to evacuate the restaurant as a precaution. The vacationing firemen from Illinois offered to assist and tried to find an extinguisher—until heat building rapidly around the Deli area drove them back.

  Ginsberg’s fast-paced walk got him to the far end of the casino by 7:20. He faced a low set of steps up to the restaurant area and the main elevator lobby. But he froze. He could see the flickering reflections of flames coming from the Deli entrance on his right. Beyond that he saw people running from the coffee shop. He knew panic when he saw it. He also felt it. He broke into a jog back toward the center of the casino, away from the flames and the panic, until he felt safe enough to stop and watch.

  Louis Miranti, the Eye in the Sky monitor in his office over the casino, was taking a break from watching to writing. He had another hourly report to prepare. In the quiet of an early Friday morning he was distracted by a sound. It was different. Not a noise exactly. Not loud. Not the maintenance crews, either—but something completely out of place. It was, he thought, more like the “crackling of a very intense fire.”

  Betty Gillihan on the hotel switchboard had received the first fire alert from Kenny, the assistant chef, and in turn called the Clark County Fire Department. Station 11 was located across the street from the hotel. “This is the MGM. We have a fire in the Deli,” she said, her voice so calm and unperturbed that fellow switchboard operators thought it was just another routine call, like so many that rarely rated notice in the local news.

  The first rescue unit to cross the street brought a four-man crew that included Bert Sweeny, a six-foot-six firefighter known in the station as Godzilla. He was confused upon arrival just a minute or two later. There was no visible smoke, no rush of people trying to get out of the hotel, and, therefore, no obvious point of entry. They pulled up in front of the Flamingo Road entrance. A woman in a dark velvet dress was just outside the doors wiping her eyes and coughing. Still, no signs of panic. No general alarm.

  The firefighters pushed through the glass doors and advanced about forty feet into the casino’s eastern end nearest the restaurant area. Sweeny noticed the smoke, a stratified layer about eight feet thick and clinging to the ceiling. They had paused only for a moment to consider their first move when a monstrous presence intervened.

  From out of the Deli burst a rolling fireball of dense black smoke and red-orange flame, hugging the ceiling as it swooshed out toward the casino, sucking up oxygen and new energy and growing into something suddenly gigantic. Entering the high-ceilinged casino it took the shape of a fiery tidal wave, reaching from floor to ceiling, mixing with a deadly black smoke that Godzilla and his rescue crew couldn’t hope even to slow. They ran for their lives.

  Betty Gillihan at her switchboard station in the lower level of the hotel was already broadcasting a notice to immediately evacuate the casino. The mass exodus on the casino floor above them sounded like “an elephant stampede” to the crew of phone operators.

  Harvey Ginsberg was part of that stampede. He was running from the same fireball that already had firefighters in desperate retreat. The smoke had suddenly descended, too, obstructing vision and burning lungs. Ginsberg couldn’t see chairs from abandoned blackjack tables left overturned in this path. He went sprawling on the plush maroon carpet, scrambled to his feet, and kept running.

  That fireball apparently caught the Kellers from Indiana waiting together near the elevators just outside the Deli and only steps from their breakfast table at the coffee shop. The elevators themselves were traps for another half-dozen guests, the lifts effectively turned into little gas chambers by the smoke and toxic fumes.

  The crackling sound that first alarmed Louis Miranti was, in fact, the fire as it consumed its way through the walls and ceiling of the Deli a floor below his Eye in the Sky. It was spreading fast with an advance column of deadly smoke. Miranti fled, but the smoke pursued. His only hope was to reach a back exit he knew. Cutting through the executive office wing, Miranti used his shoulder to break through glass doors to offices of the bosses fortunate to be fishing off the California coast at that moment, then through the executive washroom, grabbing a Turkish towel for use as a crude breathing device, and down into a lab
yrinth of dark and increasingly smoky hallways. He collapsed just as the hand of an unseen security guard reached out to drag him out of the building.

  Ginsberg managed to escape the casino into the adjacent porte cochere just ahead of the fireball. His car was now first in line for the valet, the keys still in the ignition. He drove off as flames ignited the roof over the valet station.

