Token from the Old Cathay Club, a casino, restaurant and bar open in the mid-1950s in Reno, Nevada

1955-1966

Harry Chon, licensed operator of the gambling operations at the Old Cathay Club* in Reno, Nevada, found himself in an uncomfortable spot, under pressure from two parties, in 1956.

The story begins about a year earlier, when two other men, Horace Fong and his godfather, Moon Wah, applied unsuccessfully for a gambling license for the same property. Of the two, only Wah had casino experience, and he’d been convicted recently of tax evasion in California.

Soon after, Fong re-applied — this time with Chon named as the co-licensee — but to no avail because the Nevada Gaming Control Board (NGCB) deemed Fong unsuitable, likely due to his relationship with Wah.

Then Chon alone sought and was granted a gambling license to lease space from Fong and run a casino in it. Fong operated the other entities on the property, a restaurant and bar.

Rumblings Then Temblor

In spring 1957, the NGCB heard rumors that individuals other than Chon were running the gambling at the Old Cathay. It was verboten to change casino interests without approval first from gaming regulators, so agents investigated.

Chon confided in them he’d hired a man named Fred Down to manage the casino, but Down did what he (Down) wanted and had brought in George Chinn to be the pit boss, despite Chon having urged him not to. Chon also admitted he, himself:

• Lacked access to the safe as Down had the combination
• Didn’t know how much the house’s bankroll contained from day to day
• Didn’t have any say over hiring or firing employees

The NGCB cited Chon on five counts:

• Transferring interest to an unlicensed person
• Permitting concealed interests in the club
• Misrepresenting on his license application the casino’s financial structure
• Improperly maintaining the bankroll
• Unsatisfactorily conducting business

The board ordered Chon to explain in person why he should be allowed to keep his license. In the interim, he voluntarily shuttered the Old Cathay casino, on March 15, to remove some of the people associated with it, he said.

Testimony Given

At the hearing, Chon relayed a different story, perhaps because Fong, Down and Chinn also were there. He denied telling anyone he lacked control over his club and the workers and that Down wouldn’t do what he said. Chon claimed it was his choice to not have the safe combination because he tended to spend money when he consumed too much alcohol.

However, he did concede to having expressed his concerns about Chinn to Down. (Chinn had had a run-in with the state some years prior when it was discovered he’d held a secret interest in the Yukon Club in Reno.) Chon said Down’s response had been that he and Chinn were friends but he’d take care of it later.

Chon explained he’d often traveled to and from San Francisco and spent three days a week there where he oversaw a grocery store.

Also, he vehemently denied that he’d allowed unlicensed parties to operate the casino, specifically Fong, Down and/or Chinn, or that he’d abandoned his gambling permit.

Fong and Chinn attested to not holding any interest in the Old Cathay Club.

The NGCB’s auditor testified that Chon had initially signed the casino checks but within a month of opening the doors, Down had assumed the task. He noted Chon had contributed $18,000 to the bankroll, but it hadn’t been recorded in the club’s accounting records.

It seems some bad characters had used Chon, without his knowledge, as a front man for the Old Cathay Club then took over.

The NGCB Rules

In May, pursuant to the testimony provided at the proceeding and their own findings, the board members determined that Chon:

• Hadn’t, willingly at least, allowed any transfer of interest in the casino, but they strongly doubted he truly controlled it
• Hadn’t allowed a concealed interest in the gambling house
• Hadn’t misrepresented information on his license application
• Had funded the bankroll via loans, but against the rules, the transactions hadn’t been recorded
• Had improperly maintained the bankroll and admitted he couldn’t control it
• Had conducted the business unacceptably

Consequently, the agents unanimously agreed Chon was unfit for a gambling license and, therefore, recommended it be revoked. In agreement, the tax commission pulled it.

Chinn Goes For It

With Chon out, Chinn, already on the NGCB’s radar as being shady, applied for a gambling permit in June to run the casino at the Old Cathay but under the name, California Club, noting he would invest $42,000 in it.

