Here's what I believe is the background on this seemingly confusing bit of dialog. Please bear with me:
When gambling was legalized in Nevada in 1931, the state legislature put control of the industry (including licensing) into the State Tax Commission. The industry was very loosely regulated because the legislature was happy that casinos were bringing money into the state. All they cared about was taxing the profits.
But, the Kefauver hearings in 1950-51, and the Eastland hearings in '57, established proof (highly publicized through televised hearings) that organized crime ran gambling in Nevada. The state legislature, anxious to keep gaming "clean," took control out of the Tax Commission and put it into a new Gaming Commission that had two big fangs: the power to license key employees of casinos, and the "Black Book," a list of people whose criminal records or reputations could bar them from even entering a casino, much less owning or operating one (this is what Ace and Nicky ran afoul of in the movie "Casino). Now the gangsters were driven to hide their involvement.
Back to Michael and Geary:
As the most powerful politician in the state, Senator Geary's influence would be needed to obtain any approval for anyone to be involved in the sale, transfer or operation of a casino, or to staff it with key employees. As I said earlier in this thread, Turnbull most probably was his political bagman--a guy who collected money for Geary and kept it from looking like bribery (which it really was).
When Geary said, "the licenses were grandfathered in," he probably meant that the actual operation of the casino that Michael was interested in had been licensed previously, under the Tax Commission, which would mean that it didn't have to get a start-from-scratch license from the new Gaming Commission. "But that leaves you with one problem: the license will be in Klingman's name." I think Geary meant that if Michael or one of his people wanted to be the official license-holder for the casino, that application would have to be reviewed by the new Gaming Commission. When Michael replied, "Turnbull is a good man," he meant, "I made my application through your political bagman, just like everyone else does who wants your ok." Probably there was a flat "legal fee" paid to Turnbull that would satisfy Geary. But then Geary tells Michael that he's going to "squeeze" him because he's Italian--and demands $250k up front and 5% of the gross of all of Michael's hotels, "Mister Core-lee-own-eee," to emphasize his contempt. Now Michael gets it: he's a victim of prejudice as well as greed. So he replies, "The fee for the gaming license is less than $20k, am I correct?" He's really telling Geary, "If this were an honest process--and you weren't a crooked politician--that's all I'd be paying, instead of having to pay you off through Turnbull, much less the preposterous money you're demanding on top of that." And when he said, "...I'd appreciate it if you'd put it up personally," Michael was saying, "Because you've insulted me, now you're gonna pay, you greedy, bigoted bastard."