Gambling in American History

Utah is one of two states to enter the twenty-first century with no legally authorized form of gambling (the other is Hawaii). In 1992, the voters defeated an effort to establish pari-mutuel betting on horse racing. Horse races are conducted at fairs, but no betting is permitted. Throughout the state there are small charity games, but these are operating contrary to the law. Utah residents are not totally adverse to casino betting, however, as Nevada casino entrepreneurs have set up facilities near state lines in order to capture their patronage. Several casinos in Mesquite, Nevada (in Clark County thirty miles from St. George), and Wendover, Nevada (in White Pine County 100 miles from Salt Lake City), market their products to Utah gamblers. Periodically, supporters of casino gambling in Utah try to start campaigns for casinos by pointing out how gambling money is leaving the state. The political leaders of what is probably the most church-oriented state in the union do not, however, give much attention to the advocates of any form of gambling.

Uruguay is a small country with an area of only 63,000 square miles (the size of Missouri) and a population of about 3,200,000. It is between the two largest countries of South America: Argentina and Brazil. These countries, with their restrictions on casino gambling (nearby Buenos Aires does not have casino gambling), provide tourist market customers, especially for Uruguayan facilities along the Atlantic Coast beaches. Uruguay has a free economy, and the flow of foreign currency in and out of the country is unrestricted. There is no discrimination between nationals and foreigners, and for that reason there has been an inflow of casino investment dollars.
Private casinos existed in Uruguay more than 100 years ago. The first gaming law passed in 1856. Legend has it that French immigrants started casinos to conduct their tradition roulette games.  The government took over the casinos early in the twentieth century, and up until the 1990s, governments owned all casinos. Two municipally owned casinos were in the capital city of Montevideo, and the national government owned a series of small facilities along the ocean and in interior cities bordering Brazil and Argentina. Then the government authorized the building of a private five-star hotel with a casino in Punta del Este. The facility, which opened on 1 January 1997, is operated by Conrad International.
In Montevideo, the earnings of the two municipal casinos – the Parque Hotel and Hotel Casino Carrasco – go to the city government. In the rest of the country, Direccion Nacional de Casinos del Estado (an entity of the central government) owns and operates the casinos. Forty percent of its earnings go to the municipality in which the casino is established, 20 percent to the Ministry of Tourism, 10 percent to the National Food Institute, and the last 10 percent to a special fund for the preservation of the casinos. In 1995 a national casino was opened in the Hotel Victoria Plaza in Montevideo.
Uruguay also has facilities for horse racing and bingo games, and the government also operates a lottery.

Two up is a popular game in Australia. It was played briefly at the Main Street Station casino in downtown Las Vegas during the 1990s. It is quite a simple game that involves tossing two coins in the air and watching them make their random falls to the floor. Its social setting provides the action in the game. A group of players surrounds the one who is selected to toss the coins using a special stick. Players can bet that two heads or two tails will come up. If the two coins are different – odds – there is no decision, and they are tossed again. When two heads or two tails are the correct bet, the payoff is even money. If five odds come up in a row, however, all players lose. All persons in the circle around the coin tosser may make bets. The players may bet that heads or tails will come up three times in a row, and if they do, players are paid off at 7.5 to 1 for a 6.25% house advantage (odds are ignored in the sequence).

