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Cashed Out

Local charities could lose big when the Horseshoe comes to town

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The twentysomething guy wearing blue Nike basketball shorts and Apple earbuds and fiddling with a stack of poker chips on a recent Monday night is one of Liberation United Church of Christ's most valued donors. But they don't know his name, and he probably doesn't know theirs either.

The Lakewood church is running a three-day tournament at the Nautica Charity Poker complex in the Flats, taking a tithe from each hand as action progresses in what will probably be its largest fund-raiser of the year. By the end of the night, it will have pocketed thousands of dollars — an incredible and efficient score in the nickel-and-dime land of small nonprofits.

The guy in the Nike shorts and other players like him unwittingly make up one of Cleveland's largest sectors of charitable giving, both in numbers and in sheer financial volume. Over the last seven years, millions of dollars have been raised for non-profit groups by thousands of poker players, benefiting everyone from hospice organizations to local high schools to Ronald McDonald House.

But he and his fellow players descend upon the hardscrabble West Bank of the Flats because Nautica, whatever its faults — and there are many — offers the only legal poker game in town.

At least for the moment.

The doomsday clock has been ticking at Nautica ever since voters gave Dan Gilbert the go-ahead to erect a casino downtown. Now the countdown is nearing its end: The grand new poker room at the Horseshoe Casino, better than Charity Poker in every quantifiable way, is slated to open on May 14. It's a date Nautica players have been eying gleefully.

"Three months until this place is a ghost town," one Nautica regular wrote on a poker forum in February.

And three months until dozens of local charities get royally flushed.

***

Kevin Hartman is pretty much like every other high school athletic director, watching helplessly as his budget gets pared by the state scalpel year after year. Necessities become luxuries, and luxuries become fantasies.

As each dollar is lopped off, alternative avenues of revenue become increasingly essential. There's bingo and booster clubs, but that trickle of nickels is fruitless strategy when you're tens of thousands of dollars away from putting your teams on the field.

Seven years ago, however, the AD at Garfield Heights High School found a reliable source of dough to shovel cash — tens of thousands of dollars at a time — into his department's hungry maw: When the Nautica charity tournaments launched in 2005, the Garfield Heights Athletic Boosters were the first group to sign on.

Since then, every year, and sometimes twice a year, volunteers run games during two- and four-day tournaments taking place every night of the week. The charity rakes in a portion of all the money flowing across the tables. A typical take for a four-day stint: More than $30,000.

Hartman says they averaged even more than that annually — closer to $40,000 — and sometimes as much as $80,000 when they've been able to land multiple tournaments in a single year.

***

Before four o'clock each afternoon, the crowds begin to converge on the corner of Elm and Main.

There, bombed-out buildings share the block with ritzy glass condos, and shards of broken glass line the packed curb that's filled end-to-end with cars till midnight.

Before the Greater Cleveland Aquarium arrived in January, there was little reason to venture down to this corner of the Flats unless you were taking in a summer concert at the pavilion or a comic at the Improv, a lap dance or a cheap drink, or you were simply lost. Gigantic parking lots sit forlornly vacant, daily reminders of more prosperous, boisterous times.

Today, the occasional police siren and the consistent clatter of cars passing overhead on the Shoreway bridge are the only sounds you'll hear outside at any installment of Nautica Charity Poker. Inside, however, the air buzzes with the hum of TVs, chatter, and the constant nervous tapping of chips.

Twenty-five tables that look as if they were dragged in from a Vegas casino circa 1975 fill the cramped room, which despite the exposed brick walls and paint job, feels more like a banquet hall than a gambling parlor. Volunteers in brightly colored shirts work the front desk, assigning players to seats and organizing tournaments. A cashier's window in the back, cordoned off by a sad-looking velvet rope, is guarded by a camera in the ceiling and bars on the window.

It's a far cry from where the tournaments started, across the street in the Nautica parking lot seven years ago.

Jacobs Investments, which owns and runs the Nautica complex, brought Charity Poker to Cleveland in 2005 for two reasons. Ostensibly, there was the magnanimous desire to help out nonprofits struggling to find income.

But more important for Jacobs: Charity Poker was the soft launch of real gambling in Ohio. CEO Jeff Jacobs always wanted a casino in the Flats. He hoped that, by showcasing his land and the public's insatiable desire for games, the state might be convinced that the time was right for casinos, which had been voted down twice since 1990. Jacobs Entertainment, a subsidiary of Jacobs Investments, was already running gaming operations in four states.

