1958-1959

Two major impactful events occurred, one in 1958, the second 1.5 years later, involving the Senator Club, which offered the game 21 and slot machines. Near the Nevada capitol in Carson City, this casino-restaurant-bar was popular among state legislators and politicians.

At the time, Stella C. Vincent and William “Bill” E. Duffin had co-owned the business, 63 percent and 37 percent, respectively, for about two years. Duffin, though, ran the place.

Impetus For First Upset

Cheating at the Senator Club came to light in January 1958 when Nevada Gaming Control Board (NGCB) investigator William Walts witnessed Nicholas “Nick” V. Goodman dealing seconds, using the second versus top card in the deck, during 21 games. The NGCB called Goodman in for a chat. Agents told him they’d received unfavorable reports about his conduct and warned him he better deal cleanly.

Four months later, three Reno insurance salesmen filed a complaint with the tax commission, alleging a dealer named Nick had swindled them at the Senator. They’d seen Nick burn a card in the middle of a hand (take it from the top and put it face up on the bottom of the deck). This is usually only done after each shuffle. Nick also allegedly turned the deck or dealt from the bottom mid-game, so he could access cards used in earlier hands.

Also in April, Michael MacDougall, a gambling detective the Nevada Tax Commission hired to survey the industry in The Silver State, reported he witnessed cheating at the Senator Club (and at the New Star in Winnemucca).

Hammer Comes Down

To address the alleged cheating at the Senator, the NGCB held a hearing, per protocol, in June, for Vincent and Duffin to explain why they should be allowed to keep their gambling licenses.  

At the proceeding, NGCB agents questioned all of the witnesses, the co-owners and Goodman. Duffin and Vincent asserted they didn’t know cheating was taking place. Goodman denied he’d knowingly cheated, ever.

In late July, the Nevada Tax Commission, on the NGCB’s recommendation, revoked both gambling licenses associated with the Senator Club. All gambling activity ceased there. This was the first big blow to the gambling business during the Duffin-Vincent time.

Picking Up The Pieces

The co-owners made the best of it. They kept open the restaurant and bar and installed a dance floor in the casino space. Later, in early 1959, they leased the gambling concession to an outside operator.

Goodman, however, didn’t fare so well. He was fired from the Senator Club, for starters.

“The case washed up Goodman as a Nevada dealer, although he has steadfastly maintained he was not cheating,” wrote the Nevada State Journal (Dec. 27, 1959).

Shocking, Irreversible Loss

At the end of shift early Christmas morning in 1959, Duffin invited the Senator Club employees leaving work and some patrons still there to join him for breakfast at the nearby Silver Spur café-casino. Reportedly, Duffin often showed such kindnesses, including driving home employees so they wouldn’t have to walk or take a taxi in the dark wee hours.

Following the meal, the group dispersed. Duffin, on his way through the parking lot, stopped to wish several Silver Spur employees Merry Christmas.

Once at his car, after he opened the driver’s side door, a handful of bullets hit him in the back and drove him to the ground.

Duffin died then and there.  

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It Really Happened! will publish Part II next Wednesday, April 20, 2022.

Sources

1955-1956

In March 1955, Nevada gaming regulators accused Caliente mayor Donald E. Rowan of cheating while dealing a 21 game — which is illegal — in the Shamrock Club. He’d operated the Clover Street gambling enterprise with his partner and father-in-law Joe Colombo for seven years. Rowan had been the elected head of this southeastern Nevada railroad community for six.

The charge jeopardized his mayorship (the election was a month away, and he was unopposed) and his entrepreneurship (he may lose his gambling license), both sources of income.

A Civil Servant

By 1955, Rowan, 46, had lived in Caliente for about 30 years. The Silver State native, born in Goldfield,  had worked for the Nevada Highway Department and during World War II, served as a medic with the U.S. Navy in the South Pacific.

Along with serving as mayor, Rowan’s civic contributions included having organized the Caliente Fire Department and being its first chief. Also, he’d formed and headed three local groups: the Rotary Club, Veterans of Foreign Wars and Chamber of Commerce.

Charge Of Bubble Peeking

As ordered, Rowan appeared on April 1 before the Nevada Tax Commission to state his case.

At the hearing, the commissioners alleged that one of their undercover agents and a commission investigator both witnessed Rowan and another Shamrock dealer, Bob Powell, bubble peeking. In this move, advantageous to the house, the dealer crimps the top card on the deck with their thumb, creating a bulge, or bubble, and then peeks at the card’s number.

