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Nevada legalizes gambling

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In an attempt to lift the state out of the hard times of the Great Depression, the Nevada state legislature votes to legalize gambling.

Located in the Great Basin desert, few settlers chose to live in Nevada after the United States acquired the territory at the end of the Mexican War in 1848. In 1859, the discovery of the “Comstock Lode” of gold and silver spurred the first substantial number of settlers into Nevada to exploit the territory’s mining opportunities. Five years later, during the Civil War, Nevada was hastily made the 36th state in order to strengthen the Union.

At the beginning of the Depression, Nevada’s mines were in decline, and its economy was in shambles. In March 1931, Nevada’s state legislature responded to population flight by taking the drastic measure of legalizing gambling and, later in the year, divorce. Established in 1905, Las Vegas, Nevada, has since become the gambling and entertainment capital of the world, famous for its casinos, nightclubs, and sporting events. In the first few decades after the legalization of gambling, organized crime flourished in Las Vegas. Today, state gambling taxes account for the lion’s share of Nevada’s overall tax revenues.

LISTEN NOW: What happened this week in history? Find out on the podcast HISTORY This Week. Episode 11: How Lady Luck Saved Las Vegas

Question of the Day - 17 November 2017

With all the talk about the Supreme Court paving the way for legalized sports betting, maybe you could answer my question about when it was introduced by Nevada.

Gambling was legalized in Nevada in 1931, but race and sports betting remained largely the province of illegal bookies or small stand-alone legal (or semi-legal) "turf clubs," like the Derby and Saratoga clubs owned by Jackie Gaughan and the Hollywood Horse and Sports Book, owned by Jimmy "the Greek" Snyder, some of which were highly lucrative affairs -- Jimmy the Greek was allegedly making $2 million a week in the mid-'50s from his Vegas Turf and Sports Club.

In 1951 however, reacting to a groundswell of popular opposition to all the illegal sports gambling outside of Nevada, the federal government slapped a 10% tax on Nevada's legal sports books, which simultaneously regulated the industry and drove a lot of the legitimate operators either out of business or into the untaxed underground.

No one with a brain was playing at that rate, so bookmakers and bettors worked around it. Bets were written for 10 percent of what the actual cash transaction was. For example, a bet might be for $5,500 to win $5,000, but the ticket &mdash if anyone even bothered to write one out &mdash would be for $55 to win $50. Oddsmaker Roxy Roxborough says that the Churchill Downs sports book used to put a little "r" next to the amount written on the ticket. That meant the bet was 10 times the amount written down.

It took two decades for the federal government to relax the tax on sports betting on October 15, 1974, it became a more palatable 2%. Prior to that change, the casinos didn't want to touch race and sports betting. Obviously, their edge was way too low to fade that kind of a tax burden.

Following the repeal of the onerous 10%, Jackie Gaughan opened the first sports book inside a casino at the Union Plaza in 1975, overseen by legendary oddsmaker Bob Martin.

The following year, the prototype for the modern race and sports book was pioneered by notorious bookmaker Frank "Lefty" Rosenthal at the Stardust. Lefty's plush book featured six giant TV screens with seating for 300 and it's been the model for Las Vegas race and sports books ever since.

On January 1, 1983, the tax on sports betting was further cut to 0.25%, making it a much more attractive proposition to Las Vegas resort-casinos, most of which now have race and sports books, whether their own or an outside franchise. Even though the casinos' edge remains low, sports betting is seen as a strong draw that gets people in the door, where they'll hopefully partake in some of a property's more profitable offerings.


Brothels have been allowed in Nevada since the middle of the 19th century. In 1937, a law was enacted to require weekly health checks of all prostitutes. In 1942, President Franklin D. Roosevelt issued an order to suppress prostitution near military bases—affecting the red-light districts of Reno and Las Vegas. When this order was lifted in 1948, Reno officials tried to shut down a brothel as a public nuisance this action was upheld by the Nevada Supreme Court in 1949. In 1951, both Reno and Las Vegas had closed their red-light districts as public nuisances, but brothels continued to exist throughout the state. [3]

In 1971, Joe Conforte, owner of a brothel called Mustang Ranch, near Reno, managed to convince county officials to pass an ordinance which would provide for the licensing of brothels and prostitutes, thus avoiding the threat of being closed down as a public nuisance. [4]

Officials in Las Vegas, afraid that Conforte would use the same technique to open a brothel nearby, convinced the legislature, in 1971, to pass a law prohibiting the legalization of prostitution in counties with a population above a certain threshold, tailored to apply only to Clark County. [5]

In 1977, county officials in Nye County tried to shut down Walter Plankinton's Chicken Ranch as a public nuisance brothels did not have to be licensed in that county at the time, and several others were operating. Plankinton filed suit, claiming that the 1971 state law had implicitly removed the assumption that brothels are public nuisances per se. The Nevada Supreme Court agreed with this interpretation in 1978, [6] and so the Chicken Ranch was allowed to operate. In another case, brothel owners in Lincoln County protested when the county outlawed prostitution in 1978, having issued licenses for seven years. The Nevada Supreme Court ruled, however, that the county had the right to do so. [7]

A state law prohibiting the advertising of brothels in counties which have outlawed prostitution was enacted in 1979. It was promptly challenged on First Amendment grounds, but in 1981, the Nevada Supreme Court declared it to be constitutional. [8] (Princess Sea Industries, one of the parties involved in the case, was Plankinton's company that owned the Chicken Ranch.) In July 2007, the law was overturned by a U.S. District judge as "overly broad", and advertising in Las Vegas started soon after. [9] [10] In March 2010, the district judge's decision was reversed back by a three-judge panel of the U.S. Ninth Circuit Court of Appeals. [11] The ACLU appealed to the full Ninth Circuit Court in March 2010. [12] It further appealed to the Supreme Court of the United States in 2011, but the Supreme Court refused to hear the appeal. The ban on brothels advertising therefore remains in force. [13]