  It was nearly 7:30 on a glorious Las Vegas morning. A raging monster now possessed Kirk’s baby. Dozens of guests were already dead and more were dying. All available ambulance and paramedic units were on call. The ominous black clouds of smoke that suddenly fouled the air above the MGM Grand Hotel now loomed as well over Kirk’s long and uninterrupted lucky streak.

  Mike Agassi at his home noticed the plume of dense smoke in the distance. The smell of smoke was in the air. Kirk’s friend and onetime tennis instructor was now a showroom captain, a sort of maître d’ or majordomo. His realm was the Ziegfeld Room. He immediately clicked on his television set.2

  His fears were confirmed with the first news report from the scene. It was the MGM Grand. Mike watched live shots of desperate hotel guests waving from window ledges and balconies, gasping for air through broken windows amid swirling smoke. There were endless street scenes and fire ladder trucks making dramatic rescues from the lower floors. Helicopters kept circling the rooftop crowded with refugees from the toxic smoke and fumes.

  Inside the hotel towers, beyond the view of TV cameras, rescue workers were climbing smoke-filled stairwells, crawling over fallen bodies, searching for people with a pulse, people who might still be saved. In one upper-level elevator lobby, rescuers found five couples dead from smoke and toxic gases. The firefighters had determined that the ten victims were couples because each pair had died in each other’s arms. Of the eighty-five guests and employees who died, all but a handful succumbed to smoke and noxious fumes. Some victims died in their sleep.

  The fifteen-hundred-degree fire had raced through the casino and lower levels of the hotel in a matter of minutes, leaving utter devastation in its path. The flames were over quickly, spent more than extinguished, with the heaviest damage confined to those lowest floors. The formal investigation and recovery of bodies began once the flames were out and the smoke was dissipating—within two hours of the first emergency call. But in that brief period of compressed terror those eighty-five deaths made it the second-most-deadly hotel fire in U.S. history. Another seven hundred were injured. The casino was in shambles. And the MGM name was now permanently affixed to a heartrending disaster.

  Mike Agassi had to see for himself just how bad it was. Up close and in person. He headed for the hotel sometime around 9:30 a.m. His prominent role for years at the MGM Grand made him a familiar face in small-town Las Vegas. He had friends among police and fire officials, and his personal friendship with Kirk was widely known. He was waved through police and fire lines and entered the casino where Godzilla and his first responders had encountered the fireball.

  It was a charred and melted mess. Without the glittering casino it was as if the heart of the MGM Grand had been ripped out. Slot machines were still recognizable, but the intense heat had fused whole rows of them into solid blocks of plastic and metal, ghastly remnants frozen in time. The whole place reeked with the essence of smoke and garbage and death. Mike tried to breathe through his mouth.

  He roamed through the showrooms. They had escaped the worst of the fire, but smoke and water damage seemed to be everywhere the fire missed. All around him, the business of removing bodies and starting the hunt for clues was proceeding. Mike stayed out of the way.

  He had returned to the devastated casino in the early afternoon when a small crowd stepped in through the Flamingo Road entrance. There were uniformed fire officials, a gaggle of photographers, and a group that looked like businessmen.

  One of the visitors held a handkerchief over his nose and mouth, clearly bothered by the pervasive odor. But even with his face half covered, Mike knew it was Kirk Kerkorian. His team of top managers surrounded him. Mike also recognized Fred Benninger and accounting boss Jim Aljian.

  Earlier that day, after checking his messages in New York, Kirk had walked out of his meeting with the Columbia Pictures board of directors. His private jet was waiting at Teterboro Airport across the Hudson in New Jersey where he pressed his crew to get him back to Las Vegas as fast as possible. He was standing in the doorway absorbing the incredible loss and human suffering about four hours later, a time when the last of the victims’ bodies were still being removed from his building.

  Mike approached Kirk and his party of VIPs searching for the right words, uncertain what to say. He finally stammered something plain but heartfelt: “I’m so sorry about what’s happened.”

