Nevada Legalized Gambling That Never Went Away

At the roulette wheel of a Reno casino shortly after gambling was legalized in Nevada in March 1931.

When the Nevada Governor signed Assembly Bill 98 which legalized most forms of gambling—or gaming as they prefer to characterize it—on March 19, 1931 not much changed in an already pretty wide-open state.  But the measure was supposed to send a signal to visitors and tourists with spending money that the party was on and rescue a desperate, collapsed economy.  Together with another law making quickie divorces easily obtainable after establishing a short “residence” it was a huge success.  By the end of the decade Nevada cash registers were ringing loud.

To understand the unusual centrality of gambling to Nevada history and culture, we have to take a brief step back to look at its geography and climate.  The state occupies much of the Great Basin, essentially the floor of a pre-historic ocean that existed millions of years ago, sort of a giant bowl between the Rocky Mountains to the east and the Sierra Nevadas to the west.  I’m not sure where all of that water went except that it ain’t there now.  About all that’s left of that ocean is a puddle called the Great Salt Lake over in what is now Utah.  Today, and for thousands of years it has mostly been some of the driest and most inhospitable terrain in North America—blistering deserts and ranges of arid mountains.

It was sparsely populated in parts by only the poorest and most ragged native tribes who were pushed there by more aggressive warrior tribes surrounding them.  The land was too poor for agriculture and supported little or no large game leaving these wretched peoples to survive as lizard eating hunter-gathers who dwelt in hovels that were little more than piles of sticks.  And in fact much of the land was too hostile to support even these tribes.  Vast reaches were uninhabitable.

When the European stock peoples came, it was country that must be dangerously endured on the way to something better.  The wagon trains to California crossed it to their peril and many immigrants and their livestock perished on the way. 

When the Mormons came to the Valley of the Great Salt Lake and began to spread out from there, some of the heartiest of their pioneers staked out hardscrabble communities clustering around what little water could be found.  That included what Utah Philips later called the Old Mormon Muddy Mission in the Las Vegas Valley near the site of today’s downtown in 1855. Nevada became the vast west of Utah Territory.

The discovery of the massive and rich silver Comstock Lode under the eastern slope of Mount Davidson, in the Virginia Range in 1859 and set off the greatest mining rush since California in 1849 changed everything. 

The U.S. Government had gone to virtual war with the Mormons in 1857-58 over polygamy and Brigham Young’s perceived defiance of Federal law.  Thousands of troops were dispatched and the Mormon Nauvoo Legion Militia revived.  Despite Mormon harassment and delaying tactics not actual battles were fought until Congress ordered the Buchanan administration to ease up and allow Young to remain as governor after swearing to uphold and obey the law.  But the Feds were in no mood to allow the Mormons to get their hands on what looked like the limitless wealth of the Comstock Lode and in 1860 carved Nevada Territory of the western half of Utah.

The onset of the Civil War in 1861 made Nevada strategically important to keeping California, where there was an active secessionist movement in the Union.  It was also on the route of the proposed transcontinental railroad and telegraph lines which would stitch the nation together.

Most Americans, if they are aware of this part of the story at all, learned about it from Mark Twain, a young Confederate deserter named Samuel L. Clemmons who accompanied his Republican older brother Orion, who had snagged a political appointment as Territorial Secretary.  Orion went to the capitol at Carson City while Sam tried his hand at prospecting and mining around Virginia City until he took up a career as newspaper man writing as Mark Twain. 

C Street in Virginia City, epicenter of the Comstock Lode.

In his first book Roughing It, Twain vigorously depicted the rough and tumble life of miners in the boom towns of Nevada and California which centered around saloons and all of their temptations including rot gut booze, rigged gambling wheels, shady faro dealers, and poker games played with drawn pistols on the table.  Fleecing the miners on payday leaving them broke and enthralled to the new silver kings became the Territory’s second major industry.

Republicans had an urgent need to speed the underpopulated Territory to statehood—they needed the three Electoral College votes for Abraham Lincoln who was up against a tough challenge from Democrat and former Army Commander George McClellan who was running on a peace platform.  On October 31, 1864 just days before the November election, Nevada achieved statehood.  But by the time the election was held Union battlefield victories had turned the tide of the War and much of the Army had been furloughed home to cast their votes.  Lincoln was re-elected easily without having to rely on Nevada.  But they couldn’t actually take back statehood.

