Terry is playing Kwazy Kupcakes, the same game Holt got addicted to in season one.
In an extended cut there is more to the scene when Hitchcock and Scully are asking Holt about their sunken casino scheme. Hitchcock asks Holt if Blair Underwood whom Holt had seen would be interested in giving money for it. Andre Braugher instead of responding in character says an expletive and then says no which makes Dirk Blocker burst out laughing.