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Las Vegas And The Organized Crime

Gambling is often associated with crime. The relationship is easy to understand. Many types of gambling have been, indeed still are, illegal. Hence, by definition, criminals were the only operators of games. When gambling restrictions were relaxed, criminals were the first to open up legal gambling establishments.

A lax regulatory framework in Nevada did not prevent members of organized crime from openly owning and operating casinos. To some degree, Nevada needed the criminals to make gambling viable because no one else had their expertise and experience.

Nevada was plagued by teamster financing, hidden ownership, employment of individuals of questionable character and background, and the clear links to organized crime.
In this context, organized crime doesn't just mean Mafia.

Nevada improved its regulation only under the threat of federal intervention. The federal government believed, with good reason, that Nevada casinos were fueling organized crime throughout the country.

Because of this history, the concern about organized crime usually is raised whenever legalizing gambling is discussed. Even when New Hampshire began its state lottery in 1964,there was concern that organized crime would take over.

Much has changed since the days when Bugsy Siegel started the first modern casino in Las Vegas. Organized crime has become part of the mystique of gambling but it is without significant influence today. Las Vegas and the Flamingo are part of an historical association with organized crime.

Crime Inside Casinos

Gambling operations, including card rooms, earn large amounts of cash and present particular opportunities for skimming and money laundering. Dealers don't have to continually inventory their chips and money while they are working, providing opportunities for fraud. In addition, cheats are drawn to casinos and card rooms because of the large amount of money generated by the facilities. Dealer skimming of chips by palming or collusion is probably the greatest risk. Clubs allow employees to gamble when they aren't working, a situation that can lead to collusion. Other risks include credit abuse, card cheaters, and currency transaction violations. Because of these factors, proper operations and security are very important.

Skimming has been a significant problem. The Kefauver committee found that it was widespread. There were indictments in the early 1960s of casino owners for tax evasion. Skimming can also occur with the granting of

credit. Credit can be granted to individuals who aren't required to repay all of the loan. One solution is to prohibit credit, but that can increase the problem of loan sharking.

Money laundering is another problem. Bettors can come in with a large amount of cash and purchase chips. The chips can then be cashed in, labeled as "winnings" and the money is now legal. In California card rooms, where the house is not the banker, it is harder to dispute claims of large winnings. Federal regulations require that currency transactions of $10,000 or more must be reported including multiple transactions that exceed $10,000. Employees have to be alert to the time periods and possibility of multiple transactions.

Another issue is kickbacks. These occur in a variety of different situations. Operators can receive kickbacks for allowing money laundering. Employees can be pressured into giving kickbacks for preferred assignments.