As expected, regulators denied the license because of “unsatisfactory past operation” (Nevada State Journal, June 27, 1957).

Chon, Take Two

Fast forward six years. Chon, who had his gambling license taken away, applied to have it reinstated. That time it was for Basin Street, a casino at 246 N. Lake Street, also in Reno. NGCB agents decided to give him another chance, as his prior infractions hadn’t been egregious and he’d closed his casino voluntarily before any state action. They voted 2 to 1 to give him one on a six-month conditional basis.

Chon ran that gambling house for two and a half years.

—————————–

* The Old Cathay Club previously had been called Confucius and before that, the Lido Bar. It was located at 222 Lake Street in Reno (now a parking lot across from Greater Nevada Field).

Sources

1954

Due to the 1953 scandal in Wells, Nevada, the state tax commissioners in June 1954 prohibited open gambling in the town of Jackpot, just south of the Nevada-Idaho border along U.S. Route 93.

They worried that gambling 1) couldn’t be policed easily in that remote area and 2) might cause resentment among Twin Falls residents because Idaho had outlawed its only legal gambling — slot machines — earlier that year.

In July, Nevada banned gambling, too, in Wells (further south on the 93).

1958-1959

(Part I ran last week.)

The Nevada Tax Commission withdrew the gambling license of the New Star casino’s operators — Brent Mackie and Kenneth Henton — in July 1958 after investigators allegedly witnessed 21 dealers cheating customers in eight different ways at the Winnemucca casino.

Later that month, defense attorney Thomas Foley of Las Vegas, petitioned the district court to review the tax commission’s license revocation order on the grounds that it was “capricious and arbitrary” (Reno Evening Gazette, July 29, 1958). District Judge Merwyn H. Brown ordered the agency to defend its action.

Bias Alleged

However, Brown was automatically disqualified from hearing the case. This was due to Nevada Gaming Control Board (NGCB) member, William Sinnott, alleging via an affidavit that Brown, also of Winnemucca, possibly was biased against the tax commission as he’d ruled on the side of the Thunderbird Hotel in Las Vegas when its gambling license was in contention. 

The commission also was concerned Brown had become too close to Mackie and Henton when they’d owned the Mint Club casino in town previously.

“I’ve been booted off the case for an asinine reason,” Brown said (Reno Evening Gazette, July 30, 1958). “Frank Petersen [NGCB’s counsel] called and said he felt I was disqualified because a lady who has been my neighbor for 30 years owns a half interest in the building in which the New Star casino is located. I told Petersen that if that reason is valid, I can’t sit on any case because I have had friends here for 50 years.”

Legal Sparring Ensues

In August, District Judge John F. Sexton of Battle Mountain, Brown’s replacement, stated the license revocation was too strict, and as such, he lessened the penalty to closure of only the 21 game for 60 days and covering of the dice table for 30 days with time served taken into account. Mackie and Henton still could operate the slot machines.

Petersen, attorney for the gaming regulators, called the alteration “improper and prejudicial,” pointing out that Sexton must have determined cheating had taken place or he would’ve reversed the revocation (Nevada State Journal, Dec. 11, 1958).

“Sexton’s modification decision was another milestone in the evolution of Nevada’s thorny problem in policing the state’s multimillion-dollar legalized gambling industry,” noted the Nevada State Journal (Aug. 9, 1958).

Petersen appealed to the Nevada Supreme Court. In mid-August, that court sided with the tax commission, granted its motion to stay Sexton’s order, or in other words, reinstated the license revocation and casino closure.

One Last Tack

Mackie and Henton, however, continued to fight. Foley asked the high court to dismiss the tax commission’s appeal of the district court decision that eased the revocation order and, instead, to allow a motion for re-hearing of the testimony in the lower court.

That effort, too, was unsuccessful as the Nevada Supreme Court in September said it, not the district courts, was the final arbiter on appeals concerning state gambling regulation orders.

