Gambling in American History

In November 1996, Michigan voters passed Proposition E, which allows Detroit to develop three unlimited stakes, Las Vegas–type casinos. Although the victory for casino proponents was relatively narrow (51.8 % to 48.2 %), it was unexpected in most quarters. In the 1996 elections, voters in Ohio and Arkansas turned down casino proposals by wide margins. Detroit voters had rejected casinos in advisory votes in 1976, 1981, 1988, and 1993 before voting yes in advisory votes in 1994 and 1995. The Michigan vote was the first statewide victory for unlimited casino gambling since the 1976 New Jersey vote.  Detroit has become the largest city in the Western Hemisphere with casinos located within its boundaries.
Michigan passed supplemental legislation to enable the licensing process to begin. The process involved recommendation from the city government and final action by a new state casino gaming commission. Proposition E actually designated two of the companies that would receive licensing. It was stipulated that preference had to be given for two licenses to organizations that had sponsored the successful Detroit advisory vote in favor of casinos in 1995. Those two companies were Greektown and Atwater groups. The Greektown Group of investors took on as partners a Chippewa Native American tribe that runs several casinos in Michigan’s Upper Peninsula. The Atwater Group teamed with the Circus Circus (now Mandalay Resort) Company for its proposals. These two winning proposals joined a successful proposal for the MGM Grand Company of Las Vegas. As a part of the licensing, the casinos won the right to have temporary facilities. The first temporary facility was opened by the MGM in the summer of 1999, and the other two followed in the fall.
In addition to many fees, the casinos must pay a tax of 18 percent of their gambling winnings. Of this amount, 55 percent goes to the city of Detroit and 45 percent goes to the state government’s public education fund. Originally it was estimated that the casinos would have revenues approaching $1.5 billion a year. In the first year, two casinos had more than $700 million each.
The voters in Michigan were not strangers to casino gambling and other forms of gambling. In fact, the election victory on Proposition E could be credited to the existence of the Windsor, Ontario, casinos. The first Windsor casino had opened in 1994. A second riverboat casino opened two years later. Approximately 80 percent of the business in the casino came from the United States, and most of those gamblers were from the Detroit region. It was claimed that the Detroit economy was losing around $1 million dollars a day as Detroiters crossed over the Ambassador Bridge and through the Detroit-Windsor tunnel.
The state had its own casinos, which were operated by Native American tribes under agreements made in 1993. A state lottery was established in 1972 after voters removed a ban on this form of gambling. The removal of the ban also enabled the establishment of casino gambling for the Native Americans, as did a 1975 law that authorized charitable gambling, including charitable casino gambling. Pari-mutuel horse-race betting began in the state in 1933 in an effort to garner public revenues amid the Depression economy.
The billion-dollar Native American casino industry of Michigan is anchored by the Soaring Eagle Casino in Mt.  Pleasant on the lands of the Saginaw-Chippewa tribe. The casino is the second largest Native casino in the country, having a gaming floor of 150,000 square feet, over a hundred tables, and 4,000 slot machines. Other large casinos are located in Pshawbetown near Traverse City, in Sault St. Marie, and in Baraga near Marquette. Fourteen other casinos are scattered across the state in Brimley, Watersmeet, Wilson, Petoskey, Athens, Manistique, Manistee, St. Ignace, and New Buffalo. The Native casinos had agreed to pay the state 10 percent of their machine revenues (with 2% going to local governments) as long as there was no other machine gaming in the state. After Detroit casinos were licensed, the state dropped its 8 percent share of the tax, but the tribes agreed to continue the 2 percent tax to the local governments. <

