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

1935

Although it was a Ponzi scheme, its lure of big money was too strong for many Renoites to resist. One chain letter business, the Opportunity Club, popped up overnight as part of the nationwide craze in 1935. In five days, it garnered more than 5,000 participants (about one-quarter of Reno, Nevada’s population then).

“The business has been well organized and every section of the town has been invaded with ‘investors’ seeking to attract their friends into a ‘sure thing,’” reported the Nevada State Journal (May 15, 1935).

How did it work? A customer bought two copies of a letter from a broker for $5 (an $86 value today). He then sold them to two people who signed for and received two more letters from the broker. Each of those two sold their letters to two other individuals and so on. Each letter contained six names. The payout for the top name getting 64 people to buy each of his two letters was $256 ($4,400 today). That amount was $320 minus the per-letter 20 percent broker fee of $32. One name moving to the top of a letter would put $12,288 in the company’s coffers.

While it sounded enticing for the public, it wasn’t. The deal depended on an individual getting 128 (64 per letter) people to pay the $5 apiece at the broker’s office. That would move him up one spot on each letter. The payout also required 128 people for each of the other five names on the letter, or 640 individuals, also paid $5 apiece in person Further, an individual couldn’t get the reward until he advanced to the top of two letters.

The Weak Link

When District Attorney Ernest Brown learned of the racket, he demanded the Opportunity Club cease operations immediately and threatened its manager, Ralph C. Perrin, and other principals with prosecution if they didn’t comply. Brown declared such a business fraudulent because it involved an element of chance and, therefore, violated Nevada’s anti-lottery law, in which it defined:

“A lottery is any scheme for the disposal or distribution of property, by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining such property, or a portion of it, or for any share or any interest in such property upon any agreement, understanding, or expectation that it is to be distributed or disposed of by lot or chance, whether called a lottery, raffle or gift enterprise, or by whatever name may be known.”

The following morning, Perrin applied for a gambling license. That night, the sheriff noted a sign on the club’s door, “Operating with Permission of the Sheriff” — a false statement. On the D.A.’s orders, the sheriff closed the club and arrested Perrin and three others. All were arraigned and released on their own recognizance pending an upcoming jury trial.

A second chain letter brokerage — the Golden Chain Letter Club — was about to open but given the heat on Opportunity never did.

Perrin asserted the chain letter business:

• Wasn’t a lottery as chance didn’t play a role
• Didn’t have the chance of any investor losing (ha!)
• Didn’t involve a drawing

If the business were a lottery, they argued, then so were other types of currently licensed games, such as roulette, keno, 21, horse racing, etc.

They gathered petition signatures of people who believed similarly. Perrin claimed to have received 1,500 signatures from less than one day’s effort. In the meantime, many who’d bought letters asked the D.A.’s office what would happen. Would officials ensure the investors got what the broker promised them? Would they lose their money? At that point, it totaled about $25,000, which Perrin said was being held for investors in a trust.

Taken To A Jury

Five days after Brown ordered the club closed and with chain letter activities finally halted, the Opportunity Club trial began. Two days in, Justice of the Peace James Sullivan declared Brown’s complaint against the defendants defective, thus ending the case. Brown said he’d issue a new complaint against the men only if they restarted the business. Opportunity’s lawyer said the men intended to operate if the city granted them a gambling license — a long shot.

Three days later, the city council, also believing the chain letter gig was a lottery, denied Perrin a gambling license. He then tried to obtain one from the neighboring city and his hometown, Sparks. It, too, for the same reason, refused to grant it. That was the final break in Northern Nevada’s chain of chain letter enterprises. It’s unknown what happened to the money investors already had paid to Opportunity.

Photo from pond5.com: “JOIN Chain Links” by 5@iqoncep

Sources

Mexico’s Monte Carlo and Sunset Inn

1913-1929

With various state bans on gambling and, later, a nationwide prohibition against liquor, many Americans, particularly wealthy Southern Californians, traveled to casinos in Mexican border cities to play and imbibe.

“The great hegira* is in, and already these towns are filled to the limit with throngs of the thirsty, willing to pay big sums for the pleasures banned by law on American soil,” reported the Reno Evening Gazette (March 30, 1920).