Foley again appealed to the higher court, the second time asking the revocation be overturned because evidence had been lacking and insufficient for the penalty to be imposed initially.

In court in December, the justices asked Petersen how the tax commission could function in a judicial capacity when there was a dispute over which witness to believe and the commission itself had not observed the witnesses. (Before 1955, the tax commission directly heard all hearing testimony but that duty was transferred to the NGCB when the legislature created the entity that year).

Petersen replied that the commission has the record of the gaming board hearing and determines the weight and credibility to be accorded to the various accounts.

Out Of Gas

In January 1959, the Nevada Supreme Court found that Sexton’s order to reduce the penalty was administrative rather than judicial. It also determined a reasonable cause for the revocation had existed. The final ruling was that Mackie and Henton’s gambling license for New Star would remain cancelled for the requisite year, and it was.

Gambling At New Star Revived

That didn’t mean a different party couldn’t obtain a license and run the gambling at New Star. In fact, that’s what happened.

In February, the tax commission granted a gambling license to Sumner and Doris Kirkby to operate 20 slot machines at the club. The next month, it approved Roland I. Benum of Las Vegas to run blackjack and dice games there, too, with a $25 table limit, a restriction that in July was removed.

In December 1960, Harold Larraguetta invested $40,729 in and assumed control of the entire casino operation, which he ran for four years.

Sources

Photo from freeimages.com: by Steve Roberts

New Star (restaurant, casino, bar), Winnemucca, Nevada, 1960s

1958

Casino workers at the New Star allegedly were caught in flagrante delicto.

In April, a gambling detective — Michael MacDougall from New York — conducted a statewide, in-person survey of various gambling entities upon the request of Robbins Cahill, head of the Nevada Tax Commission, the state’s gambling regulatory agency at the time.

MacDougall spotted dealers cheating during games of 21 (blackjack) on two different days at the Winnemucca gambling house. In May, Fred Galster, an agent for the Nevada Gaming Control Board (NGCB), which investigated all cheating complaints, played the game at New Star for hours, and he, too, noticed the same deceitful activity.  

Array Of Infractions

The two witnesses observed the dealers employing the following cheating methods

• dealing seconds = dealing the second card in the deck

• turning the deck = turning a card over and dealing from the deck bottom

• one hand bottom = taking a card from the deck bottom to give the dealer 21

• copping the cut = picking up the cards in the same way they’re cut

• hi-low stack = picking up discards in such an order that the dealer gets two high cards and the player gets one high and one low card

• dealer’s stack = picking up discards in such an order that the dealer gets 21

• bubble peeking = bending the top card slightly to glance at it

• bridge = bending a card so players unconsciously cut at that card

• false shuffle = passing cards through a shuffle without rearranging their position

During the 1950s, Nevada gaming authorities cracked down on cheaters, typically revoking the gambling licenses of the casino operators, thereby closing their establishments for a year.

This was to portray to outsiders, federal lawmakers in particular, that the industry in The Silver State was honest and clean. One might argue they were extra vigilant during 1958 because Robert F. Kennedy was working diligently and blatantly to eradicate racketeering throughout the U.S., and gaming was an obvious place to root out such underworld activity.

Defense Offered

The NGCB ordered New Star casino’s operators — Brent Mackie and Kenneth Henton — to appear at a hearing to show cause why their gambling license should be maintained.

At the proceeding — during which MacDougall, Galster and numerous other people testified — New Star’s defense attorney, Thomas Foley of Las Vegas, denied his clients were guilty and asserted the NGCB had failed to prove the cheating charges. The primary defense was that MacDougall’s findings weren’t credible and, therefore, he wasn’t either. Foley argued MacDougall  had:

• Identified one of the allegedly cheating dealers by physical description but that man hadn’t worked then

• Testified that a certain allegedly cheating dealer was right-handed when in fact the dealer at the time was left-handed

Despite the discrepancies, though, the tax commission pulled Mackie and Henton’s gambling license in July, closing New Star’s casino.

