Las Vegas & Organized Crime Part III

LAS VEGAS AND ORGANIZED CRIME
—A TALE OF BLOOD & MONEY

PART III

In the third and final part of our serialization of Las Vegas, we continue with its rich and wild history, its more modern experiences with organized crime, and learn more about the transition into the epic Sin City we’re more familiar with today.

ORGANIZED CRIME EXPANDS ITS HOLD OVER SIN CITY

After the murder of Benjamin "Bugsy" Siegel and the subsequent change in leadership at the Flamingo, Meyer Lansky and his associates transformed the struggling casino-hotel into a rousing success. By 1948, only a year after Siegel's death, the business posted over $4 million in profits. The Flamingo's success attracted more gangsters from dozens of different crime families to Las Vegas, eager to make their fortune.

Now regarded as an "Open City" by organized crime figures, crime bosses from all over the country sent their representatives to gain a foothold and take advantage of everything Las Vegas had to offer. Among their number, were large numbers of mobsters from the New York and Chicago Mafia.

Although his role was considerably more restrained than in previous years, Meyer Lansky remained a prominent presence in the city and is believed to have advised and aided several other mob bosses, including Chicago Outfit boss Tony Accardo, in setting up their own gaming operations. As a result, large parts of the city fell under the sway of the Chicago Outfit and Lansky.

Eventually, money from crime families, combined with funds from Wall Street investors, pension funds, churches, and several other sources, helped build more mob-controlled casinos along the area that would become the Las Vegas Strip. Around the same time, Allen Dorfman, a close associate of long-time union leader and president of the International Brotherhood of Teamsters, Jimmy Hoffa, took over the Teamsters Central States Pension Fund.

Dorfman had a long association with organized crime through his ties to the Chicago Outfit, and soon after taking over the pension fund, mob affiliated Las Vegas casino owners and developers started getting loans to build more casinos. The Thunderbird Casino came in 1948, the Desert Inn in 1950, along with the Sands and the Sahara in 1952, The Hacienda, The Riviera, The Fremont, The Tropicana and Caesars Palace followed over the next few years. All were owned and operated by organized crime families. As a result, it became commonplace for casino executives to have connections to organized crime.

Big-name performers like Elvis Presley, Andy Williams and Frank Sinatra were coaxed to Las Vegas to play shows in the mob-run establishments, and movie stars like Dean Martin made frequent appearances. The chance to rub shoulders with famous movie stars and gangsters, along with the gaming, top-notch food, drinks and other vices, attracted visitors in droves. By 1954, Las Vegas saw over 8 million people visit, and well over $200 million pumped through the casinos.

Las Vegas was bigger than ever, and it was nearly all controlled by organized crime families like the Chicago Outfit, which emerged as the dominant group in the city. Through their efforts, Vegas continued to grow. Profits were made through the use of traditional gaming activities as well as the introduction of sports betting. Due to their ties with legitimate casino executives and other front men, organized crime crews easily got away with money laundering and skimming, which provided another revenue stream. For years they took gaming profits out in cash, to avoid paying tax.

TONY THE HAT AND MR LAS VEGAS

When organized crime bosses held sway over most of the gaming industry in Vegas, there were more than a few gangsters based in the city. Some were only cogs in the wheel, but others were instrumental in helping craft the future entertainment capital of the world.

ANTHONY CORNERO

Anthony Cornero Stralla, also known as "Tony the Hat" or just Tony Cornero, first came to Las Vegas in the 1930s. After starting his career as a rum runner during the prohibition years, he was always looking for other business ventures. So, when gaming was legalized, he purchased land outside the city limits with his brothers Louis and Frank. The trio built one of the first licensed casinos in the area, The Meadows Casino & Hotel. It was nowhere near the size or scope of Bugsy Siegel's future project, The Flamingo, but it predated nearly every other major casino by a decade or more.

Because of his past troubles with the law, Cornero used his brothers as the front men while he controlled operations from behind closed doors. The business thrived; however, the brothers’ success allegedly attracted high-profile gangsters Charles "Lucky" Luciano, boss of the New York Luciano crime family, and Meyer Lansky. They demanded a share of the profits, but Cornero refused.

