El Rancho in Las Vegas, Nevada in the 1950s

1951-1952

Gambling boomed in Las Vegas, Nevada immediately following Senator Estes Kefauver and his committee’s nationwide investigation into organized crime.

The 27 hearings the group conducted in 14 United States cities in 1950 and 1951 (Las Vegas was in November 1950) “turned a bright, hot light on illegal gambling in other parts of the country,” reported the Reno Evening Gazette (May 31, 1951).

“With illegal gambling considerably reduced in Miami, Chicago, Cleveland and the other big cities, the big spenders out to make a fast buck on the wheel or crap table are flocking to Las Vegas,” the newspaper added. “Weekend reservations at the flossier* hotels like the Last Frontier, Flamingo, Desert Inn, Thunderbird and El Rancho are getting scarce for next winter. Motels and private rooms are jammed all the time.”

In fact, in 1951, Nevada yielded the highest ever gambling tax revenue to that point, of $1.5 million ($13.7 million today). That meant gamblers cumulatively bet about $1 billion ($9.2 billion) in the state over the 12-month period.

Spin On The Story?

Just as the industry was flourishing, a potentially detrimental news story came out. It noted some of 30,000 crooked gambling devices – loaded dice, marked cards and wired roulette wheels – discovered in a Phoenix, Arizona warehouse were destined for Nevada. Specifically, packets of illegal dice bore the monogram of various Las Vegas and Reno clubs, according to Sheriff Cal E. Boies, who’d stumbled upon the cache.

Strangely, though, soon after his initial report, Boies backtracked and said the equipment wasn’t slated for Nevada, only New Mexico and other parts of Arizona.

“However, it was learned that a reliable Phoenix source had actually seen the crooked dice monogrammed with the names of certain Las Vegas clubs,” reported the Reno Evening Gazette (Dec. 30, 1951).

The members of the Nevada Tax Commission, which regulated gambling then, scrambled to quell the evolving public relations nightmare for fear rumors of crooked casinos in the state would keep away people wanting to play games of chance. The regulatory agency immediately sent one of its investigators, Ray Warren, to Phoenix to determine if in fact Silver State gaming clubs were involved.

Warren quickly reported he hadn’t found any evidence to indicate any of the gambling devices were to be going to Nevada. He added the crooked dice in question were not loaded and merely were displayed souvenirs of the manufacturing shop owner, which he’d purchased 10 years prior when he’d lived in Reno and Las Vegas.

The same day, tax commission secretary, Robbins Cahill, emphatically denied on the record that any crooked gambling equipment had been sent to or intended for any Nevada casinos.

“He added that no major casino in Nevada has ever been caught using loaded dice and that, on the contrary, the clubs’ biggest problem in that respect was to prevent players from trying to exchange crooked dice for the carefully inspected and closely watched dice used by the casinos,” noted the Nevada State Journal, Jan. 1, 1952).

*Flossier: superficially stylish, slick

Photo from the University of Nevada, Las Vegas University Libraries’ Digital Collection: “Dreaming the Skyline: Resort Architecture and the New Urban Space”

Sources

1949-1953

Only months after Cleveland bar owner, Norman Khoury’s 1949 acquisition of Club Savoy in Las Vegas, Nevada, Allen Smiley, an associate of the then-deceased Benjamin “Bugsy” Siegel, unexpectedly approached him.

He introduced Khoury to Bob “The Fixer” Smith, who’d been prominent in Vegas’ gambling industry in the 1930s. Subsequently, Smith allegedly purchased a 50 percent interest in the casino from Khoury for $100,000 ($1 million today). However, Smith was broke at the time, a fact perhaps unknown to Khoury. 

The next week at 4 a.m. on Sunday, Smith appeared at the club with 10 men, plopped down $30,000 ($300,000 today) in cash and $1,400 ($14,000 today) of silver and informed the night casino manager, Pete Brady, Smith’s people were to replace Khoury’s dealers immediately, which they did. Khoury, the entity’s primary gambling licensee, wasn’t present. Under usual operating circumstances, with his own manager in charge and his own employees working the casino, he wasn’t required to be there.

Jack Durant, the casino manager at the Flamingo, a rival gaming house, showed about three hours later, flanked by widely known gambling figures. Among them were Smith, Smiley and Louis “Russian Louie” Strauss, who was believed to have murdered a man at a Lake Tahoe hotel-casino in 1947.

Durant played craps, starting with $5 chips and graduating to $500 ones. In 45 minutes, he won $67,000 ($671,000 today) but was paid only $20,000 ($200,000 today) in cash from Smith’s bankroll. Likely over the monetary shortfall, Durant and Brady got into a fist fight, which a bystander broke up.

When Khoury heard of the incident, he refused to pay Durant the remaining $47,000 ($470,000 today) of his “winnings” as he’d learned crooked dice, ones that only throw sixes and eights, had been used during Durant’s play. Because Khoury failed to pay the entire amount, the Las Vegas city commissioners suspended his gambling and liquor licenses, began a search for the crooked dice (which mysteriously went missing) and notified the state tax commission. Khoury was forced to close his establishment.

Khoury “charged that he was the victim of a fast shuffle involving a pair of dice that didn’t belong to the club, and he therefore is not obligated to pay off,” reported Long Beach, California’s Independent (Dec. 23, 1949).

When the city and tax commissioners tried to investigate what’d occurred at Club Savoy, none of the men present during the gambling spree, including Smith and Durant, could be found as they’d skipped town.

Possible Motive

Were these events, beginning with Smiley’s introduction of Smith to Khoury, a double cross by the Flamingo to force Khoury’s Club Savoy out of business?

If so, it worked.

In January of 1950, the tax commission revoked and suspended Khoury’s gambling license for six months for two reasons: 1) He let Smith’s people operate the games when Smith’s name wasn’t on the gambling license. 2) In allowing Smith, about whom he knew nothing, to take over operation of Club Savoy, and due to what ensued, specifically nonpayment of the debt, he generated negative publicity about the club and Nevada, as the story made headlines in numerous publications.

The suspension of Khoury’s gaming license, however, lasted longer than a half-year. When Khoury reopened Club Savoy as a bar in September 1951, the tax commission only allowed him a gambling license for slot machines.

Two years later, in 1953, Khoury closed Club Savoy for good.

What would’ve happened if Khoury had paid Durant the entire $67,000 at the time? Would he have kept his licenses and continued to run Club Savoy interruption free? Would the Flamingo have harmed Khoury and his enterprise some other way?

Sources

In The Silver State (Nevada), casinos hired men for the sole job of picking up dice that rolled off the game tables. Only these workers were allowed to touch the cubes to keep cheaters from swapping them with crooked ones.

Photo from freeimages.com: “Dice Closeup 2” by Crow Girl