1951

Gambling is the lifeblood of organized crime.

This was U.S. Senator Estes Kefauver’s conclusion after the Special Committee on Organized Crime in Interstate Commerce, which he headed, concluded its investigation.

The Kefauver Committee’s work, in part, involved conducting hearings in 14 U.S. cities, during which they grilled (sometimes, unsuccessfully) about 600 witnesses, including big-time Mobsters, some of their associates and officials knowledgeable about Mob activity. The 15-month query shone a spotlight on gambling taking place at the time and for years before, most of it illegal, prohibited by law in most states.

The hearings were televised, and Americans tuned in, rapt. The broadcasts opened their eyes to the who, what,  where, when and how of gambling and other organized crime happening all around them. By March 1951, 72 percent of U.S. residents were familiar with the Kefauver committee and what it was doing.

Crackdown On Some Gamblers

As a result of the Senate committee’s findings, Kefauver recommended the federal government impose a 10 percent tax on all gambling. At the same time, U.S. residents, facing a likely federal personal income tax increase, expressed dissatisfaction at gambling operators (gamblers) paying little or no taxes on the loads of cash they made.

These two factors in large part pressured Congress to act, and it did in 1951 but not to the extent Kefauver had suggested. It imposed two taxes* on a subset of gamblers, individuals who received bets from people — bookmakers, numbers writers, and punch board and lottery operators.

The goal was to force these people to pay heavy taxes or go out of business, and in doing so, shrink the  gambling industry nationwide and generate a good chunk of revenue for the U.S.

Trio Of Mandates

One of the new federal levies, called the tax on wagers, was 10 percent of all gross receipts.

The other was an occupational tax, often referred to as the gambling stamp tax. It required wager takers to buy a special tax stamp every year by December 1 and display it in their place of business or, for those without such a location, on their person. The stamp cost $50 (about $525 today).

Anyone required to pay the special tax also had to register with the local Internal Revenue Bureau (IRB) collector and provide their name, home and business addresses and the name and home address of their partners, employees and clients. Once the bureau received the information, it provided a copy to local law enforcement officials and maintained its own public list of all gambling stamp purchasers.

These wagering-related taxes went into effect on November 1, 1951.

Failure To Comply

The penalty for not purchasing the $50 tax stamp was a fine of at least $1,000 ($10,300 today) but not higher than $5,000 ($51,500 today).

Gamblers who had a stamp but didn’t display it were fined, $50 for those who’d forgotten to do so and $100 for those who outright refused to do so.

Providing false information on the relevant forms was punishable by up to $10,000 in fines and five years of imprisonment.

Regarding the 10 percent tax on wagers, IRB Commissioner John B. Dunlap told the United Press that “cases of willful evasion or attempt to defeat the tax will be promptly referred to the department of justice with recommendation for criminal prosecution” (Nevada State Journal, Dec. 5, 1951).

Early Stamp Numbers

By the first deadline, December 1, 1951, a total of 7,706 gamblers had applied for the federal gambling tax stamp. The state of Washington submitted the most applications, at 1,412. Next was Montana, with 902. Nevada, where gambling was legal and wide open, accounted for only 33 applications.

It wasn’t long before problems with these latest federal taxes arose.

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Look for Part II next week.

* Congress enacted the two taxes on wage takers through the Revenue Act of 1951, which also temporarily raised federal individual income and federal corporate taxes.

Sources

1936-1950s

The Palace Club introduced a new casino game to Nevada’s “Biggest Little City” on May 1, 1936. Renoites quickly discovered it, and its popularity soared, leading to a solid run over about a decade.

The emergence of this enticing gambling offering was “a major event in the development of Reno’s gaming,” Raymond Sawyer wrote in Reno, Where the Gamblers Go!“

It was race horse keno.

The game essentially was keno or Chinese lottery but with horse names instead of numbers or Chinese characters. The equine monikers — Shot Gun, Red Fox, Mixed Party, Wedding Ring, Rustic Lady and Fussbudget, for example — were entertaining.

To start, the Palace Club conducted the game every 30 minutes versus the then typical twice daily keno schedule. The announcing of the events was exciting, like actual horse races at a track. According to Sawyer, they went something like this:

“All right folks, they’re at the post! And they’re off on race number 57; the first one out is Jockey Number 16 on Main Street right down the main drag. A hell of a race and a hell of a bunch of horses! Next is Jockey Number 60 on Kay Dugan, that old Irish gal again. Next is Number 50 on Bally Boy, that bloody English horse. And next out is Number 8, on Ask Kate. I did — and nothing happened!”

How It Got To Reno

Palace Club pit boss, Frances Lyden, had seen race horse keno played in Montana and proposed to his boss, casino owner John Petricciani, that they debut it in Reno. He agreed.  

Lyden telephoned Warren Nelson, 23, whom he’d seen run the game in Great Falls, and asked if he’d be willing to start up and operate race horse keno at the Palace Club with a few experienced men of his choosing.

In late April, Nelson, arrived, with a crew — Jim Brady, Clyde Bittner and Dick Trinastich — and immediately got to work preparing and then launched the game.

At first, the Place Club generated about $200 to $300 (about $3,700 to $5,600 today) per day from race horse keno, selling each ticket for $0.10 ($1.80).

And They’re Off …

In its newspaper advertisements, the Palace Club described race horse keno as “the game that has taken Reno by storm.” The claim was true.

“It didn’t take long, not more than a week or so, for the new game to catch on,” Sawyer wrote.

Over time, at the Palace Club, Nelson began holding the “races” more often, first changing it to every half hour, then every 20 minutes and finally, every 10.

