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On the eve of the year 1923 Nucky Thompson, the former treasurer of Atlantic City and his wife, Margaret, host a garish Egyptian themed party honor of the recent discovery of the tomb of Pharaoh Tutankhamun by archaeologist Howard Carter. In attendance are numerous individuals with ties to bootlegging and organized crime. At a private meeting between the gangsters Nucky Thompson, wanting to adopt a lower profile considering his ties to the Harding administration and its impending legal issues, decides to minimize his exposure to the bootlegging industry by selling his liquor solely to Arnold Rothstein. Unable to comprehend the logical reasons for such a maneuver and facing the prospect of losing a big supplier, Giuseppe Columbano Rosetti rebukes the assembled guests, threatens Thompson, and leaves the party, irate.
Soon thereafter Gyp, who had been staying at a hotel in the small stopover town of Tabor Heights, after familiarizing himself with the geography of the town in relation to New York and Atlantic City, makes the decision to dam up the flow of liquor passing between the cities. He strongarms the sheriff into allowing him to commandeer a gas station and in so doing stops a shipment overseen by Owen Sleater and Mickey Doyle. At this point some attempt at a reconciliation is made between Gyp and Nucky, but the détente was short-lived and the conflict began again with renewed vigor.