How the Mob Stole Las Vegas

Old Vegas
Old Vegas. Photo Courtesy (Nevada Casino History)

Over the first forty years of legalized gaming in Nevada, the Mob stole every profitable casino they wanted in Las Vegas, usually without even drawing a gun! The casinos, the city, even Nevada itself was made for the very things the Mob stood for: greed, gambling, and prostitution. A perfect fit.

Gaming was legalized in 1931, but the Mob didn’t rush to invest any money in the Silver State’s casinos, even though they had the money and the know-how.

They didn't rush because their own clubs in Kentucky, Arkansas, Ohio, Florida and New York were bigger and more profitable than anything found in Nevada. Chicago alone had more gaming action and profits than all the little clubs in Nevada could produce.

Most of the casinos in Nevada were small operations run by a single owner, although Reno did boast one large casino – the Bank Club – owned by Reno’s own local Mob (George Wingfield, Bill Graham, Jim McKay and Nick Abelman). By today’s standards, it was tiny, with just 5,000 square feet of gaming, and the club was the largest employer in the state!

Still, Reno offered something else the Mob liked: sanctuary. From the teens to the thirties there was no place safer, even if the FBI kept close track of the gangsters and gangs who came to stay like kidnapper Alvin Karpis and his friends, Ma Barker and her boys, “Baby Face” Nelson and many others.

The Original Mob

The genius of the American Mafia was what Charles “Lucky” Luciano set up; a dynamic for the most powerful crime families in the country to co-exist and share resources. In the 1920’s, while the country drank millions of gallons of bathtub gin in direct defiance of the Volstead Act (Prohibition of alcohol manufacturing, distribution, and sale) the streets of Chicago and New York were bloody battlefields.

Luciano figured it was time for a change, so he had his boss killed and took his place. 

With Giuseppe "Joe the Boss" Masseria out of the way (ambushed by four gunmen, including "Bugsy" Siegel), Luciano arranged the Mob’s first meeting in Chicago and was appointed Chairman by the Five Families of New York. The original Five Families were headed by Luciano himself, Joseph Bonanno, Tommy Gagliano, Vincent Mangano, and Joe Profaci. Also included on the Commission was Chicago Outfit boss Al Capone and Buffalo family boss Stefano Magaddino.

Capone was originally from Brooklyn and got his early training with the Bowery Boys and the Five Points Gang. He was the exception to the rule, the only family boss not born in Italy, and while he was King of Chicago in the 1920’s, his control withered after he was sent to jail for tax evasion in 1931.

Mob groups in Detroit, Philadelphia, Minneapolis and Kansas City all used their enormous political clout (money and bribes) to keep a river of liquor flowing and illegal gaming running for years. In Cleveland, remnants of Detroit’s Purple Gang ran casinos for “Moe” Dalitz that were far grander than Reno’s bosses could ever imagine, and down south in Louisville and Miami, the clubs and slot machines were bringing local bosses like "Silver Dollar Sam" Sylvestro Carolla truckloads of coins.

So why look elsewhere?

Reno

Still, Reno was an enigma for the Mafia. The local sportsmen had a strong grip on just what the Mafia knew was most important: controlling the politicians. The self-proclaimed “Biggest Little City in the World” had its own Mob, consisting of men well-entrenched in both the culture and the community. They had the local Sheriffs and Police Captains in their pocket, and a direct line to the mayor and their senators. The saying at the time was, “If you can’t find your vice in Reno, you’re deaf, dumb and blind, or G-Man”

While Meyer Lansky lent his financial acumen to the Mob, he also invested his own money in the illegal casinos of Kentucky, Louisiana, and Florida during the 1930’s. By the end of the decade, more and more cities were cracking down on gambling, so Meyer was steering his connected friends towards investments in safe locations, like Reno, Lake Tahoe, Las Vegas and Cuba.

Reno and Lake Tahoe offered a short season, with snowy winters and small casinos. Still, Harold’s Club had matched the Bank Club in size by the 1940's, and Bill Harrah had purchased two small clubs and was moving from Virginia Street through the alley towards Center Street to build what became Harrah’s Reno.

Down south, Las Vegas was just beginning to come into its own, and further south, Cuba looked like the home the Mob had longed for, so the exodus began. Well-connected casino bosses moved from illegal casinos in places like Steubenville, Ohio; Louisville, Kentucky; and Miami, Florida to the warmth of Cuba, and started investing time and money on the small island’s business districts.

Las Vegas

In Las Vegas, those same well-connected, well-financed businessmen took over the downtown casino area and expanded several clubs like the Las Vegas Club and the El Cortez. Most of the Mob’s early clubs still stand today, holding a history deep in their bellies about how Vegas grew, often against the wishes of the founding fathers.

The small clubs of downtown Vegas were locally owned and operated. They were two-slot machine joints with a bell for the barmaid and another for the hookers who had rooms up Fremont Street. The casinos had roulette, craps and blackjack. They had Faro tables that were hot, Chuck-a-luck games with questionable dice, and most came with a partner named Guy McAfee.

McAfee was born in Los Angeles where he worked as a firefighter, policeman, and then as the head of the Los Angeles Police Department Vice Squad.

All that, while he owned saloons with gambling houses and brothels his own wife ran. McAfee was forced out of town in 1938 and acquired the Pair O’Dice club. Later he was a partner or owner of other clubs like the Pioneer, the El Rancho, and the Golden Nugget.

