Las Vegas Mob

Few American cities are more mythic than Las Vegas, and no issue has been more central to the creation of those myths than organized crime. Thanks to entertaining if historically dubious films—The Godfather trilogy, Bugsy, and Casino stand out—the public developed an image of what the mob meant to Las Vegas. Thanks to its publicity machine, Las Vegas helped mold that image.

Organized crime is as old as crime itself. Today, as in the past, gangs are one of the most visible forms of organized crime. The mob associated with Las Vegas grew out of the "Great Migration" through Ellis Island between 1880 and 1924. Southern and eastern Europeans—Italians and Slavic Jews—moved mostly into eastern cities, but also inland to Midwestern cities and occasionally to the West.

These immigrants and their next generation faced the same problem previous and future immigrants faced. Discrimination often deprived them of respectable, well-paying jobs. So, they could choose between low-paying jobs that few wanted and high-paying jobs that few wanted. Accordingly, some turned to illegal activities: gambling, white slavery (prostitution), protection, and, during Prohibition (1920-1933), bootlegging.

These mobsters were mostly Italian and Jewish. For example, Frank Costello, Lucky Luciano, Meyer Lansky, and Benjamin Siegel worked together although much remains unknown about that working relationship, in New York City and later on the Las Vegas Strip. Did Italians work for Jews? Or were Jews front men for Italians who kept their real ownership hidden because they could not be licensed? This much is clear: usually, Italians provided the muscle in organized crime while Jews were administrators and accountants.

Siegel was an unusual example of Jewish muscle, committing murders and bringing Hollywood under his sway by taking over important movie unions in the late 1930s. Legend has it that Siegel invented Las Vegas, or at least its resort hotels. In fact, he wasn't even Nevada's first mobster. In the 1920s, Bill Graham and Jim McKay, allies of Chicago gangland leader Al Capone, ran Reno's main casino. Later that decade, Capone's friend Frank Detra moved to Las Vegas and eventually operated one of the first casinos on Highway 91, better known as Las Vegas Boulevard or the Strip. Other Chicago mobsters would become the last organized crime operators in Las Vegas—at a hotel next to the site of Detra's old Pair-O-Dice, where the Frontier is today.

Siegel's arrival in Las Vegas in the early 1940s wasn't based on a whimsical desire to build a resort to consort with his Hollywood friends. Rather, Lansky, whom it would be fair to call the chief financial officer of organized crime, and his boyhood friend, Siegel, agreed Las Vegas was ripe for the mob. First, Siegel and another old friend, Moe Sedway, took over race wire dissemination services, which provided race books with horse racing results.

Only after that proved successful did they target gambling. They took over the El Cortez and apparently set up skimming operations elsewhere downtown before setting their sights on the Strip. Again, the facts are murky. Billy Wilkerson, publisher of the Hollywood Reporter and owner of Southern California's ritzy Ciro's restaurant, started construction of the Flamingo. Siegel was one of his investors and partners early on. He eventually took over the project, partly because Wilkerson's drinking and gambling problems ate into building funds, partly because Siegel's mob connections made it easier for him to obtain construction supplies.

But Siegel's mismanagement had far-reaching consequences. He knew little about how to run a casino—or any other business, for that matter. The original construction estimate of $1 million ballooned to $6 million, reducing the Flamingo's chances of paying off its debt to its mob financiers. After Siegel's murder on June 20, 1947, new, mob-connected managers took over and made the Flamingo profitable. This group combined physical and business toughness: longtime Phoenix bookmaker and veteran casino operator Gus Greenbaum, Sedway, Minneapolis gambling veteran Davie Berman, and Ben Goffstein, who was involved in often violent newspaper circulation wars. Some had a history of violence, but all were experienced businessmen.

Thus began a couple of trends. Casino executives with ties to organized crime usually won respect for their financial acumen. If their hands were dirty, they got that way from skimming and laundering money made and spent on possibly violent criminal activities, or they moved between the economic and enforcement sides of organized crime as needed. Another trend was that mob-connected operators tried to avoid repeating Siegel's errors. They managed their businesses well and sought, with varying success, to avoid the publicity he attracted.

Over the next two decades, almost every hotel-casino in Las Vegas had some connection to Lansky and his New York/Miami branch of organized crime. Their builders often had run illegal casinos in various locations—from Providence, Rhode Island, to Portland, Oregon; from Minneapolis, Minnesota, to Dallas, Texas. They apparently underreported their earnings and sent money to Lansky and other eastern investors.

The activities of these operators bred other myths and important realities. Contrary to the belief that their illegality extended throughout the operation, almost all of them ran honest games: They appreciated the opportunity to operate legally and wanted to avoid screwing that up, and the odds were so strongly in favor of the house that they had no need to cheat. They emphasized gambling, the most profitable part of the hotel-casino.

While their facilities were less luxurious than today's mega resorts, Strip hotels did not scrimp. They booked big-name entertainment and paid well, having known these stars from illegal gambling clubs. They were innovative, hosting major golf tournaments and prize fights to attract tourists and money. And they understood business generally, often investing outside the Strip: The classic example, Desert Inn boss Moe Dalitz, formed a development company that built housing tracts, country clubs, and shopping centers.