  Kirk’s sad eyes showed from behind the handkerchief. He was clearly upset. He responded softly, his voice further muffled by his makeshift air filter, “Thanks, Mike. I’ll call you later.” And the man who built the place was led off on a somber tour of what remained of his prized possession.

  At his home about two weeks later, Mike answered a knock at the door. It was Jim Aljian—the hotel’s senior vice president, a member of the corporate board of directors, and a financial adviser to Kirk. Mike knew him as “Kirk’s treasury man.” Aljian wanted a look at Mike’s last couple of tax returns.

  “What?!”

  Aljian explained that Kirk wanted to be certain that Mike was not harmed by the hotel’s shutdown. It would reopen in a few months, he assured the idled showroom captain, but in the meantime Kirk would pay him his monthly take-home. Personally.

  “No. No, that’s not necessary,” Mike protested. “I’ve saved some money. You don’t need to do this.”

  Aljian had a pleasant round face, very little hair, and a patient smile. He looked around the room filled with the telltale signs of a family with three children. Little Andre Kirk Agassi was nine.

  “Of course I have to do this,” he said. “It’s what Kirk wants.”

  Later that month Aljian returned in what would be a monthly ritual to deliver Mike and his family an envelope with precisely $9,089 in cash from his friend Kirk.

  27

  Villain of the Actuaries

  Early 1981

  Las Vegas, Nevada

  Kirk and his management team had determined within hours of the fire that they would begin immediately rebuilding the MGM Grand—“bigger and better than ever,” he insisted. And in consultations with attorney Terry Christensen regarding damage claims by victims and their families, Kirk underscored his priorities in the difficult negotiations ahead: “The victims were our guests. We aren’t fighting them. We’re on their side.”1

  But such promises and priorities posed a considerable financial challenge. The hotel’s insurance coverage with liability limits in the vicinity of $30 million appeared pathetically inadequate for a tragedy of this scale. The company started the new year facing dozens of unresolved personal injury lawsuits seeking nearly a billion dollars in actual and punitive damages.

  Those uncertain and potentially massive liability costs complicated just about everything on Kirk’s agenda, including cleanup and hotel reconstruction costs anticipated to exceed $50 million. He had been hoping to break ground in Atlantic City early in 1981 on a new casino project, but that was now on indefinite hold. He also had wanted to complete his takeover of Columbia Pictures, but that fight was looking more costly, and nastier, than ever.

  The Columbia board of directors had just filed another nuisance suit, acting as aggrieved MGM stockholders. The New York–based film company held a mere ten shares of MGM Grand Hotel stock, but its court filing attracted plenty of press coverage. It claimed those ten shares lost value after the deadly fire that it blamed in part on unsafe and substandard hotel construction.2

  With so many major issues pending and critical options to consider, Kirk decided to get away for a few days, flying down to Mexico City on his private jet. Kirk’s personal life at the time was also facing change a
nd uncertainty. He and Jean were no longer living together, though they continued to make appearances as a couple at social events. Kirk flew to Mexico with his friend Yvette Mimieux.

  The actress, then estranged from her film director husband, Stanley Donen, shared Kirk’s home on Bedford Drive. She was an active conservationist and naturalist with avid interests in history and art. Her friendship with Kirk would span years.

  While Kirk was traveling, Fred Benninger and his staff came up with a plan that could put a lid on the hotel company’s liability exposure. It would also set up a high-stakes gamble pitting Kirk against big insurance interests that would ultimately make him the villain of actuaries everywhere.

  The Prussian had discovered an insurance product called a “retroactive policy.” For the price of a very high premium payment of $38.3 million, a collection of insurance companies guaranteed to cover an additional $120 million or more in liability costs. It was, of course, a rarely used financial instrument, violating one of the basic rules of the insurance business: “Never write a policy on a burning building.”

  The policy’s economic logic lay in expectations that damage and injury payouts were likely to take years of hard negotiations to resolve. Meanwhile, as the years dragged on, that hefty premium payment earned interest or investment returns. What the insurers didn’t count on was a policyholder like Kerkorian who considered customer goodwill and social responsibility good for business. He was hardly the stone-cold capitalist assumed in the actuarial formulas for retroactive insurance.