While brothels and prostitutes are subject to federal income tax and also pay local fees, Nevada has no state income tax, and brothels are exempt from the state entertainment tax and do not pay any other state taxes. In 2005, brothel owners lobbied to be taxed in order to increase the legitimacy of the business, but the legislature declined. [14] Brothels pay taxes to their respective counties. Lyon County receives approximately $400,000 to $500,000 per year from these taxes. [15]

In November 2005, former prostitute and madam Heidi Fleiss said that she would partner with brothel owner Joe Richards to turn Richards' existing Cherry Patch Ranch brothel in Crystal, Nye County, Nevada into an establishment that would employ male prostitutes and cater exclusively to female customers, a first in Nevada. In 2009, however, she said that she had abandoned her plans to open such a brothel due to wishing to avoid having to "deal with all the nonsense in the sex business" and preferring to focus on renewable energy which would be "perfect for Nevada..that's the wave of the future." [16]

On December 11, 2009, the Nevada State Board of Health unanimously agreed to add urethral examinations to the guidelines, thus allowing male sex workers to be tested for sexually transmitted diseases. [17]

Under Nevada state law, any county with a population of up to 700,000, as of the last decennial census, [18] is allowed to license brothels if it so chooses. [5] Incorporated towns and cities in counties that allow prostitution may regulate the trade further or prohibit it altogether.

Currently seven out of Nevada's 16 counties have active brothels (these are all rural counties). As of February 2018 there are 21 legal brothels. [19]

State law prohibits prostitution in Clark County (which contains Las Vegas), and under county or municipal law in Carson City (an independent city), and these other counties: Douglas, Eureka, Lincoln, Pershing & Washoe (which contains Reno). The other 10 Nevada counties permit licensed brothels in certain specified areas or cities. [3] All 10 of these rural counties have had at least one legal brothel in operation subsequent to 1971, but many of these brothels were financially unsuccessful or ran afoul of State health regulations. As of 2016, only seven of these counties have active brothels, while the other three (Churchill County, Esmeralda County and Humboldt County) no longer do.

The precise licensing requirements vary by county. License fees for brothels range from an annual $100,000 in Storey County to an annual $200,000 in Lander County. Licensed prostitutes must be at least 21 years old, except in Storey County and Lyon County (where the minimum age is 18).

The brothels and their employees must register with the county sheriff and receive regular medical checkups. Brothels have existed in Nevada since the old mining days of the 1800s and were first licensed in 1971. The legendary Mustang Ranch operated from 1971 through 1999, when it was forfeited to the federal government following a series of convictions for tax fraud, racketeering, and other crimes.

Nevada law requires that registered brothel prostitutes be tested weekly (by a cervical specimen) for gonorrhea and Chlamydia trachomatis, and monthly for HIV and syphilis [20] furthermore, condoms are mandatory for all oral sex and sexual intercourse. Brothel owners may be held liable if customers become infected with HIV after a prostitute has tested positive for the virus. [21] Women work a legally mandated minimum of nine days for each work period. [22]

Nevada has laws against engaging in prostitution outside of licensed brothels, against encouraging others to become prostitutes, and against living off the proceeds of a prostitute.

In June 2009, then-Nevada Governor Jim Gibbons signed the most stringent punishments nationwide for child prostitution and pandering. Assembly Bill 380, which allows for fines of $500,000 for those convicted of trafficking prostitutes younger than 14 and $100,000 for trafficking prostitutes ages 14 to 17. Both the House and the Senate unanimously approved the bill, which went into effect October 1, 2009. [23]

Overview Edit

State legislation Edit

  • Prostitution is only legal in licensed brothels. [24]
  • Brothels are prohibited in counties with more than 700,000 inhabitants. [25]
  • The use of condoms by prostitutes is mandatory. [26]
  • Prostitutes must be tested for STIs weekly/monthly. [20]

County legislation Edit

County Prostitution legality Legislation Number of brothels (as of February 2018) Notes
Carson City County Code, Title 8, Chapter 8.04.110 [27] 0
Churchill County County Code, Title 5, Chapter 5.20 [28] 0 The last brothel license was surrendered in 2004. [29] No licenses have been issued since.
Clark County Nevada Statue NRS 244.345 [25]
County Code, Title 12, Chapter 12.08 [27]
Douglas County County Code, Title 9, Chapter 9.20 [30] 0
Elko County Prostitution only legal in the incorporated communities of Elko, Carlin, Wendover and Wells County Code, Title 7, Chapter 1.6 [31] Carlin: 2 [19]
Elko: 4 [19]
Wells: 2 [19]
Esmeralda County Ordinance 154 [27] 0
Eureka County County Code, Title 6, Chapter 60 [32] 0
Humboldt County Prostitution only legal in the incorporated community of Winnemucca County Code, Title 5, Chapter 5.08 [33] 0
Lander County County Code, Title 5, Chapter 5.16 [27] Battle Mountain: 1 [19]
Lincoln County County Code, Title 7, Chapter 2 [34] 0
Lyon County Prostitution only legal in Mound House [35] [36] County Code, Title 5, Chapter 3 [37] Mound House: 4 [19] No more than 4 brothel licenses may be issued. [37]
Mineral County County Code, Title 5, Chapter 5 [38] Mina: 1 [19] For the purposes of licensing, Mineral County is divided into 2 geographical areas: Mina district and Hawthorne district. Licenses are limited to no more than 2 in each area [38]
Nye County County Code, Title 9, Chapter 9.20 [39] Amargosa Valley: 1 [19]
Crystal: 1 [19]
Pahrump: 2 [19]
No more than one brothel license can be issued for Amargosa Valley. [39]
Pershing County County Code, Title 9, Chapter 9.08 [40] 0
Storey County County Code, Title 5, Chapter 5.16 [41] near Sparks: 1 [19]
Washoe County County Code, Chapter 50.238, 53.170.25 [27] 0
White Pine County Prostitution only legal in the incorporated city of Ely [42] County Code, Title 10, Chapter 10.36 Title 17, Chapter 17.60 [42] Ely: 2 [19]

