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Mafia roots of American casinos
The history of American casinos is not only the architecture of the resorts and neon Streep, but also the era of organized crime, when early capital, personnel and "operational practices" came from bootlegging, illegal halls and bookmakers. In the middle of the 20th century, the mafia helped Vegas start - and strict regulation and corporations later supplanted crime. Let's figure out how it happened.
1) Before Vegas: Bootlegging, underground halls and "numbers"
Prohibition (1920-1933) made alcohol illegal, and bootleggers established logistics, security and corruption ties. The same networks fed speakeasy, underground casinos and bookmakers.
"Numbers "/policy in major cities (New York, Chicago, Cleveland) gave cash flow and betting management experience.
Cuba 1930-1950s: part of American criminal investments flowed into Havana casinos (until the 1959 revolution closed this "offshore"), after which capital and personnel switched to Nevada.
2) Early Las Vegas: Money drips and first resorts
Nevada legalized gambling in 1931, but a critical mass developed in the 1940s: highways, the proximity of California, money coming from the Hoover Dam.
Bugsy Siegel and the circle of Mayer Lansky became symbols of the "glamorous crime" of Vegas: the Flamingo project (1946) skidded administratively, but set the standard of "resort-casino with a show."
Following Flamingo came Sands, Desert Inn, Sahara, Riviera - a part with direct or indirect connections with criminal capital and "shadow" managers.
3) How the "old" Vegas economy worked
Front men and "invisible" managers. Formal owners signed papers, and real management and profits were controlled by "consultants" and "partners" from the underworld.
Skimming ("skim"). Before the proceeds got into the accounting department, part of it was withdrawn in cash and went "up the chain." This reduced taxes and divided money between families.
Tax-free "lubrication." Cash from the hall made it possible to finance security, bribes and external operations.
4) Teamsters and resort loans
In the 1950s and 1970s, the Teamsters Central States Pension Fund issued large loans for real estate and casinos.
Through intermediaries, money went to the purchase/construction of Strip facilities; risks and control are weak, which facilitated access to "gray" management.
In the mid-1970s, Argent Corporation (Allen Glick), funded through this circuit, managed Stardust, Fremont, Hacienda, Marina - it was there that the investigation later revealed high-profile cases of skim.
5) "Cinematic" period: Rosenthal, Spilotro and Strip 1970s
Frank "Lefty" Rosenthal - gifted manager of betting lines and casino operations; Tony Spilotro is the "power" curator of the Chicago family in Vegas.
The second half of the 1970s is famous for investigations into Stardust/Fremont and ties to Chicago's Outfit, Kansas City and Milwaukee groups.
Media and later cinema (artistic interpretations) romanticized the era, but the reality was about financial crimes, violence and pressure on managers.
6) State counterattack: hearings, the black book and new laws
The Kefauver hearings (1950-1951) gave the country its first television portrait of organized crime and its links to gambling.
Nevada has consistently tightened the rules:- 1955 - Nevada Gaming Control Board (NGCB) is created for audit and investigation;
- 1959 - Nevada Gaming Commission (NGC) and Gaming Control Act with licensing and disciplinary powers;
- Black Book ("List of excluded persons"): unwanted persons are prohibited from entering the casino.
- The RICO Act (1970) gave federal prosecutors the tool to hit criminal "enterprises" as organizations, not just individual episodes.
- Late 1970s - 1980s: a series of wiretaps, raids and sentences in skim cases on the Strip: long-term schemes, cashing chains and "tips" from Midwestern families are revealed.
7) Pivot to corporations: Hughes, banks and public companies
Howard Hughes (1966-1967) bought up a number of Strip objects and showed that you can enter Vegas with clean money with public reporting.
At the turn of the 1960s and 1970s, the corporate era came: a strengthened KYC for investors and top managers, bank financing, audit, insurance compliance circuits.
In the 1980s-1990s, the market was consolidated by brands that set the standards today: Caesars, MGM, Boyd, Station, Wynn/Encore, etc. Their licenses are personal inspections of owners/directors, sustainable AML procedures, independent audit committees.
8) Atlantic City and the "east window"
When New Jersey legalized casinos in 1976, the state created one of the strictest regulators - the Division of Gaming Enforcement (DGE) and the Casino Control Commission - as an "antidote" to Vegas history.
Early episodes of the influence of "unlicensed persons" were suppressed by licensing to the level of suppliers and ensuring full transparency of owners and financing.
9) What of "that era" is alive today?
Continuous background check for owners/managers, audit of sources of funds, severe sanctions for hiding beneficiaries.
Excluded persons: "black lists" are valid and updated; the appearance of an unwanted guest on the floor is a reason for intervention.
Title 31/AML (federal level) and staff regulations: reports on large cash, SAR on suspicious transactions, KYC even for VIP guests.
Compliance culture: for operators today, reputational and regulatory risk is more expensive than short-term benefits.
10) Myths and realities
Myth: "Mafia families still control casinos."
Reality: Licensing and public corporations pushed crime out of ownership and management; pinpoint attempts at influence are thwarted by inspections and criminal cases.
Myth: "Crime and made Vegas."
Reality: criminal capital and managers participated in the start, but infrastructure, laws, tourism and corporations turned the city into a legal entertainment industry.
Myth: "Skimming is inevitable."
Reality: modern cash and gaming systems, closed-circuit accounting, video surveillance, independent audit and personal responsibility of licensees make such schemes extremely risky and rare.
11) Timeline - Short Tape
1920s-30s: bootleg, underground halls, "numbers."
1931: Nevada legalizes casinos.
1946: "Flamingo" is a symbol of a "glamorous" start.
1950-51: Kefauver hearings (focus on the Mafia).
1955/1959: NGCB/NGC, black book, Gaming Control Act.
1966-67: Howard Hughes - white-collar turnaround.
1970: RICO.
1970s-80s: "Skimming" cases, blows to Streep's ties to Midwestern families.
1990s: The era of public corporations and megacurrents.
12) Withdrawal
American casinos really had mafia roots: early capital, "operating system" and personalities came from the world of bootleg and underground gambling. But from the 1950s through the 1990s, regulators, federal laws and corporate standards consistently moved the industry into legitimate, public and auditable business. Today, Las Vegas is not a "terra incognita," but one of the most regulated areas of service: access to a license is a privilege for those who undergo multi-level verification and live according to compliance rules.