I have never heard it used, but I assume it is gambling slang. If I had to guess what it meant, it might be similar to ‘butt up against’, meaning — in a relational rather than physical context — to come uncomfortably close to someone else when you’re both working to opposite ends.
It may also just be gambling slang for playing with someone. However, because slang is made-up and its meaning is created communally, and it’s used to show that you’re a part of a community, phrases in slang often take meaning from their similarity in words/sound to other phrases.
So it’s possible the meaning of ‘butt onions’ has an element of ‘working to opposite ends’ in there too, from ‘butt up against’. We can see an element of that in the text, too — Joey is telling Mike that they’ll take all of his money, that they’re working against him and that they’re much better than him.
Hope that helps!