At a time when wide-open gambling was legal in Nevada (as of 1931), the penalty for operating a game of chance without a license was 60 days in the county jail or a $120 fine.

Photo from freeimages.com: “Jail Door” by Robin Turner

The 1869 statute partially legalizing gambling in Nevada prohibited any such operations in first floor rooms.

An 1877 revision allowed gambling in back rooms of a ground level in certain small counties.

In 1905 and on, gamblers statewide could hold games in any room on any floor.

Photo from freeimages.com: “Number One” by Audrey Volodov

In Nevada, where casino operators can employ shills to play in their clubs, it was established that a licensee may not act as a shill, gambling in their own establishment. Their spouse can’t either unless playing with money other than the licensee’s personal funds.

Photo from freeimages.com: “We’ve Got a Winner” by Dimitri C.

Governor Fred Balzar

1930

In December, while vacationing in Southern California, Nevada Governor Frederick “Fred” Balzar — foretelling the future — told reporters that gambling already was wide open in his state and that a bill making it official certainly would be brought before the legislature at its next session.

It did happen; Silver State lawmakers legalized gaming in March 1931.

Photo from the Nevada Historical Society

1925

As of 1915, Nevada gambling law only allowed slot machines that discharged tokens, or bingles, exchangeable for on-site merchandise; those that paid out in money or bingles redeemable for currency were forbidden.

“The fact remains, however, that the illegal money machines are running unmolested all over the state and particularly in Reno, under the noses of the state police, the county officers and the city authorities,” noted a Reno Evening Gazette opinion piece (March 13, 1925).

The Nevada Committee on Good Laws, whose members included a reverend and a university professor, took it upon itself to investigate “the slot machine evil,” reported the Reno Evening Gazette (May 2, 1925). The group initiated its efforts in part because it opposed a bill the legislature had introduced that year to allow wide-open gambling. Although the assembly killed the proposal, it didn’t stop the crusaders. Police officers of several counties grew concerned about the spotlight on one-armed bandits and encouraged owners or licensees to turn their illegal ones toward the wall.

In late March, the committee complained to District Attorney L.D. Summerfield that local businesses still were operating the banned devices and pressured him to crack down on these violations. Summerfield immediately informed officers of the law about the illegal activity, reiterated the relevant statutes and directed them to enforce it.

The following month, policemen seized slot machines deemed to be illegal, one each from the Overland hotel, Owl Club, Elite Cigar Store, Washoe Lunch Counter and Block N.

Machines, Owners At Risk

A hearing took place for the justice of the peace to determine the fate of the proprietors and their gambling equipment. If convicted of the misdemeanor charge, the men would be sentenced to a $50 to $100 fine and/or 25 to 50 days in county jail. The machines could be destroyed.

“Reformers and uplifters” packed the courtroom, “the crowd bulging through the doors into the hallway of city hall,” reported the Reno Evening Gazette (May 2, 1925).

Summerfield called the state’s first witness, Good Laws committee member, Otis Linn. The reverend testified that on April 27, when he and Professor F.C. Feemster had played the slot machines at each of the five enterprises on trial, the payouts contained nickels. He showed the court some coins he claimed the instruments had spit out; a single nickel was in the bunch.

In his cross-examination of Linn, the defense attorney pointed out that no pay-back-money machines pay out fewer than two nickels.

“Linn became vexed during that and hurled a handful of coins on the floor as a protest,” noted the Reno Evening Gazette (May 2, 1925). “The Justice of the Peace requested he pick them up.”

Feemster then took the stand and corroborated all that Linn had said. Summerfield even testified, saying money came out when he’d played the machines after they’d been seized.

The only defense witness was up next — A.A. Baroni, the co-proprietor of the Owl Club, Washoe Lunch Counter and Overland Hotel. He testified that all the apparatuses had been loaded with bingles but sometimes nickels the customers inserted to play trickled down into the bingle compartment due to a mechanical defect.

Perry Mason Ending

The five contraptions in question then were opened in court for a look-see. A total of about 300 bingles and 17 nickels were in the bingle bin!

Justice of the Peace Seth W. Longabaugh mulled over the case for three weeks then ruled.

Seemingly highly influenced by the in-court demonstration of what currency actually sat inside the machines, he found the gambling operators had not intended to break the law and, therefore, were innocent.

As such, the gaming devices weren’t to be destroyed but, rather, returned to their owners, which they subsequently were.

Sources

1941

In an override of Governor Edward Carville’s veto, Nevada legislators legalized bookmaking.

The law explained that “the receiving of bets or wagers on horse races held without the state of Nevada shall be deemed to be a gambling game,” thereby making it permissible for those with a gambling license to take such bets on such events.

