Question of the Day - 10 October 2023

Gambling was legalized in Nevada in 1931, but race and sports betting remained largely the province of illegal bookies or small standalone legal (or semi-legal) "turf clubs," like the Derby and Saratoga clubs owned by Jackie Gaughan and the Hollywood Horse and Sports Book, owned by Jimmy "the Greek" Snyder, some of which were highly lucrative affairs -- Jimmy the Greek was allegedly making $1 million a week in the mid-'50s from his Vegas Turf and Sports Club.

In 1951, however, reacting to a groundswell of popular opposition to all the illegal sports gambling outside of Nevada, the federal government slapped a 10% tax on Nevada's legal sports books, which simultaneously regulated the industry and drove a lot of the legitimate operators either out of business or into the untaxed underground.

No one with half a brain was betting sports at that rate, so bookmakers and bettors worked around it. Bets were written for 10 percent of what the actual cash transaction was. For example, a bet might be for $5,500 to win $5,000, but the ticket — if anyone even bothered to write one out — would be for $55 to win $50. Oddsmaker Roxy Roxborough says that the Churchill Downs sports book used to put a little "r" next to the amount written on the ticket. That meant the bet was 10 times the amount written down.

It took two decades for the federal government to relax the tax on sports betting; on October 15, 1974, it became a more palatable 2%. Prior to that change, the casinos didn't want to touch race and sports betting. Obviously, their edge was way too low to fade that kind of a tax burden.

Following the repeal of the onerous 10%, Jackie Gaughan opened the first sports book inside a casino at the Union Plaza in 1975, overseen by legendary oddsmaker Bob Martin.

The following year, the prototype for the modern race and sports book was pioneered by notorious bookmaker Frank "Lefty" Rosenthal at the Stardust. Lefty's plush book featured six giant TV screens with seating for 300 and it's been the model for Las Vegas race and sports books ever since.

On January 1, 1983, the tax on sports betting was further cut to 0.25%, making it a much more attractive proposition to Las Vegas resort-casinos, most of which now have race and sports books, whether their own or an outside franchise. Even though the casinos' edge remains low, sports betting is seen as a strong draw that gets people in the door, where they'll hopefully partake in some of a property's more profitable offerings.