Rowan declared innocence, saying, “I might hold my deck funny, but I wasn’t peeking.” He asked the commission to act swiftly because if they decided to revoke his gambling license, he would bow out of the run for mayor. He wanted to give Caliente residents (about 1,500 people lived there) some time to find a replacement, and the filing deadline for candidates was only eight days away.

Allowing Minors To Gamble

The tax commissioners also accused Rowan of allowing under-age youths to gamble and drink alcohol at the Shamrock, violations of Nevada law as well.

Rowan’s response was that he’d let his son, who’d just returned home from college, drink a little with his friends, but stopped it when the friends invited others to join them. The mayor added that the Shamrock Club hadn’t been in trouble with the Caliente police ever, and one member of the force was at the club often, playing in a band.

How The Votes Went

Despite Rowan claiming innocence and having a clean gaming record since entering the industry seven years earlier, the tax commissioners stripped him of his gambling license, which had covered 21, craps and slot machines. They based their decision on the alleged “unsuitable method of operation” of the Shamrock. Their unanimous vote for revocation put Rowan out of business.

On the mayoral front, though, developments were positive for Rowan. Caliente’s residents re-elected him in May 1955, and he’d go on to complete a second term.

No Reprieve In Sight

Rowan requested a reinstatement of his gambling permit, in June 1955. However, the licensing arbitrators disallowed it and told him he had to wait a year before reapplying.

When that time rolled around, Rowan tried again, to no avail. In fact, he never would be granted another gambling license.

Other men, however, would get licensed for gambling at the Shamrock Club, until 2005, at which time the proprietors stopped offering games of chance. Today, the enterprise is still in business but as the Shamrock Pub, at a different Clover Street address.

Did the tax commissioners treat Rowan fairly or not?

Sources

One Carlin, Nevada business owner learned the hard way that the state didn’t tolerate gambling operators cheating the players. 

Gino Quilici just had been granted a gambling license in August 1952 for the State Inn, in the small city about 270 miles northeast of Reno. Only three months later, the Nevada Gaming Control Board (NGCB)* found on the premises two illegal, “plugged,” three-reel, mechanical slot machines.

A $1 machine, sitting in the bar area, contained a percentage changer, or “jumper,” on the center reel, which prevented the three reels from showing a jackpot. A $0.50 machine in the café had a jumper on the right reel, preventing a jackpot and three other payoffs.

Quilici, who’d emigrated from Italy to the U.S. at age 15 in 1914, had owned the State Inn as well as the State Hotel, also in Carlin, since 1947. He’d held a gambling license for the hotel since 1950. His criminal record contained one conviction, for violating Prohibition in 1925 and for which he’d served 30 days in jail.

Made To Answer

At the hearing before the Nevada Tax Commission concerning the rigged slot machines in February 1953, Quilici testified that he’d bought the ones in question from someone in another state and hadn’t known they’d been tampered with.

The tax commissioners suspended Quilici’s gambling license for the State Inn for 15 days. This meant that for that period he had to turn around and keep his slot machines facing the wall. Presumably, Quilici complied. He was warned that next time the penalty would be more serious.

Events at that meeting set a precedent for how Nevada’s gambling regulators would, from that point on, deal with rigged slot machines cases. They’d impose a short suspension for first and minor offenses and longer suspensions or license revocation for second or large offenses. Previously, the agency had turned over the matter to local law authorities. In those instances, the cases oftentimes were dropped because prosecutors couldn’t prove the operators knew their slots were cheating customers.

Lesson Not Learned

Quilici tested the commission’s new policy six years later when NGCB agents again discovered a problematic slot at the licensee’s State Inn in April 1958. This time it was a $0.25 machine with a plug on the center reel, which kept a certain symbol from showing.

In this second incident, Quilici didn’t get off so easily; he was arrested. The machine was confiscated for possible use as evidence in court, if the case wound up there.

In fact, it did. Quilici stood trial in October. Again, he claimed ignorance. In less than 30 minutes, the jury found him guilty of allowing operation of a plugged slot at the State Inn. The judge fined him $1,000 (about $9,000 today).

The next month he had to answer to gambling regulators for this violation of the state gambling law. During that proceeding, Quilici resorted to the same defense. The tax commissioners revoked his gambling license for both the State Inn and State Hotel.

Tough, Economic Consequences

A gambling license revocation wasn’t for life in many cases, so a once-licensee could reapply for another one. Quilici requested a new license about seven months later, for eight slot machines at the State Inn and another eight slots at the State Hotel. The tax commission refused to grant him one due to his conviction on a gambling charge.