But this isn’t the story’s end. Check back next Wednesday for the finale.

Sources

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

1953-1955

In fall 1953, John “Fat Jack” Galloway was playing the card game, 21, at Leo Quilici’s hotel-casino, the El Rancho Hotel, in Wells, Nevada.

Fat Jack himself, in his early 40s, was the operator of a gambling saloon located 8 miles west of Fallon. Beforehand, he’d been employed as a dealer at Lake Tahoe and Las Vegas clubs and had served prison time on bunco and vagrancy charges in the early 1940s in California.

Leo’s son, Joe Quilici, 27, the El Rancho’s manager and a city councilman, was dealing to Fat Jack. Thinking Fat Jack was a tourist, Joe cheated him out of about $4,200 ($37,000 today); Joe’d often peek at the top card in the deck and deal the second card rather than the first.

After Fat Jack left the casino, another El Rancho dealer told Joe that Fat Jack was an undercover agent for the tax commission. Joe ran across the street to the Bulls Head Bar, and told his father, the proprietor, he’d been caught cheating. (Joe had been discovered dealing dishonestly previously, and his gambling license had been suspended but then reinstated. The same had happened to Leo for having cheated customers with a plugged slot machine that couldn’t pay out jackpots.)

The day after Fat Jack and Joe’s gaming encounter, Dudley Kline, 61, allegedly paid Leo a visit at his saloon. Dudley was second in charge of the Nevada Tax Commission’s gambling division that, since 1948, had been tasked with keeping games of chance in the state honest. Dudley told Leo that Joe had swindled a tax commission agent and that he, Dudley, might be able to help. Then he left.

Fat Jack then paid a visit to Leo several hours later. After deceptively introducing himself as a tax commission agent, Fat Jack reiterated that the problem of Joe cheating him could go away for $3,000 ($27,000 today), an amount he said he had to split with another person, presumably Dudley. Leo paid him the full amount.

In February 1954, after an investigation in which the Quilicis were the only witnesses, Dudley and Fat Jack were arrested. They were bound over for trial and released on $5,000 bond each.

Elko County District Attorney Grant W. Sawyer, who’d learned of the incident from an anonymous tipster, asserted that Dudley was an accessory before the fact to extortion but charged him as a principal because he supposedly “set the stage” for Fat Jack telling Leo that he, Fat Jack, was a commission member (Reno Evening Gazette, Feb. 11, 1954). Sawyer similarly charged Fat Jack.

Despite Dudley denying knowledge of any blackmail attempt, Robbins Cahill, the tax commission’s secretary, fired him. 

“The circumstances of this case dictate that we continue to dig. We are going to turn over every spade full around and weigh it carefully,” Cahill said (Reno Evening Gazette, Feb. 11, 1954).

Without a choice, Leo Quilici closed down the gambling at his two properties — standard procedure when cheating has been discovered.

Pursuit Of (In)justice

Sawyer’s charges against Dudley were dismissed twice. Two different judges, first in district then in justice court, granted Dudley a permanent writ of habeas corpus based on insufficient evidence to warrant holding him for trial.

In a third attempt to convict Dudley, Sawyer, in early 1955, filed an appeal with Nevada’s Supreme Court, challenging the writ.

“I have searched my conscience and I honestly believe there is evidence to hold [Dudley] Kline for trial,” he said, denying he was attempting to persecute him (Reno Evening Gazette, Aug. 13, 1954).

At that point, Fat Jack was awaiting trial pending the outcome of Sawyer’s appeal on Dudley’s case. He closed his gaming operation.

The higher court upheld the original writ, saying “there was no error in the conclusion of the district court that Kline had been held to answer without reasonable or probable cause or in the order discharging him from custody by reason thereof” (Nevada State Journal, April 14, 1955). This ended the legal ordeal for Dudley. Despite the outcome, though, he wasn’t reinstated on the tax commission.