Not long after, the building burned down after a fire broke out. Because the casino was outside the city limits, the local Las Vegas fire department didn't attend the scene. It's unclear if any of these events were connected to the alleged standover attempt by Luciano and Lansky. After the fire, Cornero sold up his business interests in Las Vegas and left the area for many years.

After leaving Vegas, he tried creating a fleet of floating casinos that were just outside U.S waters, and technically outside the jurisdiction of local law enforcement. Still, authorities found a loophole in the law and sent out their own fleet to shut the operation down, albeit after a standoff on the high seas that lasted over a week.

Cornero then tried to set up a new gaming venture in Los Angeles, but fellow gangsters shut him down this time. Defeated but undeterred, he returned to Las Vegas and tried to lease the Apache Hotel. Due to his checkered past, the city council quickly blocked the deal, and frustrated all Cornero's attempts to build a new casino. He once again left Vegas, but he would return one last time.

After nearly being murdered in Beverly Hills, reportedly due to his attempts to invest in a Mexico based casino, Cornero moved back to Las Vegas and started building the Stardust Resort and Casino. However, this time it would be the Nevada Gaming Commission who thwarted his plans. They refused to issue him a gaming license because of an old conviction connected to his days as a rum runner. Cornero refused to back down though and continued with construction.

Say what you will about Tony Cornero; the man was determined. After failing to get a gaming license, he came up with a new plan, and asked his friend Milton B. "Farmer" Page—another casino owner—to take over the project and act as a front man. He then went on the hunt for more investors and found his way to Moe Dalitz, owner of the Desert Inn hotel and casino, and Meyer Lansky.

The gangsters initially gave Cornero $1.25 million, but like Bugsy Siegel, his dream project would prove to be far too grand, and costs exploded beyond all initial projections. Cornero soon needed a second loan, then a third, using the unfinished Stardust Hotel as collateral, he racked up over $ 4 million in debt, and the building was still incomplete.

By 1955, Cornero was planning to meet with investors to raise more funds to finish the project, but he would never get the chance. While playing craps in the Desert Inn Casino, Cornero fell to the floor and died on the spot. The death was considered suspicious. Cornero's body was removed before the authorities were called, no autopsy was performed, and his drinking utensils were removed and washed immediately. Rumors suggested that he was poisoned; it's unknown if his death was connected to organized crime and the Stardust Resort and Casino construction project. A coroner's jury in Los Angeles determined that he died of a heart attack.

A few years later, in 1958, the Stardust Resort and Casino finally opened and became one of the world's largest and most successful hotels. Cornero may not have seen the grand opening of his masterwork, but his dream project became another building block in crafting modern Las Vegas. Along with the Stardust Resort and Casino, Cornero is also credited with the concept of using slot machines in the lobby of hotels to lure in punters as they wander past.

MORRIS BARNEY DALITZ

Moe Dalitz, also known as Mr Las Vegas, was an important figure in Las Vegas. He was instrumental in helping other organized crime figures open their own casinos. His influence in Vegas started in 1940, when casino owner and land developer Wilbur Clark, ran out of money trying to build the Desert Inn. Dalitz and some of his associates paid for the rest of the project.

When the casino finally opened in 1950, Clark acted as the frontman of the operation, but Dalitz was the actual owner. His close ties to Union President Jimmy Hoffa, made him the driving force behind several mob run casinos securing loans from the infamous Teamsters Pension Fund. This set the stage for other loans to Las Vegas commercial projects and, ultimately, organized crime figures infiltrated the casino industry through the pension fund.

Unlike many of his fellow gangsters, however, Dalitz understood how to stay out of trouble and kept his involvement in gaming operations reasonably low key. Instead of spending his time lurking around his casinos, Dalitz helped build up Las Vegas. Among his many contributions to the city was the first golf course at the Desert Inn, residential communities and the Las Vegas Country Club, of which he was one of the four founding members.

Dalitz also supported charitable causes and helped start the University of Nevada, Las Vegas. His most high-profile contribution to Vegas though was the $1 million loan from the Teamsters Union Pension Fund to build Sunrise Hospital. Despite his criminal background and involvement in organized crime, his charitable contributions ensured Dalitz was held up as a pillar of the community until he died in 1989.