A month later, Quilici applied for a license for table games at the Star Hotel and Bar in Winnemucca, another of his properties.

“The application was deferred because the present operation did not indicate that he could handle another one,” it was recorded in the August 1959 NGCB meeting minutes.

In yet another effort, Quilici applied for the 16 slots total for his café and hotel, and in December, he, with his attorney, argued his case before the NGCB. Quilici stated he’d studied up on slot machines and now knew enough to determine whether or not they’ve been doctored.

“I won’t trust anybody but myself,” he said (Reno Evening Gazette, Dec. 2, 1959).

The board indicated it needed additional time to research and consider his case and, thus, deferred action on the repeat offender’s application.

Subsequently, in January 1960, on the NGCB’s advice, the tax commission refused Quilici a new gambling license on the basis of his previous license suspension and revocation.

A Different Tack

In July, instead of Quilici, Elijah I. Puett, owner of Puett Appliance Co. and a lifelong Carlin resident, applied for a gambling license for eight slot machines at the State Inn. The two businessmen had come to an arrangement wherein, in part, Puett would lease the machines from Quilici for $12.50 ($110) apiece each month, and Quilici’s employees would service them. It’s probable that Quilici also was to get a percentage of the earnings from the slots.

The commissioners denied Puett’s application with no prejudice to him, a man the NGCB agents found to be “of good character” (Meeting Minutes, January 1960), and cited Regulation 3.020, Section 1, as the reason.

That rule read, “The commission or the board may deem that premises are unsuitable for the conduct of gaming operations by reason of ownership of any interest whatsoever in such premises by a person who is unqualified or disqualified to hold a gaming license, regardless of the qualifications of the person who seeks or holds a license to operate gaming in or upon such premises.“

When it came to getting a new gambling license, like the people who’d played his plugged slots, Quilici wouldn’t hit a jackpot.

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* Formed in 1955, the Nevada Gaming Control Board served as the investigative team for the Nevada Tax Commission, which originally handled gambling licenses. In 1959, when the Nevada Gaming Commission was formed, it took over that responsibility from the tax commission.

Sources

1954

Two gambling-related issues — cheating by operators and prostitution — in Nevada’s town of Searchlight came to a head at the July meeting of the state tax commission, then responsible for overseeing gaming.

Regarding the roughly 300-resident community, commissioners 1) had heard rumors that its local ladies of the night mingled with customers in the casinos and 2) had been getting increasing complaints about the gambling clubs swindling their patrons.

Exercise Of Power

Until Searchlight addressed both problems to the satisfaction of the commissioners, they’d deny all gambling license applications, they said. And they did. In July, they refused to grant licenses to three of the town’s four casinos:

Oasis Club: one application by Belle Norheim then a second application by her sons Herman and Wilfred John Collier

Searchlight Casino: applicant Ernest Sandquist

El Rey Club: Gerald W. Judd and W. J. Martello applied for a reinstatement of their license as the commission had revoked it the previous year after discovering a rigged slot machine on the premises

Survival At Risk

The Crystal Club being the only licensed gambling house there at the time created an economic crisis for Searchlight, located about 60 miles south of Las Vegas. The community relied on its cut of gambling license fees to cover the $5,000 to $6,000 a year needed to operate. Its other income source, property taxes, contributed only about $800.

“We need licenses regardless of whom they are issued to,” Clyde C. Cree of the Searchlight town board told commissioners at their August meeting. “We want a town, gentlemen, I’m here to tell you that. We’d like to know what the tax commission wants cleaned up” (Reno Evening Gazette, Aug. 10, 1954).

Commissioners made it clear that Searchlight and its casinos needed to 1) keep gambling separate from prostitution and 2) stop the cheating of players. Cree agreed to make it happen.

“If it is a matter of the girls keeping the boys from getting licenses, then we’ll get rid of the girls,” he said.

The gambling agency gave Searchlight some time to get it done and, thus, deferred action on the town’s three pending license applications, at least until it next met.

Supposed Turnaround

At the subsequent monthly meeting, commission secretary Robbins E. Cahill reported what he’d found during his recent investigative trip to Searchlight.

The license applicants were willing to abide by the tax commission’s mandates, none of the clubs was engaged in prostitution and gambling there “was pretty well straightened out,” he said (Nevada State Journal, Sept. 10, 1954).

Therefore, the commissioners granted licenses for the Searchlight Casino and El Rey Club.

They, however, denied the Colliers brothers a license for the Oasis Club because they had criminal pasts, including prison time served in California for burglary. That ended gambling at the Oasis for good, leaving Searchlight with only three licensed casinos.