As of February 2018, 21 legal brothels exist in the state [19] employing about 200 women at any given time. [43] In some locales, there exist multi-unit complexes of several separate brothels run by the same owner. These include "The Line" in Winnemucca, and Mustang Ranch in Storey County.

Mandatory HIV testing began in 1986 and a mandatory condom law was passed in 1988. A study conducted in 1995 in two brothels found that condom use in the brothels was consistent and sexually transmitted diseases were accordingly absent. The study also found that few of the prostitutes used condoms in their private lives. [44]

Illegal prostitution is the most common form of prostitution in Nevada the offense is a misdemeanor. The cities of Las Vegas and Reno have worked to expand their tourism base by attracting families to the hotels and casinos. Accordingly, the state legislature has made prostitution illegal in Clark County, and law enforcement agencies have tried to eliminate the once-rampant street prostitution, enacting legislation against it in 1971. Nevertheless, prostitutes continue to work in casinos, where they wait in bars and attempt to make contact with potential clients. [45] Of all the prostitution business in Nevada, only about 10% is legal, and 90% of illegal prostitution occurs in Las Vegas. [46] The vast majority of prostitution in Nevada takes place illegally in the metropolitan areas of Las Vegas and Reno. [47] [48] [49] Legal prostitution in Nevada grosses about $75 million per year while illegal prostitution in the Las Vegas area grosses about $5 billion per year. [1] Some 300–400 prostitutes are arrested each month by the Las Vegas police. [50]

Escort services offering sexual services euphemistically as 'entertainment' or 'companionship' are ubiquitous, with a reported 104 pages of a Las Vegas yellow pages directory devoted to "entertainers". [51] Flyers are dispensed to tourists and others along the Las Vegas Strip by freelance workers. These flyers also graphically depict female 'personal' entertainers or escort services. Despite the attempt to make the Las Vegas Strip more family-friendly, such advertising for these services continues. [52]

In 2009 Las Vegas was identified by the FBI as one of 14 cities in the U.S. with high rates of child prostitution. [53] Las Vegas police claimed that "roughly 400 children are picked off the streets from prostitution each year." [54]

The U.S. Justice Department has also named Las Vegas among the 17 most likely destinations for human trafficking. [55]

The brothels in Nevada's rural counties have been criticized by law enforcement professionals, journalists, sex worker activists, feminists, social and religious conservatives and politicians.

A grotesque exercise in the dehumanization of women is carried out routinely at Sheri's Ranch, a legal brothel about an hour's ride outside of Vegas. There the women have to respond like Pavlov's dog to an electronic bell that might ring at any hour of the day or night. At the sound of the bell, the prostitutes have five minutes to get to an assembly area where they line up, virtually naked, and submit to a humiliating inspection by any prospective customer who has happened to drop by". [56]

During the 1970s and early 1980s, several towns had enacted rules prohibiting local brothel prostitutes from frequenting local bars or casinos or associating with local men outside of work. After a lawsuit was filed in 1984, these regulations had to be abandoned, but as a result of collaboration between sheriffs and brothel owners, they remain in effect unofficially. Most brothels do not allow the prostitutes to leave the premises during their work shifts of several days to several weeks. [3]

In 2009, prostitution researcher Melissa Ditmore wrote in The Guardian that brothels "impose some extraordinary restrictions on commercial sex workers" in order to "separate sex workers from the local community": some places forbid prostitutes to leave the brothels for extended periods of time, while other jurisdictions require the prostitutes to leave the county when they are not working some places do not allow the children of the women who work in the brothels to live in the same area some brothel workers who have cars must register the vehicle with the local police, and workers are not permitted to leave the brothel after 5pm in some counties registered sex workers are not allowed to have cars at all. [57]

The Nevada brothel system has also been criticized by activists in the sex worker rights movement, who are otherwise supporters of full decriminalization of prostitution. [58] [59] Organizations and individuals supporting the rights of prostitutes typically favor deregulation and oppose Nevada-style regulation, mainly for three reasons: [60]

  • the licensing requirements create a permanent record which can lead to discrimination later on
  • the large power difference between brothel owner and prostitute gives prostitutes very little influence over their working conditions
  • while prostitutes undergo legal and health background checks, their customers do not the regulations are thus designed to protect customers, not prostitutes.

