Gambling in American History

In Honduras the “action” is found in two casinos at night, and in the plaza of the Tegucigalpa Cathedral by day. The poor people visit the marketplace each day. There they buy and sell groceries and lottery tickets. As with many less developed as well as several forward-looking countries, the lottery operations are of the poor, by the poor, and for the poor. People with no other jobs – and maybe no job possibilities – can sell tickets on consignment. The profits from the lottery are also designated to go to programs for the poor.
Honduras is a very poor country, and Tegucigalpa certainly does not have the airs of a national capital. Its streets are narrow and dusty, and many people seem to wander them without a sense of their destination. Cows graze on garbage that is thrown into a dry riverbed. The most visible commercial sign in the city is the Coca Cola sign on the side of a mountain just above the central business and government district. It seems to be a reminder to all that their independent sovereign country may not be totally in control of its own affairs – maybe people in Atlanta have as much control over their lives as they do. Although many Third World countries have towns and cities that could be called “quaint”, the presence of machine guns on each corner and outside of each major store or office building keeps the word quaint from entering the mind.
U.S. commercial interests are in Honduras, selling Coca-Cola and also running large banana plantations. They and their employees, as well as military personnel, provide a marketing base for the casinos. Unfortunately, the poverty of the country as well as the devastation of Hurricane Mitch in 1998 has weakened prospects for strong casino revenues.
Two casinos operate in Honduras: one in Tegucigalpa at the Honduran Maya Hotel; the other in the country’s business capital, San Pedro Sula, near the Hotel Copantl Sula. Private entrepreneurs from the United States operate the two hotels. One of the management teams is also active in the casino industry in Curacao; the other operator has a history of old ties to Cuban and London casinos.
Both casinos have roulette games, blackjack, and slot machines, and the casino at San Pedro Sula also has poker games, punto banco, and bingo sessions. The casino tax represents 20 percent of the gaming win.
I visited Honduras in January 1989 and discovered that the Casino Copan in San Pedro Sula had a feature unique among Western Hemisphere casinos. In the past the casino had difficulties in granting credit to players. Most of the players were local residents. When they were approached to pay back their loans, they considered it an affront to have an American demanding repayment of a loan to them. Courts were also reluctant to order locals, many of whom may have been living on modest means, to pay money to the “rich” American casinos owners. The casino decided to cut off all credit play, but then discovered that their crowds decreased considerably. The operators came up with a solution.  They found local agents who would be happy to purchase chips from the casino cage at a discount, and then loan the chips to the players. They would have all responsibility for collection on the loans, and if they made the collection, they of course would realize a good profit—as they purchased chips at a discount and also charged the players a loan fee. The loan agents were local residents in good standing and usually with good connections to judges and other local officials. The patrons borrowing chips from them would be sure to pay them back, as their standing as honorable citizens was at stake with these loans. The casino operators assured me that the loan agents did not use any unacceptable methods to collect loans. <