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Photo from Pond5.com: by egubisch

Sources

Frost, 1936

1906-1967

Frank “Frankie” Frost (1898-1967) spent about two decades working in Reno’s gambling scene and had close relationships with those in power locally, including gambler-Mobsters William “Bill/Curly” Graham and James “Jim/Cinch” McKay and banker and businessman, George Wingfield, Sr. Frost had a checkered past, which eventually got him blacklisted from Nevada’s gambling industry.

Here we present the “work” (criminal) highlights of Frost, tracking him geographically through Illinois, then California and, finally, Nevada.

Chicago, 1906-1930: Murder Charge By Age 30

Though Frost was born in California, he spent most of his youth in Chicago and eventually became part of its North Side Aiello–Moran gang (Giuseppe “Joe” Aiello and George “Bugs” Moran), which was involved heavily in bootlegging during the 1920s. Frost, who used the aliases Eddie Ryan, Frank Bruna and Frank Citro there, was arrested three or four times for disorderly conduct but wasn’t charged.

Also, Frost was the primary suspect in the November 16, 1928 machine gun murder of John G. Clay, head of the Laundry and Fyehouse Chauffeurs’ Union. Police theorized that Moran ordered the hit because Clay was thwarting Moran’s attempts to muscle in on the cleaning and dyeing racket in The Windy City’s West and South Sides, Alphonse “Scarface” Capone’s territory. Though Frost was arrested for the murder, he wasn’t charged.

In a supposed act of retaliation by Capone, some of his soldiers, disguised as police officers, lined up and machine gunned down six of Moran’s men on February 14, 1929, nearly wiping out his crew. Initially, Frost was thought to be among the victims of what was dubbed the St. Valentine’s Day Massacre. Afterward, Frost switched his allegiance to Capone.

When Chicago Tribune crime reporter, Alfred “Jake” Lingle was murdered June 9, 1930, police traced the gun, left at the scene, back to Frost but determined that a Leo V. Brothers was the shooter.

Frost

Los Angeles, 1930-1934: Not Staying Out Of Trouble

Frost was indicted by a grand jury for accessory to the Lingle crime because he presumably had guilty knowledge of the killer(s) and their motives, but he was in Los Angeles at the time, using the alias Frank Foreman. He was captured there on July 1, 1930, arrested, returned to Chicago and placed in the county jail. After five months, though, he had to be released by law, so he got out on a $20,000 ($309,000 today) bond.

In March of the next year, Frost testified at Brothers’ trial. Also called to the stand was a witness who said he saw Frost and Brothers flee the scene in different directions after Lingle was shot. One detail the witness recounted was seeing Frost help Brothers light a cigarette afterward so Brothers didn’t have to take one of his hands out of his pocket.

The trial of Frost, for his alleged involvement in Lingle’s murder, was scheduled for April 28, but it never took place because the witnesses disappeared. Frost was back in Los Angeles when he learned, in June, that charges against him were dropped.

In September, Frost was arrested on suspicion of extortion in connection with a scheme to extort money from the widow of soap magnate, Leo Bergin. Bergin racked up a gambling debt of at least $6,000 ($102,000 today) in a days-long dice game run by representatives of New York gambler-Mobster Arnold Rothstein. Bergin wrote some checks for what he owed but later stopped payment on some. Before Rothstein’s men could collect in full, Bergin died, so they went after Gladys Bergin for payment. Due to lack of evidence, Frost wasn’t charged.

The following year, 1932, in February, a patrol officer pulled over Frost, who was working at the time as a bail bondsman. A search of the new car he was driving yielded a fully loaded, 0.45-caliber automatic pistol. Frost also had with him a letter from a “Ben” in New York, possibly Benjamin “Bugsy” Siegel, which read in part, “Other people out there are trying to keep out of trouble, but are always in touch with New York. Glad you have gone into the bonding business, as that is good cover for the business you are in.” Frost was found guilty of carrying a concealed weapon, a misdemeanor. Because he then failed to appear at a hearing of arguments concerning a possible new trial, the judge issued a warrant for his arrest.

A month later, police in San Francisco raided an apartment in their investigation of a $100,000 ($1.8 million today) jewelry robbery and took the four men inside to the station. Frost was among them. It resulted in a vagrancy charge (that later would be removed) and him being returned to the City of Angels. He was sentenced to six months in the county jail for the concealed weapon offense. Frost, though, disappeared, and a nationwide hunt for him began. Before he could be found, the appellate court reversed his conviction.

