Las Vegas in Nevada owes its success to the mobster
Benjamin "Bugsy" Siegel who organized gaming and bookmaking
operations for The Mob (the Mafia). Due to a crackdown on gambling in the
eastern USA, Siegel moved west in the 1940s. During the Great Depression
gambling had been legalized in Nevada to increase revenue for the state, but
what existed in Las Vegas at that time were a few decidedly down-market
casinos that were frequented by the locals.
Siegel planned to open a luxurious hotel where the rich and
famous could gamble and, after a failed attempt to take over an existing
casino, he decided to build his own. Once Siegel had managed to convince The
Mob to invest in his idea, building started, but costs escalated from
initial estimates of $1.2 million to over $6 million, because everyone,
including Siegel, was stealing money from the project. It is rumored that
the palm trees were sold to the casino several times over and that Siegel's
girlfriend, Virginia Hill, was accumulation money in a Swiss bank account.
The Mob soon soon discovered Siegel's skimming and ordered
him to be killed, but decided to give him a reprieve until after the opening.
The Flamingo Hotel and Casino finally opened on 26 December
1946. A huge party was organized, with many of the film stars of the day in
attendance. The hotel was not finished, so the guests had nowhere to sleep.
They parties for two days and then went home.
The Flamingo was a flop and Bugsy Siegel was eventually
killed by The Mob in 1947, but his dream of making Las Vegas into a gambling
As other businessmen realized that Las Vegas had potential
as a resort, investment flowed into the town. The Desert Inn Casino opened
in 1950, followed by the Sands Casino in 1952, with the Dunes, and the
Riviera opening in 1955.
Despite gambling being illegal, casinos continued to
operate elsewhere in the USA thanks to widespread corruption in the police
and government. One of the most luxurious "illegal" casinos was
Chicago's Big House which operated between 1929 and 1950. Run by associates
of gangster Al Capone, it was elegantly furnished, with mahogany gaming
tables, oriental rugs and a free taxi service to shuttle players to and from
Chicago's south-side. The club was also the headquarters of a countrywide
During the 1950s virtually all the casinos in Las Vegas
were controlled by The Mob. A US senate investigation into criminal activity
in the casino industry found that skimming (retaining a portion of the
profits) was rife, resulting in tax evasion on stakes and profits.
When legislation allowing corporations to own Las Vegas
casinos came into being in 1965, entrepreneur and multi-millionaire Howard
Hughes was the first to take advantage of this change in law, buying the
Desert Inn and several other casinos, as well as plots of land in the city.
When MGM, Hilton and Holiday Inn followed suit, the finances of the mob
proved to be no match for the might of the major corporations, and gradually
the casino industry was cleaned up.