Listen to me Anthony. I got your head in a fuckin' vise. I'll squash your head like a f*ckin'   

                  grapefruit if you don't give me a name.

Sam "Ace" Rothstein, a sports handicapper for the mob, is entrusted by four Midwest mob bosses (Remo Gaggi, Vincent Borelli, Americo Capelli and Vinny Forlano) to oversee the management of the Tangiers Hotel's casino in LA while they illegally skim the casino profits. Sam's experience in gambling and "hands-on" management style allow him to quickly double the profits of the Tangiers. The bosses send his boyhood friend, Nicholas "Nicky" Santoro, who is famous for his violent temper, to "protect" Sam and their interests. Nicky shows his sadistic and brutal nature in one of the Outfit's bars. When Sam asks a man talking to a woman if a misplaced pen is his, the man insults him in return after saying that the pen does belong to him. Nicky takes the pen out of Sam's hand and furiously stabs him in the neck and kicks him even mocking his whimpering. A certain mobster-style can be seen in Sam too, especially in the scene where he and several casino security guards severely beat and threaten two cheaters.

Later on, Sam falls in love with an attractive hustler named Ginger McKenna. Three months later, he proposes to Ginger, who claims to care about him but not love him. Sam laments that his entire life he's always bet on the sure thing, while marrying Ginger would be a "real long shot." But he convinces himself married life will change her. The two have a daughter, Amy, and do marry. Nicky's recklessness, combined with his cheating in various Las Vegas casinos, get him banned from every gambling den in the city. Undeterred, Nicky starts working for himself in Vegas, organizing his own crew, Jack Hardy (Jed Mills), Sal Fusco (Clem Caserta), and Bernie Blue, plus a jewelry business and a restaurant with his brother Dominick and his right-hand man Frank Marino.

Tensions rise when an up-and-coming hood, Tony Dogs, along with two other men shoot up one of Gaggi's diners, killing two of his men and a young waitress. An enraged Gaggi demands information out of Dogs by any means necessary. Nicky and his men beat and torture Dogs for two days. He eventually sticks Dogs' head in an industrial vise with the option of ratting on his crew or dying. Nicky tightens the vise after Dogs curses him, until one of his eyeballs pops out of his head. Dogs finally breaks and gives up one of his partners, begging Nicky to kill him afterwards. Nicky leaves Marino to slit the man's throat, and possibly goes to find the other man.

Sam is interviewed by a reporter concerning the running of the Tangiers' hotel. After hinting he runs the casino, which is technically under the cover of the legal chairman, Phillip Green, Sam is forced to apply for a gaming license. The application is rejected by a crooked Nevada senator as a favor to county commissioner Patrick Webb, whom Sam had enraged earlier by firing his brother-in-law (played by Joe Bob Briggs).

Upon hearing a phone conservation between Ginger and her former boyfriend Lester Diamond, Sam learns that Ginger is financially aiding Lester with his money troubles. Sam then tells Nicky to make arrangements for Lester to be beaten up, and makes Ginger watch Nicky and his crew brutalize Lester. After this, Ginger's drug and alcohol addictions worsen and eventually, Ginger turns against Sam. By way of revenge, she and Lester take Amy and flee. Nicky persuades Ginger over the phone to return but Sam refuses to forgive her disloyalty and drug use. Following a violent argument, Ginger leaves Sam and begins an affair with Nicky.

The bosses notice that the suitcases delivered from the Tangiers are getting lighter, since the men counting the money have begun stealing more than usual for themselves. The bosses put Artie Piscano, the underboss of Kansas City, in charge of overseeing the operations, but his loud complaints give the FBI, which had placed bugs in Piscano's grocery, cause to start an investigation. Worse yet, out of frustration at not being reimbursed, Piscano starts keeping precise records of the expenses, despite Borelli warning him to put nothing in writing.

Nicky starts drinking too much, and the members of his crew become cocaine addicts. Their work, once cold and precise, becomes sloppy in both planning and execution. Ace notes in a voiceover that it took Nicky three punches to knock down a man; before he'd have needed just one. After two detectives killed Bernie Blue, mistaking his foil-wrapped hero sandwich for a gun, the crew draws attention to themselves by shooting up the detectives' homes.

Sam and Ginger's relationship ends for good after Ginger ties Amy to her bed while she goes out to Nicky's restaurant. When Ginger returns home, Sam gives her some luggage and forcibly throws her out; hours later, Ginger returns into the bedroom and Sam decides to forgive her. Soon afterwards, a furious Sam threatens to kill her, prompting Ginger to turn to Nicky for help. Nicky, aghast at Ginger's attitude (and still showing loyalty to his friend), refuses to help, causing her to create a public scene; Ginger then yells that she is now going to go the FBI and drives away in fury. Nicky laments to Marino that he "fucked up good this time", a cardinal sin to the bosses being for one associate to sleep with another's wife. Ginger drives to Sam's house in a fit of rage to collect her possessions. The police are called. She tricks the police into letting her enter the home where she steals the keys to a safety deposit box holding $1,000,000. Later, Ginger is arrested for aiding and abetting the Mob.

Ginger's arrest and Piscano's big mouth start the crumbling of the Mafia's desert empire. FBI agents storm Nicky's business and the casino. Piscano's expense reports provide them with a blueprint of how the scam worked, along with dates, names and addresses. While being arrested in his living room, Piscano becomes so upset, he has a massive heart attack and dies.

The FBI also visits Sam with photographic evidence of the affair between Nicky and Ginger to persuade him to testify, but Sam balks. The bosses are arrested and taken to court, where they hold a meeting during a recess in a back room to decide which witnesses should be eliminated to stop them from ratting them out. Gaggi's hitmen murder several associates. Ginger sinks deeper into drug addiction, and ultimately ends up with a group of lowlife bikers in California who use her money to purchase drugs. She collapses in a hotel hallway and dies of a drug overdose, alone. Sam's voiceover suggests Ginger was purposely given a "hot dose," and talks about how he had paid for a second autopsy.

Sam himself is almost killed by a car bomb, surviving by sheer luck due to a metal plate being underneath the driver's seat. Though he can't prove who planted the bomb, Sam suspects that it was Nicky. The Tangiers and other mob-run Vegas casinos are demolished and replaced with family-friendly "resorts." As Nicky's own narration puts it, "It turns out that was the last time that street guys like us were ever given anything that fucking valuable."

Nicky and his brother Dominick hold a meeting in a cornfield with Marino, Nicky's crew, and two of Gaggi's wiseguys, Fat Sally (Michael Toney) and Beeper (Steve Vignari), who helped murder the witnesses. Nicky's own crew turns on him, with Marino clubbing him with a baseball bat. As Nicky is helplessly restrained by Fusco and Fat Sally, he watches in horror as Marino, Hardy and Beeper brutally beat Dominick with baseball bats. He begs them to stop, but Marino clubs him twice in the mouth (a scene omitted from most versions), and eventually knocks Dominick into unconsciousness. Nicky is next, and Marino and his men bury the Santoro brothers alive. Sam's narration states the bosses had enough of Nicky, and ordered Marino and the rest of Nicky's crew, along with their hoods, to "make an example" of Nicky and Dominick.

Sam is seen in San Diego, living alone in what appears to be a luxurious large house with a swimming pool (though not nearly as big as the mansion he had previously owned in Vegas) making bets for the mob and watching sporting events on multiple televisions. Sam notes that he ended up right back where he started before taking over the Tangiers, picking winners and making money for the bosses back home.

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