Which Las Vegas Casinos Did the Mob Control? The Real History

For decades, the Mafia’s involvement in Las Vegas has been exaggerated, romanticized, and sometimes simply invented. Almost every famous casino from old Las Vegas has been described at one time or another as “Mob owned.”

The truth is more complicated.

I know. I’ve been researching Nevada casinos and organized crime for more than forty years. I lived in Las Vegas during the period when different Mob families were fighting over the spoils, and I was there when Frank “Lefty” Rosenthal narrowly survived a car bombing after leaving Tony Roma’s restaurant on East Sahara Avenue on October 4, 1982.

Rosenthal climbed into his Cadillac Eldorado, turned the ignition, and the car exploded. He survived, helped, remarkably, by a steel plate beneath the driver’s seat installed by General Motors as part of the car’s design.

Milwaukee Mob boss Frank Balistrieri has long been associated with theories surrounding the bombing, although responsibility was never conclusively established. Balistrieri was aligned with the Chicago Outfit and deeply involved in the Las Vegas casino-skimming operations uncovered during the Allen Glick/Argent Corporation era.

By then Rosenthal had become extraordinarily visible. He had managed casinos associated with Argent, publicly battled Nevada gaming regulators, appeared on his own television show, and talked to the press. That was a dangerous amount of attention during the final years of organized crime’s casino operations in Las Vegas.

I watched that era unfold while living there. What was happening behind the casino marquees was considerably more complicated than the familiar story that “the Mob ran Vegas.”

Organized crime did play a major role in the development of Las Vegas gambling. Mob-connected investors financed casinos, hidden owners shared in casino profits, bookmakers and gambling operators moved west from cities such as Chicago, Cleveland, New York, Detroit and Kansas City, and millions of dollars were eventually skimmed from casinos before the money ever appeared on the books.

But not every casino with a Mob connection was actually controlled by the Mob.

Some casinos had hidden organized-crime investors. Others were financed with loans influenced by organized labor. Some employed casino executives with underworld connections. And some were genuinely controlled by criminal organizations that expected a share of the profits.

Understanding those differences is the key to understanding the real history of the Mob in Las Vegas.

Which Las Vegas Casinos Were Connected to the Mob?

Among the best-known Las Vegas casinos with significant organized-crime connections were:

The degree of Mob involvement differed enormously from casino to casino. That distinction matters.

It was that “hidden ownership” that piqued the Nevada Gaming Control Board’s interest over the years. At the Thunderbird, Jack Lansky worked as a manager, but only after his brother, Meyer Lansky, loaned the new owners enough cash to pay their opening-night winners. Did Meyer then own a piece of the casino? It would appear so.

At the Dunes, New England crime boss Raymond Patriarca received a piece of the profits. Establishing whether he was actually an investor, a hidden owner, or an interloper taking a share is a more complicated question without a perfect answer.

Basically, it’s complicated.

Even Bugsy Siegel had interests in several downtown Las Vegas casinos besides the El Cortez. He was a listed owner of the Rex Club in 1946.

That’s why simply publishing a list of “Mob-owned Las Vegas casinos” can be misleading. A casino might have a legitimate owner on paper, a Mob-connected manager running the floor, an undisclosed investor providing money, and someone hundreds or thousands of miles away expecting a percentage of the profits.

A casino that borrowed money from the Teamsters Central States Pension Fund was not automatically “owned by the Mafia.” Nor did the presence of a Mob-connected investor necessarily mean organized crime controlled the casino. At several Las Vegas properties, however, the connection went much further.

Before the Flamingo: The El Cortez

The popular version of Las Vegas history often begins with Benjamin “Bugsy” Siegel building the Flamingo in the Nevada desert. It didn’t happen that way.

Las Vegas already had legal gambling, casinos and hotels before Siegel became involved with the Flamingo. And Siegel himself had been involved in Las Vegas gambling before the Flamingo opened.

The El Cortez, which opened in downtown Las Vegas in 1941, became one of the important early links between established Las Vegas gambling operators and the growing interest of organized-crime figures from outside Nevada. Siegel and Moe Sedway were among a group that acquired an interest in the El Cortez before eventually selling it.

