Arnold Rothstein (1882–1928) represents a great transitional mark in gambling life in the United States. He took gambling enterprise from being an entrepreneurial activity of individuals operating at the edge of the law toward becoming a major industry centrally controlled by criminal elements. In the process he established a reputation for being a man of his word and a dominant high-stakes player. He defeated Nick the Greek Dandolos in a dice game with stakes of $600,000. Rothstein owned several casinos, and he was the financial linchpin who held together the ring that fixed the 1919 World Series. He also developed the layoff system for bookies across the country. His transitional role coincided with the coming of national Prohibition, which, of course, provided great incentives for centralized Mob activities.
Arnold Rothstein was born in 1882, the son of Arthur Rothstein. His father was a successful merchant. Although he wanted Arnold to follow in his footsteps, it was not to be. Arnold loved games, and he also loved to play. In 1909, Arnold was married at Saratoga during the racing season. He actually used his ring and his wife’s jewelry as collateral for his bets on his wedding night. Compulsive gamblers say that gambling is the most powerful of life’s urges, and whatever is in second place cannot even compete. Rothstein coveted the lifestyle he found at Saratoga, and he vowed (some vows are taken seriously) that he would come back in a role other than a tourist player.
Rothstein started playing harder and harder in New York City and also on ocean liners. Then he ran the games. Before he was thirty he had gambling halls in the city, and soon he was planning his return to Saratoga.
In Saratoga he created and opened the Brook, a nightclub with gambling. He began to restore an aura that Richard Canfield had established in the first decade of the century. Rothstein later acquired the Spa casino, and he invited Meyer Lansky and Lucky Luciano to be operators of his games. Other figures who emerged as leading mobsters and propelled the Mob’s gambling activity toward the Las Vegas Strip were his friends – Frank Costello, Dutch Schultz, Waxey Gordon, and Jack “Legs” Diamond.
Rothstein had a stable of horses, and he became very active in bookmaking – for races and sports events. At a casual meeting of other bookies, one remarked that he had passed up a lot of action recently because too many bets were on one side of the proposition, and he had to control his risks. Rothstein told him if that happened again to call him, and he would cover the action and thereby help the bookie balance his books – for a small percentage. Rothstein’s headquarters suddenly became the center of sports and race betting for the United States. Layoffs came from Rothstein. (Layoffs occur when the clients of minor bookies bet too heavily in favor of one team. The minor bookies seek out major players, such as the Rothsteins, in order to spread out their risk – that is, lay off some of their bets with a bigger bookie). The central headquarters also became the source of odds for sports gambling.
From such a position of power and influence in sports betting, Rothstein became involved in the most notorious sports scandal of the twentieth century. A Boston bookie called him because some players on the Chicago White Sox had requested $80,000 to throw the World Series in which they were playing the underdog Cincinnati Reds. Definitive facts do not exist to say for sure if Rothstein provided all or part of the $80,000. Many writers think he did. For sure he gambled heavily that the Cincinnati team would win. He took hundreds of thousands of dollars in gambling wins on the series. The fix held. Revelations of the fix were not made public for a year. The subsequent response was for major leagues (especially the baseball leagues) to establish strict rules governing betting by players. Owners were treated differently. Neither players nor owners, however, were ever to bet on games involving their own teams. Rape, drug sales, and even murder were lesser crimes compared to this serious matter. Players involved in the 1919 scandal were banned forever from baseball, just as Pete Rose has been for his alleged bets that his team would win games in the 1980s. The name of the greatest hitter in the history of the sport is not found in the Hall of Fame because of transgressions that violate the rules that arose from the 1919 scandal.
Rothstein’s days as a leading hitter came early in his life. Actually, there were not many days later in his life. Although he had been considered a man of integrity, he welshed on gambling debts stemming from a game in 1928 in which he lost $340,000. He indicated a refusal to pay because he thought the game was rigged. A few weeks after refusing to pay, he was found with a bullet in his side. He knew enough of the code of honor not to squeal on his assailant in the day or so he lingered before he died. He was only forty-six.
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