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Early Mob Activity in Las Vegas

Deep within the psyche and culture of Las Vegas is an ever-lasting connection to the Mob, a link embraced by casino owners as well as visitors.

In the 1970s when hit theaters and stirred the specter of a sinister force behind Sin City’s playground the public easily accepted that the town was once dominated by Mafia Families from New York to Chicago, Detroit to Miami.

Little did they know that organized crime figures in Buffalo, Philadelphia, Milwaukee, Chicago, and Kansas City were still draining the cash from their operations in Las Vegas that included loan sharking, Union shake-downs and skimming casino profits.

If anything has been a constant in the United States, it’s gambling. Legal and illegal casinos have flourished across the country for more than two-hundred years, from the dry mining camps of every boom and bust town to sea and river ports up and down every coast. And, gambling brings with it a very specific commodity, cash, because that’s what a casino’s inventory is, cash.

When Nevada legalized open gaming March 19, 1931, there were several hotels that already offered quasi-gaming, poker, and even liquor, although the consumption of alcohol was illegal according to the laws of Prohibition. Gaming had been both legal and illegal over the years, but Las Vegas allowed “nickel-in-the-slot machines” that paid out less than $2 in cigars.

Games that were considered to be skill, such as bridge, were also allowed, and if the boys were playing some poker, well that was alright too.

Gaming in Las Vegas 1931

To be fair, players needed a break from the sweltering heat outside and inside the clubs, unfazed by lazy fans that slowly stirred cigarette and cigar smoke around but did little to cool things down.

Little water fell in the valley, so farming was tough, and although the town sits at a point centered between Salt Lake City Utah, Albuquerque, New Mexico and Los Angeles, California, fresh fruits and vegetables weren’t plentiful. There were few houses of worship, a single newspaper, and one theater which was often closed.

Legalized gaming brought new interest to the town, along with money and new games like roulette, craps, Chuck-a-luck, and others a proprietor could earn a regular percentage from. Early casinos in Las Vegas were on Fremont Street, close to the train station where new visitors could deposit their money.

Men were the dominant prospects for the Northern, Exchange, Las Vegas, and Boulder clubs. Although women weren’t specifically restricted entrance, they were discouraged from standing about in the smoke-filled casinos.

Unlike today’s Mega Resorts that boast 100,000 square feet of casino space, the early clubs along downtown streets were small establishments, often no more than 20-feet wide with less than 1,000 feet devoted to gaming.

The revenue hardly warranted interest from the likes of Al Capone and Frank Nitti, who oversaw larger, much more profitable illegal casinos around Chicago. However, Lucky Luciano, who had taken over as the boss of New York’s Five Families, kept an eye on the small Nevada town through a series of informants.

The Mob Moves On Las Vegas

Lucky Luciano got regular reports on gaming hot spots like Hot Springs, Arkansas, Louisville, Kentucky and Toledo, Ohio, but his interest was piqued by the newly-legal gaming towns of  Reno and Las Vegas, Nevada. Reno’s big guns, Bill Graham, Nick Abelman, and Jim McKay had strong ties to politicians, but Vegas was virgin territory, something savory and potentially lucrative. Meyer Lansky reported that besides the small casinos downtown, a had opened.

The Meadows Club 1935

The property was the first real resort in town, owned and operated by Tony Cornero and his brother, Louis. Tony had recently been released from prison, serving a sentence for selling bootleg liquor.

As a major supplier, he had ties to Mob Families across the west and stretching to Detroit (where Canadian whiskey was just across the river) and even New York.

Louis was licensed for a dozen table games (roulette, blackjack, poker, hazard, faro, and Big Six) plus a handful of slot machines and The Meadows (“Las Vegas” in Spanish) became an instant success on Boulder highway, the main thoroughfare for workers at Boulder Dam to the city.

The club had a snazzy floor show, fine dining, beautiful tile work and rugs on the floor. It also offered rooms in a newly built motel beside the casino.The success of the property led to a meeting between Meyer Lansky and the Cornero brothers.

Lansky wanted a piece of the action for Luciano in New York for their continued support of the Cornero’s enterprises. The Mob had purchased boatloads of liquor from the Cornero’s over the years and demanded a share of the profits. Tony and his brother refused.

Shortly after the meeting, a fire erupted inside the swank casino, and although it had been the major source of income at The Meadows, it was never rebuilt. Tony and his brother took a break from Las Vegas, hiding out somewhere in California and the resort slowly slid into obscurity, never again offering gaming. They sold the property in 1935.

The Mob’s interest in Las Vegas cooled after seeing only small revenue being generated by the clubs downtown, but Moe Sedway told Meyer Lansky that the clubs were being underutilized, and needed a more organized .

He took an interest in the Northern Club and talked to the owners of the Las Vegas Club while Bugsy Siegel bounced between the glitzy Hollywood scene and the dry, choking desert air of Las Vegas that he hated.

Sedway loved his job as an enforcer with Bugsy Siegel and grew to love Las Vegas, where he would someday rise to the respected position of Clark County alderman.

He cultivated relationships with casino owners, council members, local businessmen, sheriffs and even religious leaders. And, he convinced nearly every casino in town that they needed to honor a commitment to use the syndicate’s race-wire for their race books.