That history is important because it illustrates what was actually happening in Las Vegas during the 1940s. Organized crime didn’t suddenly discover an empty desert and create Las Vegas. Nevada already had a legal gambling industry.

What outside gambling syndicates discovered was an opportunity.

Bugsy Siegel, Meyer Lansky and the Flamingo

No casino is more closely associated with the Las Vegas Mob than the Flamingo. It is also the source of some of the biggest myths.

Billy Wilkerson, publisher of The Hollywood Reporter, originally conceived the Flamingo project. Financial problems opened the door to new investors, including Siegel and his associates, and Siegel became the public face of the project.

The Nevada Gaming Control Board didn’t exist yet, so even a known gangster could build a casino and apply for a gaming license.

J. Edgar Hoover and the FBI took note. Federal agents bugged Siegel’s Las Vegas Club offices and intercepted his mail. But they didn’t stop him.

Perhaps that was partly because behind Siegel stood a much larger network of gambling and organized-crime figures, a so-called Mafia whose existence J. Edgar Hoover would spend years publicly downplaying.

Meyer Lansky was particularly important, serving as one of organized crime’s most accomplished financial minds. Close at hand was Moe Sedway, who also played a major role in Nevada gambling operations and had long-standing connections to Lansky.

The Flamingo opened in December 1946. Its initial opening was disappointing, and construction expenses had risen dramatically. Siegel’s backers were not happy.

According to one of the enduring accounts of Siegel’s downfall, Mafia leaders meeting in Havana discussed what to do about him. Lucky Luciano supposedly gave the word. Lansky, Siegel’s longtime friend, is said to have objected.

Whether Siegel’s fate was actually decided that way remains one of the unanswered questions of Mob history. The Flamingo closed briefly before reopening in March 1947, a more finished and increasingly profitable version of its original self. But for Siegel, it may already have been too late.

On June 20, 1947, Siegel was shot to death while sitting in the Beverly Hills home of Virginia Hill. His murder became part of Las Vegas mythology almost immediately, with the familiar story holding that the Flamingo’s soaring costs and suspicions that Siegel had stolen from his Mob investors ultimately sealed his fate.

The actual reason for Siegel’s murder has never been conclusively established. What is clear is that his death did not end organized crime’s interest in Las Vegas. If anything, the Flamingo had demonstrated just how much money could be made there.

The Desert Inn and Moe Dalitz

If Bugsy Siegel became the Hollywood version of the Las Vegas gangster, Moe Dalitz represented something much closer to the way organized crime actually operated in Nevada.

Dalitz had ties to Cleveland’s Mayfield Road Mob and had made money through bootlegging and illegal gambling before entering the casino business. He and his associates became involved with the Desert Inn, which opened in 1950.

Unlike Siegel, Dalitz generally avoided the flamboyant gangster image. He became a prominent Las Vegas businessman and civic figure.

That transition, from illegal gambling operator to respectable Nevada businessman, was one of the defining characteristics of the Las Vegas Mob era. The money was becoming legitimate. Or at least some of it was.

The Sands and the New Las Vegas

The Sands Hotel and Casino, which opened in 1952, became synonymous with the glamorous Las Vegas Strip. Frank Sinatra performed there. The Rat Pack made the Sands famous around the world. Celebrities, entertainers and high rollers filled its casino.

Behind the glamour was a more complicated ownership and operating structure. Investors and casino figures with ties to established gambling syndicates were part of the Sands story.

One of the important behind-the-scenes figures was Joseph “Doc” Stacher, a longtime organized-crime associate whose career stretched back to the Prohibition era. Stacher had close relationships with Meyer Lansky and other major underworld figures and became an inside man at the Sands.

That was typical of Las Vegas during this period. The person whose name appeared most prominently on a casino’s ownership documents didn’t necessarily tell you who had influence, or who expected to benefit from the operation.

The Riviera and Gus Greenbaum

By the 1950s, Chicago organized crime had developed substantial interests in Las Vegas.

The Riviera, which opened in 1955, became particularly important. Its ownership included a complicated collection of investors and operators, some with organized-crime connections.

Gus Greenbaum became the Riviera’s manager, bringing with him years of experience in gambling and casino operations. Greenbaum was hardly a newcomer to the underworld side of the business, his associations reached back well before the Riviera opened.

