1948-1950

In between dispatch orders, a Las Vegas, Nevada taxi driver fleetingly picked up the announcement of horse racing information on his cab radio one day in mid-October, 1948.

He informed Clark County Sheriff Glen Jones, who contacted the Federal Communications Commission (FCC) in Los Angeles. The agency immediately sent to Sin City two radio engineers — Robert Stratton and Raymond Day — to investigate.

Illegal Activity Uncovered

Their testing revealed that the broadcasts had taken place between 10:30 a.m. and 6:30 p.m. daily and had originated from equipment in Room 228 of Vegas’ Apache Hotel on Fremont Street.

The guest register showed a Charles Stauffer, 28, residing there.

Stratton, Day and Jones raided the space, discovering a rigged system for hijacking horse racing information — odds, entries, results and parimutuel payoffs.  Through a hole cut in the Apache room’s floor, which opened into an air duct that traversed the El Dorado Club’s ceiling, a microphone picked up the race details announced via loud speakers at that casino.

It fed the sound into a transmitter which then sent it to a receiver in the Santa Anita Turf Club, 60 yards away, across the street.

The stolen data originated from Chicago-based Continental Press Service, which collected them from the horse racing tracks and distributed them nationally via leased Western Union facilities. However, three men controlled distribution of that information in Las Vegas — Moe Sedway, Morris Rosen and Cornelius Hurley.

(Sedway owned the El Dorado Club. He and Morris Rosen owned the Golden Nugget horse race wire service. Both were mobsters associated with Meyer Lansky and Benjamin “Bugsy” Siegel. Hurley was Continental’s Las Vegas manager.)

Hurley provided exclusive access to the race wire to Sedway and Rosen, who in turn sold the service only to select casinos in town. The Turf Club wasn’t one of them. In, fact, for unknown reasons, they’d turned down the owners — Ed Margolis and Sam and Dave Stearns — when they’d applied previously, leading to them tapping the wire.

Five suspects were arrested for the crime: The three Turf Club owners along with the man they hired to install the equipment at the Apache, John Melvin Cole, 26, and Stauffer, 28.

Attempted Double-Double Cross

Stauffer, who was in Nevada for a divorce, had been offered a fully comped room if he’d turn a transmitter on and off at two designated times per day. He’d agreed.

However, he’d figured out what was transpiring and tried to capitalize on that knowledge for added benefit. He’d told Hurley that for $6,000 he’d disclose where the “bootleg” transmitter was located.

Hurley had negotiated the price down to $4,000, but no deal had been finalized when the cab driver set the subsequent events in motion.

Wire Tapping Consequences

A federal grand jury indicted Cole, Margolis and the Stearnses in mid-1949 for violating the Communications Act of 1934, a felony. They were released on $1,000 bond apiece.

In federal court in February 1950, the men’s defense attorney asked for suppression of the evidence against them for two reasons:

The search warrant that law enforcement had used to get into the Apache Hotel room was illegal as it hadn’t been directed at any one person and that a deputy sheriff, rather than a requisite U.S. marshal, had served the warrant.

• Because Cole was illiterate, he couldn’t have written the confession presented.

• The judge granted both motions and dismissed the grand jury indictments against all four.

Cole was released, but the Stearnses and Margolis were charged with violating FCC regulations governing low-power radio stations, a misdemeanor. They all pled guilty and, ultimately, paid $1,200 apiece in fines.

As for Stauffer, he was charged with operating a radio station without a license, a felony with a maximum penalty of $10,000 and two years in federal prison. It’s unknown what sentence he received, if any.

Sources

The article, “Las Vegas Gamblers Arming in Control Battle,” ran on the front page of a Los Angeles newspaper in the third week of December, to the chagrin of Nevada gambling regulators, casino owners, officers of the law and other industry representatives.