Teri, a prostitute who has worked in a Nevada brothel (and who would like prostitution to be decriminalized), stated that "The brothel owners are worse than any pimp. They abuse and imprison women and are fully protected by the state". [61]

Another former prostitute who worked in four Nevada brothels attacked the system, saying, "Under this system, prostitutes give up too much autonomy, control and choice over their work and lives" and "While the brothel owners love this profitable solution, it can be exploitative and is unnecessary". She described how the women were subject to various exaggerated restrictions, including making it very difficult for them to refuse clients, not being allowed to read books while waiting for customers, and having to deal with doctors who had a "patronizing or sexist attitude" (the brothels discouraged and in many cases forbade prostitutes to see doctors of their own choosing). [62]

In an article published in The Guardian in 2007, anti-prostitution campaigner, Julie Bindel wrote: "If you believe their PR, Nevada's legal brothels are safe, healthy – even fun – places in which to work. So why do so many prostitutes tell such horrific tales of abuse?" [63]

In her 2007 report, Prostitution and trafficking in Nevada: making the connections, anti-prostitution activist Melissa Farley presents the results of numerous interviews with brothel owners and prostitutes, she says that most brothel prostitutes are controlled by outside pimps and that they suffer widespread abuse by brothel owners and customers. [64] [65] Farley said that "What happens in legal brothels is sexual harassment, sexual exploitation and sometimes rape" [66] she also said more than 80% of the women she had interviewed told her they wanted to leave prostitution. [67]

Alexa Albert, a Harvard medical student who has conducted a public-health study inside one of Nevada's brothels, and authored Brothel: Mustang Ranch and Its Women, [68] wrote in her book that the brothel owners used to require the prostitutes to have outside pimps, because the pimps were thought to make the women work harder: "The involvement of pimps enabled brothel owners to leave discipline to men who wouldn't hesitate to keep their women in line." [69]

Bob Herbert also stated that many brothel prostitutes are controlled by outside pimps: "Despite the fiction that they are "independent contractors," most so-called legal prostitutes have pimps — the state-sanctioned pimps who run the brothels and, in many cases, a second pimp who controls all other aspects of their lives (and takes the bulk of their legal earnings)." [70]

In 1998, some pimps from Oregon managed to place at least four underage girls in Nevada's legal brothels they were arrested and convicted. [71] [72]

Detective Greg Harvey, from Eugene, Oregon, said such cases were in reality very common he said, "It's happening right now, it's amazing how many girls are shipped from here to different brothels in northern and southern Nevada. Many are underage." Another detective, Sgt. Pete Kerns, supported Harvey's claims: "Never buy the line that nobody under 18 works in (Nevada brothels)," he said. "It's happening." [72]

Former Nye County Commissioner Candice Trummell, director of the Nevada Coalition Against Sex Trafficking, said "It is way past time for Nevada to be the last state in the United States of America to finally stand against all forms of slavery." [73]

Assemblyman Bob L. Beers said that "A brothel owner is somebody who, when it gets down to the very essence, is nothing more than a slave-owner." [66]

Some brothel owners have been involved in criminal activities: in March 2009, a Nye County brothel owner pleaded guilty to fraud charges for paying bribes to a former Nye County Commissioner [74] in 2008, a former brothel owner was sentenced to 15 years in federal prison on two child pornography charges [75] in 1991 Joe Conforte fled to Brazil in order to avoid a conviction on tax fraud charges.

Occasionally, lawmakers attempt to introduce legislation outlawing all prostitution in Nevada. These efforts are typically supported by owners of casinos and other large businesses, claiming that legalized prostitution harms the state's image. The Nevada Brothel Owners' Association, led by George Flint, from Reno, lobbies against these laws. [76] [77] Rural lawmakers normally oppose these laws as well, despite the fact that legal brothel prostitution does not provide a significant amount of income for counties.

One particularly colorful opponent of legalized prostitution in Nevada was John Reese. Initially arguing on moral and religious grounds, he switched to health hazard tactics, but had to back down in the face of a threatened libel suit. In 1994, he tried to get a license for a gay brothel in a thinly veiled attempt to galvanize opposition against all brothels. Then in 1999 he staged his own kidnapping near the Mustang Ranch. [78] His efforts to collect enough signatures to repeal the prostitution laws have so far failed.

Nevada politicians can (and generally do) play both sides of the prostitution dispute by declaring that they are personally opposed to prostitution but feel it should be up to the counties to decide. As almost three-quarters of the population of Nevada lives in a single county (Clark County, where prostitution is illegal), county control over local matters is a hot-button issue. Legislators from the northern counties will often reflexively oppose what is seen as "meddling" from the majority in the south, and the legislators from the south have been too divided on the issue to push through a state-wide ban.

Since 2003, Las Vegas mayor Oscar Goodman has repeatedly stated that he favors legalization of prostitution in the city, perhaps turning East Fremont Street into a little Amsterdam. Goodman said there are pragmatic reasons to back legalized prostitution. Those include the acknowledgement that illegal prostitution is occurring and that brothels could provide safer, regulated and revenue-generating sex, he said. [79] [80]

The brothel owners' organization, supported by Democratic State Senator Bob Coffin, has been pushing for taxation of the brothels, to increase the industry's legitimacy. The proposal, which would have instituted a $5 tax per act of prostitution, with the proceeds partly being used for a sex worker counseling agency, [81] was voted down in the Taxation Committee in April 2009. [82]

In February 2011, U.S. Senator Harry Reid suggested that brothels be made illegal in Nevada. [83] [84]

The opinions of Nevada residents vary, but the majority appears to support the status quo of prostitution: they support laws allowing licensed brothels in the rural areas but oppose the legalization of prostitution in Las Vegas. A poll conducted in Nevada in 2002 [85] found that 52% of the 600 respondents favored the existing legal and regulated brothels, while 31% were against laws that allow prostitution and the remainder were undecided, preferred fewer legal constraints on prostitution, or did not offer an opinion. In 2003, nearly 60% of Nevada residents opposed the legalization of brothels and prostitution in Las Vegas (59% opposed this idea, 35% supported it and 6% didn't know or didn't answer). Again, support was stronger in the rural areas (where most people were born in Nevada) and weaker in Clark County and Washoe County women were more opposed to the idea than men. [86]