Presumably, the man who repeatedly had gotten away with crimes laid low in Southern California for the next few years.

Reno, 1935-1967: Focus On Gambling, Business

Frost next turned up living with his wife in The Biggest Little City. Only five months later, in April 1936, he was arrested for allegedly stealing $125,000 ($2.3 million today) worth of jewelry from a New York City store that January. For the story, see next blog post, Reno Mobsters Aid Gangster From Chicago, Raising Suspicions.

In 1938, the owner of a New York clothing store, Cy Kronfield Inc., sued Frost for $630.85 ($11,500 today) for not paying for goods and services it provided to him between 1933 and 1939.

Using the name Frank Foster, Frost was arrested in Elko, a city about 300 miles northeast of Reno, in May 1940 for attempted burglary of the Reinhart general merchandise store. Two months later, he was arrested and served 30 days in jail in Reno for “prowling through parked automobiles” (Reno Evening Gazette, Dec. 10, 1940). In June 1941, he was arrested for petty larceny after getting caught trying to sell children’s clothes he’d stolen from somewhere.

Frost reportedly ran or helped run the race horse pool at Graham and McKay’s Bank Club for several years, after which he opened and operated his own book, the Reno Turf Club.

In 1947’s first half, Frost applied for another gambling license from the city, this one for a new entity, Washoe Sports News, which was to supply race results from the Trans-America News and Publishing Co. wire service to local outlets. On behalf of Capone, Siegel was tasked with forcing bookmakers on the West Coast to switch to Trans-America from Continental Press. While the city council was mulling over whether or not to eliminate the existing cap on the number of race pools allowed in Reno, because granting Frost the license would’ve exceeded it, Trans-America went bankrupt and folded after its primary owner-operator was murdered. Soon afterward, Siegel was killed, too, and Frost withdrew his gambling application.

In 1951, Frost sold the Reno Turf Club. Afterward, he returned to working at the Bank Club, supposedly wrapping money. However, members of the Nevada Tax Commission, the entity which in 1947 gained the task of issuing state gambling licenses, saw him overseeing a game of faro there once. Because of his criminal background, the commissioners didn’t want Frost involved with running the gambling in any Silver State casino.

However, they spotted him again doing just that, counting money and giving orders at Reno’s Palace Club. After a related brouhaha, the casino banned him from working there in 1953, and after that, according to Frost, he no longer could get a job in the state’s gaming industry.

Dorothy Frost

In 1955, Frost’s wife Dorothy, a Manitoba, Canada native, took her life by overdosing on sleeping pills.

His Final Years

The widower remained in Reno and was involved subsequently in some shady business dealings, which came to light through various lawsuits. Frost held and breached the lease on the Mt. Rose Sawmill. In an incident that led to a lawsuit, Frost physically prevented a competing lumber firm (Frost owned the Nevada Pine Mill and Lumber Co.) from taking from the sawmill wood it purchased. Also, he was sued for failing to pay for lumber he bought from a Lake Tahoe man.

In another arrangement, Frost was a co-partner with McKay and Marion T. Weller in F.M.W. Drilling Co. In 1957, an employee sued F.M.W. for not paying him $1,650 ($15,000 today), the remainder of wages due him for building an oil derrick.

In 1961, a Frank Frost appeared to be working at the local Buick dealership as the assistant general sales manager. It may or may not have been him.

The Mobster Frost, who’d left a trail of crime in his wake, passed away on April 1, 1967 at age 68 in Nevada.

Sources

Benjamin “Bugsy” Siegel and his famed Las Vegas hotel-casino

1947

“The Flamingo Hotel, one of the nation’s most elaborate establishments, was [Benjamin] Siegel’s baby and was set to be the operating headquarters for his syndicate which embarked on a program to control gambling in Nevada as well as Los Angeles, San Francisco and other spots in the west,” read a Nevada State Journal op-ed piece (June 22, 1947).

Among other various criminal enterprises, Siegel was involved in trying to establish the Mob-run Transamerica race wire service on the West Coast.

The well-publicized murder of Siegel, Mobster, hitman and gambler, on June 20, 1947 led to restrictions on who received a Nevada gambling license. The Silver State tightened control to filter out the undesirables and, thus, clean up the industry.

“It is up to the authorities to protect the state against the invasion of gangsters. Gambling attracts them but vigilance and honest enforcement of the gambling law and particularly the license provisions of it will keep them out, wrote an NSJ opinion writer (June 22, 1947).

