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April 19, 2014

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LV historians compile top gambling events

The most important event in the history of the U.S. gaming industry occurred long before the first Nevada casino -- indeed long before European settlers moved to what would eventually become Nevada, according to a survey of former regulators, gaming executives, journalists and historians.

The most important event in gaming history was the adoption of the Bill of Rights to the U.S. Constitution and the resulting "culture supportive of state action regarding gaming," according to a list compiled by Michael S. Green and Gary E. Elliott, professors of history at the Community College of Southern Nevada.

The professors presented their list Wednesday at the second annual Gaming Business and Law Update, a conference for gaming attorneys underway at Bellagio.

The American constitutional system of dual federal and state sovereignty, in which states have the right to regulate anything not explicitly spelled out in the U.S. Constitution, made legal gambling possible in Nevada, the professors say.

"That is why gambling was and is a state issue," said Elliott. "Gambling, to exist, must rely on liberty, autonomy of the people and self-government."

The list was compiled by the professors at the suggestion of Robert Faiss, a prominent gaming attorney and history buff. Green explained that the purpose is really to legitimize Nevada history and generate discussion.

"This is sort of like Mays v. Mantle," said Green. "You can sit on a barstool and argue forever about it."

Second on the list was Nevada's legalization of gambling in 1931, an event that could not have occurred without the framework of the U.S. Constitution, the professors argued.

The professors said Nevada's legalization of gambling came at the end of a decadelong debate. Contrary to popular believe, legalized gambling was not seen as a way to take Nevada out of the Great Depression, the professors argue -- Nevada was actually affected far less by the Depression than other states.

Legalized gambling, said Green, "was purely a business proposition," intended to support and benefit the state's other industries.

Third on the professors' list is federal support of transportation, specifically acts like the Federal Highway Act and Civil Aeronautics Act that ensured federal funds for highway and airport construction and a regulated airline industry.

"For tourists to flow into the state and then other places, they needed transportation to get them there quickly and happily," said Green.

The CAA was passed in 1938, and the FHA in 1956.

Fourth on the list was the arrival of Bugsy Siegel in Las Vegas in the 1940s. The professors noted that Siegel's legacy is full of misperceptions: the mobster didn't start the Flamingo, he bought it from a Californian. Nor did he invent the Strip -- it already featured resorts like the El Rancho and the Last Frontier.

But Siegel was a visionary, adding class to Las Vegas with touches like requiring dealers to wear tuxedos, said Green. And while the Flamingo struggled at first, it did show others the way, leading eventually to legitimate hotel-casino operators, he said.

Fifth on the list was the Senate Committee to Investigate Organized Crime in America, also known as the Kefauver Committee after Sen. Estes Kefauver, in the 1950s.

Kefauver's committee investigated the influence of the mob in the gaming industry and led to more stringent gaming regulations, said Green.

"It did help lead to improvements in state gaming regulations," said Green.

Those improvements include the creation of Nevada's gaming control apparatus in the 1950s, number six on the list. This apparatus included granting regulators the power to deny and revoke gaming license applications, conduct background checks on casino employees, and inspect casino records. In 1955, the Legislature created the Gaming Control Board to regulate gaming.

These measures and agencies, now taken for granted, met much resistance at the time, the professors said.

"What we have come to accept as normal gaming control apparatus was at one point quite controversial," said Elliott.

Number seven on the list was the 1967 creation of the list of persons excluded from Nevada casinos -- otherwise known as the 'Black Book.'

The Black Book helped regulators solve the "knotty" problem of how to deal with unsavory characters who hung around in casinos. The Black Book helped solve the "perception question" about mob influence in Nevada casinos, said Elliott.

Eighth on the list is the 1969 Nevada Corporate Gaming Act. This measure essentially allowed publicly traded companies to own casinos for the first time. There was never a prohibition against public company ownership of casinos, but prior to the Corporate Gaming Act, every shareholder of a company that owned a casino had to be licensed.

Bills to remove this condition were considered in 1963 and 1965, but never passed. But the fear that mob figures could use public companies as a front to control casinos was alleviated in part by Howard Hughes' involvement in the casino industry in the late 1960s. The Act led to corporate control of the gaming industry and the megaresort casinos that populate the Strip today, said Elliott.

The ninth and tenth items on the professors' list address the proliferation of gaming outside of Nevada. The New Hampshire Legislature's 1963 legalization of a state lottery -- number nine -- led to the legalization of lotteries nationwide. And Atlantic City's legalization of gambling in 1977 -- ten on the list -- led directly to today's situation, where gambling is proliferating nationwide, said the professors.

The list was compiled after consulting a number of gaming industry experts, and the professors invited criticism. Things like Indian gambling and concerns about problem gambling were excluded because it is simply too early to determine what impact, if any, they will have on gaming history, said Green.

"When better historians conduct the next survey ... they and other items may make the list," said Green.

The panel consulted by Green and Elliott included: Faiss; Bernie Anderson, chairman of the Nevada Judiciary Committee; Chuck Baker, editor of the Boulder City News; Frank Catania, former director of the New Jersey Division of Gaming Enforcement; Burton M. Cohen, former chairman of the Nevada Resort Association; Ruthe Deskin, columnist for the Las Vegas Sun; Kathie Dones-Carson, coordinator of gaming control activities and director of research and analysis for the Detroit City Council; William Eadington, director of the Institute on Gambling at the University of Nevada, Reno; Arthur J. England, former chief justice of the Florida Supreme Court; Karen Galatz, executive producer and anchor of "Business in Nevada,"; Kimberly Maxson, Nevada deputy attorney general for gaming; Judy Patterson, vice president and executive director of the American Gaming Associati on; Harry Reid, U.S. senator from Nevada; John L. Smith, author and columnist for the Las Vegas Review-Journal; Michael Sargent, applicant services coordin

ator for the Nevada Gaming Control Board; and Roger Trounday, senior executive vice president of John Ascuaga's Nugget casino in Sparks and former chairman of the Gaming Control Board.

As Green explained it, after receiving responses from this panel, he and Elliott, "convened a meeting of the two of us and decided the list."

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