The story reported that in the new iteration of Sin City:

• Casino owners (gamblers) were readying to fight for control of gambling there
• Many gamblers were carrying weapons and had armed bodyguards
• Men (presumably hired by the gamblers) were cruising competing casinos’ parking lots, trying to persuade guests to play at their clubs instead
• Ladies planted in cocktail lounges were directing visitors to specific casinos
• Although unreported, several physical beatings took place in gamblers’ inner circles
• One casino owner left the state because his life had been threatened*
• Fixers, dispatched by East Coast Mafia heads, were en route to negotiate a truce

Landscape At The Time

In the ’40s, downtown Las Vegas transformed when a handful of its gambling properties changed owners and names. The 1949, or post-war, Fremont Street was home to the:

Las Vegas Club (1930)
Boulder Club (1931)
Frontier Club (1935)
El Cortez Hotel (1941)
Western Club (1941)
Pioneer Club (1942)
Santa Anita Turf Bar (1943)
Monte Carlo (1945)
Golden Nugget (1946)
Club Savoy (1946)
El Dorado Club (1947)

Downtown Las Vegas in early 1950s

Also in that decade, the city saw the start of what would become the Las Vegas Strip, with the debut of this quartet of hotel-casinos:

El Rancho Vegas (1941)
Last Frontier (1942)
Flamingo (1946)
Thunderbird (1948)

Still fresh in the minds of those in the gambling world was the execution two years earlier, in 1947, of Benjamin “Bugsy” Siegel, violent mobster (Genovese crime family associate) and Meyer Lansky pal. Siegel had overseen (badly) the building of the Flamingo in Vegas, and had run the business until his murder.

In mid-December 1949, the Flamingo double-crossed Club Savoy, which was across the street, with a play that involved a cheating gambling stunt. The incident was extensively reported in the papers when Savoy’s owner refused to pay the Flamingo its winnings. It was negative publicity that gambling regulators and state officials disliked.

Also around the time, several casinos agreed to stop some of their blatant efforts to poach customers from other gambling properties. They’d used people on megaphones and “circus-type banners” to inform passersby that their slot machines had better payouts than their competitors’.

The L.A. newspaper article didn’t specify which gambling factions supposedly were fighting one another. Perhaps it was a Strip vs. downtown beef.

Similar, Widespread Reaction

The overarching response to the newspaper report from the big names in and associated with the Vegas gambling industry was denial: A turf war? What turf war? Calling the article’s contents hogwash, they deduced it merely was an attempt to hurt Nevada’s booming sector at a time it would feel it the most, the New Year’s Day weekend.

Here are some of the individuals who publicly weighed in and their comments. (All quotes are from the Nevada State Journal, Dec. 29, 1949.)

Gus Greenbaum, mobster, Meyer Lansky lieutenant and Flamingo hotel-casino president:

“The stories to that effect are fabricated entirely,” he said, specifically referring to an impending war for control. “No guns are being carried on any hotel or club property except by authorized personnel.”

Spokesman for the Nevada Tax Commission, the then gambling regulation agency:

Any impending warfare over gambling control “is news to us.”

Spokesman for the downtown casinos, who asked to remain anonymous:

“Relations between the gambling clubs and the casinos are more harmonious than ever. We think the story was carried mainly to counteract favorable publicity given our gaming recently by another Los Angeles newspaper. This whole business has been dreamed up by some eager newspaper correspondent.”

William J. Moore, Jr., Hotel Last Frontier executive vice president and tax commission member:

He wasn’t aware of any threats on the gambling scene, he said. In fact, the various gamblers have gotten along well in recent months and hold weekly meetings to hash out any issues. The story was “a deliberate attempt to keep California dollars from coming into the state, appearing as it did on the eve of the biggest weekend in the history of gambling in Las Vegas.” He added Vegas gamblers aren’t using “steerers,” or “persons corresponding roughly to ‘B’ girls in cocktail lounges who direct visitors to a certain casino,” which the state prohibits.

Archie Wells, City of Las Vegas acting police chief:

He didn’t know about any alleged beatings of certain gambling figures, he said. “We checked thoroughly and found no violence of any kind — reported or otherwise.” His department found no evidence the reports perhaps stemmed from possible attempts at revenge by Club Savoy.

Glen Jones, Clark County sheriff:

“We’ve received the utmost cooperation from all gambling operators.” He didn’t know of any gambler who was carrying a gun openly other than the special officers with deputy sheriff status in the clubs.

Informal Peace Summit

After the story appeared, the city’s casino and gambling club owners quickly convened to address its allegations.

They must’ve come to a mutually satisfactory resolution, if in fact a battle for gambling control had been underway or imminent, as no lives were taken . . . at least that we know of.

———————–

* One gambler, Beldon “Jake” Katleman, co-owner of the El Rancho Vegas, had traveled to the Middle East recently but was back in town at the time the newspaper article was published, the Nevada State Journal noted.

Sources