Why they got out of the boat business.
forbes.com
Gus Boulis built a casino boat business on street smarts and bank debt. Will a string of lawsuits sink it?
Forbes 9/00
House Of Cards
By Michael Freedman
ON A SUNNY WINTER DAY IN DECEMBER 1998 state and county authorities boarded the Sun Cruz, a casino boat in Hollywood, Fla., and seized slot machines, roulette wheels and nearly $1 million in cash. Florida's attorney general, Robert Butterworth, filed a civil suit alleging the casino company engaged in illegal gambling. Then the owner of the vessel, Konstantinos (Gus) Boulis, arrived. "I started screaming," he recalls. "I said, 'What are you guys doing?' They said it belongs to them now. So I called my lawyers."
He ought to have their number on speed-dial. Gambling is illegal in Florida, with certain exceptions for Indian reservations. But state jurisdiction ends 3 nautical miles off the Atlantic coast and 9 off the Gulf Coast. So Boulis' ships cruise into international waters before allowing any wagers. It's an old loophole. Back in 1939 then California state attorney general Earl Warren shut down a handful of gambling boats running 3 miles off the coast. But Boulis has bigger plans than any predecessors. He has ten boats in Florida, one in South Carolina and wants to expand into Texas and New York City.
These boats may be legal. But since the Greek immigrant started in this business in 1994, he's fought civil and criminal lawsuits, filed by city, state and federal authorities, that allege fraud, illegal gambling and destruction of natural resources. Now, a suit filed by the Florida Attorney General's office alleges that these "cruises to nowhere" violate a Florida law that prohibits having gambling paraphernalia such as slot machines on state property--in this case, the slip used by Boulis in Ponce Inlet, a historic beach community just south of Daytona Beach.
So why isn't he worried? Boulis has a knack for staying afloat. In Hollywood, for instance, while the illegal gambling suit lingers, a judge compelled the state to return the seized property, allowing the casino to continue operating. In Ponce Inlet there could be years of litigation before the state gets its relief. And what's to stop Boulis from anchoring casino boats in the Atlantic and running tenders to pick up customers?
Meanwhile, business thrives. Last year Boulis' casino operations earned an estimated $13 million on $85 million in sales. Legal battles? "I leave these things to the lawyers," says Boulis, 51.
Born the third of four children in the coastal Greek town of Kavala, Boulis joined the shipping industry after grade school, as his father had done. It was not an easy life, and with dreams of finding something better for himself and his family, he jumped ship near Halifax, Nova Scotia in 1968. Within six months Canadian immigration caught up with him, and Boulis fled to Toronto, where even a poor-English speaker could blend into the Greek community. There, in the then-hippie Yorkville section of the city, Boulis took a job as a short-order cook at a Mr. Sub. Again, immigration officials caught up with him, landing him a week in the slammer. He fought the government's extradition attempts, married a 16-year-old Greek-born Canadian citizen and got citizenship.
Meanwhile, as Mr. Sub expanded, so did Boulis' role there. He helped sell the company's concept to franchisees, expanding the company to 200 restaurants in Canada and the U.S.
When Mr. Sub's three founders bought out Boulis' equity stake for an undisclosed sum in 1979, he moved to Florida. With a $50,000 loan from a Canadian bank, Boulis leased and renovated a dilapidated restaurant in Key West. Two years later, with a $2.5 million overdraft from a local bank, he built his first hotel in Key Largo. (He now owns eight.) He bought the bank, too--which helped in 1990 to finance Miami Subs, a chain of 192 submarine-sandwich restaurants, notable for their Miami Vice-style neon decor and Dom Perignon on the menu. Miami Subs was later merged with a struggling public chain of Mexican fast-food restaurants and was sold to Nathan's.
It was while taking 300 Miami Subs employees on a corporate retreat aboard a Florida gambling boat that Boulis found his true calling. Never one to agonize over business decisions, Boulis that week paid $2 million cash for the Sir Winston, a 100-foot cruise ship. The boat was an immediate success. Sailing from the marina at a Boulis-owned hotel in Key Largo, the Sir Winston sold out the first week with 150 passengers a night. Three weeks later, with backing from a banker friend, Boulis ordered a 350-passenger boat for $5 million.
Since then, he has raised the ante in a rogue industry. The main source of revenue for the few casino boats in Florida before Boulis were admission fees of as much as $70 a person. Boulis cut ticket prices to $10 to $15 per passenger, and began letting regular bettors on board gratis. By buying expensive billboard advertising and luxurious boats at prices up to $20 million, he has forced competitors to scale down their operations. At Europa Cruises, sales dropped 79% to $709,000 in the first quarter of 2000; in Hollywood alone, Boulis' slot machine revenues came to $2.2 million during the same period. "Banks love me," he says.
Lawyers do, too. A federal suit, for instance, claims Boulis made false statements to the U.S. Coast Guard when he first applied for the ship license in the mid-1990s. In February his companies paid $2 million to resolve criminal and civil suits surrounding the allegations.
Neighbors don't have much use for him either. A suit in Port Richey alleges that the Sun Cruz has been dredging a hole in the middle of the Pithlachascotee River bed. Another suit claims a boat in the shallow Crystal River caused "irreparable harm" to plants and animals. In South Carolina, where there is no casino gambling, Boulis' 50-50 partner is Harold Dewayne Williams, a casino operator who lost his gambling license in Mississippi in the early 1990s, and was indicted by a federal grand jury there on a charge of failing to provide U.S. Customs officers with cash receipts and then lying to investigators. He later pleaded to a lesser misdemeanor charge of contempt.
In Florida, where Boulis sells more than a million tickets a year, the authorities are clearly looking to bring him down. "This is a cash business and all the things that go along with that are potential problems," says Jonathan Glogau, an assistant attorney general. "I'm talking about coming on a boat with a suitcase of money; no one's doing the books, no one knows what's going on out there." Following the money is a good lead. In the midst of a divorce suit Boulis listed a net worth of $90 million as of June 30, 1997 and $47 million nine months later.
It pays to hire well-connected lawyers. Lawrence Crow, who has defended Boulis in suits filed by Florida's Department of Environmental Protection, is a state representative; Ralph Haben, a former speaker of the Florida House, is lobbying on behalf of the cruise-to-nowhere crowd. A betting guy might put at least some chips on Gus Boulis. |