Licensing At The Start

When the Nevada Legislature approved gambling in 1931, responsibility for granting licenses fell to the counties or cities; the state wasn’t involved. The only requirement for obtaining a license was that the applicant be a U.S. citizen. Licensees paid two monthly fees: $25 per table game and $10 per slot machine.

Fourteen years later, in 1945, state legislators shifted gambling licensing to the then two-person Nevada Tax Commission and, simultaneously, instituted a state gambling license fee equal to 1% of gross revenue for enterprises doing more than $3,000 worth of business quarterly. Cities and counties still could issue gambling licenses, too but only after an applicant obtained one from the state.

Changes In 1947

The tax commission established licensing-related guidelines based on the opinion of the Nevada Attorney General Alan Bible, which he delivered in October 1947.

According to Bible, the commission had the power to:

• Investigate a gambling license applicant’s background, including their character, habits, associates and the like

• Require license applicants to provide proof of citizenship

• Deny an applicant a gambling license when they are deemed to have an “unsavory character,” when granting a license wouldn’t serve the public’s interest or when another just reason warrants it

• Revoke a gambling license if the holder is determined to have an “unsavory  character,” if the licensee is acting against the public’s interest or if some other sound reason exists

“All applicants must now present complete evidence of past records, current business associates, dormant or active, and must submit themselves to an investigation if such is required by the tax commission,” reported the Nevada State Journal (Jan. 24, 1948). “If evidence is presented that any operator is knowingly permitting cheating in his establishment, his license is subject to immediate revocation.”

Immediate Repercussions

When the tax commission held its subsequent meeting, in January 1948, it granted 1,000 gambling licenses but denied five, for reasons not made public.

Two of the denials went to existing bookmaking enterprises, the Turf Club in Las Vegas and the Reno Turf Club in Reno.

Turf Club in Las Vegas

Sources

Token from the Old Cathay Club, a casino, restaurant and bar open in the mid-1950s in Reno, Nevada

1955-1966

Harry Chon, licensed operator of the gambling operations at the Old Cathay Club* in Reno, Nevada, found himself in an uncomfortable spot, under pressure from two parties, in 1956.

The story begins about a year earlier, when two other men, Horace Fong and his godfather, Moon Wah, applied unsuccessfully for a gambling license for the same property. Of the two, only Wah had casino experience, and he’d been convicted recently of tax evasion in California.

Soon after, Fong re-applied — this time with Chon named as the co-licensee — but to no avail because the Nevada Gaming Control Board (NGCB) deemed Fong unsuitable, likely due to his relationship with Wah.

Then Chon alone sought and was granted a gambling license to lease space from Fong and run a casino in it. Fong operated the other entities on the property, a restaurant and bar.

Rumblings Then Temblor

In spring 1957, the NGCB heard rumors that individuals other than Chon were running the gambling at the Old Cathay. It was verboten to change casino interests without approval first from gaming regulators, so agents investigated.

Chon confided in them he’d hired a man named Fred Down to manage the casino, but Down did what he (Down) wanted and had brought in George Chinn to be the pit boss, despite Chon having urged him not to. Chon also admitted he, himself:

• Lacked access to the safe as Down had the combination
• Didn’t know how much the house’s bankroll contained from day to day
• Didn’t have any say over hiring or firing employees

The NGCB cited Chon on five counts:

• Transferring interest to an unlicensed person
• Permitting concealed interests in the club
• Misrepresenting on his license application the casino’s financial structure
• Improperly maintaining the bankroll
• Unsatisfactorily conducting business

The board ordered Chon to explain in person why he should be allowed to keep his license. In the interim, he voluntarily shuttered the Old Cathay casino, on March 15, to remove some of the people associated with it, he said.

Testimony Given

At the hearing, Chon relayed a different story, perhaps because Fong, Down and Chinn also were there. He denied telling anyone he lacked control over his club and the workers and that Down wouldn’t do what he said. Chon claimed it was his choice to not have the safe combination because he tended to spend money when he consumed too much alcohol.

However, he did concede to having expressed his concerns about Chinn to Down. (Chinn had had a run-in with the state some years prior when it was discovered he’d held a secret interest in the Yukon Club in Reno.) Chon said Down’s response had been that he and Chinn were friends but he’d take care of it later.

Chon explained he’d often traveled to and from San Francisco and spent three days a week there where he oversaw a grocery store.

Also, he vehemently denied that he’d allowed unlicensed parties to operate the casino, specifically Fong, Down and/or Chinn, or that he’d abandoned his gambling permit.

Fong and Chinn attested to not holding any interest in the Old Cathay Club.

