Despite the titillating power plays among the casino owners, politicians, tax collectors, and law enforcers, everyone else was partying, baby!
Between 1955 and 1960, the city’s population grew from 45,000 to 65,000, with another 20,000 living between Henderson and Boulder City. A dozen major hotels on the Strip and downtown accounted for nearly 10,000 hotel rooms, along with restaurants and chuckwagon buffets, showrooms, lounges, shops, and swimming pools. In the casinos in 1960, 11 million visitors lost a record $375 million, up from $50 million in 1950. Upwards of 30,000 weddings and 10,000 divorces were performed annually. The Las Vegas Convention Center opened in 1959, providing potential visitors with a reason other than gambling to come to Las Vegas. Atom bombs went off like clockwork up the road.
No new hotels were built between 1958 (Stardust) and 1966 (Aladdin). This allowed the Control Board and Gaming Commission to consolidate their power. Together, they tightened licensing procedures and took stricter account of revenue reporting. Tax collections spiraled. State investigators even circulated a "black book" of absolute personae-non-grata, whose very presence could cost a casino its gaming license.
Still, the image of the casino industry remained anathema within conventional financial institutions. Publicly traded corporations were ineligible for licensing, since each stockholder in a casino had to be approved individually and personally. On the other hand, the industry’s high profitability continued to attract non-mainstream capital -- the Teamster Union’s Central States Pension Fund, for example, with its ties to the Chicago-Midwest Syndicate. Teamster money, which had been dribbling in since the mid-1950s, started showing up in a big way in the mid-1960s, financing major expansions of the Desert Inn, Dunes, and Stardust, and the opening of the $25 million Caesars Palace in 1966.
By then, Las Vegas found itself the main battleground in the intensifying federal war on organized crime. Robert Kennedy embarked on a personal crusade to rid Las Vegas of the underworld element. The Justice Department, the IRS, the Department of Labor, the Bureau of Narcotics, and several federal task forces all came calling. The FBI moved in wholesale -- wiretapping, bugging, photographing, harassing. Even legitimate owners were besieged. The situation stagnated in a tense stalemate.
Enter Howard Hughes -- at midnight, incognito, from an ambulance and through the back door of the Desert Inn, trailing a truckload of Kleenex and a retinue of Mormon advisors.
In 1965, Hughes had sold TWA for a half-billion dollars, cash, giving him a larger bankroll than anyone else in the country, and he felt like spending some. Hughes’ attraction to Las Vegas dated back to the early 1950s and he apparently decided to see how much it might cost to buy, piece by piece, the whole city.
He moved into the top floor of the Desert Inn, but when the casino bosses wanted him to move back out, Hughes had grown so comfortable (with armed guards stationed at the entrances, an air-purifying system working round the clock, blackout draperies on all the windows, and a special phone system) that he wasn’t in the mood to be evicted. So in March 1967, he paid the DI’s Moe Dalitz, by now 68 years old and sweating under the unrelenting federal spotlight, $13.2 million for the whole schmear.
Hughes didn’t move again for more than three years. But he moved his cash in a big way, embarking on the most robust buying spree Nevada had ever seen. When the dust settled, Howard Hughes owned seven casinos, large lots on the Strip and around the city, the North Las Vegas Airport, a TV station, a small airline, casinos in Reno, mining property around the state, and more. In all, he dropped $300 million between March 1967 and April 1970.
Hughes’ investments also stimulated an unprecedented boom. By 1970, the Four Queens, Circus Circus, Landmark, International, and several other smaller joints all joined the Las Vegas ranks, with major expansions at another dozen existing casinos.
In addition, the special dispensations Hughes received from state regulators and politicians paved the way for the Nevada Corporate Gaming Acts of 1967 and 1969, which allowed publicly traded corporations to acquire gambling licenses without the need for every stockholder to be individually licensed. MGM, Hilton, and Holiday Inn quickly secured financing from legitimate sources to build their own Las Vegas hotel-casinos.
Thus, according to conventional history, Las Vegas was suddenly swept clean of its entire underworld element by the huge broom of corporate respectability.
Of course, a number of deeply entrenched organized-crime connections took many more years to play themselves out. In 1973, previous owners of the Flamingo pleaded guilty to hiding an interest by Meyer Lansky from 1960 to 1967. In 1976, state auditors uncovered a major skimming operation at the Stardust, which implicated the Fremont, Marina, and Hacienda, all owned by Argent Corporation, found to be a front for the Midwest Syndicate; this era, featuring Allen Glick, Frank "Lefty" Rosenthal, and Tony Spilotro, has been covered to death, so to speak.
The Aladdin, Dunes, Tropicana, and others also had their gangster pointholders wrenched out from under them, but by the time Tony and Michael Spilotro were found bludgeoned to death in an Indian cornfield in 1986, Las Vegas was finally, ostensibly, free of mob involvement.
Tomorrow: the thrilling conclusion of the History of Las Vegas.