Within the week, Sawyer dismissed the extortion charges against Fat Jack, believing the state wouldn’t be able to adequately prove a guilty verdict.

Was Dudley guilty or, perhaps, framed by Fat Jack and the Quilicis?

Sources

1948

A real or perceived protective relationship with illegal gambling operators got Nevada Police Superintendent Lester C. Moody fired.

Governor Vail Pittman, who’d appointed Moody to the position two years before, terminated him in May 1948. The Nevada Tax Commission, charged with regulating gambling, supported Pittman’s action.

The governor had lost confidence in Moody’s operation of the police force and was distressed by his inability to obtain evidence supporting the arrest and prosecution of the various illegal roadside zoo owners. At the time, these shady gambling places were operating in Nye, Eureka and Clark counties.

“Moody was called into the governor’s office time and time again and was impressed with the vital necessity of investigating and closing places which were a disgrace to the good name of the state of Nevada and caused considerable adverse publicity,” Pittman said (Nevada State Journal, June 10, 1948).

He’d heard rumors that Moody was reluctant to get the Emigrant Pass roadside zoo in Eureka County shut down specifically because Moody was close friends with the owners.

Pittman added, “Immediately before Mr. Moody’s dismissal there came into my possession evidence that incontrovertibly established such intimacy” — a personal letter from Les Moody to Mr. and Mrs. Ernest Dennison (Nevada State Journal, June 10, 1948).

Vehement But Futile Objections

The police superintendent didn’t go quietly. He claimed the real reason for his getting fired was Pittman succumbing to political pressure. Further, he argued it wasn’t his fault the roadside zoos didn’t get closed down, but, rather, the county officials who wouldn’t cooperate with him were to blame.

“If I hear of one more charge or allegation from anyone linking me with gambling conspiracy in this state, I will sue for libel,” Moody wrote in a statement (Nevada State Journal, May 22, 1948).

Pittman refuted Moody’s charge.

“My action in discharging Mr. Moody was based solely on his undue intimacy with men he had been charged with investigating and arresting,” he reiterated (Nevada State Journal,” June 10, 1948).

After an extensive investigation, Attorney General Alan Bible sided with Pittman. Then in September, a grand jury in Eureka County, where Dennison’s zoo was located, also found that Moody’s firing was justified.

“Either through inefficiency, lack of initiative, shifting of responsibility or some other motive, Lester Moody, former superintendent of state police, was culpable for continued existence of the Emigrant Pass establishment,” members noted (Nevada State Journal, Sept. 19, 1948).

The jury, however, also found the county sheriff, Stanley Fine, responsible for continued operation of Emigrant Pass gambling in his jurisdiction, as he repeatedly voted for granting the owner gaming licenses.

“He condoned an offense that called for immediate action — closing the establishment for illegal operation,” they added.

Moody countered, insisting that some grand jury members ruled the way they did because they disliked Moody and were Dennison’s competitors.

Sources

Photo from pond5.com: “Chess and job concept” by Alex Skopje

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

1955

It’s hard to believe this ever happened in Nevada.

As an emergency measure, the state government approved a temporary moratorium on issuing gambling licenses. It was to last five months, until 30 days after the 1955 legislative session adjourned.

The freeze applied only to applications submitted to the tax commission after the legislation went into effect, not those already filed and pending. Naturally, immediately preceding enactment of Assembly Bill 104, a slew of new applications entered the system.

The moratorium was to fend off public attacks on Nevada’s $89 million ($791 million today) a year gambling industry for being dominated by mobsters and to show the public the state was tackling the problem. Nevada’s legislators were to use the moratorium period to consider revising the state’s few gambling laws.

The licensing suspension was badly received, particularly in Southern Nevada where certain parties believed it was the legislators’ way of curbing growth on the Las Vegas Strip. Even tax commission members publicly criticized it.