"The Poker Festivals will demonstrate the phenomenal demand for gaming in Ohio and show people that gaming is a viable source of revenue," a Jacobs VP said at the time. The county leased the space from Jacobs for $1, then leased it to each charity for $1 a week. From the moment the casino pilot launched in June 2005, tables were packed for four-day tournaments held through Labor Day in a 20,000 square-foot tent near the Cuyahoga River.

In 2006, $700,000 was raised by participating nonprofits, according to Nautica's numbers. In 2008, the tournaments were moved inside the Powerhouse and expanded to 46 weeks a year. In 2009, operations were expanded year-round. In 2011, it moved again to its current space in The Apartments at Nautica. Through it all, local charities were raking in more than $1.75 million a year and booking their tournaments a year in advance.

Between 2009 and 2011, more than 80 groups a year were taking their turns and eagerly coming back for more. It's easy, insane money: Just pull up the car, deal some hands, and walk away with $30,000.

All that qualifying charities need do is apply for a spot. Returning customers are given preference in calendar dates and in hosting more lucrative four-day tournaments instead of two. By law, each nonprofit runs the tournament; Jacobs serves merely as a non-compensated "consultant," which means little more than rudimentary table training and use of the space.

In its formative years, Nautica charged a "seat fee" for players by the hour; that practice evolved into a standard "rake" or commission: $5 for the charity for every $20 buy-in for tournaments, and a $5 or $6 rake per hand in live action table games.

At the end of the night, the charities were responsible for all expenses, paid out of their net earnings. The rest was gravy.

Garfield Heights, for one, has walked away with nearly a quarter-million dollars of gravy — a figure no amount of bake sales or charity drives could have rivaled. And that money came just as bingo — a traditional source of fund-raising for charities — began its sharp decline.

At Garfield Heights, parents must pony up $350 for their kid to play one sport, and $100 more for the second. But if you or your kid's team works a poker tournament, your ante gets cut. Poker's real score at Garfield, however, comes in helping with the cost of gear: Charity Poker earnings almost completely cover the school's annual equipment needs.

Midpark High School is in the same boat. In just two days, the school's Athletic Booster Club cleared more than $18,000 at Nautica. That money went into the general athletic fund for operations, buses, equipment, and to pay officials, according to athletic director Bob Johnson. He estimates it represents about 20 percent of his total budget.

"Not having it would affect the entire operation of the program," he says.

***

The Jacobs group was right when it forecast an increasing demand for table games, a steady stream of gamblers filling those tables, and the eventual welcome mat for casinos in Ohio. But that casino wasn't bound for the Flats.

In a painful ironic twist, Jacobs Investments will likely lose Charity Poker, one of its last remaining draws, because it was absolutely right about the demand for casino gambling.

Charities large and small are now nervously eyeing that day when Dan Gilbert's Horseshoe Casino throws open its doors and players move en masse up to the plush poker room on Public Square.

Where there was an easy $40,000 in four short days, there will now be nothing. And if things go that route?

"It would cripple us," says Garfield Heights' Hartman.

But scarce are the reasons why it won't happen. Nautica, after all, is short on the creature comforts serious gamblers are accustomed to. In the words of one player who asked not to be identified: "Where to start?"

"It's all a big pain in the ass," says Scott, a regular who's been playing at Nautica twice a week for the last three years. He asked that his full name not be used for this story; he and other players aren't exactly keen on having their pictures taken, let alone their real names published.

Among the complaints: Unlike the all-hours access of the gaming palace up the hill, Nautica is required by Ohio law to close at midnight, and those restricted hours can lead to long wait times and hurried tournaments. There is no alcohol, the official lubricant of casual gamers everywhere. The dealers are your neighbor kid's mom and the guy who fixes your car — volunteers who are probably no more than marginally knowledgeable about the game they're running.

"You have to understand, playing [at Nautica] is terrible," says Scott. "You have to hold [the dealers'] hands because they don't know how to handle the chips or count the pot. There are no cameras watching the games, so there's no way to solve anything if there's a problem. I've seen someone steal another player's chips, and there's no proof.

"Plus, I can't tell you how many hours you spend standing around or sitting next-door [at McCarthy's bar], waiting for a table to open," he says. "That's not going to happen at the casino."

Despite efforts to make the experience as welcoming and efficient as possible, the final product at Nautica is still something more akin to sitting at a game in your friend's basement, with his uncle serving as dealer because he once saw a poker tournament on TV. It may be real money, but it's not the real thing.

"Nautica's always had this backroom feel to it," Scott says. "But not in a good way." His gripes aren't unique, but there's nothing that Nautica can do to overcome them, limited as it is by logistics and law.

