Gambling in American History

Nevada Gambling

Gambling activities persisted in early Nevada, although casinos were made illegal for a brief time after statehood was granted.  By the turn of the twentieth century, however, the Progressive movement was gaining strength across the United States and in the Silver State. In concert with temperance organizations, civil leaders attacked the local sin industries. They approached the state legislature and gained passage of a bill that closed the casinos on 30 September 1910.
By 1911, the legislature had second (and third) thoughts. Certain card games were legalized, only to be made illegal again in 1913. In 1915 limited gaming was permitted again. Enforcement of the gaming limits was sporadic at the best and nonexistent as a rule. In lieu of fees when gaming was legal, operators now paid bribes to local officials who pretended that gaming did not take place.
A move to legalize gambling was revived in 1931 when Nevada assemblyman Phil Tobin of Humboldt County introduced the legislative measure. Although opposition was voiced by religious groups, Tobin’s bill passed the assembly on a 24 to 11 vote and the state senate by 13 to 3. On 19 March 1931, Gov. Fred Balzar signed the measure to legalize casino gambling. A second law passed later in 1931 permitted local governments to regulate gambling and fixed fees for the gaming statewide. The fees were shared, with 75 percent going to local governments and 25% to the state. Licenses were granted by county commissions, and all regulations were enforced by the sheriff.
State regulation began in the 1940s as larger gambling operations were established, and casino gambling began to emerge as the state’s dominant industry. In 1950 the state weathered the first concerted national attack on its casino industry. The U.S. Senate Special Committee to Investigate Organized Crime in Interstate Commerce (the Kefauver Committee) targeted Nevada. The state resisted the attack through the efforts of its congressional delegation and also by means of the adoption of new rules for licensing and controlling casinos. In 1955 a full-time Gambling Control Board was established. In 1959, the state responded to continuing attacks that now came from the McClelland Committee, which included Sen. John F. Kennedy (D-MA) and had his brother, Robert, as its special counsel, by adding the Nevada Gaming Commission to strengthen its regulatory framework. During the 1960s more federal attacks ensued, and governors Grant Sawyer and Paul Laxalt coordinated the state’s response by inviting Howard Hughes to the state in 1966 to become a major player by buying out casinos tied to Mob interests.
In 1969 the state authorized publicly traded companies to own casinos, hence welcoming a type of federal control over big operators – through the Securities and Exchange Commission. The state also strengthened its control over casino operators by banning licensees from having gambling operations in other jurisdictions. This ruling was later modified in 1977 to allow licensees to go into New Jersey. This change was effectuated after Nevada reviewed New Jersey regulatory structures to assure that they would adequately oversee casino operations in such a way that no federal authorities would challenge their industry.
The Las Vegas casino interests had not taken a role in the New Jersey casino campaigns of 1974 and 1976 (when the vote was successful). The competition from the East blindsided Nevada. Coupled with a general national economic slump, in the early 1980s Nevada casinos had their only three-year period (since statistics were gathered) when gambling revenues fell in terms of constantvalue dollars. Nonetheless, the casinos stood by silently during the 1984 California lottery campaign. Nevada was very much aware of the possibilities of harm that could be done to its industry by Indian gambling, however, seeing the harm in terms of unregulated gambling that would draw organized crime and consequently discredit all casinos. Native Americans saw it differently. They saw Nevada as only fearing the competition they would give. In any event, the Nevada congressional delegation came forth with the proposals for a national law to regulate the Native American gambling after the U. S.  Supreme Court in the Cabazon case of 1987 said states could not regulate the gambling without an act of Congress. After the Indian Gaming Regulatory Act was passed, Nevada interests provided research help for state attorneys general throughout the nation who stood in opposition to Native American gambling. In most cases the Nevada interests and state attorneys general lost their battles.
During the 1990s, Nevada interests, with the support of Nevada political leaders, continued to fight for the gambling industry. Nevada participated in a congressional initiative to limit sports betting to Nevada and three other states where it already existed – although not in the open way it exists in Nevada. In 1993, the Nevada legislature abolished its rule precluding Nevada licensees from participating in gambling elsewhere. Other states had succumbed to the inevitability of Native American casinos, and eventually nine additional states permitted commercialized casino gambling. The Nevada casino industry was quite eager to be able to cash in on opportunities to manage Native American casinos or to have their own gambling halls in other states.
A new threat to the gambling industry came in 1994 when Pres. Bill Clinton proposed a 4 percent surtax on all gambling winnings in the United States. As lotteries and Native casinos were exempted, it was clear that the impact of the tax would fall upon the casinos of Nevada. The state (which cast majorities for Clinton in both 1992 and 1996) rallied together in opposition. While the congressional delegation did its job in Washington the casinos formed a new national lobbying bloc – the American Gaming Association (AGA). The AGA read Clinton’s message well, and campaign funds started to flow. Ironically, the Clinton election team was probably the biggest beneficiary of this money spigot. In 1996 the AGA and Nevada forces sought to prohibit the creation of the National Gambling Impact Study Commission. Failing in this endeavor, they succeeded in limiting the powers of the commission, and they gained control over several of its appointments. The venom of the commission – which was led by a decidedly antigambling chairwoman – was deflected away from commercial casinos and onto targets such as Native American casinos, lotteries, and Internet gambling. Betting on college games also attracted commission opposition, leading to proposed legislation to effectuate a ban. Again the Nevada political forces closed ranks in defense of the status quo monopoly the state’s gaming industry has over this form of gambling.
The 1998 approval of Proposition 5 in California presented the greatest threat to Nevada casinos since the Kefauver hearings of the 1950s. After it was set aside by California courts, Nevada interests were content to accept the compromises of the new Proposition 1A. It is possible that Proposition 1A will now allow the casinos of Nevada and the Nevada political establishment to build important bridges to California and its power structure (See Native American Gaming: Contemporary).