I re-watched the episode and now have a better appreciation of how Nucky "played" Arnold Rothstein. Nucky mentioned something about "big bait" and he was referring to the distillery that he got from Andrew Mellon.
After Rothstein demanded 95% of the ownership of that distillery in return for getting Masseria to drop his support of Gyp Rossetti and the war was over Nucky was able to get Gaston Means reach out to Mellon and turn the government against Rothstein.