 With a population approaching 100 million and an active tourist industry, Mexico could expect to be a lucrative market for casino gambling. Actually, for many decades in the early twentieth century, it was. Casinos performed well in cities bordering the United States, drawing in gamers from their northern neighbor. The casinos were associated with corruption, however, and following the election of reform president Lazaro Cardenas, they were closed down in 1938.  The casinos of Tijuana and Mexicali had been very popular with Americans, and hopes have remained over the past six decades that they could reopen.
Indeed, discussions for reopening casinos have had the appearance of being quite serious. In the 1990s the discussions had an increasing measure of urgency, especially as economic troubles in Mexico increased. In 1996 the final draft of legislation for legalization was prepared for the National Congress. The plan called for ten casinos, one each to be located in a tourist city or border town. Sites selected included Tijuana, Juarez, Mexico City, Acapulco, Cancun, Cabo San Lucas, Cozemal, Monterrey, Puerto Vallarta, and Reynosa. Many U.S. companies rushed their representatives to Mexico City to offer governmental officials their proposals. The Mexican Tourism Agency studied the issue of casino gambling and concluded that the gambling would benefit the tourist economy.
As with every proposal before, however, just when action was about to be taken, forces of resistance intervened. Governmental corruption again was exposed, as was an increasing drug trade and involvement of organized crime operatives close to the government. Fears were expressed by leading politicians that casinos could be dangerous and that they could aid drug dealers with money-laundering services. In 1997 the proposal was set aside. The talk continues.
Mexico, while reluctant to embrace casinos, has embraced many other forms of gambling. The lottery has been active all throughout the nation’s history, even in its colonial era. There are dog races and horse races and sports betting opportunities on international soccer as well as on all major U.S. sports events, both professional and collegiate. <

In January 1955, Democratic senator John McClellan of Arkansas became chairman of the Senate’s Permanent Subcommittee on Investigations. Previously Sen. Joseph McCarthy (R-Wisconsin) had used the chair position to conduct his discredited investigations into the Communist influences in the national government. McClellan turned the committee toward other topics. Initially he looked at corruption in government contracts and trade with Communist China. He selected a young attorney named Robert Francis Kennedy to be the chief counsel and chief investigator for the committee. Kennedy sensed a presence of the International Brotherhood of Teamsters (the Teamsters’ union) in certain contract abuses, and he began to probe Teamsters’ activity. During 1956, he stumbled upon evidence of corruption by Teamsters’ president David Beck. Kennedy was influential in having McClellan’s committee transformed into a Select Committee on Labor Corruption. The eight-member bipartisan committee met for two years, during which Robert Kennedy’s efforts were directed first at Beck, who was forced to resign his union position after a conviction for stealing from the union, and then at Beck’s successor, James Riddle Hoffa. The investigations of Hoffa revealed a widespread involvement of Teamsters’ union funding of casinos in Nevada, as well as other connections of union officials and organized crime figures; in turn, union activity was linked to illegal gambling. The committee reiterated the conclusions of the Kefauver Committee that there was indeed an organized crime association known as the Mafia and that its major illegal activity concerned gambling.
Following the 1960 elections, McClellan was appointed to be the chair of a newly organized crime committee while Kennedy became the attorney general in the presidential administration of his brother John F. Kennedy. The crime committee met for three years.
Kennedy created a crime task force within his office and pursued gamblers and their activity whether it was legal or illegal. He also pursued Jimmy Hoffa, seeking to expose him as a thief and gangster within the union. Kennedy and McClellan often worked in tandem, especially in the legislative field. Their joint efforts led to the passage of two major pieces of legislation in 1961 that grew out of the Kefauver Committee report. One law banned the use of interstate commerce for any illegal gambling equipment – hence expanding the thrust of the Johnson Act. The other prohibited the use of any interstate communication devices (wire services) in order to transmit information used for wagering activities. <

Gambling (European-style) came to Massachusetts with the Pilgrims. In fact, the gambling activity must have been pervasive, because the leaders of the colony saw fit to ban all gambling in 1621 in the Plymouth settlement’s second year. Similar prohibitions were instituted by the Puritan groups that settled the Massachusetts Bay Colony. The political leaders knew at the beginning what they surely know now, that residents of Massachusetts love to gamble. The state lottery begun in 1972 now has sales of more than $3 billion a year, trailing only New York in sales. The state has instant games, lotto, and daily numbers games and also sells tickets in the multistate Big Game lotto. Massachusetts introduced the first instant lottery game in the United States in 1974. Massachusetts has also had a strong charitable gambling establishment, as well as pari-mutuel gambling for five dog and horse tracks.
Massachusetts has attracted much interest from casino gambling entrepreneurs.  In 1978 a major campaign was initiated to win permission to place commercial casinos in the towns of Hull and Adams. The MGM Grand casino company was a major promoter of the idea. Local residents voted in favor of having casinos; however, efforts in the legislature that lasted more than three years only resulted in rejection. The state has one Native American tribe, the Wamponoags. The tribe has a small reservation on the exclusive resort island of Martha’s Vineyard. Residents of the island have adamantly opposed the notion of having a casino near their expensive homes. The tribe agreed and made a deal to purchase land and create a new portion of their reservation near New Bedford, a declining city on the main coast. The governor negotiated the first stages of a compact for a casino. The proposed casino has confronted a series of roadblocks, however, and has not been opened as of early 2001. In the meantime casino ships began to operate three miles off Gloucester in the international waters of the Atlantic Ocean. <