Louis Tom Dragna

1960-1967

Los Angeles mobsters, Louis Tom Dragna and John “The Bat” Battaglia, conversed in a hotel-casino cocktail lounge on the Las Vegas Strip one day in February 1960. But their visit was cut short when Nevada Gaming Control Board (NGCB) agents appeared with local police who arrested the two.

They charged them with vagrancy and threatened to arrest them the next time they appeared in Sin City (they soon after dropped the vagrancy charge).

Gaming authorities didn’t want either man in any Nevada casino, which they formalized via the “Black Book” two months after the undesirables’ arrest. The black book, whose creation had been in progress prior to the Dragna/Battaglia incident, contained the names of individuals casino operators had to keep out of their facilities or lose their gambling license.

The NGCB strictly enforced it, having those on the list kicked out of gambling clubs. Repeat offender Johnny Marshall (aka Marshall Caifano), triggerman for the Chicago syndicate with 18 arrests on his record between 1929 and 1951, found himself booted out several times.

“I agree with any measures necessary to keep the hoodlums out of Nevada,” said Nevada Governor Grant Sawyer. “The operators have a great responsibility to cooperate. We might as well serve notice on underworld characters right now that they are not welcome in Nevada and we aren’t going to have them here” (Nevada State Journal, Nov. 2, 1960).

Hashed Out In The Courts

That year, Dragna tested the constitutionality of the black book in the courts. He sought a federal court injunction against it and the members of both state gaming agencies. He claimed they caused Las Vegas hotels to refuse him entry, depriving him of his rights as a U.S. citizen.

Marshall also sued each gaming regulator along with Governor Sawyer for ($100 apiece) and the Desert Inn (for $150,000), whose staff had kicked him out.

In 1961, a U.S. District Court judge dismissed Dragna and Marshall’s suits on the grounds that gambling isn’t a protected federal civil right and the matter was a state one.

Marshall Pursues The Cause

Within the following year, Dragna dropped his appeal upon being sentenced to five years in prison for extorting the manager of a boxing champion.

As for Marshall’s case, the appellate judges remanded it to federal district court for trial. One justice suggested that “Nevada has as much right to keep suspect persons out of its casinos as Texas ranchers have to ban cattle with hoof and mouth disease” (Nevada State Journal, May 13, 1962).

Subsequently, Marshall lost in federal court and again appealed. In 1966, six years after gaming authorities distributed the black book, the U.S. Court of Appeals upheld its use. It noted that neither being put on the list nor being denied entry to casinos was unconstitutional.

The U.S. Supreme Court, in 1967, refused to hear the case, finally answering the civil rights question.

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

1960

Bookies throughout Nevada had been taking wagers right and left on who’d win the upcoming U.S. presidential election — Senator John F. Kennedy (Dem.) or Vice President Richard Nixon (Rep.).

Suddenly, in November, they were forced to stop doing so when a news story was published about the forgotten Silver State law of 1919 that banned any type of election betting.

Wonder what happened to the money they’d already collected!

1906-1909

An underage young man, Master Wadell, gambled at various games from poker to faro and lost big over the winter of 1906-1907.

His preferred playhouse was the Sixty-Six casino in the mining town of Rhyolite, Nevada. Subsequently, he sued the club’s three owners for what he claimed were his total losses — $10,000 (about $240,000 today).

During the trial in 1909, testimony revealed the proprietors allegedly had cheated repeatedly at various games, thereby swindling him out of large sums. None of that mattered, though, as the question before the court was whether or not a minor had the right to recoup money lost from gambling.

Wadell’s attorney argued that the defendants must repay Wadell as Nevada law prohibits casino proprietors from allowing minors into their establishments, never mind letting them gamble. He said that rule stood regardless of whether the individual said he was of age or looked it.

In the case of Wadell v. the Sixty-Six, the club owners’ counsel argued the law stated if an individual claimed to be 21, he couldn’t, after losing in a gambling house, take advantage of his own fraud and sue to recover his losses. Further, no statute existed that allowed for the recovery of money lost from gambling, he said.

Nevada law at the time — when some kinds of gambling were legal — stated that it was a misdemeanor for any gambling operator to knowingly allow anyone under age 21 to enter or play in their licensed club. (Previously, as of 1869, the legal gambling age had been 17.) To further protect minors, lawmakers in 1897 had allowed for parents of a minor to collect, in a civil action, between $50 and $1,000 from proprietors who’d allowed that child to spend time or play games in their gambling rooms.

In what was the first case of its kind in The Silver State, the jury found in Wadell’s favor in the amount of $2,762.40 (about $66,000 today).

“The decision makes a landmark in Nevada litigation and was one of the most hotly contested and longest cases ever tried in the state,” The Tonopah Sun reported (Reno Evening Gazette, June 8, 1909).

Sources