In 2004, after the closure of the last brothel in Churchill County, a county ballot initiative to permanently ban prostitution in that county was defeated by a 2–1 margin. [87]

A July 2011 Public Policy Polling survey found that 56% of Nevada voters thought that prostitution should be legal, while only 32% thought it should be illegal and 12% were not sure. [88]

A June 2012 Public Policy Polling survey found that 64% of Nevada voters thought that brothels should be legal in the state, while only 23% thought they should be illegal, and 13% were not sure. [89]

In 2018, Lyon County voted by a 3-to-1 margin to reject Question 1, which would have repealed the county's brothel ordinance and closed four brothels in Mound House. [90]

Crystal, Nye County, Nevada had a brothel art museum associated with two local brothels. Vistors have reported it was primarily newspaper clippings. As of 2020 both Crystal brothels were closed. [91]

Legalized gambling in Nevada marks 90 years

Although gambling has been around much longer, brought to the Silver State by prospectors seeking their mining fortunes, legal gaming got its official start in 1931.

Don’t expect any parades or fancy cakes Friday, even though it is the 90th anniversary of one of Nevada’s most significant historic events.

It was March 19, 1931, when state leaders approved legalized gambling, forever changing the economic course of Nevada and Las Vegas.

While the news wasn’t a big deal at the time — illegal casinos had operated in some hotels for years before legalization occurred — Nevada historians and industry leaders say that legislative decision forever changed the Silver State.

It’s unclear how many casinos were open 90 years ago. The Railroad Pass Casino between Henderson and Boulder City was the state’s fourth licensee, opening Aug. 1, 1931, to entertain Hoover Dam construction workers.

With the three licensees that preceded Railroad Pass out of business, the 89-year-old hotel-casino is now considered the state’s oldest legal casino. The oldest hotel-casino in Las Vegas is the Golden Gate, which originally opened as the Nevada Hotel in 1906.

As of Dec. 31, 436 licensed hotel-casinos were operating in the state with 2,340 taverns, restaurants, convenience stores and supermarkets that offer up to 15 slot machines in their businesses.

Among the newest licensees is the Virgin Hotels Las Vegas casino, which opens to the public Thursday. There also are 13 licensed casinos statewide that remain closed because of the coronavirus pandemic.

“If you look at 1931 when gaming was legalized, it was a very small-scale business at the time,” said David Schwartz, associate vice provost for faculty affairs at UNLV and an affiliate professor at the university’s Department of History who has written extensively on the history of gambling, gaming statistics and casino technology. “In the 󈧶s, it grew tremendously and the regulatory structure had to grow with it.”

‘Give people a reason to visit’

Michael Green, an associate professor at UNLV’s Department of History, said the Depression may not have necessarily been the driver of gambling legalization.

“It’s not that historians are professional debunkers, but there was always the claim, ‘Oh, it was done to get revenue during the Depression,’ or to regulate a vice,” Green said. “It appears really to have been a result of the efforts of a real estate developer from Las Vegas, Tom Carroll, and his attitude was, ‘Give people a reason to visit. They’ll come here. They’ll like it. They’ll invest. They’ll stay. If not, we made a little money,’” Green said.

“Of course, today, we do not look at the tourists coming here and say, ‘We hope all of you stay and invest,’ although we hope some of them do so.”

Quoting Wilbur Shepperson, a historian at University of Nevada, Reno, Green said, “‘Nevada was always a company state — but in 1931, the company changed hands. This had been a mining, ranching and railroad state,’” he said. “Dependent on being able to get stuff out of the ground and the general economy, we switched to becoming a tourism state with a similar kind of dependence on the kindness of strangers.”

And the switch really paid off for Las Vegas.

“I don’t know how visionary they were at the time,” Green said. “Success has a thousand fathers, failures and orphans, so naturally, everybody was a visionary. But it certainly worked out. The way to look at it is at this point, the population of Las Vegas, when gambling became legal, was a little over 5,000. There are probably that many people in the Spaghetti Bowl right now.”

The addition of a regulatory layer in the 1950s turned Nevada into a leader nationwide.

“Even though there are things that come up that are problematic, it always seems like the industry and the regulators come forward to address the problem and get it right, and that’s why we’re the gold standard,” said Nevada Gaming Commission Chairman John Moran, currently the state’s longest-serving gaming regulator.

“Nevada’s gaming standard is built around the two-tier system where we have the (Gaming Control) Board regulating and enforcing and we have the commission that oversees that and makes the final determination to enhance policy in the state of Nevada,” Moran said. “The forefathers of gaming obviously did the right thing and followed the right path that’s led us from its early beginnings to now being the gold standard in the United States.”

That big head start in the industry is why Nevada is still considered the nation’s — and maybe the world’s — leading authority on gambling. Regulators from foreign countries frequently pick the brains of the state’s top legal minds for advice.

“The next state to legalize modern casino gaming was New Jersey in 1976,” Schwartz said. “That’s a 45-year head start, so I think a lot of questions that came up were answered in Nevada first. I think as long as people in the state and the regulators continue to innovate and evolve, we’ll continue to do well.”

Contact Richard N. Velotta at [email protected] or 702-477-3893. Follow @RickVelotta on Twitter.

Gaming’s roots

According to a history of the gaming industry on the Nevada Resort Association website, gambling was a part of Nevada culture before it ever became a state. Prospectors searching for gold in the Sierra Nevada brought their games of chance with them when looking to strike it rich.

Five years after Nevada became a state in 1864, the Legislature decriminalized gambling and there were few changes until 1909 when political progressives succeeded in passing legislation banning nearly all games of chance.

In the next decade, some laws were relaxed and by 1919, all cities and counties throughout the state were licensing card rooms that permitted social games. In the 1920s, Reno became the state’s gambling capital, and legal card rooms and clubs offering illegal games flourished.