Donald John Trump emerged as the dominant personality of Atlantic City in the 1980s as he developed three casinos in the East Coast gambling center. He was not yet in his forties when he won a license in 1982, along with his younger brother, Robert, to build and operate the Trump Plaza. Soon he negotiated a merger for the ownership of the property with Holiday Inn. The finished property opened in 1984 as the Harrah’s at Trump Plaza. In 1986, Trump bought out his Holiday Inn partners and also purchased a casino, which was being constructed by the Hilton Corporation, after Hilton was denied a license. The project became known as the Trump Castle. In 1988 he acquired rights to the Taj Mahal casino in a financial struggle with Resorts International and directed the completion of Atlantic City’s largest property, which at the time featured the largest casino floor in the world. By the time the Taj Mahal opened in 1989, it carried a price tag of $1 billion, the highest price for any casino project in the world up to the time. High prices come at a cost, and in the early 1990s, the property went through a bankruptcy action in order to survive. But as the economy began to improve in the mid-1990s, Trump’s properties made money again, or at least could satisfy their creditors. That is, he did well enough to be able to sell equity shares in his properties and keep everything afloat. Out of the debts he arose again as the champion of the Boardwalk. He also reached out to the Midwest by opening a large riverboat in Indiana on the shores of Lake Michigan. The self-proclaimed master of “the deal” even allowed his sights to scan the political landscape, as he publicly pondered a run for the presidency in year 2000 on the Reform party ticket.
Donald Trump was raised in wealth. His father, Fred Trump, was a builder who parlayed construction of individual housing beginning in the 1920s into development of tracts and building of large apartment complexes, often with government subsidies. His father learned all about political connections and how they were necessary in his line of work. Donald was born in 1946 in the Jamaica Estates in Queens, a borough of New York City. His family lived in a twenty-three-room mansion. As a youth, the younger Trump gained a taste for fancy cars, tailored clothes, and fancy women – what he would consider to be the most important things in life—possessions. He also showed a proclivity to follow in his father’s footsteps as a builder.
He was sent to the New York Military Academy in Cornwell on the Hudson. He was a good student, and he demonstrated leadership qualities. After military academy Trump attended Fordham University and the Wharton School at the University of Pennsylvania. He graduated with a B.A. in economics in 1968. Trump expressed disappointment that the real estate courses at Penn emphasized single-family dwellings because he desired to build big things. Soon he was working with his father building bigger things. And soon after that, he left to go on his own because his father did not want to build big enough things. His father was somewhat content to be rich building in the neighborhoods, but Donald Trump wanted Manhattan.
Trump saw his first big opportunity come when the Penn Central Railroad declared bankruptcy. He took options on some of their land alongside the Hudson River, and he also took an option on the fifty-nine-year-old Commodore Hotel. He persuaded the city to purchase the riverfront land for a major convention center. Trump cut a deal with the Hyatt Corporation to construct the Grand Hyatt on the Commodore location; the new hotel, with 1,400 rooms, was finished in 1990. Almost simultaneously, Trump started other hotel projects and also a high-rise apartment building called Trump Towers. He visited Atlantic City often and pondered casinos. He never gave them serious thought, however, until he saw reports saying how Hilton’s two Las Vegas hotel casinos made almost half the income of all Hilton properties in the United States. Suddenly he realized that even a mediocre hotel with a casino could be much more profitable that the most luxurious hotels of the world.
Trump took a long look at Atlantic City before jumping into that market.  He wanted land near the center of the Boardwalk area. In 1980, some land investors came to him with a plan by which he could gain control over what he considered the most prime land in the city. In his book The Art of the Deal, Trump describes the intricacies of how to put many separately owned parcels of land together (Trump and Schwartz 1987). Every offer he made for a purchase was contingent upon all parcels being purchased. He also determined that he would not start to build a casino until he was fully licensed. In 1982 he and his younger brother, Robert, won casino licenses. After he began to construct his casino, he went into a partnership with Holiday Inn. When the casino hotel was finished in 1984, it was called Harrah’s at Trump Plaza. He bought out his partner in March 1986 and installed his brother as its manager. Later Steve Hyde took over control of the casino aspects of the operation. The property became the Trump Plaza. By then, Trump had taken over the Hilton’s 614-room hotel casino complex in a deal that was necessitated by the fact that the New Jersey gambling authorities had denied Hilton a license in 1985.
When the complicated deal was completed, Trump chose his wife, Ivana, to be the property manager of the new Trump Castle. Ivana had absolutely no experience in gaming – for a fact, neither did Trump. She saw the Castle as a place of glamour that could attract high rollers, whereas Hilton had intended to have a slot-intensive facility that would cater to the masses. The Plaza was a place for high rollers. Rather than working with a strategy that tied the two properties together, Trump encouraged Hyde and Ivana to operate as competitors. Soon internal corporate battles turned vicious. Also, Trump had found a girlfriend named Marla Maples. In order to conceal his affair with Maples, Trump allied himself with Hyde in the battle between Hyde and Ivana. His tryst flowered in the Plaza. Finally, Trump felt it was necessary to remove Ivana from the Castle and get her out of town. He publicly humiliated her as he moved her into management of one of his New York City properties. An inevitable divorce was followed by a short marriage to Marla Maples.
The next casino opportunity came for Trump when Resorts International president James Crosby died on 10 April 1986 at the premature age of fifty-eight. In 1984 he had revealed plans for the largest casino attached to a hotel in the United States. The Taj Mahal was to have over 120,000 feet of gambling space and over 1,000 rooms – the largest number in Atlantic City. Resorts won all the approvals for construction, and the process of building began. The death of Crosby plunged Resorts into a fiscal crisis, however, and Trump made a move to buy out the company and hence acquire the rights to the “largest casino in America”. As the New Jersey law provided that a casino owner could have only three properties, Trump indicated that he would close the Resorts Casino as soon as the Taj Mahal opened. Trump did win a controlling position in Resorts with his stock purchases. He found, however, that he lacked the capital to finish the Taj Mahal. Television entertainer Merv Griffin, in a sense, bailed Trump out by purchasing all Resorts property except the Taj Mahal from Trump in 1988. In 1989, the project was completed. Trump, however, did not have the funds to properly open the facility. Legal troubles flowing from his divorce further complicated his already complex financial affairs. The property was also beset with a tragedy, as Steve Hyde, who was to become its manager, and two other top executives were killed in a helicopter accident on 10 October 1989. Only recourse to bankruptcy proceedings in 1992 and transfers of equity in the property to bond holders and other creditors saved the property.
In 1995, Trump completed an initial public offering on the New York Stock Exchange to sell more than $300 million of common stock and senior secured notes backed by his casino revenue flow. That same year he was named to be a member of the World Gaming Congress Hall of Fame. When his rival, Stephen Wynn, heard this, he asked the congress to remove his name from the Hall of Fame. A rivalry persists, but Trump is the one who can say he “turned things around.” Showing that he has something like the proverbial nine lives of a cat, Trump has survived to go into riverboat gambling (actually lakeside) and set his visions on a run for political office. He remains a man in search of a big deal, wherever that deal might be found.