James Riddle Hoffa became an essential part of the Las Vegas casino industry when he arranged the financing of several new properties in the late 1950s and early 1960s with the use of pension funds of the International Brotherhood of Teamsters.
Hoffa was born in Brazil, Indiana, on Valentine’s Day in 1913. He was the son of a coal driller who died when Jimmy was seven years old. His mother soon moved the family to Detroit, where she secured employment in an automobile factory. Jimmy got his first job when he was eleven years old. Life was tough, and Hoffa responded to it with his fists, fighting and scrapping all the way. Through experiences in many hard jobs, Hoffa was drawn into the union movement.  He organized a strike at a Kroger’s grocery store where he worked in the stockroom. That successful effort resulted in his first affiliation with the International Brotherhood of Teamsters (often referred to as the Teamsters’ union). He went on to work for the union, first in 1932 as a recruiter, then as a business agent, and soon as a leading organizer. In the mid-1930s, he became the president of Detroit Local 299. Hoffa rose in the Teamsters’ ranks, and in 1952 he became the chairman of the Michigan Conference of Teamsters. He joined in the efforts to help make David Beck the Teamsters’ president, and Hoffa got the vice presidency of the union as a result.
David Beck was the first victim of the U.S. Senate’s McClellan Committee hearings on union corruption. It was revealed that Beck had misused Teamsters’ pension funds, and he had to step down from the presidency in 1957. Hoffa became union president. The McClellan Committee, with its counsel Robert Kennedy, never ceased its attacks on the Teamsters’ union, now making Hoffa its target of choice. An ongoing battle between Kennedy and Hoffa ensued that lasted for almost a decade.
During his union presidency, the Teamsters’ union’s Central States Pension Fund became the leading source of funds for capital financing of Las Vegas casinos. Moe Dalitz turned to Hoffa for the money needed to build La Costa Country Club in California, the Sunrise Hospital in Las Vegas, and the Stardust Casino in Las Vegas. Hoffa financed the Dunes Casino through his personal attorney, Morris Shenker, and also the Landmark, the Four Queens, Aladdin, Circus Circus, and Caesars Palace. Caesars received the biggest Teamsters’ loans, over $20 million. The money was critical, as it came into Las Vegas at a time when organized crime interests tied to Meyer Lansky were pulling back from investments because they were coming under more and more scrutiny from federal investigators. The Hoffa pension fund money provided an interlude between Lansky capital and Howard Hughes capital financing. The Teamsters’ loans came at a price, even though interest rates were not high – actually quite the opposite. Through a variety of means, however, Hoffa reportedly received kickbacks and also access to casino operations. He could place his people in the casino, and he also could demand a piece of the action through different skimming-type mechanisms.
Although Hoffa lived a very modest middle-class lifestyle, the charges of corruption and misuse of funds came to rest at his doorstep. Robert Kennedy pursued a prosecution of Hoffa with a vigor that probably transcended notions of due process or adherence to constitutional liberties or values. After one unsuccessful prosecution in 1962, Hoffa was finally nailed with a conviction for tampering with the jury. In 1964 he was convicted again of misappropriating union funds. His appeals ran out, and in 1967 he stepped down from union office and went to prison for fifty-eight months.
President Nixon commuted Hoffa’s sentence in 1971 with a pardon decreeing that he could not hold union office again until 1980. In 1975 Hoffa was purportedly cooperating with federal authorities who were still investigating the misuse of Teamsters’ pension funds. Perhaps he was seeking to have his pardon changed so that he could reclaim the union presidency. That was not to be. On 31 July 1975 he disappeared. The presumption is that he was murdered, although his body was never recovered, and the crime has never been solved.
In 1936, Hoffa married Josephine Poszywak. They had a daughter, born in 1938, and a son, James Hoffa Jr., in 1941. The son is now the president of the Teamsters’ union. <

See Craps and Other Dice Games. <

Tourism is one of the mainstays of the Hawaiian economy. Therefore, many interests have sought to bring casinos into the state. The efforts go on unabated. The efforts have never won the support of the important decision makers, however, so Hawaii does not have casinos. Also, Hawaii has avoided having lotteries, charity gambling, or pari-mutuel wagering. There certainly is an underground offering gambling products in an illegal form, but leaders fear that bringing gambling into the open air of legality would only encourage bad elements. Hawaii is one of two states (the other is Utah) in which no form of gambling whatsoever is permitted under the law. <

Harrah’s Casino Corporation has more gambling facilities across the United States than any other casino company. There is a Harrah’s casino in each major casino jurisdiction and in many other places as well – Atlantic City, Laughlin, Lake Tahoe, Las Vegas, Reno; the states of Mississippi, Louisiana, Missouri, and Colorado; and New Zealand. Harrah’s operates many Native American casinos as well. Until the Hilton casino group (Park Place Gaming) and Caesars Casinos merged in 1999, Harrah’s was the biggest gambling company in the world. Harrah’s gambling revenues are well over $1 billion a year. Harrah’s markets to middle America and features many tour packages for its customers.
The founding father of Harrah’s casinos started his gambling activities at Venice Beach, California. William F. Harrah was born in southern California in 1911. His father ran bingo halls and carnival gambling games in Venice Beach. Father and son discovered that gambling activities in a jurisdiction that really did not want gambling could be rather tenuous. The Depression years were also hard on them. They sought to practice their business activities elsewhere. When Nevada legalized casino gambling in 1931, it certainly appeared to be the place to go. Both Harrahs came to Reno in 1937, but by the time they did, young Bill had bought out his father’s interest in the business. Bill Harrah first opened a bingo parlor, but then turned to casinos.