After the war the construction boom around laying the track for the Union Pacific Railway which created the unusual Hell on W heels end of line camps and created new towns at division points.  Gamblers set up in tent saloons and fleeced gandy dancers as effectively as they had miners.  When passenger service to and from California was finally up and running, the more successful sharpies erected fine edifices for their saloon/casino/brothels which were very efficient in sucking money from the pockets of well-healed travelers on the briefest of layovers. 

Proprietors of such establishments became important local personages and were often elected mayors, justices of the peace, sheriffs and other county officials, and state legislators or could hand pick candidates for those offices.  Their political power in the state sometimes even rivaled that of the silver kings.

Through the rest of the 19th Century rode out the cycle of panics and booms to which the mining based economy was especially sensitive and endured many of their richest mining districts becoming played out.  By the mid 1870’s the eight original bonanzas of the Comstock Lode were basically exhausted.  Only small, deep mines in the area continued to produce and they were finished by the 1920’s leaving Virginia City, Gold Hill, and other settlements virtual ghost towns.  Smaller strikes of silver and even gold continued to be made around the state, but nothing on the scale of the glory days of the Comstock Lode.  The economy only diversified marginally.  Ranching was established to feed the California market via a spreading network of railroads, but much of the state was too arid to support grazing.  The Mormons were spreading from Utah again and establishing communities.  When the Latter Day Saints officially abolished polygamy, hold-out escaped to remote areas of Nevada.  Railway tourism was becoming a thing for the wealthy and Lake Tahoe on the California state line became a resort area centered in Reno.  Open gambling was one of the attractions which brought visitors to the state.

But slowly a movement began to build to end gaming in the state because of its predatory nature, fostering of corruption, association with other vice especially prostitution, encouragement of street crime and violence, and on general moral grounds.  An unusual and sometimes uncomfortable alliance began to build to end legal gambling.  As always in such reform efforts, at the center of things were the middle class women who yearned to erase the wild and wooly reputations of their communities and bring civilization and respectability.  Even without the power of the franchise in alliance with Protestant ministers they held a lot of sway over their sometimes reluctant husbands.  The growing Mormon minority was scorned by the same Protestant Evangelicals, but was on the same side against vice.

The Labor movement, especially the miners of the Western Federation of Miners, hated the gamblers and tinhorns who preyed on their members.  But the unionists were the arch enemy of the Silver kings and the gambling bosses, the biggest political powers in the state.  

Wyatt Earp's saloon in Tonopah, Nevada pictured in 1902 was just the kind of place Nevada reformers wanted to put out of the gambling business.  Earp, the man with the mustache was a "sporting man", professional gambler, and faro dealer.  His wife Josie is likely the woman riding side sadsle to the left.  d you left Wyatt's place with any jingle left in your jeans it was certainly not his fault.

Finally in 1909 the anti-gambling forces came together as part of the nation-wide Progressive Movement and were able to get sweeping legislation that outlawed almost all forms of gambling effective in 1910.  In the larger towns and cities, casinos and card rooms were shut down.  The popular early slot machines that were even then cropping up in saloons, cafes, hotel lobbies, and other locations were removed.  But in many counties and municipalities enforcement was nonexistent and gambling continued more or less openly.  And in those larger towns with reform administrations, things just moved behind closed doors.  Occasional raids would often embarrassingly sweep up local dignitaries and officials especially when their private clubs and fraternal lodges were targeted.  Routine corruption flourished with payoffs to cops, prosecutors, and judges.

Even though gambling continued, its reduced visibility and accessibility had an almost immediate impact on growing tourist industry.  The state legislature started carving out various exceptions to the total ban almost immediately.  According to the history of gaming on the Nevada Resorts Association web site:

…gaming laws relaxed, initially allowing specific social games and “nickel-in-the-slot machines” paying out drinks, cigars and sums of less than $2. By 1919, all cities and counties throughout the state were licensing card rooms that permitted social games such as bridge and whist, and during the 1920s, Reno became the state’s gambling capital, with both legal card rooms and clubs offering illegal games.