Trente et quarante has been a very popular game in Continental European casinos, especially in France, where the game was developed. It is a simple luck game that gives the player a very good expected return of more than 98 percent. All the bets are even-money bets. The dealer uses a six-deck shoe. Cards are given their number value; aces count as one, and face cards count as ten. The dealer deals out two rows of cards. The first row is called noir (black); the second row is called rouge (red). Cards are dealt until each row has a collective card value between 31 and 40. For instance, the dealer deals a 6 of hearts, 10, queen, 3, and 8 for a total of 37 for the first (noir) row. Then he or she deals a 9, jack, ace, five, and seven for a total of 32 on the second (rouge) row. The row with the lower number (closest to 31) wins. In this example, the rouge row wins. Players betting on rouge win even money; for example. $100 on a $100 bet. The players may also make an even-money bet on whether or not the first card dealt (the 6 of hearts) has the same color as the winning line (rouge). As the heart is red, and the winning line is red, those betting “color” (yes) win. Those betting “inverse” (no) lose that bet. If the two lines tie, there is no bet, unless there is a tie on the number 31. Then the house takes half of all bets, giving the house a small edge of about 1.1%.
A side bet of 1% of the original stake (ergo, $1) may be made to insure that the 31 tie situation does not arise. If this insurance bet is placed and there is a 31 tie, the player does not lose half of his or her bet and keeps his or her insurance bet. If there is no 31 tie, the player loses the insurance bet, but the other bets are paid as if there were no insurance side bet. The insurance bet reduces the house edge to 0.9%. (If the casino requires an insurance bet in excess of 1 percent, it increases its edge, and players are wise to avoid the bet). There is a 2.19% chance that there will be a 31 tie.
Being a simple game with easily tracked results, trente et quarante attracts system bettors. The low house edge also makes the game very desirable for high rollers. It is also a fast game, making the table one of the most exciting places in the staid European casino halls.

The Travel Act of 1961 was designed to target members of organized crime. It was part of Attorney General Robert F. Kennedy’s crime package of legislation. The law was written in very general terms and could be applied to myriad situations involving individuals or criminal groups. A person could be punished with a fine of $10,000 or a prison sentence of five years for traveling “in interstate commerce” or using any facility of interstate commerce (including the mail) with an intent to commit a “crime of violence” or to “otherwise promote, manage, establish”, or carry out any unlawful activity”. “Any unlawful activity” included gambling.
In the broad sweep of the language in the act, it could apply to a wide variety of methods of “transportation”, possibly even the Internet and credit card machines. Courts have even held that intrastate mails are covered by the act, as they are part of an interstate mail system.