The NGCB’s auditor testified that Chon had initially signed the casino checks but within a month of opening the doors, Down had assumed the task. He noted Chon had contributed $18,000 to the bankroll, but it hadn’t been recorded in the club’s accounting records.

It seems some bad characters had used Chon, without his knowledge, as a front man for the Old Cathay Club then took over.

The NGCB Rules

In May, pursuant to the testimony provided at the proceeding and their own findings, the board members determined that Chon:

• Hadn’t, willingly at least, allowed any transfer of interest in the casino, but they strongly doubted he truly controlled it
• Hadn’t allowed a concealed interest in the gambling house
• Hadn’t misrepresented information on his license application
• Had funded the bankroll via loans, but against the rules, the transactions hadn’t been recorded
• Had improperly maintained the bankroll and admitted he couldn’t control it
• Had conducted the business unacceptably

Consequently, the agents unanimously agreed Chon was unfit for a gambling license and, therefore, recommended it be revoked. In agreement, the tax commission pulled it.

Chinn Goes For It

With Chon out, Chinn, already on the NGCB’s radar as being shady, applied for a gambling permit in June to run the casino at the Old Cathay but under the name, California Club, noting he would invest $42,000 in it.

As expected, regulators denied the license because of “unsatisfactory past operation” (Nevada State Journal, June 27, 1957).

Chon, Take Two

Fast forward six years. Chon, who had his gambling license taken away, applied to have it reinstated. That time it was for Basin Street, a casino at 246 N. Lake Street, also in Reno. NGCB agents decided to give him another chance, as his prior infractions hadn’t been egregious and he’d closed his casino voluntarily before any state action. They voted 2 to 1 to give him one on a six-month conditional basis.

Chon ran that gambling house for two and a half years.

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* The Old Cathay Club previously had been called Confucius and before that, the Lido Bar. It was located at 222 Lake Street in Reno (now a parking lot across from Greater Nevada Field).

Sources

1954

Due to the 1953 scandal in Wells, Nevada, the state tax commissioners in June 1954 prohibited open gambling in the town of Jackpot, just south of the Nevada-Idaho border along U.S. Route 93.

They worried that gambling 1) couldn’t be policed easily in that remote area and 2) might cause resentment among Twin Falls residents because Idaho had outlawed its only legal gambling — slot machines — earlier that year.

In July, Nevada banned gambling, too, in Wells (further south on the 93).

1958-1959

(Part I ran last week.)

The Nevada Tax Commission withdrew the gambling license of the New Star casino’s operators — Brent Mackie and Kenneth Henton — in July 1958 after investigators allegedly witnessed 21 dealers cheating customers in eight different ways at the Winnemucca casino.

Later that month, defense attorney Thomas Foley of Las Vegas, petitioned the district court to review the tax commission’s license revocation order on the grounds that it was “capricious and arbitrary” (Reno Evening Gazette, July 29, 1958). District Judge Merwyn H. Brown ordered the agency to defend its action.

Bias Alleged

However, Brown was automatically disqualified from hearing the case. This was due to Nevada Gaming Control Board (NGCB) member, William Sinnott, alleging via an affidavit that Brown, also of Winnemucca, possibly was biased against the tax commission as he’d ruled on the side of the Thunderbird Hotel in Las Vegas when its gambling license was in contention. 

The commission also was concerned Brown had become too close to Mackie and Henton when they’d owned the Mint Club casino in town previously.

“I’ve been booted off the case for an asinine reason,” Brown said (Reno Evening Gazette, July 30, 1958). “Frank Petersen [NGCB’s counsel] called and said he felt I was disqualified because a lady who has been my neighbor for 30 years owns a half interest in the building in which the New Star casino is located. I told Petersen that if that reason is valid, I can’t sit on any case because I have had friends here for 50 years.”

Legal Sparring Ensues

In August, District Judge John F. Sexton of Battle Mountain, Brown’s replacement, stated the license revocation was too strict, and as such, he lessened the penalty to closure of only the 21 game for 60 days and covering of the dice table for 30 days with time served taken into account. Mackie and Henton still could operate the slot machines.

Petersen, attorney for the gaming regulators, called the alteration “improper and prejudicial,” pointing out that Sexton must have determined cheating had taken place or he would’ve reversed the revocation (Nevada State Journal, Dec. 11, 1958).

“Sexton’s modification decision was another milestone in the evolution of Nevada’s thorny problem in policing the state’s multimillion-dollar legalized gambling industry,” noted the Nevada State Journal (Aug. 9, 1958).

