Question of the Day - 11 July 2025

Gambling was legalized in Nevada in 1931, but race and sports betting remained largely the province of illegal bookies or small stand-alone legal (or semi-legal) "turf clubs," like the Derby and Saratoga Clubs owned by Jackie Gaughan and the Hollywood Horse and Sports Club owned by Jimmy "the Greek" Snyder. Some of these betting parlors were highly lucrative affairs; Jimmy the Greek, for example, reportedly made $2 million a week for a stretch in the mid-'50s from his Vegas Turf and Sports Club.

In 1951, however, reacting to a groundswell of popular opposition to sports gambling, the government slapped a 10% tax on the enterprise, which simultaneously regulated the industry (the legal taxpaying books were on the government books, so to speak), while driving a lot of the legitimate operators out of business or else into the non-taxpaying underground.

The other effect was that the casinos wanted nothing to do with race and sports betting. The margins for both were far too low for the joints to fade that kind of a tax burden. In addition, in the '50s and '60s, the Vegas casinos were run mostly by recently legitimized operators; the last thing they wanted to do was to take on reporting requirements to the feds. 

It took two decades of opposition to the tax from the legal bookies for the federal government to reduce the rake on sports betting to a more palatable 2%. That happened on October 15, 1974.

Following the repeal of the onerous tax, Jackie Gaughan opened the first sports book inside a casino at the Union Plaza in 1975, overseen by legendary oddsmaker Bob Martin. But it wasn’t until the following year that the prototype for the modern race and sports book was pioneered by notorious bookmaker Frank "Lefty" Rosenthal at the Stardust. Lefty's operation was a plush affair, featuring six giant TV screens with seating for 300. It's been the prototype 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 more attractive proposition to Las Vegas resort-casinos, most of which now devote space to a race and sports book, 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. We examined the role of the casino sports books, in the face of small margins and large spaces, in a recent QoD.