But in 1931, with the country entering the Great Depression, freshman Assemblyman Phil Tobin introduced a bill legalizing wide-open gambling. On March 19 of that year, Gov. Fred Balzer signed the bill into law.

How did Nevada become a world leader in gaming? Expert David Schwartz picks out the key dates that changed our state's biggest industry.

From the Archives

Please note that this Article is more than three years old and details may have changed since the publish date.

Editor's Note

Today, Nevada's gaming industry is a juggernaut the largest in the United States and second largest in the world, with annual casino revenues of more than $11 billion. About 80 percent of that revenue comes from Las Vegas. But it wasn't always that way. The five dates discussed below are significant milestones that show how Las Vegas developed its dominance--and how it is hoping to retain it in the future.

March 19, 1931: Commercial Gambling (Re) legalized

This is the day that changed everything. Contrary to popular belief, A.B. 98, which Governor Fred Balzar signed into law on this day, didn't "legalize gambling" in Nevada. Rather, it brought back "wide open" gambling. Here's the difference: In 1869, Nevada first legalized commercial gambling, which back then was primarily card and dice games played against the house. In 1909, thanks to Progressive opposition, the state criminalized gambling, though over the years a series of carve-outs allowed low-stakes social games -- pastimes like poker, played against other players and not against a central bank.

In early 1931, reeling from the effects of the Great Depression, lawmakers considered returning to a regime of "wide open" gambling, which would allow commercial establishments to bank games once more. When Balzar signed the law, it again became legal for saloons and hotels to offer games like craps and blackjack. The first gambling halls were small, but this was the origin of today's international commercial casino industry.

April 3, 1941: The Strip is Born

Originally, gambling in Las Vegas was small-scale. Mostly confined to downtown clubs and a few small roadhouses on Boulder Highway and Highway 91, the artery leading south to Los Angeles. But that all changed when California hotelier Thomas Hull opened the doors of the El Rancho Vegas, the first self-contained casino resort on what would, over the next decade, become the Las Vegas Strip.

Gambling in Las Vegas had been around since 1931, but for the first time at the El Rancho Vegas, it became part of a larger resort complex that could appeal to both casual vacationers and serious gamblers. With only 63 rooms at opening, it was a fraction of the size of today's Strip megaliths, but it had all the elements -- gambling, dining, lodging, entertainment, retail -- that Strip resorts have today.

August 5, 1966: An Empire Rises

The model for the Strip casino resort had been set for over two decades when the first really new idea came to Las Vegas. Before Jay Sarno opened Caesars Palace, Las Vegas casinos were exciting without being exceptional visitors gambled, drank, ate, and were entertained, but they were never wowed. That changed with Caesars Palace, whose thorough theming (even the stationery features burned edges, reminiscent of Rome burning while Nero fiddled) put it head and shoulders above the competition.

Jay Sarno, the compulsive gambler and relentless dreamer who conceived and realized Caesars Palace, saw the direction that Las Vegas would take: serving up not just freedom from rules, but fantasy unleashed. Until the next pivotal date, Caesars Palace would continue to be the most successful casino on the Strip--a reign of 23 years. Today, it remains the most recognized casino name in the world, and it's the flagship of Caesars Entertainment, one of the world's largest casino operators.

November 22, 1989: Presenting the Dream

The 1980s started off bad for Las Vegas, but got better. The early-decade recession forced casinos to reevaluate everything, and by the middle of the decade, most had started chasing middle-market gamblers, who made up in numbers what they lacked in bankroll. The result was a series of expansions and renovations that bulked up the Strip but left an opening in the market: no one had added facilities that catered to upscale visitors for years, and the last major resort opening was in 1973. Atlantic City had opened nearly a dozen new casinos since 1978, and had surpassed the Strip in win in 1983.

So it took vision and courage to build something new, large, and geared toward the high end in Las Vegas. Steve Wynn had both: The Mirage was the largest casino resort built from scratch to date, and it had an unprecedented range of nongaming, nonrevenue-producing elements -- a rainforest, a white tiger habitat, and a Strip-front volcano among them.

Many of the Strip's most seasoned operators predicted an ignominious flop, but Wynn and his team knew they had a winner. They were right. The first night, 50,000 guests showed up, and until Wynn opened the Bellagio nine years later, The Mirage was the undisputed champion of Las Vegas Boulevard. The Mirage provided the model not just for other Wynn casinos, but for the subsequent development of the Strip.

April 30, 2013: Stepping into the Next Frontier

Betting on the Internet isn't new real-money sites have existed since 1995. But the United States has been much slower than other nations to create a framework for legal online gambling. After a December 2011 Justice Department opinion opened the door for states to regulate gambling over the Internet within their own borders, Nevada began developing the rules and procedures that would permit companies to offer online poker to those within the Silver State.

It took time for online providers to develop geolocation, identity verification, and security protocols that met regulators' standards, but in the spring of 2013 Ultimate Poker opened the first legal, state-regulated online poker game in the United States. The Station Casinos subsidiary remained Nevada's only online poker provider until Caesars Entertainment's launched that September.

Today, there are three Nevada-based online poker sites, a compact with Delaware permitting the sharing of player pools across state lines, and the promise of future growth as other states approve online play. As with commercial gambling, the first step was a single milestone on a long journey.

Regulation History

From 1931 to 1945, gaming licensing was handled at the local and county level. Taxes were determined by the number of games or machines in operation. In that year, licensing authority shifted to the state level and Nevada enacted a new licensing program that, in addition to the per-game fee collected, enacted fees based on percentage of gross gaming win.