Petersen appealed to the Nevada Supreme Court. In mid-August, that court sided with the tax commission, granted its motion to stay Sexton’s order, or in other words, reinstated the license revocation and casino closure.

One Last Tack

Mackie and Henton, however, continued to fight. Foley asked the high court to dismiss the tax commission’s appeal of the district court decision that eased the revocation order and, instead, to allow a motion for re-hearing of the testimony in the lower court.

That effort, too, was unsuccessful as the Nevada Supreme Court in September said it, not the district courts, was the final arbiter on appeals concerning state gambling regulation orders.

Foley again appealed to the higher court, the second time asking the revocation be overturned because evidence had been lacking and insufficient for the penalty to be imposed initially.

In court in December, the justices asked Petersen how the tax commission could function in a judicial capacity when there was a dispute over which witness to believe and the commission itself had not observed the witnesses. (Before 1955, the tax commission directly heard all hearing testimony but that duty was transferred to the NGCB when the legislature created the entity that year).

Petersen replied that the commission has the record of the gaming board hearing and determines the weight and credibility to be accorded to the various accounts.

Out Of Gas

In January 1959, the Nevada Supreme Court found that Sexton’s order to reduce the penalty was administrative rather than judicial. It also determined a reasonable cause for the revocation had existed. The final ruling was that Mackie and Henton’s gambling license for New Star would remain cancelled for the requisite year, and it was.

Gambling At New Star Revived

That didn’t mean a different party couldn’t obtain a license and run the gambling at New Star. In fact, that’s what happened.

In February, the tax commission granted a gambling license to Sumner and Doris Kirkby to operate 20 slot machines at the club. The next month, it approved Roland I. Benum of Las Vegas to run blackjack and dice games there, too, with a $25 table limit, a restriction that in July was removed.

In December 1960, Harold Larraguetta invested $40,729 in and assumed control of the entire casino operation, which he ran for four years.

Sources

Photo from freeimages.com: by Steve Roberts

New Star (restaurant, casino, bar), Winnemucca, Nevada, 1960s

1958

Casino workers at the New Star allegedly were caught in flagrante delicto.

In April, a gambling detective — Michael MacDougall from New York — conducted a statewide, in-person survey of various gambling entities upon the request of Robbins Cahill, head of the Nevada Tax Commission, the state’s gambling regulatory agency at the time.

MacDougall spotted dealers cheating during games of 21 (blackjack) on two different days at the Winnemucca gambling house. In May, Fred Galster, an agent for the Nevada Gaming Control Board (NGCB), which investigated all cheating complaints, played the game at New Star for hours, and he, too, noticed the same deceitful activity.  

Array Of Infractions

The two witnesses observed the dealers employing the following cheating methods

• dealing seconds = dealing the second card in the deck

• turning the deck = turning a card over and dealing from the deck bottom

• one hand bottom = taking a card from the deck bottom to give the dealer 21

• copping the cut = picking up the cards in the same way they’re cut

• hi-low stack = picking up discards in such an order that the dealer gets two high cards and the player gets one high and one low card

• dealer’s stack = picking up discards in such an order that the dealer gets 21

• bubble peeking = bending the top card slightly to glance at it

• bridge = bending a card so players unconsciously cut at that card

• false shuffle = passing cards through a shuffle without rearranging their position

During the 1950s, Nevada gaming authorities cracked down on cheaters, typically revoking the gambling licenses of the casino operators, thereby closing their establishments for a year.

This was to portray to outsiders, federal lawmakers in particular, that the industry in The Silver State was honest and clean. One might argue they were extra vigilant during 1958 because Robert F. Kennedy was working diligently and blatantly to eradicate racketeering throughout the U.S., and gaming was an obvious place to root out such underworld activity.

Defense Offered

The NGCB ordered New Star casino’s operators — Brent Mackie and Kenneth Henton — to appear at a hearing to show cause why their gambling license should be maintained.

At the proceeding — during which MacDougall, Galster and numerous other people testified — New Star’s defense attorney, Thomas Foley of Las Vegas, denied his clients were guilty and asserted the NGCB had failed to prove the cheating charges. The primary defense was that MacDougall’s findings weren’t credible and, therefore, he wasn’t either. Foley argued MacDougall  had:

• Identified one of the allegedly cheating dealers by physical description but that man hadn’t worked then

• Testified that a certain allegedly cheating dealer was right-handed when in fact the dealer at the time was left-handed

Despite the discrepancies, though, the tax commission pulled Mackie and Henton’s gambling license in July, closing New Star’s casino.

But this isn’t the story’s end. Check back next Wednesday for the finale.

Sources