THE KEFAUVER COMMITTEE

Organized crime’s unprecedented growth and influence in Las Vegas soon attracted the attention of various government agencies. As a result, the United States Senate Special Committee to Investigate Crime in Interstate Commerce was formed in 1950. Known as the Kefauver Committee because of its chairman, Senator Estes Kefauver, the group failed to halt the expansion of organized crime families directly, but they were primarily responsible for exposing the secretive dealings of mob bosses and their influence in the gaming industry to the rest of the country. This would lead to law reforms and other sanctions in later years.

The Committee held hearings in 14 major cities across the United States, and many were televised on national television, giving a large audience a glimpse into the reach of organized crime. In 1950, Kefauver brought his committee to Las Vegas, and the televised hearing helped cement the link between gangsters and Las Vegas in the public's minds.

The hearings found that money from organized crime was linked with the growth of Las Vegas, and its casino industry. This revelation led to some reforms and prosecutions elsewhere in the country, but it failed to change anything in Vegas. The gangsters in Sin City survived the Kefauver Committee unscathed, but their reprieve was only temporary. The scrutiny resulting from the hearings would lead to further attempts from law enforcement to oust organized crime from Vegas, and while it would take a few more decades, eventually, they would succeed.

THE LITTLE BLACK BOOK

By the late 1950s, the Nevada Gaming Commission was established; and they became responsible for licensing and overseeing gaming operations in the state. By 1960, the commission had created its famous List of Excluded Persons, or little "Black Book", which banned anyone listed from stepping foot in a casino. In the first wave of inductees, regulators placed the names of 11 underworld figures.

By enforcing the law and removing corrupt public officials, the commission slowly eroded organized crime's grip over the city. The next official to join the war against the gangsters in Vegas was Attorney General Robert Kennedy, brother of President John F. Kennedy. Robert started a crusade against the mob all over the U.S.A and set his sights on taking Las Vegas from them.

Despite all his efforts, Kennedy's campaign to cripple the mob's operations in Vegas failed, and the casino industry continued to grow with financing from the Teamsters Pension Fund. Organized crime had dodged another bullet, but with everyone gunning for them and increased scrutiny, many gangsters started to look for alternative business ventures. When the corporations came on the scene with offers to buy the casinos, more than a few notable mobsters jumped at the chance.

HOWARD HUGHES TAKES OVER LAS VEGAS

In the late 1960s, billionaire Howard Hughes came to Las Vegas and finally did what so many law enforcement officials and politicians had been trying and failing to do. In a relatively short amount of time, he made significant gains in forcing organized crime out of Vegas. The key, it turned out, was paying the gangsters large sums of money to leave.

After all the extra attention from law enforcement, more than a few organized crime figures were keen to get out of the casino industry and look for business ventures with less scrutiny. Hughes bought the Desert Inn from its mob-connected owners, then bought up real estate, media outlets, and more hotels, many of which were connected with organized crime. Gangsters made millions by selling their casinos to the billionaire.

Hughes quickly became one of the most powerful men in Las Vegas and kicked off an era of corporations moving into Vegas and buying the gaming empires mobsters had spent decades building. By the 1970s, organized crime took another hit when the Nevada legislature passed a law making it easier for corporations to own casinos.

Only a year later, the Racketeer Influenced and Corrupt Organizations Act was passed. The RICO Act allowed the justice department to use criminal statutes to investigate organized crime groups as ongoing criminal enterprises for the first time. Task forces were set up with the sole purpose of investigating gangsters and their activities.

It was a slow process, but the period of organized crime dominance in Vegas was coming to an end as many of them were either forced out by the law, or willingly left after being paid off. This kicked off an era that saw Vegas become a more commercialized, family-oriented place, with large corporations owning the hotels, casinos, and nightclubs in place of mob bosses.

ORGANIZED CRIME LOSES ITS GRIP ON VEGAS FOREVER

By 1971, the organized crime presence in Las Vegas was severely diminished in stature but still active. In the dying days of the mob's reign, Anthony John Spilotro, nicknamed "Tony the Ant", a Capo in the Chicago Outfit, was sent to Las Vegas so he could protect one of the last illegal skim operations at The Stardust, The Hacienda, The Marina and The Fremont casinos.

From the early 1970s until 1981, Frank "Lefty" Rosenthal ran the four casinos for the Chicago Outfit, while Spilotro ensured that the skimming operation continued smoothly. Cash was being taken directly from the count rooms and sent back to crime bosses in various cities around the country. On paper, San Diego businessman Allen R. Glick owned the casinos through his Argent Corporation, but in reality, they were under the control of the mob; Glick was just the front man.