Eventually, $0.35 tickets replaced the $0.10 ones as the most common, $0.35 ($6.50) ones became most popular. Some players bought $0.50 or $1 tickets ($9.40 or $18.80).

“Soon we were writing $1,500 to $2,000 [$28,000 to $37,000] a day, and by the end of summer we were writing $5,000 [$93,000] a day,” Nelson said in Always Bet on the Butcher.

Competition Springs Up

Also starting in 1936, and over the ensuing years, other gambling places got in on the action, offering race horse keno themselves. Those gambling houses were the Wine House, Block N and Harolds Club in Reno; the Index Club in Winnemucca; Jill and Eddie’s in Fallon; and the Nevada Club in Stateline, to name a few.

When the Bank Club, the Palace Club’s nemesis, followed suit, the latter raised its game win maximum to $5,000 from $2,000. Later, Reno’s Frontier Club debuted its game with a $25,000 limit ($400,000), and that drew even more players.

In Southern Nevada, the first club received a gambling license for race horse keno in late 1939. There, the Las Vegas Club and the Boulder Club adopted the game early on.

Retiring The Game

Race horse keno in Nevada began fading out in the late 1940s and early 1950s.

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Sources

Everton Judson Conger

1883-1884

A gambling affinity, in part, did in Everton J. Conger’s career as associate justice of the Territory of Montana.

President Chester A. Arthur suspended him in March 1883. Conger had served three years in that role, beginning in 1880. Along with his penchant for playing games of chance, legal there at the time, reasons cited for Arthur’s punitive action against him included drunkenness, incompetence and dereliction of duty.

“It was held by his accusers that his indulgence in these practices destroyed his usefulness upon the bench and lowered the dignity of his high office, and that his continuance therein was an insult to the people of the Territory,” reported The Daily Miner (July 11, 1883).

It went on: “No charges, having any foundation in fact, were made against his integrity and honor as a man or as a judge. His ability was not impeached, nor was his industry in the discharge of his duties questioned. He was suspended simply on account of his supposed non-observance of certain social obligations which his position imposed upon him.”

His Link To Lincoln

During his service in the Civil War, Conger, who’d attained the rank of lieutenant colonel, had sustained three or more severe wounds in his right hip. Those injuries troubled him continually thereafter, and he used alcohol, morphine and chloral to dull the persistent pain.

Conger, at age 31, had conducted the interrogation that produced the location of President Abraham Lincoln’s assassin, John Wilkes Booth, and accomplice, David E. Herold. He also had accompanied the 16th New York Cavalry Regiment that had cornered the two men, resulting in the shooting of Booth and the capture of Herold. (In the HBO movie, Manhunt: The 12-Day Chase for Lincoln’s Killer — based on a book of the same name — Harrison Ford plays Conger.) Conger claimed to have known Booth from having seen him at various gambling houses they’d frequented in Washington, D.C. The federal government had given Conger $17,500* for his part in Booth’s capture.

Despite his heroics, not everyone loved the judge, in the U.S. capital city and in the territory, for various political reasons, including a ruling he’d made against the Northern Pacific Railroad and his support of replacement of county commission members. Many believed these disagreements caused his enemies to fight for his removal from office on grounds of immoral behavior. Thrilled at Conger’s suspension, they wrote to Arthur they were “hunting a cannon to fire a salute” (One Man’s Rebellion Record).

Behavioral Examination

Conger’s supporters pressured the administration to investigate the allegations against him. Peter C. Shannon, lawyer, politician and judge, was discharged to Bozeman, where, beginning May 30, 1883, he gathered testimony over a month’s time, generating more than 1,000 pages of information.

After learning of specific instances in which Conger had played poker, faro and billiards and the various saloons he’d frequented, Shannon concluded and testified before a congressional committee that Conger’s gambling activities were “unbecoming, unseemly, and indecorous” and “unsuitable to the office of Justice of the Supreme Court of Montana, and judge of that district.” As for Conger’s alcohol consumption, Shannon determined it exceeded that which was medically necessary and impacted his work performance. But the investigator pleaded for Conger to be extended grace.

“His honorable services in the war for the preservation of the Union, his crippled condition, and his physical sufferings, plead strongly for mercy, which I beg may be shown to him,” he added.

Not A Peep

Eight months after the inquest concluded, action on Conger’s case still hadn’t been taken. And Montana continued to suffer for it, with its remaining two judges overworked and the courts backlogged.

“The President don’t [sic] seem to see his way clearly through it,” reported The Daily Miner (Oct. 19, 1883). “On the one hand there is a party clamoring for the Judge’s removal, on the other is a car-scarred soldier, a tried patriot, a sound lawyer, a man whose integrity off or on the bench cannot or has not been successfully impeached.”

A Final Insult

Arthur reappointed Conger to the bench in March of 1884 but only one day before his term was to expire. What seemed like a victory really wasn’t as he was out of a job.

“The general opinion of the bar and people who know Judge Conger best is that he is honest and incorruptible, although incapacitated by his wounds from giving that close attention to his judicial duties which is demanded by the position he holds,” reported The Daily Independent (April 11, 1883). “He is a gentleman somewhat loose, perhaps, in habits, of strong partialities, and some prejudices, but who aims to do the just and fair thing, as he sees it.”

* This compares to the U.S. president’s salary of $25,000.

Sources

1941

Ten years after Nevada legalized gambling and shortened the residency requirement for divorce from six months to six weeks, Montana took steps to compete. Bills to legalize gambling and to allow 30-day divorces were introduced to the state legislature.

Neither made it through, leaving dude ranchers and many others upset about the potential economic boon for which such laws likely would have allowed.