Here are some casinos that lured U.S. citizens across the border to do what they legally couldn’t at home:

In Calexico

• Owl (Tecolote) Café and Theatre: Large but unadorned, “an immense barn-like structure,” the Owl boasted nearly 40 tables for keno, faro and poker along with many roulette wheels (The Bakersfield Californian, Feb. 10, 1920). Advertisements for the gaming resort touted: “Both night and day, across the way, you will never find closed, the Owl Café.” Three Bakersfield, California, saloon and brothel owners — Marvin Allen, Frank Beyer and Carl Withington — or ABC Corp., opened the Owl around 1913. Seven years later, a fire that raged for three hours burned it down.

“The destruction of the Owl leaves one large gambling house in Mexicali, a Chinese establishment where many of the games are beyond the ken** of the average American,” reported The Bakersfield Californian (Feb. 10, 1920).

In Mexicali

• Casino de Mexicali: Following the conflagration of the Owl, Governor Esteban Cantu of Baja, California, built and oversaw in his capital city the upscale Casino de Mexicali, which also was open 24/7. Luxuriously appointed, the entire top floor was divided into suites equipped with games for wagering. Cantu charged customers an initial $250 membership tax (about $2,950 today) and a $20 monthly fee. In the first month alone, 2,000 people had joined. In its early days, the Casino de Mexicali drew about 25,000 to 30,000 Americans per day.

“The project stood Cantu an even million dollars before a wheel turned,” noted the Reno Evening Gazette (March 30, 1920).

In Tijuana

• Feria Típica: This traditional fair, the brainchild of Antonio Elosúa, offered gambling in the forms of cockfighting, bullfighting, bull baiting and horse racing along with folk dancing and Mexican food and drink. It debuted in 1915 with the slogan: “Where Everything Goes and Where Everyone Goes.”
• Monte Carlo: Elosúa opened this casino the following year. Adjacent to the Feria Típica’s open-air arena, it offered cards and dice table games, slot machines and roulette wheels. By 1917, ABC Corp. had bought out all of Elosúa’s holdings.
• Sunset Inn: ABC Corp. and Jim Coffroth built in 1920 this new $1 million casino with a balcony that overlooked the racetrack. The proprietors added to the casino’s events schedule many of the feria’s most popular exhibitions, like bullfighting.

“To lure and keep gamblers on the property, the new Monte Carlo served decent enough 75-cent meals and the dance hall stayed open all night,” wrote Lawrence D. Taylor (San Diego Historical Society Quarterly, Summer 2002).

• Agua Caliente Casino and Hotel: Another trio of Americans — Wirt G. Bowman, Baron Long and James N. Crofton — built this ornate, $10 million, Spanish-style resort that boasted a casino offering faro, roulette and baccarat, horse and greyhound racing among other recreational amenities. Four-person bungalows allowed for gambling in private. Located six miles south of the border near the hot spring, the property opened in two phases, in 1928 and 1929. During its heyday, Agua Caliente attracted a slew of tourists, among them famous Hollywood stars.

“American cupidity has enriched the gamblers of Augua [sic] Caliente more than $4 million in the past 10 months. The Old West in its heyday never saw such gambling as is being done at Augua Caliente these days,” reported The Kokomo Tribune (June 7, 1929).

The end of Prohibition curtailed the throngs of U.S. citizens visiting Mexico for pleasures.

————————

*A flight or journey to a more desirable or congenial place
**Understanding or knowledge

Sources

1934-1935

Today, 80 years later, the circumstances of actress Thelma Todd’s death remain a mystery, and the case still is one of Hollywood’s infamous unsolveds.

A deep cover-up precluded the truth about the incident from surfacing. On December 16, 1935, the famous, 29-year-old blonde was found dead in her garage, her beaten, slumped body behind the wheel of her brown phaeton. The cause of her death was ruled accidental carbon monoxide poisoning from her car’s engine.

One theory behind the fatal event, however, purported in the book, Hot Toddy, is that the powerful Mafioso, Charles “Lucky” Luciano, had her murdered. He wasn’t just a low-level syndicate soldier. He was a boss, the first official head of the modern Genovese crime family, and made his mark in New York by splitting the city into five such dynasties. Meyer Lansky and Benjamin “Bugsy” Siegel were associates.

Luciano and Hot Toddy, as friends nicknamed her in her youth, began a casual relationship that evolved into a sexual dalliance by 1934. That year, the actress and her friend and neighbor, Roland West, opened a restaurant called Thelma Todd’s Café.