Alvin Clarence Thomas was one of the great gambling hustlers of the modern era. He was born in the Ozarks near Monnet, Missouri, on 30 November 1892. There are several different stories about why he was called “Titantic”. Some refer to the notion that he was unsinkable, unlike the ship. Others suggest that when he won a lot of money, he was on the top of the world, but that he would often sink rapidly if he continued to play. For many years he was “Titanic Thomas”, but once a newspaper mistakenly called him “Titanic Thompson”, and he did not bother to make a correction, perhaps liking the sound of the name better. After all, he was not fond of being called Alvin Clarence either – why not change it all. Titanic was renowned for the proposition bet. He loved all games, and he loved to participate in physical games as well as to turn cards or roll dice. As a teenager, he trained his dog to dive into a fifteen-foot-deep pond to retrieve rocks he threw. One day he “chanced” upon a fisherman who had a modern rod and reel that the teenager coveted. He engaged in conversation with the fisherman, who said he sure liked the dog. Thompson made a wager – “I’ll bet my dog against your rod and reel that my dog can fetch this small pebble from the bottom of the pool if I throw it in”. The bet was made, and to ensure that all was on the up and up, Titanic marked the pebble with an X. He threw it in, the dog jumped after it, dived to the bottom of the pool, and brought up a pebble in his mouth. The pebble was marked with an X. Thompson won his first proposition. He neglected to tell the fisherman that he had spent the previous day marking pebbles with X’s and lining the pool with them.
His talents as an athlete were renowned. Al Capone once wagered that Thompson could not throw an orange over a five-story building. Titanic extracted a good odds advantage and then indicated that he needed a harder orange. He returned from a fruit stand and threw the “orange” over the building. In fact, with sleight of hand he had changed the orange for a harder and smaller lemon. Capone just laughed and paid him off, not knowing he had been tricked.
Titanic Thompson was an accomplished golf player, and he hustled millions of dollars on various wagers on the golf courses. He often won money from professional players from whom he would negotiate a handicap advantage – although he was capable of winning straight up. He was very adept at determining the changing odds as a poker game progressed. Had blackjack been popular, he would have been able to execute the card-counting strategies of Edward Thorpe with the best of them. Thompson could also work magic with his hands, dealing any card from the bottom or middle of a deck of cards. He could substitute crooked dice into a craps game. With his crowd and such advantage he could achieve what was always considered “fair game”. The loser had only two options, pay up and play again, or pay up and not play again.
Titantic Thompson did not have a formal education, and he could not read or write for his entire life. But he could count, he could figure out numbers quickly in his head, and he could memorize words. He achieved great wealth during the course of his hustling days, and he used all the trappings of wealth in his games. He had a fine home in Beverly Hills, he drove the best cars, and he wore elaborate clothes. He also had beautiful wives – five of them at different times.
Thompson played with the most renowned gamblers of his time, from Al Capone to Johnny Moss. He also played with Arthur Rothstein. In 1928 he was in Rothstein’s last card game. Rothstein, like other gamblers, had his favorite games, but there were also games where he was a sucker. In poker, Rothstein was a sucker. Leading players from all over the country descended upon his New York City apartment when he put out the word that he wanted to play. He liked games with no limit, and he had a reputation of paying off.  In this game, he lost hundreds of thousands of dollars to Thompson and others, and he gave his word that he would make his payoff later. He word was accepted, but he welshed on his promise. After several weeks passed, and he kept avoiding his obligation, he declared that the game was rigged and would not pay. He was found in a hotel lobby with a bullet wound in his side. He refused to talk from his hospital bed, where he died a day later. Thompson was arrested along with the other players in the big game. He testified in the murder trial to the integrity of his co-players, and the charges were dropped for lack of evidence. Thompson was never considered the triggerman, although in his hustling career he had killed at least five men in “self-defense” situations.
Titanic Thompson was in his heyday through the 1950s when the big players discovered Las Vegas and routinized their play. They sought regular games with rules. The big gambling scene for hustlers was over. He suffered a major downfall when he was jailed for several months in 1962 after a big party at his Phoenix home. It was found that one of the “playmates” in his crowd of friends was underage. He dropped from the scene, although for his remaining days he kept trying to hustle - efforts that led to losses as often as wins. In May 1974, at the age of eighty-one, he died of a stroke in a rest home near Dallas. He was broke and broken.

