The Biggest Little City in the World – Reno, Nevada – was settled in 1868 as a community planned around a railroad center serving the Comstock mining area of Virginia City. The city grew sufficiently during its early years to allow its survival after silver-mining interests waned. Nonetheless, the city had to turn to other activities to remain economically viable. Reno and Nevada accepted certain behaviors and activities not allowed elsewhere. The city did not ban the prostitution that became part of the scene in the early mining years. The city held the Jeffries-Jackson boxing match in 1910 when other states banned the sport. In the early decades of the twentieth century, Reno established its reputation as a place where divorces could be easily obtained. Gambling was permitted from the beginning without interruption. From 1910 to 1931, however, the gambling activity was illegal, even though openly tolerated.
When Nevada’s legislature passed the wide-open casino bill of 1931, Reno became the premier casino city of the United States. It maintained that status until Las Vegas accelerated its development in the 1950s.
The first legal casinos of the 1930s were merely the same bars, taverns, and restaurants that had operated gambling over the previous two decades in their back rooms. The largest was the Bank Club, which had conducted games in its basement. Within a month of the new law, a renovated and enlarged facility was opened on the ground floor. It had the first electric bingo board in a casino. Other facilities proliferated with small-scale gambling.
The operations of Bill Harrah and the Smith family redefined the nature of Reno and of casino gambling generally in the later years of the decade. When they developed their properties, Reno became much more than just an outlaw town with quickie divorces. It was a destination resort.
The Smiths came from Vermont, where Raymond I. “Pappy” Smith had run carnival games. In the early 1930s he migrated to a beach location near San Francisco, where he began to take the “suckers’” dollars. In 1935 California attorney general Earl Warren began an antigambling crusade. “Pappy” and his two sons, Raymond A. and Harold, decided that the legal air of Reno would be better for their health. They started a bingo hall on Virginia Street in the red-lined area where gambling was permitted by the city council. They called their place Harolds Club. The other clubs and casinos acted like carnival operators and tried to take all the players’ money as fast as they could, but the Smiths tried a new approach in their facility. They viewed their customers as their ultimate “bread and butter” only if they were nurtured, well respected, and well treated. Every day Pappy Smith would walk the floor, joke with players, and give “donations” to players who lost all their money. Every player always had a meal and enough money for a bus ride home.
The Smiths were also promoters. For a short time they had a game called mouse roulette. A mouse would be released into a cage having a circular board with numbered holes. The mouse would eventually go into one of the holes, and the number on the hole would be the winning number in the game. Players discovered, however, that they could make noises, causing the mouse to quickly run into the nearest hole. The game had to be taken out as it lost too much money for the casino.
The Smiths launched casino gambling’s first national (and world) advertising campaign. They placed 2,300 billboards on major highways throughout the country. The billboards featured a covered wagon and the words Harolds Club or Bust. The signs soon appeared in countries on every continent. The world knew that there was a Reno and that Reno had casinos. The Smiths also opened their doors to women players by being the first casino to hire women as dealers. In 1970 Harolds Club was sold to Howard Hughes. It was Hughes’s only northern Nevada property.
Bill Harrah and his father were also encouraged by authorities to close down their “bingo” games in California. Bill had grown up in luxury, but unfortunately his father’s fortune fell apart during the Depression, and he had to leave college to help run his father’s remaining business venture, a bingo game at Venice Beach. When Bill visited Reno he was generally disgusted with the “sawdust” nature of the low-class joints he found. He thought the city could do a lot better. After several tries he was finally able to set up operations on Virginia Street. He gave his players the feel of luxury – carpets, draperies, good furniture, comfortable restaurants. He was the first Reno operator to bring big-time entertainers to a casino. He also drew customers by creating the largest automobile collection in the world. Harrah is also credited for developing internal casino security by installing the skywalk, also known as the “eye in the sky”.
Harrah also developed a casino at South Lake Tahoe, bringing his ideas of luxury surroundings to gambling properties there. While developing marketing strategies there, he instituted bus tours for players out of the San Francisco area and other parts of California.
Harrah’s was the first casino organization with publicly traded stocks. Nevada passed its legislation enabling public stock ownership for casino in 1969, and Harrah’s went public in 1971. In 1973, the stock was traded on the New York Stock Exchange. After Bill Harrah’s death in 1978, the company was sold to Holiday Inn. Today it is among the giants of the corporate casino industry, having revenues second only to the Park Place conglomerate.
Reno grew with other new properties and with expansions. In the 1950s, the red-line casino district was eliminated, and casinos could be placed in other commercial areas. The 1950s saw gaming grow with the Mapes and Riverside Hotels on lower Virginia Street; John Ascauga started the Nugget in suburban Sparks. Competition from Las Vegas dampened expansion in the 1960s, but the 1970s brought a building revival. Several major properties were opened. The Eldorado started games in 1973, and the Comstock, Sahara (now the Reno Flamingo Hilton), and Circus Circus opened in 1978. The same year Kirk Kerkorian constructed the MGM Grand with over 1,000 rooms – later expanded to 2,000. The MGM Grand had the largest casino floor in the world when it opened—over 100,000 square feet of gaming space. The MGM Grand was later sold to Bally’s, and subsequently to Hilton.
Until 1995, there was no more casino construction in Reno. The market essentially went flat. In 1995, however, the Eldorado and Circus Circus combined to build the largest downtown casino – the Silver Legacy. Today Reno seeks to “hold its own” against competition from Native American casinos in California and the aura of Las Vegas to the south. The city has developed marketing around a series of events throughout the year. The National Bowling Center was built downtown, and it features many tournaments. The city also hosts the world-class Reno Hot Air Balloon Races each year. There is also a multitude of music, ethnic, and nationalities festivals. Canada Days is especially popular with a key market segment – tours from the country to the north.
The forty-five casinos of the Reno-Sparks area (Washoe County), with approximately 15,000 rooms, produce gambling revenues of approximately $1 billion a year, or 12 percent of the state’s revenue and 2% of the national gambling revenue. The casinos are not as able to appeal to “high rollers” as are the Las Vegas properties. Las Vegas casinos win about 40 percent of their revenues from table games, whereas Reno properties win less than 30% from tables. Next to Las Vegas, Reno will continue to be number two, and they will have to “try harder” just to stay in place.
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