The Riviera also became an important foothold for Chicago Outfit interests in Las Vegas, part of a much broader network connecting Nevada casinos with organized-crime organizations in Chicago and other American cities.

Greenbaum’s story eventually took a darker turn. In December 1958, Greenbaum and his wife Bess were murdered in their Phoenix home. Their murders remain one of the more notorious episodes associated with the Mob era.

And that is another reason the history of organized crime in Las Vegas cannot be reduced to Bugsy Siegel and Meyer Lansky. By the 1950s and 1960s, money and influence flowed between Las Vegas and criminal organizations across the country. Chicago was one of the most powerful.

Frank Costello and the Tropicana

The Tropicana, which opened in 1957, produced one of the most remarkable pieces of evidence connecting organized crime to Las Vegas casinos.

New York Mob boss Frank Costello was shot in Manhattan in May 1957. He survived, and police investigating the shooting found a note in Costello’s pocket containing figures connected to the Tropicana’s casino operation. The discovery helped expose what investigators believed was an organized-crime interest in the casino.

Costello’s connection illustrates another important feature of the Las Vegas Mob era: the people benefiting from a casino did not necessarily appear on Nevada’s official ownership documents. Hidden interests were enormously valuable, and Nevada regulators would spend years trying to identify them.

What Did “Mob Control” Actually Mean?

This is where Las Vegas history often gets muddled.

There were several different kinds of organized-crime involvement in Nevada casinos. A Mob-connected individual might legally own part of a casino. Another person might secretly hold an interest through a front man. A criminal organization might exert influence over casino management without appearing anywhere on the ownership documents. Still another casino might simply receive financing from a source associated with organized labor or organized crime.

Those situations were not identical. The most lucrative arrangement was one in which casino money could be removed before it was reported as revenue. That was the skim.

How the Las Vegas Casino Skim Worked

The concept was remarkably simple.

Cash came into a casino through slot machines and gaming tables. Each day, the cash boxes from the tables were exchanged and taken to the count room. Until the mid-1950s, there was no Nevada Gaming Control Board, and casinos operated essentially as private businesses with far less state oversight than would exist later.

Before all of that money was recorded on the casino’s books, a portion could simply be removed. Because the cash was never officially recorded as casino revenue, it could be transported to organized-crime figures elsewhere without being reported as profit, or taxed.

The challenge wasn’t inventing the system. It was keeping regulators and federal investigators from discovering it. Trusted bagmen, and yes, women, carried thousands of dollars away, eventually sending casino cash to organized-crime interests in Chicago, Detroit, Kansas City, Philadelphia, Buffalo, Milwaukee and New York. Early on, Meyer Lansky played a major role in handling and distributing profits. Later, much of the skimmed cash flowed first through Chicago.

As Nevada gaming regulation became more sophisticated, hiding ownership and removing unreported casino cash became increasingly difficult. But during the Mob era, enormous amounts of money moved through Las Vegas casinos, and even a small percentage of the take could represent a fortune. The FBI estimated that between 1944 and 1984, at least $300 million in casino cash left Las Vegas for organized-crime interests in Chicago and New York.

The Teamsters Pension Fund and Las Vegas

Another important part of the story involved financing.

Building large casino resorts required enormous amounts of capital, and traditional banks were often reluctant to finance gambling projects. The Teamsters Central States Pension Fund became an important source of casino financing.

Under Teamsters president Jimmy Hoffa and others associated with the fund, millions of dollars were loaned for Las Vegas casino projects. This helped finance the growth of the city, but it also created opportunities for organized-crime figures who had influence within the union and pension fund.

An important distinction needs to be made: a Teamsters loan by itself did not mean a casino was Mob owned. Caesars Palace, for example, received substantial Teamsters financing. That doesn’t put Caesars in the same category as a casino where organized-crime families secretly shared in skimmed casino profits.

Howard Hughes Changes the Equation

The arrival of billionaire Howard Hughes in Las Vegas during the 1960s represented another turning point. Hughes purchased several major casino properties, including the Desert Inn, Sands, Frontier, Castaways, Silver Slipper and Landmark. His acquisitions helped move Las Vegas toward corporate ownership.

