1961

It was hot inside and outside Harolds Club in Reno, Nevada on a Wednesday afternoon in the early summer of 1961.

Indoors, people gathered around to watch high-roller Lonnie Joe Chadwick on a winning streak. In his two-day spree playing 21, he already had cashed in about $30,000 to $50,000 ($239,000 to $398,000 today) and still had numerous $100 chips in front of him. He continued to bet the $500 limit at each of the gaming table’s seven spots.

Suddenly, Internal Revenue Service (IRS) agents appeared, interrupted Chadwick’s gambling rush and confiscated his more than $18,000 in chips!

Previously, they’d informed him that the federal government had “closed out his taxable year as of that time and the chips on the table were under levy for payment of taxes for the period” (Nevada State Journal, June 10, 1961) and had given him three-and-a-half months to file a return — which he hadn’t done.

“I’ll sue,” Chadwick said.

Although unusual, IRS representatives had made this move in the past in a Las Vegas casino, which was legal. A federal law allowed the Treasury department to declare the end to a person’s tax year when it appears they may not pay their income taxes otherwise. The agency rarely invoked the law and only in special cases. It’s unclear why it had done so with Chadwick; the law banned agents from disclosing reasons to the public. The IRS, however, had notified Chadwick beforehand of the assessment against him.

Business Repercussions?

The incident sparked some casino owners to wonder:

• Can the IRS truly legally take such action?

• Do we have to honor the chips the IRS seizes?

• Could this IRS practice negatively affect my business?

• Will the high rollers gamble underground as a result?

• Will it reduce the amount in gambling taxes going to the city, state and federal governments?

“We want to allay any fears of the clubs that this is any sort of harassment,” said Dalmon Davis, the IRS director for Nevada (Nevada State Journal, June 10, 1961). “This is an isolated incident, but there is no assurance it will not occur again if the situation warrants.”

The IRS gave Chadwick another three months to file a return, which he did only minutes before the deadline.

Sources

Illustration from pond5.com: “Uncle Sam and the USA Flag” by Batareykin

1947-1979

“Neat appearing girls from 21 to 25 to shill and learn to deal games at Rolo Casino, 14 E. Commercial Row,” read a Help Wanted ad in the Nevada State Journal (June 6, 1947).

A shill, as later defined by the Nevada gaming authorities, is: “an employee engaged and financed by the [gambling] licensee as a player for the purpose of starting and/or maintaining a sufficient number of players in a card game” (Regulation 23).

Another type of decoy is a proposition player — “a person paid a fixed sum by the licensee for the specific purpose of playing in a card game who uses his own funds and who retains his winnings and absorbs his losses.”

During the mid-1900s in the Silver State, a shill’s purpose was twofold: to entice others to play by making it appear winning was more likely than it truly was and to spur or keep action alive at game tables. In 1954, the pay for such a job in Reno was $5 a day.

In Northern Nevada, shills most often were female. Oftentimes, they were married, residing in Reno for the requisite six weeks to be awarded a divorce and wanting to earn some money in the meantime.

Occasionally, though, they were male.

“Once in a while to liven things up, a gambling house will employ a man shill and give him $10,000. With this bundle, the man shill will up and roar and scatter large bets,” wrote columnist Stan Delaplane about Reno casinos (Reno Evening Gazette, May 6, 1957).

Casino management worried shills would succumb to temptation and steal money, so they enforced strict rules to prevent theft.

“You can tell a shill by the way she stacks her silver dollars,” Delaplane added. “They stack them five on edge, five flat and so on, so the pit boss can see exactly how much money she has at a glance. The lady shill is told to play only $1 at a time. If the game is dice, she must play only the Do Pass line.”

Female shills were prohibited from carrying a purse or wearing clothing with pockets. When reaching for a cigarette or handkerchief on their person, they had to rub their open palms together first to show they were empty.

Reeled Them In

Later, in 1979, the Silver State instituted Regulation 23, mandates with respect to gambling decoys, the use of which remains legal today (unlike in most other states). They are:

• No more than two proposition players or a combination of four shills and proposition players may play in a card game.

• Shills may only wager chips or coins.

• All of a shill’s winnings must be wagered or turned in to the card room bank at the end of play.

• When asked, casinos must identify the shills and/or proposition players on the floor.

• Casinos must display a sign saying Nevada casinos allow the use of shills and proposition players.

• Shills cannot play in such a way that disadvantages the other players.

• Gambling licensees must maintain employee records on all of their shills/proposition players.

Stakes players — “a person financed by the licensee to participate in a game under an arrangement or understanding where by such person is entitled to retain all or any portion of his winnings” — are prohibited.

Sources

Illustration: by Gil Elvgren