Over the next 10 years, gaming in Nevada flourished. By 1952, commercial gambling had eclipsed mining and agriculture to become Nevada's largest revenue-producing industry. As Nevada's economy became more and more dependent upon gaming as an economic engine, the fear of federal gaming prohibition and negative public sentiment grew larger. This prompted the Nevada State Legislature to create the Gaming Control Board in 1955. A division of the Nevada Tax Commission, the Board's primary purpose was to oversee the licensing and operation of Nevada casinos, while also eliminating the unsavory elements that threatened the industry's existing and future integrity. In 1959, the Legislature passed the Gaming Control Act, establishing the Nevada Gaming Commission, which acted upon the recommendations of the Gaming Control Board and was the final arbiter of all gaming licensing matters.

Nevada's gaming regulatory system has been an integral part of Nevada's success and has become the standard upon which all other national and international gaming regulatory agencies are based.

The Casino

Between 1932 and 1967 a Nevada style casino operated inside the Nevada State Prison. For 35 years this inmate-run gambling operation coexisted in a place where vice is normally prohibited. There is no other example in the history of penology in the United States where casino gambling was allowed. Indeed, this uniquely Nevada experience seems completely at odds with prison theory at the time.

References to “legalized” gaming in the Nevada State Prison are not exactly correct. The prison was never issued a gaming license, or in any way recognized by Nevada gaming authorities. Rather, the casino was more or less ignored and tolerated. If an application for license had been made, it surely would have been denied based on the unsavory character of the applicants, not to mention their criminal history.

The casino was self-policed. The inmates who ran the games did not tolerate cheating or strong-arming for fear of getting shut down by the warden. A percentage of the take was deposited in the inmate welfare fund, an act which added legitimacy to this “immoral habit”. During its heyday, the prison casino included blackjack, craps, poker, and sports betting.

Throughout its 35 years, various wardens either tolerated the casino or considered it a worthwhile distraction for the inmates. This changed in 1967 when a bill in the State Legislature to prohibit prison gaming was defeated in the Senate. Shortly thereafter, the State Prison Board used its authority to close the casino. The sandstone building which housed the casino was demolished.

Today in History, March 19, 1931: Nevada legalized casino gambling

French explorer Rene-Robert Cavelier, Sieur de La Salle – the first European to navigate the length of the Mississippi River – was murdered by mutineers in present-day Texas.

The First Aero Squadron was deployed on the first combat air mission in U.S. history.

One of new First Aero Squadron’s Curtiss JN2s "Jennys." (Photo: File)

Congress passed the first law establishing daylight saving time in the United States, with clocks to be moved forward one hour from the last Sunday in March to the last Sunday in October.

The Senate rejected, for a second time, the Treaty of Versailles by a vote of 49 in favor, 35 against, falling short of the two-thirds majority needed for approval.

Nevada Gov. Fred B. Balzar signed a measure legalizing casino gambling.

During World War II, 724 people were killed when a Japanese dive bomber attacked the carrier USS Franklin off Japan. (The ship was saved.)

The 1966 Texas Western championship team (Photo: Courtesy of Rich Clarkson)

The Texas Western Miners defeated the heavily favored Kentucky Wildcats, 72-65, to win the NCAA Championship played in College Park, Maryland making the contest especially noteworthy was that Texas Western became the first basketball team to start five black players in a national title game as it faced an all-white Kentucky squad.

Televangelist Jim Bakker resigned as chairman of his PTL ministry organization amid a sex and money scandal involving Jessica Hahn, a former church secretary.

President George W. Bush ordered the start of war against Iraq. (Because of the time difference, it was early March 20 in Iraq.)

Waving from the stage of Union Terminal Museum Center President George W. Bush spoke about the threat facing the world concerning Iraq on Oct. 7, 2002. (Photo: Cincinnati Enquirer/Michael E. Keating)

During a Mass at the Vatican, Pope Francis officially began his ministry as the 266th pope, receiving the ring symbolizing the papacy and a wool stole exemplifying his role as shepherd of his 1.2-billion strong flock.

Casinos have storied history

At the end of the 19th century miners laid their pick axes down, in order to exchange their pay for a drink and a few chips – hoping to get lucky.

Booming silver and gold mines paired with a burgeoning logging industry gave Lake Tahoe’s gaming industry its start. Today, the big casinos at Stateline are every bit the attraction they once were, but the industry has changed substantially since Nevada legalized gambling in 1931.

Casinos have always appealed to all types of people.

“It’s a universal common denominator – everyone has played either a little or a lot,” said Placerville’s Steve McLendon, a collector and historian of gaming. ” ‘Casino’ is a European name that meant the place would have a bowling alley, ballroom dancing and fine dining.”

“Clubs and saloons were the ones that had the gaming in the back room as opposed to the front,” McLendon said. “All 1931 did was bring it to the front.”

The earliest clubs were sparsely outfitted. McLendon estimated that, at most, clubs had 10 slot machines and one poker or faro table. Surprisingly, clubs provided outside dealers with a place to game.

“You’d go in and the owner would lease people a space,” McLendon said.

After dirt roads were paved in the late 1940s, mountain travel was easier. Casinos’ three-month summer season gradually turned into a year-round operation.

Harrah’s Resort and Casino was the first to accomplish this, according to McLendon.

“Bill Harrah was the one who made a deal with the bus lines in Sacramento,” McLendon said. “He told them to ‘keep ’em coming.’ “

Bill Ledbetter, who worked in South Lake Tahoe casinos for most of his adult life, agreed that Harrah’s was the place to be. “The biggest shows were always at Harrah’s,” he said.

Ledbetter said Harrah was known for treating his entertainers with “great flair.”