That didn’t instantly eliminate organized crime from Nevada gambling. Far from it. But the casino industry was changing. Large corporations had access to legitimate financing. Nevada regulators were becoming more aggressive. Federal investigators were increasingly interested in organized crime. And yet one of the largest Mob casino operations was still ahead.

Allen Glick and the Argent Casinos

In the 1970s, businessman Allen Glick and his Argent Corporation acquired several Las Vegas casinos, including the Stardust, Fremont and Hacienda, later adding the Marina. The acquisitions were financed largely through loans from the Teamsters Central States Pension Fund.

Glick became the official casino owner. Glick later maintained that he was unaware that his $60 million loan arrangement included a back-end five-percent cash payment to Kansas City Mob bosses, or that he was becoming little more than a figurehead in his own casinos.

Getting the loans was the easy part. What happened behind the scenes became one of the most notorious organized-crime episodes in Las Vegas history.

Frank “Lefty” Rosenthal became a powerful figure within the Argent casino operation. Rosenthal was an extraordinarily knowledgeable gambler and sportsbook operator who also had long-standing associations with organized-crime figures. Among them was Anthony “Tony the Ant” Spilotro, the Chicago Outfit’s feared representative in Las Vegas.

The Stardust and the Last Great Skim

The Stardust became the centerpiece of the later Mob era. Money was skimmed from casino operations and secretly transported out of Las Vegas. The proceeds benefited organized-crime organizations in several cities.

This wasn’t the glamorous Mob Las Vegas portrayed in movies. There were no tuxedo-clad gangsters sitting around a casino table dividing stacks of cash. The real operation depended upon casino accounting, trusted employees, couriers, hidden interests and the ability to keep the money invisible to regulators.

Eventually, federal investigators began putting the pieces together. Wiretaps and surveillance helped expose the network connecting Las Vegas casino money to organized-crime families in the Midwest. The resulting investigations and prosecutions helped bring the traditional Mob casino era to an end.

Frank Rosenthal and Tony Spilotro

Rosenthal and Spilotro became the two most famous figures associated with Las Vegas during this period. Their lives later helped inspire characters in Martin Scorsese’s 1995 film Casino, but Hollywood compressed and altered a much more complicated story.

Rosenthal was a brilliant gambling operator who became increasingly visible in Las Vegas despite regulatory questions surrounding his casino employment. Spilotro had a very different role. He represented Chicago Outfit interests in Las Vegas and became associated with loansharking, burglary and other criminal activity. The increasing attention surrounding both men was exactly what the Outfit didn’t need. Las Vegas was becoming too closely watched.

How the Mob Lost Las Vegas

There wasn’t one moment when the Mafia suddenly disappeared from Las Vegas. It happened gradually.

Nevada gaming regulators became more sophisticated and aggressive. The Nevada Gaming Control Board and Nevada Gaming Commission increased scrutiny of casino owners and employees. The state’s List of Excluded Persons, commonly known as the Black Book, provided another weapon for keeping known organized-crime figures out of casinos. Federal investigators used surveillance, informants and wiretaps to follow money leaving Nevada.

Corporate ownership also transformed the economics of Las Vegas. Public companies had access to capital that earlier casino developers could only dream about. They didn’t need secret investors or questionable financing to build billion-dollar resorts. By the 1980s, the old system was collapsing. The Las Vegas Strip wasn’t disappearing. It was becoming corporate America.

So, Did the Mob Build Las Vegas?

Not exactly.

That’s another appealing story that doesn’t survive close examination.

Las Vegas existed before organized crime arrived. Nevada legalized wide-open gambling in 1931. Local casino operators, legitimate investors, hotel owners, entertainers, construction companies, government officials and thousands of casino workers all contributed to the city’s growth.

But it would be equally misleading to pretend organized crime played only a minor role. Mob-connected money helped finance casinos. Organized-crime figures held hidden interests in important properties. Casino executives with syndicate connections operated major resorts. Millions of dollars were skimmed.

And for several decades, some of America’s most powerful criminal organizations had a financial interest in what happened in Las Vegas.

The real history is more interesting than the legend because Las Vegas wasn’t simply “run by the Mob.” It was a legitimate gambling industry operating alongside, and sometimes intertwined with, an enormous underground economy.

Untangling the two is where the story really begins.