At Fat Sam's speakeasy, there is much dancing and singing ("Fat Sam's Grand Slam"). Fat Sam is worried that his rival Dandy Dan will try to take control of the speakeasy. Blousey Brown, an aspiring singer, has come for an audition, but Sam is too distracted to see her. Bugsy meets Blousey when he trips over her luggage. He is smitten and flirts with her. Fat Sam's is raided by Dandy Dan's men, who shoot up the place. Dandy Dan's men continue to attack Fat Sam's empire, eventually taking away rackets and splurging members of Fat Sam's gang. Fat Sam sends all his available men, except Knuckles, to see if they can track down the guns. They are ambushed at a laundry and splurged by Dandy Dan's gang.