Unlike the race books in California, where Sedway and Siegel broke bones with chains and tire irons to demand payments, Las Vegas club owners were quick to accept the roll that their new friends played in the local gaming industry.

Owners offered points in their casinos so the Mob could get in on the action and sold entire operations while remaining nothing more than front men for crime figures who were unlikely to be licensed.

By the 1940s, when Las Vegas was truly growing to new heights, Sedway (and therefore the Mafia) had a hand in five casinos in the downtown area.

The Mob and the FBI

FBI Director J. Edgar Hoover refused to admit that there was any such thing as organized crime, but local field agents from Salt Lake City were deployed to Las Vegas where they kept a close watch on every casino in town and known crime figures like Bugsy Siegel.

No Crime Sign and  J. Edgar Hoover
His every move got recorded with notes to both Salt Lake City and Hoover himself. Special Agents tailed Bugsy and installed wiretaps on phones in his hotel rooms and inside offices at Siegel’s newly acquired Las Vegas Club.

The phone-tap became known as the boiler room line and provided information about the Mob’s plans to take over other clubs downtown, including the newly build El Cortez.

Siegel also planted front men at the El Rancho Vegas and Hotel Last Frontier, the only casinos along what was to become the Las Vegas Strip. It was common practice in Vegas to lease out a resort’s casino operation, and the Mob was happy to accommodate local hotel owners by bleeding their casino dry.

Ironically, the Mob was so adept at running the casinos the owners rarely knew how much money they were being cheated out of, just as the IRS misinterpreted the potential of the Las Vegas casinos and failed to see that money was being skimmed off by the millions.

In fact, the money was so good that Mob partners Siegel, Lansky, Gus Greenbaum, and Moe Sedway convinced J. Kel Houssels to sell them the El Cortez Hotel at a fair price, $600,000. The property, located at 6th Street and Fremont, was the highest grossing casino in town, with heavy-hitting players from Hollywood like William Wilkerson.

Shortly after purchasing the resort, the Mob allowed Minneapolis bookmaker Davie Berman and his brother Chickie to buy a share of the club with three other partners for $200,000. Berman arrived in town after his brother, who carried the cash in a suitcase.

A day before the purchase, Chickie got in a craps game and lost the entire $200,000. Word spread quickly, and a contract was placed on his life by the Berman’s partners back in Minneapolis.

El Rancho and Last Frontier Village Las Vegas

Davie Berman pulled every string and called in every favor to replace the lost cash and saved his brother’s life by depositing another $200,000 with Bugsy Siegel. As often happens with Mob-controlled casino resorts, the property changed hands quickly, this time, back to Houssels in 1946 for $766,000. It was a move Siegel desperately needed to finish building his new Flamingo resort on the road to Los Angeles, the soon to be Las Vegas Strip.

As fate would have it, the resort that became the Flamingo was originally started by William Wilkerson, owner of the Hollywood Reporter and upscale restaurants in Los Angeles like Ciro’s.

Wilkerson underestimated his building costs and his luck at the tables, losing heavily at craps at the El Cortez, which gave Moe Sedway and Bugsy Siegel a chance to steal the property away from him. With Wilkerson no longer gaming, the El Cortez was worth less, and Siegel spent the sales cash propping up construction of the soon to be $3.2 million Flamingo resort.

With costs spiraling out of control at the Flamingo, Lucky Luciano held a conference in Cuba where Bugsy’s best friend Meyer Lansky agreed that there were cash-control problems, likely involving Siegel’s girlfriend, Virginia Hill. When the property opened, and gaming win didn’t cover costs, Lansky agreed to a hit on his old friend.

Siegel was killed June 20, 1947, in Virginia Hill’s living room. She had been told to move along, and Mob boss Joey Adonis is said to have handed her tickets to Paris during her short stop in New York.

The Flamingo was a huge success after the bosses waiting at the El Cortez (Greenbaum, Berman, and Sedway) took over the operation and things got even brighter for the Mafia during the closing years of the 1940s.

Meyer Lansky was able to plant his brother Jake at the newly opened Thunderbird resort and purchased control of the property for the bargain price of just $165,000. It would contribute heavily to the Mob’s cash accounts through heavy skimming.

Many other properties came under the Mob’s control in the 1950s and 1960s, sometimes through front men, sometimes through intimidation of the original owners, and sometimes through the greed of individuals trusted to run the count room.

Strangely enough, the FBI didn’t get involved with anything involving the movement of cash from the clubs in Las Vegas to Mob Families across state lines until it was forced to in 1957.

On May 2, 1957, Vincent “Chin” Gigante carried out a hit on Frank Costello, shooting him in the head and leaving him bleeding profusely on the floor of The Majestic, his Manhattan apartment building.

Costello’s wound was not life threatening, but responding police officers found a ledger with the previous day’s gaming totals from the newly opened Tropicana casino in Las Vegas inside Costello’s bloody suit jacket.

Over the years, more than a dozen properties like the Desert Inn, Sands, Dunes, Stardust, Fremont, and even Caesars Palace would be tied to one Mafia Family or another, funneling pre-tax cash from casino win to Mob bosses. Amazingly, covert operations continued into the 1980s.

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