Even the promise of the slightest improvements makes players drool every time. When a small private poker room in Berea opened up two years ago, about half of Nautica's customers switched venues, according to its own estimate. At Gemini Players Club, the house didn't take any rake at the tables, and the dealers were semi-professional.

But Gemini was open less than six months; Berea shut down the private club over concerns that it violated city legislation. So the players returned to Nautica — once again the only game in town — as a refuge of last resort.

One thing everyone at the tables agrees on: Nautica poker is not long for this world. I can't wait till the casino opens, has been a common refrain throughout the room for nearly a year.

Awaiting players at the Horseshoe will be an immaculate third-floor "World Series of Poker" room with 30 tables, surrounded by all the amenities one could ask for — the kind casinos so scientifically provide to not only make you feel welcome, but to feel like you never want to leave.

"Everybody is talking about how excited they are," says Scott.

There's at least one additional draw to Horseshoe, according to players: new people filling the tables — the kind Nautica was never able to lure.

Scott offers two examples. First, he expects to see a bevy of easy-target casual players. "Fish," as the regular players call them, will roll in ready to lose handfuls of cash. Given Nautica's location and its lack of advertising, the only fish near Charity Poker are blowing bubbles at the aquarium.

The other new breed at Horseshoe: competitive, professional players in need of a score ever since the feds clamped down on online gaming in 2011.

"A lot of the online pros from this town — people that you don't know or hear about, people that earned a living online before the sites went down last April — they are going to come to the Horseshoe," he says. "They didn't come out to Nautica because it's such a craphole."

***

Scott and others aren't saying anything that Nautica's charities don't already know.

"We're guessing this will be the end of it," says Andrea Sheppa, president of the Bay Village Band Boosters. In two short days of dealing cards, her club collected more than $20,000 — dough that bought the Bay marching band its first new uniforms in 23 years.

"I find it surprising that they believe it can continue," says Midpark AD Bob Johnson. But so far, that's exactly what the folks behind Charity Poker seem to believe.

For now, Jacobs expects its tournament to continue operating long after the lights go up at the Horseshoe. It's also invested in the space as if it doesn't plan to go anywhere.

"We're planning on keeping it open and running. Charities are scheduled through the full year," says Tim Knudsen, a Jacobs spokesman. "We just put in new carpeting and monitors recently. We're looking forward to serving charities this year and in coming years."

But a Plain Dealer interview last summer with Jacobs Investments VP Dave Grunwalde yielded a more guarded outlook. "We expect the casino will reduce revenues for the charities," he said. "Our plan is continue to operate as long as it's feasible."

The Jacobs group says that as long as charities are scheduled, business will proceed as normal. If the steady stream of nonprofits slows to a trickle, then decisions will have to be made.

"A lot of this is up to the charities and what they want to do," says Paul Ertel, general manager at Jacobs. "You have to be determined, and you have to wait and see what the reaction of the players is once the casino opens."

With the aquarium just a stone's throw away and Scott Wolstein's East Bank project on the rise, a possible re-rebirth of the Flats is still premature, as is any hard data on whether those new visitors will also find their way to poker games.

"The aquarium's only been open a month. We're still waiting to see what kind of impact that has. We're waiting to see how things unfold," says Ertel. "There's a lot of proactive things going on down here right now. We just hope to continue to have a positive effect on the Flats and Cleveland as best we can, and continue doing the work for the charities — that's what it's all about for us."

When does Nautica cut the cord?

"Whenever the charities decide it's not worth their effort."

Organizers like Sheppa aren't sure how long that might take.

"You have to pay the expenses no matter what," she says. "The trash, police, employees, janitor, electricity — it all added up to about $3,500."

Charities will be staring at the prospect of that hefty tab, plus the uncertainty of the regular influx of gamblers just to cover those costs, let alone nudge the night's ledger into the black.

"It's risky work," she says.

***

Mike Ludwig is understandably doubtful about the future of Nautica. His nonprofit group, the Chagrin Dads Club, which benefits Chagrin Falls schools, is scheduled to run a tournament in March. It's their biggest fund-raiser of the year, and he knows it will probably be their last ride on the poker express.

"Last year we raised $35,000 in four days. That's about 50 percent of what we raised in the entire year," says Ludwig. "We fixed playgrounds that would have gone unfixed, purchased supplies the schools can't because they're always under budget constraints. The money funds critical components to fill holes that would otherwise not get filled.

"This year, we were hoping to get the band new uniforms. It's been over 20 years," he says. "And even for a small school like Chagrin Falls, that costs over $45,000. How many cookies do you have to sell to make that?"

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