Troubles in Bunnyland

Playboy may lose its profitable British gambling licenses

The scantily clad Bunnies last week were still spinning the roulette wheels and dealing the cards under the crystal chandeliers at London's Playboy Club casino on Park Lane. But despite the outward show of pleasure as usual, the Bunnies were fearful that they might soon be out of work and out of business. A committee of four magistrates last week refused to renew gaming licenses for the Park Lane casino and the Clermont Club casino on Berkeley Square because the Playboy corporation was "not a fit person to hold a gaming license." The move put a cloud as well over the future of Playboy's chain of 80 betting shops, six bingo parlors and three other casinos in Britain.

During twelve days of public hearings, the justices heard charges, for example, that the clubs had violated British laws between 1975 and 1979 by issuing credit to wealthy Arab businessmen and other high rollers. Favored patrons were allowed to write bad checks for gambling debts. When the accounts were settled later, a discount was sometimes available for the asking. Investigating Accountant John Godfrey testified that Qatari Sheik M.H. Behbehani cashed about $4 million worth of checks drawn on 14 different banks that were returned unpaid. Behbehani, though, eventually made good. Moreover, there were allegations that Clement Freud, grandson of Sigmund Freud and a Member of Parliament, was allowed to gamble at the club while serving as a Playboy director, a violation of British regulations.

The committee was also regaled with the exploits of a Lebanese habitue of the casino, Abdul Khawaja, who reportedly steered wealthy Arabs to the tables, and to the Bunnies. As ex-Bunny Toni Anne Gibson told an interviewer: "Once a girl went with Abdul she got special privileges. If Abdul wanted to take her on holiday, he would phone Playboy and fix it. It wouldn't take long before he had set her up with one of his sheiks." Former Bunny Mia Marsh said that Khawaja would come into the club, waving money and shouting, "Lots of monies to spend on Bunnies."

Two witnesses acknowledged that they had been paid to testify against Playboy by a rival casino operator. Nevertheless, Playboy faces an uphill battle as it pursues legal appeals to the decision of the licensing justices. The company had attempted to clean up its image in Britain earlier this year by firing flamboyant Victor Lownes, who had headed its operation in London for 15 years.

The action by the four magistrates strikes at the most profitable division of the Chicago-based corporation. In the fiscal year ending last June, British earnings made the difference between profit and loss for the enterprise. Without $40 million in earnings from Britain, Playboy would have been $15 million in the red, in part because of losses on its U.S. resorts. The firm's namesake magazine is still a moneymaker, earning about $10 million last year.

The timing of the court's decision was particularly bad because Playboy is now seeking to obtain an ongoing license for its new $150 million casino in Atlantic City. Said Steven Eisenberg, an analyst with Wall Street's Bear, Stearns & Co.: "We can assume that it would be very difficult for New Jersey to grant a license if the company loses its appeal in the United Kingdom." The future of Playboy could hang on the two decisions concerning its gambling operations. qed

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