In 1973 Maryland began a state lottery. The state’s gambling products include instant games, a lotto, a daily numbers game, and keno. It also participates in the six-state Big Game lotto. In 1974 Maryland authorized an “interest-only” lottery, based upon Great Britain’s premium bonds. In Great Britain a player purchases a bond and remains a player in a monthly lottery as long as he or she holds the bond. The bonds draw no interest. Instead, funds equal to part of the interest are put into a prize pool. At any time the player may redeem the bond for the full price paid for it. In other places, such as Cuba and the former Soviet Union, these are called “lottery savings bonds”. Many people buy such bonds for a couple when they are married or when a child is born. The former Soviet Union used these bonds in the 1920s, and Castro tried to institute this form of lottery in Cuba to replace the traditional lottery that had been operating before the revolution of 1959. After much planning, Maryland dropped its plans for the “interest-only” lottery, as the game could not promise the flows of revenue the state could gain from the other lottery games.
Maryland has had its share of active casino proponents, but their efforts have never gotten too far off the ground. Instead, nonprofit service clubs and organizations have won the right to have slot machine gaming at locations in counties that border the ocean. The state has also had an active horse racing industry for hundreds of years. There are six tracks as well as five offtrack betting facilities.
Since 1870, the Preakness, one leg of thoroughbred racing’s Triple Crown, has been run at the Pimlico track in Baltimore. Pimilico is located on the edge of Baltimore. The track was also the site of one of the most notable match races in U.S. history, when in 1938 Seabiscuit defeated War Admiral, a Triple Crown winner. <

Martinique is a Caribbean island that is governed as a department of France. It has a population of 350,000 on 425 square miles of land. It has two casinos, which are in the capital city of Fort de France: the 200-room Hotel Casino La Bateliere and the 300-room Meridien Martinique. <

Manitoba quickly jumped into the gambling business after the Penal Code was amended in 1969. The Manitoba Centennial Lottery Act was passed in January 1970. In 1971 the province included large jackpot sweepstakes games among their product mix, and the tickets were sold locally as well as in other provinces. Soon the other provinces adjusted to meet the competition, and Manitoba decided it was better to work in tandem with other jurisdictions as it helped form the Western Canadian Lottery Corporation in 1974. Manitoba maintained a provincial lottery organization, however, that sold tickets to benefit charities and also licensed the selling of pull-tab tickets (called Nevada tickets) and the conducting of bingo events to benefit the charities. Casino events were also licensed, but soon the government found that they generated a wide range of control problems. There were three violent incidents concerning casino suppliers in the early 1980s. Accordingly, the Manitoba Lottery Foundation was created in 1984 in order to centralize all the charity casinos into one operating organization.  For most of the year the casino activity was conducted out of the Convention Centre in Winnipeg; in the summer, casinos were operated on the road by the government. Only table games were permitted, although the casinos had a slot machine with two dice faces on the reels – it was used to simulate craps games.
The government brought all the charities together and formed umbrella organizations that would distribute the profits to many good causes in the community. Among the recipients of the lottery and casino revenues was the municipally owned Winnipeg Blue Bombers football team.
The Casino at the Centre was closed in 1988, as the government decided to open a year-round casino. The Crystal Casino in Winnipeg was created as the first permanent government-owned casino in the Western Hemisphere. The Manitoba Lottery Foundation leased the seventh floor of the historic Fort Garry Hotel, a landmark railroad hotel built in 1913. The casino opened in 1990. In 1993 the foundation built two new gaming centers that served to replace bingo halls that they had been operating. The McPhillips Street Station and the Club Regent offered bingo and also video gaming. Later the casinos added table games, and on 22 May 1997, when the government closed its Crystal Casino, the two facilities absorbed all casino operations.
The government gaming agency also played a role in the establishment of First Nations gaming. Agreements have been undertaken between the government and twenty-six reservations for the conduct of bingo and casino-type games on their lands. The province also began a program for video lottery terminal gaming in 1991. By the end of the decade there were 4,500 machines operating in 580 commercial locations in the province. Additionally, the province authorizes all forms of pari-mutuel wagering both on and off track. <