Exploitive Ulterior Motive

Luciano wanted to lease the top floor of her eatery to run a gambling club there, where he believed the wealthy Hollywood stars who frequented her café would spend lots of money. At the time, only poker and other player-against-player card games and horse race betting were legal in California. He sensed the strong-willed Todd wouldn’t permit it, so he employed devious tactics to get her to comply.

Luciano sent some of his goons to torment and wear down West, who managed the restaurant. They forced him to change vendors to those controlled by the mob and siphoned money from the business. As for Todd, Luciano got her addicted to speed, hoping it would make her submissive and willing to do whatever he wanted.

Over time, Charley Lucifer, as he was sometimes called, realized Todd was not a pushover, and she learned more and more about his underworld dealings. Their relationship deteriorated, and they saw each other less and less. Eventually, Todd started dating a businessman from San Francisco with whom she was infatuated.

Meanwhile, Luciano’s underworld nemesis in town, Frank Nitti, threatened to horn in on his interests — prostitution, gambling and drugs. Already, Nitti had shut him out of his shakedown of the movie industry after agreeing to include him. Consequently, to maintain an empire in Los Angeles, Luciano believed he needed Todd’s café more than ever.

He approached her with his plan. Despite knowing that refusing Luciano of anything could, and likely would, get her killed, she said no. For that, he saw her as a problem. He tried to persuade her to change her mind by other means, like having menacing men sit in the restaurant all day every day. Around Thanksgiving in 1935, he again pressured her face to face, to no avail.

“Toddy later told friends Luciano had wrangled with her all night about giving him the storage room for gambling,” wrote Andy Edmonds, the author of Hot Toddy. “He was insistent and vowed he would not walk away without the papers. They had argued violently in the car, Thelma refusing to give Luciano what he wanted.”

Luciano informed her that as of January 1, 1936, he’d be operating a gambling club on the third floor of her restaurant despite her protests.

Todd, though, remained resolute in her refusal to allow it. To thwart his plan, she turned the space into a steakhouse and opened it before he could move in.

The Slippery Slope

In early December, she called the Los Angeles district attorney’s office to relay what she knew about Luciano’s underhanded dealings and connections to other mobsters. She didn’t tell the person who’d answered the phone what her business was, only that she wanted an appointment to speak to the D.A. Little did she know that he was under Luciano’s control and that Luciano had an informant in the office.

In mid-December, Luciano insisted she go to dinner with him. She said no, but he forced her to join him. He took her to a secluded home where he grilled her about her knowledge of his “business” and what she’d told the D.A.’s office. She tried denying she knew anything, but Luciano knew better, became enraged and slapped her hard.

Todd spilled it all. Then figuring she was as good as dead, she purposefully provoked his fears of getting arrested for past actions and losing his foothold in the City of Angels. She claimed she’d hidden evidence, including photos, of his underworld operations and that she’d snitched on him to the FBI — both of which were bluffs.

Irate, Luciano made a phone call, in which he supposedly ordered a hit on Todd, drove her to a Christmas tree lot at her request where she picked out a tree then dropped her off at her home around midnight.

In the morning, her maid discovered her dead in the garage. Luciano left Los Angeles later in the day and never returned.

Sources

1944-1945

In the final year of World War II, three related mandates hampered Nevada’s gambling clubs, but, in general, casinos willingly withstood the hits out of a sense of patriotic duty.

These directives, imposed by the United States’ war mobilization agency, followed a national call for roughly 200,000 more “able-bodied men, willing to do hard work” between the ages of 17 and 35 (Nevada State Journal, Nov. 21, 1944). The requirements, listed chronologically, were:

• In January, all horse and dog racing in the country was to stop immediately, which it did. The federal government initiated this to combat absenteeism, as much as 30 percent, at war plants located near the racetracks.

The casinos offering betting on these sports suffered a decrease in business. Whereas customers no longer could place bets on races at U.S. places like Pimlico, Jamaica, Belmont and Narragansett, they still could get some action at certain local casinos that subscribed to a race track wire service that covered races held in Mexico and Cuba.

• In early February, more than 300 of Nevada’s gambling dealers, bartenders and other non-essential workers were to begin working at plants and industries in Nevada and on the West Coast, which were crucial to the war effort. Consequently, casinos lost key personnel.