Yet they faced several problems including limited financing. Bankers refused to lend money to casinos, questioning the morality of the business and whether the loans would be repaid. Casinos could rely only on two sources. The Teamsters Central States Pension Fund was under the control of Allen Dorfman, the adopted son of an Al Capone lieutenant with ties to various organized crime figures. The Bank of Las Vegas, operated by E. Parry Thomas, represented a group of Utah bankers. Thomas reasoned that Las Vegas casino executives would respond in kind if treated like legitimate businessmen. He was right, but faced sneers that he was a "mob banker."

Another problem was their image. Books and articles invariably oversimplified the mob's role in Las Vegas to make everyone involved look like cut-throat killers. They were the villains in a morality play that they hadn't written and couldn't change. As Dalitz said when Senator Estes Kefauver's committee on organized crime criticized him for having been a bootlegger, "If you hadn't have drunk it, I wouldn't have bootlegged it."

By the mid-1960s, organized crime figures were growing old—many had come of age during Prohibition in the 1920s—and they were tired of fighting the authorities. State officials wanted to attract more legitimate investors. Federal officials were cracking down on them. Howard Hughes's buying spree ended alleged mob ownership of several resorts, but with the same employees in the casinos and the counting rooms, the skimming continued.

Nevada governor Paul Laxalt along with other officials and businessmen such as Thomas and Bill Harrah hoped to bring the state new respectability with the Corporate Gaming Act of 1969. The measure enabled the state to license key investors and executives rather than every stockholder, and thus publicly traded corporations to own casinos. Laxalt's predecessor, Governor Grant Sawyer, expected the mob to find ways around the Corporate Gaming Act, and events proved him right.

Allen R. Glick formed Argent Corporation, for his initials (Allen R. Glick ENTerprises or the French word for money). He obtained a $62.7 million loan from the Teamsters to buy the Stardust and Fremont and later claimed not to know that he answered to the Chicago, Kansas City, and Milwaukee mobs. If he didn't know, he soon found out when mob bosses installed Frank Rosenthal as their top executive at the two hotels. Rosenthal and his friends apparently devised a successful skimming operation that continued even after state gaming regulators forced them out and new owners took over. Finally, in 1983, Nevada officials revoked the licenses of top executives Al Sachs and Herb Tobman (they also preceded Glick at the Stardust) and brought in Boyd Gaming to run the Stardust and Fremont. Boyd eventually bought the two hotels, effectively ending mob control.

But other mob operations flourished—and ended similarly. Kansas City interests ran the Tropicana behind the back of supposed owners Mitzi Stauffer Briggs, a chemical heiress, and Ramada Inns by installing Joe Agosto as producer of the Folies Bergere production show. FBI wiretaps revealed that Agosto and prominent casino executive Carl Thomas, long considered free of mob taint, were in charge of skimming from the casino. Detroit's Lebanese mob and St. Louis interests represented by attorney Sorkis Webbe controlled the Aladdin until its forced sale to entertainer Wayne Newton. Longtime Teamsters attorney Morris Shenker ran the Dunes. All suffered under the federal and state microscope—and local critics such as Ned Day, a respected print and broadcast journalist whose reporting revealed many mob connections.

Not until the 1970s and 1980s did the mob extend its power and profits beyond the Strip. Anthony Spilotro, nicknamed Tony the Ant, came to Las Vegas in 1971 to run a gift shop at Circus Circus. State regulators soon listed him in the Black Book, thanks to allegations that he had been involved in perhaps twenty murders. Thus, Spilotro concentrated on the streets, forming the "Hole in the Wall" burglary gang, which earned its name by blowing a hole in the side of Bertha's jewelry store during a robbery. Federal prosecutors obtained several convictions, and induced one of Spilotro's hit men, Frank Cullotta, to testify and enter witness protection. Spilotro faced numerous indictments by 1986, when he and his brother Michael traveled to Chicago in hopes of taking over the Chicago mob after the conviction of several of the old dons. Instead, their campaign failed, they disappeared, and they turned up dead nine days later in an Indiana cornfield, near a farm owned by one of the convicted Chicago leaders.

While friends and allies of Rosenthal and Spilotro remain in Las Vegas, mob rule on the Strip and the streets was effectively over. Obviously, wherever crime is organized, organized crime exists, including ethnically oriented gangs involving Latinos and Russians. Allegations have persisted that topless and nude dancing clubs have replaced casinos as mob hangouts and money-laundering enterprises.

Today, many longtime Las Vegans hanker for the days when the mob ruled. They talk nostalgically about cheap food, often ignoring inflation and the diverse offerings now available in modern resorts. They lament that the streets today are less safe without mentioning that street gangs are a national phenomenon and legal decisions have affected how the police go about their business. The mob no longer controls Las Vegas, but no one was calling Las Vegas "the all-American city" when mobsters had power. Times have changed in Las Vegas—as they have everywhere.

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