Texas has been the home to gamblers since its inception as a political entity. Whether the Texans were on the frontier in gambling saloons, in illegal Galveston or Dallas casinos, or off in Las Vegas (or in recent years Shreveport, Louisiana), they have loved the “action”. The attorney general of the state, Will Wilson, cracked down on illegal casinos in Galveston in 1957, prompting an effort to legalize the gambling. The efforts were aborted after local voters expressed a dislike for the casinos in advisory votes. Periodically there have been weak attempts to gain support for casinos, but these have all been unsuccessful. In the meantime, charitable gambling operations have been established in the state. Also, “gray” machines offering winners coupons for merchandise have existed openly in truck stops across the state, although their legality has been questioned.
In 1992, the state launched a lottery, which quickly became one of the most successful in the United States, trailing only New York in sales for some years. The lottery offered instant games, lotto, and daily numbers games. Horse-track racing experienced ups and downs in attempts at legislation over seven decades, but finally in the 1990s licensing for tracks began. There are now eight tracks, the biggest being the Lone Star Park near Dallas-Fort Worth.
The state has only three Native American reservations. One – the Alabama Coushatta – is near Livingston, seventy miles north of Houston. The tribal members once voted against casinos, as they believe that outside gamblers would disturb their quality of life. They are also strongly religious. Another vote in 1999, however, indicated that they were destined to have a casino. Two other tribes, the Kickapoos in Eagle Pass and the Tiguas in El Paso, have started gambling operations with bingo games, card games, and machines. The state has refused to negotiate compacts with the two tribes, and legal controversies surround the gambling.

When Tennessee received statehood in 1796 as the fifteenth state, it was a land on the frontier filled with individualists. Leaders such as Andrew Jackson were very active gamblers, playing many kinds of card games and also wagering on horse races. The heritage of wide-open community life did not last into the twentieth century. In the modern era, horse-race betting was legalized; however, tracks were not economically viable, and all of them closed before the 1990s. Charitable gambling is not permitted, although it has taken several police crackdowns to stop many of the games. The state has no lottery, nor does it permit any other gambling. In 2000, Tennessee was one of only three states without any active form of legalized gambling.

The first federal excise tax on gambling devices was passed as part of the Revenue Act of 1941. A stamp act of ten dollars was levied on pinball and similar amusement machines and fifty dollars on slot machines – meaning machines that operate by means of insertion of a coin or token and that “by application of the element of chance may deliver … cash premiums, merchandise or tokens”. Ordinary vending machines were excluded from the tax.
The Revenue Act of 1951 raised the stamp act to $250 for slot machines. The amusement machine and slot taxes were repealed in 1978. The state of Nevada took over the tax, however, and has dedicated the receipts to educational programs. The 1951 Revenue Act also imposed a 10% fee on the amount of money wagered on a sports event or on a lottery conducted for private profit. This tax was lowered to 2% in the 1970s and to 0.25% in 1982. (The tax remains at 2 percent if the gambling is illegal.) In addition, the 1951 law created an occupational tax of $50 for each person working for a gambling establishment. Later the tax was raised to $500. Today it remains $500 for illegal gamblers but is only $50 for those engaged in legal wagering. Those involved with lotteries, pari-mutuel gambling, slot machine games, and casino table games (not considered wagering) are exempt from the occupational tax.
In 1994, President Clinton proposed a 4% tax for all gambling profits realized by commercial operations. The proposal died in Congress among a flurry of opposition from casino interests.
The federal gambling taxes have produced only a minuscule amount of revenue for the national budget. The real purpose of the taxes seemed to be to discourage gambling and also to delineate a separate criminal offense for persons not paying the taxes. Illegal gamblers were obligated to pay the tax, and of course, most did not. In 1968, however, the U.S. Supreme Court ruled that the government could not require illegal operations to pay the taxes, as such payment would constitute a forced self-incrimination in violation of the 5th Amendment of the U.S. Constitution.