• All U.S. entertainment spots were to close at midnight starting on Feb. 26. They included gambling enterprises, bars, night clubs, theaters, sports arenas, dance halls, roadhouses, saloons, bars and the like, public and private. Restaurants that served food only (no alcohol) were exempted. Affected businesses could reopen at 8 a.m.

“The action is the most drastic of its kind yet promulgated in Washington during the present war,” noted the Nevada State Journal (Feb. 20, 1945).

The reason for the midnight closing was to conserve coal, manpower and transportation and help boost morale of active military service members, all of whom had been prohibited from entering or being in those places after midnight. It also was to help reduce the rate of civilian workers employed in critical industries not showing up to work.

Not only did Nevada’s casinos experience a drop in business, but, also, those open around the clock had to lay off their graveyard shift workers.

Relief From The Dictates

The Germans surrendered on May 8, 1945. The following day, the U.S. director of war mobilization immediately abolished the midnight curfew and the ban on horse and dog racing.

Sources

Photo from pond5.com: “American Flag Background” by ozaiachin

Former FBI Director J. Edgar Hoover was such a rabid fan of horse racing that every summer, when in nearby La Jolla for his annual physical exam, he visited Del Mar in California, where he had a designated parking space and a private Turf Club box. Along with spectating, he wagered, frequently as much as $200 a race.

“The story in the corridors of the FBI building was that the agent who had the grayest hair was the one assigned to get Hoover to the race track on time,” wrote John Christgau in The Gambler & The Bug Boy: 1939 Los Angeles and the Untold Story of a Horse Racing Fix.

Photo from the FBI

1930s

1937

An armored truck, accompanied by three deputy sheriff cars, was moving $262,000 (about $4.5 million today) the 15 miles from the Del Mar racetrack in California down the coastal highway to a San Diego bank. The money was the track’s share of one day’s parimutuel handle, or total amount wagered. This amount, from that single day, was roughly two-thirds the revenue that the City of Reno, Nevada generated over a year, the 1937-1938 fiscal year, from gambling taxes and license fees.

An anonymous phone report of a murder at a café in the City of Del Mar caused the deputies to abandon the transport vehicle and head there.

When they arrived, though, they learned the phone call had been a ruse, likely to isolate the money-containing truck so it could be robbed more easily. Upon the deputies radioing in their discovery, a swarm of law enforcement officers responded. They reached the armored vehicle in time to foil any holdup and get the cash to its destination without incident.

Racetrack Beginnings

Crooner and thoroughbred horse owner and racing fan, Bing Crosby, was behind the development of the Del Mar racetrack. He and actor Pat O’Brien convinced a handful of mostly Hollywood celebrities to invest cumulatively about $2 million (about $34 million today) to lease the new Del Mar Fairgrounds and add a racetrack, facilities and clubhouse. Along with Crosby and O’Brien, the Del mar partnership consisted of fellow actors Gary Cooper, Joe E. Brown and Oliver Hardy and businessman/racehorse owner, Charles S. Howard.

“Del Mar has class written all over it — from the stable area to the swanky interior of the Turf Club,” described Paul Lowry (Los Angeles Times, June 29, 1937). “Del Mar has the Spanish touch of old California, the artistic, aristocratic air of the day of the Dons. The buildings are in keeping from stem to stern — from the adobe outer walls to the architectural dream that brought the clubhouse and grandstand into being.”

With A Grin And A Song

On the Del Mar racetrack’s opening day, Wednesday, July 7, 1937, Crosby greeted the attendees, about 20,000 in all. “[He] appeared at the grandstand turnstiles, smoking his pipe and tipping his dark blue yachting cap to customers as they entered the grounds,” wrote John Christgau in The Gambler & The Bug Boy.

After the bugle sounded for the inaugural race, Crosby sand Where The Turf Meets The Surf, a ditty he co-wrote with James V. Monaco and Johnny Burke specifically for the Del Mar racetrack:

Where the turf meets the surf
Down at old Del Mar
Take a plane
Take a train
Take a car.
There is a smile on every face
And a winner in each race
Where the turf meets the surf
At Del Mar.

The track’s handle for the season’s first day was $183,041 (roughly $3.15 million today).

Sources

Photo from Wikimedia Commons