William Harrah and his car collection.

Bill Harrah had learned lessons in California that he applied in Reno, lessons that the rest of the casino industry had to also learn if survival in a competitive world was desired. When others were operating downmarket “joints” that sought to extract money from players any way they could, including cheating, Harrah made customer service a top priority. He also was the first to put carpets on the casino floors. He sought to make casinos more respectable by having windows to the outside and by having women dealers. He also took new measures to control all flows of money at a time when other properties were victims of skimming by employees and others.
In 1955, Bill Harrah built a casino on the south shores of Lake Tahoe. He was warned that the location was too remote, but he took the chance that people would enjoy staying near the most beautiful lake in the Sierras. Harrah did find that the casino had a seasonal problem, as winter could restrict travel for all but those coming to the area to ski. In response to the problem, Bill Harrah developed a busing system to bring in players from all over California. This was an innovation that has now been imitated in almost all other U.S. jurisdictions.
Bill Harrah was a solitary owner of his property, and he mixed his private life into the business.  He had been indulged by his father from the time he was a small child, and with the casino profits he continued to indulge himself. He was a playboy (he was married seven times), he built personal retreats, and he developed an exquisite collection of automobiles that he maintained as a business expense. As he became older, he neglected his properties, and his excesses affected his bottom-line profits. In desperate need for funds, in 1971 he converted his personal empire into one of the first publicly traded corporate gambling properties. This gave him the funds to develop a high-rise tower at his Lake Tahoe casino. Every room in his tower had windows facing the lake and its surrounding mountains.
His personal excesses hurt his company through the 1970s, however. Harrah’s associates tried to persuade him that he should sell his assets, but he steadfastly refused. Months after he died in 1979, his executive attorney, Mead Dixon, negotiated a deal to sell all of Harrah’s properties to Holiday Inn for $300 million. Much of the money was used to pay estate taxes. Although the price was considered excessive at the time, Holiday Inn was able to realize over $100 million from selling Harrah’s car collection. A new management team led by Holiday’s Michael Rose and Dixon introduced management controls and policies that emphasized both financial responsibility and property upgrades. Existing casinos in Las Vegas and Atlantic City that carried the Holiday Inn name changed their signs to carry the Harrah name, and the empire began to move into every major casino jurisdiction in the United States and many beyond the borders of the country.