 

The Stock Market Crash of 1929 and the subsequent Great Depression hit Nevada exceptionally hard.  The mining industry, ailing for decades, was hit hard and unemployment soared.  Desperate for some stimulus to the economy, tax revenue for the busted state treasurer, and fearful that with thousands of construction workers soon to pour into the state for the Boulder Dam project on the Colorado River near Las Vegas that the Federal government would harshly crack down on illegal gambling, freshman assemblyman Phil Tobin, a Humboldt County rancher, introduced the legislation to legalize casino gambling and loosen the placement regulation on slot machines.   Public opinion was in support and pro-gambling forces swamped a rear-guard of moralists.  

On March 19, 1931 Republican Governor Fred Balzar, who was born in Virginia City during the Comstock Lode boom, signed Assembly Bill 98 into law and a companion law loosening divorce residency requirements and liberalizing the grounds for ending marriage.

Legalized gambling came with regulation intended to stamp out  the flagrant cheating in many illicit operations.   Most of the old time sporting men and gamblers who ran the old clip joints and who tried to make the transition of legit businessmen soon recognized that there was plenty of profit  in the house’s advantage if the tables and slots could be kept full.   The days of the blatantly rigged wheal, loaded dice, and marked cards if not completely banished were brought under relative control.

At the roulette wheel in a Reno casino shortly after gambling became legal.

Even in the midst of the Depression, the strategy exceeded everyone’s wildest expectations.  By mid-decade Reno was the bustling and gambling and divorce capital of America.  It was enshrined in popular culture by movies, radio shows, and magazine articles.  Meanwhile once sleepy Las Vegas began to prosper with its downtown Freemont Street casinos benefitting from both the Boulder Dam construction boom and the relatively short distance from Los Angeles.

In the early ‘40’s the first hotel-casinos, Rancho Vegas and New Frontier opened.  But in 1946 Los Angeles gangster Bugsy Siegel gained control of the Flamingo, the first really lavish hotel casino on the new Vegas Strip and began featuring big name entertainers in the hotel lounge.  Soon the Chicago outfit gained control of most of the strip and some of the old downtown casinos, muscling out the old time local gamblers.  Planted managers skimmed off at least 10% to the wise guys back east and legalized bookmaking operations set the lines for the illegal books in cities across the country.  When the Flamingo’s initial opening flopped threatening the substantial investment he had raised from New York crime kingpins Siegel was suspected of pocketing some of the Chicago share, he was famously rubbed out at his girlfriend’s house on June 20, 1947.  The hit may have been premature because the Flamingo was soon making money hand over fist and inspiring construction of ever larger and more elaborate hotels.

The Flamingo Hotel casino floor in the '60's.

Mob involvement in Nevada gambling continued well into the ‘70’s and ‘80’s but was slowly broken down by Federal investigations and Nevada Gambling Commission action.  Known gangsters were forced out and ties to supposedly legitimate operators were exposed.   

Since the 1990’s the old Strip casino hotels have been displaced by corporate owned and operated theme resorts, each more elaborate and outrageous than the last and featuring performances by superstars and elaborate shows like Cirque de Soleil and the Blue Man Group.  Even though gambling revenues drove the building spree, for a while the new corporate owners tried to market the resorts as family destinations.  Las Vegas regularly vied with Orlando Florida, Disney World, and other theme parks as the Number 1 tourist destination in the United States.

The strategy worked.  In the new century Las Vegas became the fastest growing metropolitan area in the United States with vast new subdivisions springing up in the desert.  But soon almost every state tried to cash in on legalized gambling in one way or another.  Ordinary Americans did not have to fly to Las Vegas or Reno to lose their money.  Business began falling off.  Then came the great Economic Collapse of 2008.  No metropolitan area was hit harder than Las Vegas by the mortgage crisis.  Most of the mortgages in all of those new subdivisions were risky and had been sold to bundlers.  Foreclosure rates soared and whole neighborhoods of almost brand new houses are still virtual ghost towns.  Meanwhile some of the new hotel resorts went bankrupt and closed.  Other went into receivership.

To recover, Las Vegas has abandoned its push to be a family destination and is now promoting sin with its “What Happens in Vegas, Stays in Vegas” promotions.  Visiting is back up, although unemployment is still high, wages have stagnated; tens of thousands of housing units still sit vacant.

And one of these days maybe the Feds or somebody will launch an investigation into whether the new corporate masters are all that much different at heart from the gangsters and old time oily faro dealers in brocaded vests.