He knew “Bugsy” Siegel well from California, and the men respected each other enough not to have the other rubbed out.  “Bugsy” had made deals with McAfee to shake-down the illegal casinos in Los Angeles while avoiding the Vice Squad head's own clubs. Still, Siegel had the race-wire and pushed his weight around enough in Vegas to demand a huge fee for the horse-race and sports results he planted in McAfee’s casinos.

By 1943, the Mob had moved heavily into more than half of the casinos in Las Vegas. The owner’s instincts for survival were greater than their fear of associating with the Mob, and they accepted their fate. Along the way, the FBI watched, mesmerized by Siegel, Meyer Lansky, and Frank Costello’s ability to infiltrate the casinos in Las Vegas and Cuba and take control of the money while tormenting both their competitors and their own partners.

Wilbur Clark, who gave Reno a try in the early ‘40’s, moved to Las Vegas and leased the Northern Club downtown and changed the name to the Monte Carlo. He had partners. He also bought in at the El Rancho, with partners. In 1944, there were a lot of clubs with Mob partners. They may have been quiet, but they certainly weren’t silent partners!

Billy Wilkerson learned the hard way that partners like “Bugsy” Siegel were impossible to deal with.

He lost everything as the Mob stole his casino land and idea and built the Flamingo. Not far away, Cliff Jones and Marion Hicks built the Thunderbird. Within a week of opening, Meyer Lansky’s brother, Jake, was running the joint. When Wilbur Clark decided to go out on his own and build his dream – the Desert Inn – across from the El Rancho, he too found that partners are easy to acquire and hard to retire.

“Moe” Dalitz took over the building of the Desert Inn during a lull in Clark’s financial stream. The group of Mayfield Road Gang members from Cleveland included Morris Kleinman, Sam Tucker and Tom McGinty. Clark remained the face of the Desert Inn for years, holding on to a tiny 6-percent piece of the pie. His partners took over because it was easy, because the Nevada Gaming regulators looked the other way, and because the money needed was so easily available from the Mob, first from their own pocketbooks, and then through Jimmy Hoffa and the Teamsters Union.

The All-Mob Show

In fact, by the time the Desert Inn was completed, the Mob had control of the seven most successful casinos in Las Vegas, and more were to come. In Reno, the Bank Club was eventually purchased by a front for the Chicago Outfit, while five of the small casinos in Lake Tahoe were Mob-owned.

Over the years, Teamster’s money helped finance the construction of Lake Tahoe casinos like the Cal-Neva Lodge and the King’s Castle. In Reno, the Riverside used Teamster loans for several owners' building desires. They all went broke.

In Vegas, the Hacienda, the Riviera, the Tropicana, the Fremont, the Mint, the Sands and even Caesars Palace were financed with Teamster loans. It wasn’t against the law. It was easy, asl long as Jimmy Hoffa or his cohorts got their cut from the loan. Of course, every one of those casinos had Mob connections and money being skimmed that went to New York, Detroit, Chicago and Miami.  Other projects managed to be built on money fronted by legitimate businessmen, such as the Stardust, but that didn’t keep gangsters like Marshall Caifano from guarding the skim going out the back.

Caifano wanted the job in Las Vegas so bad, he traded his blond bombshell wife, Darlene, to Chicago Outfit Boss Sam Giancana for the Don spot of Vegas. Caifano was a killer and arsonist, and the first person placed in the Nevada Gaming Control Board's Black Book of persons barred from all Nevada casinos. After that happened, Tony “The Ant” Spilotro took over the guardsman job and Frank “Lefty” Rosenthal was in charge at the Stardust.

Money flowed out of Nevada casinos for another decade, and the fight for skim-money was fierce between the US Government trying to stop it and Mob families’ trying to control it. “Lefty” Rosenthal was blown up in his car in October of 1982. He lived, but left Las Vegas for good in 1987 after being added to the Black Book. He blamed Frank Balistrieri for the bombing.

Also added to the Black Book were several members of the Kansas City Mob: John Cerone, Joseph Aiuppa, Carl Civella, Angelo LaPietra and Carl DeLuna, convicted of skimming $2 million from the Fremont and the Stardust casinos. Milwaukee boss Frank Balistrieri was also sentenced during a government trial that sent all the men to jail. Balistrieri blamed 'Lefty" Rosenthal for the heat at the Stardust and for having to give a 25-peercent cut of the skim to the Outfit (as directed by Joseph Aiuppa and John Cerone).

Truth be told, the FBI had been on to Balistrieri since 1977when they sent Special Agent Joseph Pistone (see the movie Donnie Brasco) to Milwaukee to infiltrate Balistrieri’s crew. He did, but it was 8-years before Balistrieri was sent to prison for 13-years. Eventually, the Mob got what it deserved. They skimmed the properties to death, refused to refurbish their old war-horse casinos, and fought with each other until everyone could see the writing on the wall, even the FBI.

Today, the most successful casinos in Nevada are ten-times larger than any Mob-controlled property ever was. They have been refurbished or build new with Wall Street money larger than even “Bugsy” Siegel could have ever dreamed of when he incorporated the land and property he stole from Billy Wilkerson in 1945. The Mob is gone, the casinos have survived, but there was a time……

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Moe, Al. "How the Mob Stole Las Vegas." ThoughtCo, Apr. 14, 2016, thoughtco.com/how-the-mob-stole-las-vegas-4028062. Moe, Al. (2016, April 14). How the Mob Stole Las Vegas. Retrieved from https://www.thoughtco.com/how-the-mob-stole-las-vegas-4028062 Moe, Al. "How the Mob Stole Las Vegas." ThoughtCo. https://www.thoughtco.com/how-the-mob-stole-las-vegas-4028062 (accessed November 18, 2017).