“Many of the legitimate honest people who live in Nevada and have lived here a long time are being held up by this moratorium, and they are not the people who are causing all this trouble,” said Paul McDermitt, tax commissioner of Las Vegas. “I feel that some of the larger licenses are the crux of the thing” (Nevada State Journal, Feb. 3, 1955).

Gov. Charles Russell, the commission chairman, complained that when the moratorium had first been run by him, it was to encompass all applications, with which he agreed. Yet, the law the legislature passed exempted those that were pending. The chances are pretty good shady characters were linked to at least one of those.

Step Toward Greater Control

During that legislative session, the state Assembly and Senate both introduced bills requiring creation of a three-member gambling control board—Assembly Bill 236 and Senate Bill 170, respectively.

AB236 would transfer all gambling control from the tax commission to the new agency whereas SB170 would allow the board to make recommendations on licensing actions to the tax commission, which would have the ultimate say. Under AB236, the governor would appoint the members from a list of candidates compiled by a legislative committee while SB170 would allow the governor to appoint those of his own choosing who then would have to meet tax commission approval. 

SB170 prevailed, establishing the Nevada Gaming Control Board (NGCB). It afforded the NGCB the power to determine which applicants were suitable for gambling licenses.

After passing that bill in March, legislators quickly repealed the moratorium, which had been in effect for only two months.

Sources

Clip art: by Dosnerd90

1954

A bingo controversy made it a memorable year for gambling at Lake Tahoe.

To lure as many tourists as possible into their casinos, numerous operators offered big-ticket prizes for winners at summer’s end (most places closed for the winter months). The Ta-Neva-Ho boasted awarding trips to Mexico and Hawaii; the Cal Vada promoted a $10,000 giveaway and the Cal-Neva Lodge drew visitors with a new Cadillac.

The Cal-Neva Lodge’s advertisement read: “If won in 49 numbers or less, the winner will receive a 1954 Cadillac convertible. This number will be increased by an additional number every two weeks until the car is won.”

Its event, dubbed the “Grand Slam Swan Song Bingo Game,” attracted so many people that the crowd extended onto the property’s California side where gambling was illegal (the Cal-Neva straddles the California-Nevada border).

“I saw the car up there all season myself. The people were just drooling over it,” said Robbins Cahill, secretary of the Nevada Tax Commission, which regulated gambling at that time (Nevada State Journal, Oct. 1, 1954).

Despite Cahill warning all casino licensees the tax commission expected them to award their advertised prizes at the season’s close, the Cal-Neva Lodge didn’t give away the Cadillac, deceiving the public and breaching their trust, which it shouldn’t get away with, Cahill said.

The casino’s owners hadn’t awarded the car because nobody had covered a bingo card within the required 55 plays and they’d “forgotten about” the posters advertising the Caddy giveaway, they said. They’d announced five days before the casino was to close that if no one won the car, they’d divide a $7,000 “Pot of Gold” between the winners, which they had done, among six people.

But a player, not one of the six, who’d achieved bingo in 57 plays complained to the tax commission the car wasn’t awarded. After he’d groused, the Cal-Neva Lodge had offered him either the Cadillac or $5,000; he’d chosen the money. (The casino owners later sold the Cadillac for $48,000.)

As a sort of punishment, when the Cal-Neva casino owners applied for a subsequent gambling license for a different casino, the tax commissioners granted it but forbade them from running a bingo game.

Reforms Enacted

To prevent similar problems in the future, Cahill considered enacting uniform controls over bingo games or abolishing them altogether. Instead, the tax commission and the game operators developed a mutually agreeable policy. It called for:

• A minimum of 50 numbers drawn for any cover-all or blackout bingo game.
• A maximum prize of $3,000 to be offered for any single game.
• Only cash and no merchandise prizes.
• All advertised prizes to be given away by Sept. 15.

The gaming regulators threatened to deny bingo licenses in the entire Lake Tahoe area should the area’s bingo operators disobey the new rules.

Sources