Rosenthal ensured the casinos had record profits and pioneered some revolutionary ideas that are a staple of the gaming industry today. He was the first to operate sports betting in a casino and began to exclusively hire female card dealers. Glick and Rosenthal were also one of the first big hotels in Vegas to hire an up-and-coming duo by the names of Siegfried and Roy.

Spilotro also made a name for himself as well. He initiated a bloody and violent reign of terror on the streets of Las Vegas. A trigger-happy enforcer with a quick temper, he took over most of the rackets in the city and killed anyone who crossed him. He also ran a burglary ring, later dubbed the "Hole in the Wall Gang," because of their modus operandi of drilling holes through the walls and ceilings of the buildings they robbed. Nevertheless, Spilotro managed to stay out of prison for the most part, mostly because of his lawyer, and the fact that very few dared to cross him.

In 1976, the FBI and local Las Vegas Police Department discovered Rosenthal was running four casinos without obtaining a state gaming license. He was forced to step down from his position. A hearing was held to determine if he could legally have a license. However, it was denied due to his arrest record, his documented reputation as an organized crime associate, and his long-established friendship with Anthony Spilotro.

Around the same time, The Nevada Gaming Control Board and state officials discovered the skimming operation at the Stardust, Fremont, Hacienda and Marina. It was alleged that millions had been skimmed, and because Glick was the listed owner of the establishments, law enforcement opened an investigation into the businessman. He swore the skim was done without his consent or knowledge, and became a cooperating witness to escape prosecution.

As a direct result, in 1978, the FBI sent 50 agents to Las Vegas, with 83 search warrants and they conducted a series of raids. Federal authorities started prosecuting several crime bosses for skimming money at the Stardust, Fremont and Tropicana casinos. Fearing mob retaliation, Glick sold all his business interests in Las Vegas and moved back to San Diego.

Spilotro and Rosenthal stayed in the city for a few more years after the end of the skimming operation, but eventually, both of them were forced out as well. In 1982, Rosenthal survived an assassination attempt in Las Vegas when an unknown party put a bomb under his car. He survived, but left the city six months later to be with his family. He was later formally banned from being in any Las Vegas casinos and added to the Little Black Book.

By 1981, federal authorities had made significant gains in their efforts to cripple organized crime in Vegas. Spilotro’s fencing operation was shattered, and many of the members of the Hole in the Wall Gang were arrested by police. After being arrested, gang member Frank Cullotta, decided to turn informant and helped them shut down the last of Spilotro’s operations.

By 1986, the walls were closing in on Spilotro, but the law would never get the chance to convict him. Both Spilotro and his brother Michael were found battered to death and buried in an Indiana cornfield. At the time of his death, Spilotro was a suspect in over 20 murders.

With the death of Spilotro, the end of the skimming operation and the imprisonment of several crime bosses in connection with the skim, the mob lost its grip on Las Vegas and the rackets, and their power never recovered. Enforcer Donald Angelini was hired to take over where Spilotro left off in Vegas, but the era of organized crime dominance in Vegas was well and truly over. The law dismantled the last of their operations in the early 1990s, and the mob never returned.

LAS VEGAS AFTER THE FALL OF ORGANIZED CRIME

Organized crime is long gone from modern Las Vegas, but the foundations they helped build have seen the city grow well into the 21st century. Overall revenue has seen sizable increases, with 169 large casinos in Vegas reporting total revenues of nearly $22 billion before COVID-19 restrictions. The most famous location in the whole city—the Las Vegas Strip—stretches roughly 4.2 miles long, and holds the highest concentration of resort hotels and casinos.

Nowadays, organized crime groups like the Mafia are a shadow of their former selves; after decades of attention from the law, they have lost most of their power and influence. Some gangs are still present in Las Vegas, but they are not running casinos and generally stick to being petty street thugs. Despite all the time and effort organized crime groups spent in Las Vegas, it is now the exclusive domain of corporations.

END OF PART III

This is an article referencing the history of Las Vegas. It is for information and entertainment only. It is not related to, nor a reflection of, Global Poker, its views, products, content, or its games.