Harrah’s big shows began at 8:15 p.m. sharp, no exceptions.

“You could set your watch by it,” Ledbetter said.

Ledbetter’s ties to the gaming industry are rich. He came to the lake in 1936. After years of dating Beverly Gross, he married her in 1954. Beverly was the daughter of Harvey Gross, the owner of Harvey’s Wagon Wheel Saloon and Gambling Hall.

When he turned 19, Ledbetter began working at Sahati’s Club, where he washed cars during the day and parked them at night. He fondly remembers his three years there.

“Washing cars was a total delight.”

Ledbetter had the privilege of washing the cars of those who performed in area clubs, and seeing stars like Nat King Cole, who he said was a “wonderful entertainer,” and the Andrew Sisters’ trio. The only trouble with the trio was having to wash three cars.

Through the 1960s and 󈨊s, casinos presented stars like Elvis Presley, Muhammad Ali, Frank Sinatra and the “Rat Pack,” Nat King Cole, the Supremes, Tom Jones, Wayne Newton, the Righteous Brothers, Tony Orlando, and Engelbert Humperdinck.

“We’ve seen everyone from Lawrence Welk to Bill Cosby,” said Jan McKinnon of Paradise, Calif., who visited the area nearly every year at Christmastime in the late 1960s and early 󈨊s. Jan’s friend who was an entertainment secretary at the Sahara Tahoe, gave Jan and her husband tips on the best shows.

“The New Year’s galas were really something,” Jan said.

Her favorite show was Elvis Presley, who appeared at the Sahara annually from 1971-1976.

As the years passed, big acts became harder to come by, said Ledbetter who was Harveys’ chief executive officer from 1983 until he retired in 1993. Ledbetter said the decline can be attributed to television. Stations paid entertainers more than did casinos. Ledbetter should know.

Ledbetter is hopeful that South Shore will become a world class ski village someday and be the mecca for tourists it once was. He said it will be difficult because locations like Las Vegas “have a pro-gaming environment,” whereas Tahoe has to deal with”a fixed status-quo situation.”

One walking into a casino in 1999 would probably not see many couples in formal attire, nor would they know that the plastic gaming chips they’re tossing onto the table used to be made of clay.

Touching a vintage chip belonging to McLendon makes it is easy to tell the difference between casinos of past and present. The old clay gaming chips deform if the temperature hits 116 degrees. McLendon said one of the the biggest scores for collectors in recent times came out of South Lake Tahoe.

Construction workers were in the process of building the Horizon’s parking garage when they “unearthed hundreds of 55 gallon drums filled with chips,” from the concrete rubble of the parking lot of the former High Sierra Casino.

Workers grabbed hundreds of thousands of chips and carted them away in wheelbarrows.

Owners were required to destroy all their chips when a casino changed hands. An easy way to dispose of the gaming pieces was to bury them in the foundation.

By the time the 20th century arrived, gambling became widely prohibited country wide, and given that it was now illegal, the business became turned over to the criminals, and organized crime elements were quick to capitalize on this, as they did during the Prohibition area in taking over the sale and distribution of alcoholic beverages.

Certain areas with more tolerance towards gambling such as Miami, Florida and Galveston, Texas became hotbeds for illegal gambling during this time, although it did flourish quite well in the country overall, as did drinking alcohol.

The failure of alcohol prohibition is widely accepted, but we’ve been less prone to accept the failure of gambling prohibition, although the two fail for exactly the same reasons, as fairly unpopular laws don’t succeed very well.

In the early 1930’s, the state of Nevada fell upon hard economic times and made the decision to legalize gambling, which was the first wave of a tide that has been growing since, albeit quite slowly. Southern Maryland had legalized slot machines during the 50’s and part of the 60’s, and Atlantic City opened up to gambling in 1977.

More and more states started offering lotteries, and the coming of Indian casinos greatly expanded the land based gambling centers in many areas of the country. Several states legalized riverboat casinos again, and soon afterward the requirement that they be located over water was abolished.

This land based expansion continues on into the 21st century, and has now spilled over into the internet frontier, with three states now embracing regulated online gambling and several more in the process of debating it.

The New Frontier For Gambling in the U.S.

As far as the law is concerned, there are many countries that legislate gambling at the federal level, but the United States is not one of them. This is a state run affair, and prior to telecommunication, it used to be an entirely state run affair, and it’s only since information has been transmitted across state lines that the federal government has even become involved.

Many of today’s anti gambling statutes at the state level were fashioned during these earlier years of gambling prohibition, and many haven’t even been updated since. Some of these statutes compile a list of prohibited gambling games and some of them haven’t been played for over a hundred years.

In particular, the laws have been crafted to deal exclusively with land based gambling, that which occurs exclusively at a physical location within the state’s boundaries, like a gambling hall.

Contrary to what many believe, laws can prohibit gambling without specifically referencing a certain form of it, even though laws often do specify a list of prohibited games. Depending on how the law is written, it usually does not matter whether a certain form, like placing wagers on a computer, is specified as being illegal or not, as the prohibitions can and often do take a general form.

For instance the law may specify that placing a wager on any game of chance, or even stronger, placing a bet on any contingent event, meaning that the outcome is uncertain at the time of the wager, is a crime, and this can often be read to prohibit all forms of wagering that are not specifically authorized by law.

The coming of the internet and internet wagering did certainly change the landscape of gambling law significantly though, on several fronts, and together with the gambling market moving toward more tolerance and acceptance, this has created a very interesting dynamic already, with many interesting issues emerging and more set to come as the situation continues to evolve.

Watch the video: The California Law That Could Cost Nevada Billions (July 2022).


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