Las Vegas transformed from a modest railroad town into a global entertainment hub largely due to the financial and operational involvement of the Mafia.
Organized crime syndicates saw an opportunity in the burgeoning casino industry and invested heavily, fueling an era of rapid growth and development.
Let us see how it went.
Why Was This Decision Made?
Las Vegas was initially established as a small railroad town in the early 1900s.
Its strategic location between Salt Lake City and Los Angeles made it a convenient stopover for travelers.
The town’s growth accelerated in 1931 when Nevada legalized gambling, a move that drew many entrepreneurs eager to capitalize on the new industry.
Early casinos were primarily concentrated around Fremont Street, known today as the Fremont Street Experience.
These establishments were modest compared to the grand resorts that would later define the Las Vegas Strip.
The construction of the Hoover Dam in the 1930s brought a significant influx of workers and tourists, providing a boost to the local economy and the fledgling casino industry.
Despite this growth, it wasn’t until the Mafia saw the potential of Las Vegas that the city truly began to transform.
The initial casino operators were mostly small-time businessmen who lacked the financial resources to expand their operations significantly.
It set the stage for the Mafia’s entry, as they brought not only money but also a level of organization and management expertise.
The Mafia’s Entry into Las Vegas
Two individuals had the ambition to turn Las Vegas into gambling heaven:
- Meyer Lansky
- Benjamin “Bugsy” Siegel
What Did They Do?
Meyer Lansky and Benjamin “Bugsy” Siegel were among the first major Mafia figures to recognize the potential of Las Vegas.
Lansky, a financial mastermind within the Mafia, saw Las Vegas as a legitimate front for the syndicate’s operations.
He sent Siegel to oversee the completion of the Flamingo Hotel, which had been struggling due to financial issues.
Siegel’s vision for the Flamingo was ambitious. He wanted to create a luxury resort that would attract high-rollers from all over the country.
Siegel’s takeover and subsequent management of the Flamingo marked the beginning of significant Mafia involvement in Las Vegas.
Despite initial financial troubles and Siegel’s eventual murder, which was likely ordered by his Mafia associates due to suspicions of skimming, the Flamingo became a successful venture.
Lansky continued to influence Las Vegas from behind the scenes, ensuring the Mafia’s presence and control over the casino’s operations.
Following the Flamingo’s success, other Mafia families began to invest in Las Vegas. The construction and operation of casinos were heavily financed by Mafia money.
The best-known places are:
- The Desert Inn
- Sands
- Sahara
- Tropicana
These investments were often facilitated through the Teamsters Central States Pension Fund, which was controlled by Mafia-affiliated individuals.
The influx of funds allowed for the rapid development of large, opulent casinos that defined the Las Vegas Strip.
Other Prominent Figures and Their Contributions
While Meyer Lansky and Bugsy Siegel were the ones who made Las Vegas what it is today, other figures played a massive role in it as well.
Moe Dalitz
Moe Dalitz went from being a bootlegger during Prohibition to a major casino operator in Las Vegas.
Dalitz and his associates took over the Desert Inn when its original builder ran out of money.
Under Dalitz’s management, the Desert Inn became one of the most popular and successful casinos on the Strip.
He also contributed to the community by building Sunrise Hospital and engaging in various philanthropic efforts, earning him a reputation as a civic leader despite his criminal background.
Frank “Lefty” Rosenthal
Frank “Lefty” Rosenthal brought a new level of professionalism to the casino industry.
Known for his expertise in sports betting, Rosenthal managed the Stardust, Fremont, and other casinos, ensuring that they operated efficiently and profitably while skimming money for the Mafia.
His innovations, such as the introduction of the sportsbook within the casino, helped to diversify the entertainment options available to patrons.
Rosenthal served as an inspiration for the main character in Martin Scorsese’s “Casino”, Sam ‘Ace’ Rothstein, played by Robert De Niro.
Anthony “Tony the Ant” Spilotro
Tony Spilotro handled the Mafia’s interests on the ground in Las Vegas.
Spilotro’s reputation for violence ensured that the Mafia’s operations ran smoothly and without interference.
He also oversaw various street-level rackets, expanding the Mafia’s influence beyond the casinos and into other areas of organized crime.
His tragic end was the reason he was unknown for a certain period.
The resurfacing of his story was made possible because of the character in “Casino,” where the character, Nicky Santoro, inspired by Spilotro’s story, was played by a legendary Joe Pesci.
Mafia Operations in Casinos
One of the Mafia’s primary methods of extracting profit from Las Vegas casinos was through skimming, a process where money was siphoned off the top of casino revenues before it could be officially recorded.
It allowed the Mafia to evade taxes and maximize their profits. Skimming operations were sophisticated and involved trusted associates within the casino’s management. Numerous Mafia-affiliated individuals were put in prison because of skimming.
These individuals ensured that a portion of the daily earnings was diverted and delivered to Mafia bosses in cities like:
- Chicago
- New York
- Kansas City
The impact of skimming was significant. It not only deprived the state of Nevada of substantial tax revenues that could have funded public services but also highlighted the extent of the Mafia’s control over the city’s economy.
Despite efforts by state regulators to monitor and prevent skimming, the Mafia’s influence often extended to local law enforcement and political figures, making it difficult to curtail their activities.
The Mafia played a crucial role in the management and expansion of Las Vegas casinos.
Its involvement ensured that casinos were well-run, profitable, and constantly evolving to attract new customers.
Initially, the state welcomed the influx of Mafia money as it spurred economic growth and development.
However, as the extent of organized crime’s involvement became apparent, regulators began to implement stricter controls.
The creation of the Nevada Gaming Control Board and the introduction of the Black Book, a list of individuals banned from casinos due to their criminal associations, were direct responses to the Mafia’s pervasive influence.
Law Enforcement and Legal Challenges
The first significant challenge to the Mafia’s hold on Las Vegas came with the Kefauver Hearings in 1950.
Senator Estes Kefauver’s nationwide investigation into organized crime brought his committee to Las Vegas, where televised hearings exposed the extent of the Mafia’s influence over the city’s casinos.
While the hearings heightened public awareness and spurred initial regulatory efforts, they did not immediately curb the Mafia’s activities.
Throughout the 1960s and 1970s, federal authorities intensified their efforts to combat organized crime in Las Vegas.
Attorney General Robert Kennedy’s crusade against the Mafia included secret wiretaps and undercover operations aimed at gathering evidence of illegal activities.
The introduction of the Racketeer Influenced and Corrupt Organizations (RICO) Act in 1970 provided law enforcement with powerful tools to prosecute entire criminal organizations rather than just individual members.
One of the most notable federal actions was Operation Strawman, which aimed to dismantle the Mafia’s control over the Stardust and other casinos.
The operation involved extensive surveillance and the use of informants to gather evidence of skimming and other illegal activities.
These efforts culminated in the conviction of several high-ranking Mafia figures, significantly weakening their grip on the Las Vegas casino industry.
In the late 1960s and early 1970s, the entry of billionaire Howard Hughes into the Las Vegas casino market also helped to diminish the Mafia’s influence.
Hughes purchased several major casinos, bringing a new level of corporate oversight and legitimacy to the industry.
His presence encouraged other legitimate investors to enter the market, further pushing out organized crime.