In 1980 Congress passed the Maine Indian Claims Act, granting a financial settlement of $81.5 million to the Passamaquoddy, Penobscot, and Maliseet tribes. Part of the funds were used to purchase 300,000 acres of land that was put into trust for the tribes. The act specifically gave the state of Maine jurisdiction over civil and criminal law matters on any lands put into trust for the tribes as a result of such purchases from the settlement. After Congress passed the Indian Gaming Regulatory Act of 1988, however, the tribes sought negotiations so that they could have gambling that would be controlled by the federal government or by the provisions of a compact. The Penobscots held bingo games that violated state rules. Subsequent court actions upheld the state’s power to control the gaming. Nonetheless, the state has tolerated bingo games that may extend beyond limits approved for other charity games in Maine.
Since 1973 the state has offered several lottery games, including instant tickets, lotto, and a daily numbers game. In the 1980s, Maine was a member of the Tri-State Lotto game with New Hampshire and Vermont. There are also charitable raffles and bingo, and harness racing is conducted on three tracks. <

The fate of the gambling operations in Macao passed into the hands of the officials of the People’s Republic of China when the sovereignty of the Portuguese enclave in the South China Sea was transferred to the Chinese in 1999. Macao is a small peninsula and two tiny islands totaling only six square miles of land lying forty miles from Hong Kong by water.
As an enclave beyond the reach of the Chinese government, Macao became the site of many so-called sin activities. Gambling was illegal but operated openly until 1934, when the Tai King Company was given a concession to develop casinos and hotels. The company was led by Fu Tak Yam until his death in 1962. After that, operations were taken over by Stanley Ho, a Macao native. Ironically, Ho went on to purchase the largest casino in Portugal at Estorial.
There are now five large casino-hotel operations, as well as a floating casino docked in Macao. Additionally there are two machine-only casinos.  A greyhound racetrack has one of these casinos. The casinos offer Western games such as roulette, baccarat, and blackjack, as well as slot machines of every variety. They also offer a wide assortment of Asian games such as fan tan, pacapio, tai-sai, pai gow, and mah jongg. Macao has been called both “the Monte Carlo of the Orient” and “the Las Vegas of the Orient”. The Portuguese authorities over the enclave were glad to offer the sins of Macao to the Hong Kong community. Now that both entities are under the sovereignty of China, it remains to be seen how long the enclave will remain the regional “sin city”. <

Most lottery activity was banned by law before the advent of the Civil War. All but three states had constitutional or statutory prohibitions on the activity. In the 1860s the federal government began to consider legislation to keep lottery schemes from using the mail system (see Federal Lottery Laws). Amid these efforts to discourage lotteries, Louisiana lawmakers were persuaded in 1868 to charter a private company to run a lottery for twenty-five years. Other Southern states had also established lotteries as means of creating revenues during a period of governmental impoverishment brought on by the aftermath of war, defeat, and reconstruction. The Louisiana lottery was clearly the largest, and within ten years the other states ended their lottery experiments, leaving Louisiana’s lottery in a monopoly position in the entire country.
The twenty-five-year charter was won for an annual fee of $40,000 that was promised by the promoters – a New York syndicate including John Morris and John Morrisey as well as New Orleans front men. A nationwide promotion campaign popularized drawings, which were conducted with much fanfare by two retired Confederate generals. Tickets cost from two dollars to forty dollars. Ninety percent of the sales of tickets were to persons living outside of Louisiana, and they used the mails to purchase tickets. Monthly prizes were as high as $600,000. Annual profits for the lottery company reached as much as $13 million. When the lottery charter was about to end, Morris sought a renewal for a fee of $1 million a year.
Considerable opposition to the lottery arose from many sectors. The lottery’s operators were accused of corruption as well as extensive bribery. The federal government passed many acts seeking to stop the sale of tickets outside of Louisiana, but there was little effort to enforce the laws. An 1890 statute seemed to be more effective, and the promoters were cut off from the use of the mail. Efforts to win support for a renewal of the lottery were unsuccessful, and in 1893 the state joined all the others in the country and banned all lotteries. The syndicate that operated the lottery moved its operations to Honduras and shipped tickets into the United States through Florida. Congress plugged the loophole discovered in the law, however, and passed a very definitive prohibition against the importation and interstate transportation of lottery materials. The effective end of the Louisiana Lottery in 1895 marked the end of this form of gambling until New Hampshire began its state-run sweepstakes sixty-nine years later in 1964. <