Haiti achieved its independence in a revolution against the French army in 1804. Haiti is the oldest black republic in the world, and, next to the United States, it is the oldest independent country in the Western Hemisphere. The “independence” must be qualified. The people of Haiti have not enjoyed a democratic freedom during many of its years. Most of its rulers have been dictators, and the country has remained under the commercial domination of many nations during its history.
In 1915 U.S. President Woodrow Wilson feared that other countries might invade Haiti because of its foreign debt.  He sought to enforce the Monroe Doctrine before it could be breached. Therefore, he had the U.S. Marines invade Haiti. They occupied the country until 1934. Although depriving the people of their autonomous status, the presence of U.S. troops did lead to an eradication of yellow fever and also to the construction of roads and a sewerage system. Governmental instability ensued when the marines left, but in 1957 stability returned with the election of Francois “Papa Doc” Duvalier as president. In 1964 he declared himself president for life. Upon his death in 1971, his son, Jean-Claude “Baby Doc” Duvalier, became the dictator.
In 1960 Papa Doc Duvalier guided the national legislature in passing a casino law. The timing was appropriate. Operators who were being thrown out of Cuba were seeking new venues. In truth the 1960 legislation was just a piece of paper that would justify Duvalier’s invitation for new casino entrepreneurs to come on in and make an offer. One casino, the International, had been established on the waterfront in Port-au-Prince in 1949. It had a reputation of being a Mob house from the start.
The 1960 law was not intended to be followed to the letter, if at all. The law provided that casinos could only be in hotels with 200 rooms. There were no such hotels in the entire country then, and there are none now. At least two casinos, in addition to the International, were free-standing gaming halls unattached to any hotel. The casinos could have only seven table games, and the games allowed were specified. The major casinos in operation in 1989 during my tour of the country had fifteen or more table games. They also had games that were not authorized. Additionally the casinos had slot machines.
Licenses for casino gaming were supposed to be granted by the minister of commerce. At the time of licensing the operators were supposed to present a deposit of $50,000 to the government to be held in the Central State Bank. This earnest money was to be returned to the operators when the casino actually began conducting gaming activity. One of the operators in 1989 had gone through the licensing procedure for his property. When I asked about the law, he laughed. He said the deposit was not $50,000, it was $250,000. The deposit was not given to the minister of commerce; it was given directly to Baby Doc Duvalier (when he was in power). The deposit was not returned to the casino when it began operations; it was never seen again.
The law provided that the casinos would pay an annual fee of $1,000 plus a tax of 40 percent on the gaming win. Individual casinos would work with the government to negotiate certain expenses that could be deducted from the tax obligation. The tax had been paid in the past. When Baby Doc was deposed in a coup d’etat in 1985, the tax collectors no longer came to the casinos. The operator that I interviewed in 1989 indicated that he had not paid taxes since the Duvaliers had been exiled. During the earlier years of the law, an additional 5 percent tax had been levied on players when they cashed in their chips – when they won. This tax was earmarked for the construction of the Duvalier International Airport in Port-au-Prince. When the airport was finally constructed, the tax collector no longer asked for the player win tax.

The Chaucon, a thatched roof casino in Petionville, near Port-au-Prince, Haiti.

Foreigners were permitted to own the casinos; in fact, that was the desire of the government. They could have foreign dealers, but to do so, they had to get special work cards from the government for an undetermined price.
In 1989, during my visit, there were five casinos in the Port-au-Prince area. One, the Club 54 in the suburb of Petionville, was owned by Haitians. It was operating but in poor condition. As I entered the gaming area, a hen and four little chicks walked across the floor. The leading property was the El Rancho. It was also located in Petionville and was attached to a hotel with 125 rooms. A thatched-roof casino without a hotel was located on the main square of Petionville.  The Chaucon was owned by Mike McLaney, an American who had previously been involved with Cuban and Bahamian casinos. He had held the concession for the International from 1969 to 1976. In the capital city a small casino operated at a Holiday Inn, and a larger casino was at the eighty-five-room Royal Haitian Hotel. The casino, which opened in 1973, was also owned by McLaney. The International, enclosed by a chain-link fence, was in disrepair and out of business. It had been closed since McLaney gave it up in 1976.
In 1989 there were very few players at any of the facilities. In previous times – during the stable years of the Duvalier dictators – cruise ships touring the Caribbean would stop in Port-au-Prince, but by 1989 they no longer did so. A few stopped on the northern coast of Haiti, but there were no casinos there. Cruise ships ceased stopping in Haiti at all later in 1989. One week after my tour of the casinos, there was a coup d’etat, and gunfire filled crowded streets on which I had walked from the national palace to the International. Any chance of growing markets for the casinos ended with the gunfire.
Since 1989 there have been almost no tourists in Haiti. I may have been the last casino tourist. The government disintegrated into near anarchy, and in 1994, the U.S. Marines once again landed in order to preserve something – certainly not the U.S. casino property. The marines are still there.
Casino gaming is no longer of any importance. There may be some play from local residents, but the outward signs of poverty suggest things would be otherwise.