Dealing From the Bottom of the Deck: Hypocritical Gambling Laws Enrich Crooked Politicians, a Select-Few Casinos, and the Mob: Rackets, #2

By Brian Saady

Dealing From the Bottom of the Deck provides the full history of American gambling. There are certainly flaws with modern legalized gambling. However, the situation was far worse when this activity was entirely illegal and unregulated.

This book takes you back to the days of the western frontier when disputes were often settled by gunfire and naïve gamblers were routinely bamboozled. Likewise, gang wars often determined who controlled these underground markets in urban areas. In turn, organized crime used the profits to fuel cycles of political corruption. The examples provided are not only insightful, but they also add to a genuinely entertaining reading experience.

The second volume of the Rackets series covers the birth of the mafia-dominated casino industry. Government officials made numerous blundering mistakes that allowed mobsters to control this industry for decades. Fortunately, appropriate regulations were eventually put in place to remove the criminals from the industry. Now, legalized gambling benefits the taxpayers, not the mafia. However, the legal gambling business is still dominated by “racketeers,” i.e. crony capitalists.

Typically, the most powerful casinos exploit our political system by opposing new forms of legal gambling to suppress competition. Nearly every state has at least one form of legal gambling, but there are multi-billion dollar black markets that still exist. The most notable examples are sports betting and online poker.

You will also discover the remarkable parallels between Wall Street and the gambling industry. The same public officials who pioneered various anti-gambling laws also helped create the circumstances leading to the near-bankruptcies of the “Too Big to Fail” banks. This has much to do with the tainted revolving door between government and the private sector.

Dealing From the Bottom of the Deck makes it clear that gambling needs to be further legalized and regulated. More important, it reveals how stigmatized vices, such as gambling, serve as a distraction that enables vast government corruption.

Editorial Reviews

Eternal Truth: People and institutions - including government - act in their own economic self-interest. (Sorry to shock you.) So that is how government, which is a huge special-interest group, has been acting -from its inception.

In that regard, things like mind-altering and sometimes addicting drugs, prostitution and gambling have always been present in every society. But if government makes them illegal, its pawns a big bureaucracy to enforce those laws of prohibition. And that necessarily increases the size, cost and power of government, which government likes. But if the products are regulated and controlled, then two things happen. First the Al Capones and pimps of those worlds will lose so much money that they will probably go out business and, second,those products will be delivered more safely, and will also be taxed.And through all of that, the amount of drugs, prostitution and gambling will most likely stay about the same. So what's not to like?

This is what Brian Saady shows so forcefully and completely in his trilogy - which is a strong and healthy addition to the "common wisdom." Read it, and you will agree.
Judge James P. Gray (Ret.)

Author of "Why Our Drug Laws Have Failed" (Temple University Press, 2d edition, 2012) and 2012 Libertarian candidate for Vice President, along with Governor Gary Johnson as the candidate for President.

"...Cogent, clear and convincing, "Dealing" is an essential entry in the gambling canon."

Michael Konik, author of "The Smart Money"

• Language: English
• Publisher: Prerogative Publishing
• Release date: Sep 16, 2017
• ISBN: 9781386200116

Brian Saady

Brian Saady is a politically-independent author who has a healthy dose of criticism for both major political parties. The pages of his books are filled with eye-opening revelations that are backed up with extensive, academic-style documentation. Although some of the subject matter is complex and controversial, his expert analysis is easily digestible and it provides the necessary balance to inform both casual readers and devoted academics. Brian is a freelance writer whose work focuses on corruption, crony capitalism, human rights, and civil liberties, among other issues. He has been published by a diverse group of news outlets that spans the full political spectrum, i.e. Centrist, Liberal, Conservative, Libertarian, Progressive, etc. That list includes The Palm Beach Post, CounterPunch, The American Conservative, AntiWar.com, Leafly, The Mises Institute, High Times, Blacklisted News, among others. He is also a special contributor to Gambling 911.

Book preview

Introduction

Every year the top Republican presidential candidates travel to the Venetian Resort and Hotel in Las Vegas. It’s an odd location for a group of self-described family values conservatives, but they don’t make the trip to Sin City for the action. Instead, they give speeches and field questions from the audience at the Republican Jewish Coalition. This conference serves as an unofficial political fundraiser to gain the favor of one man, the casino mogul Sheldon Adelson. He is the 8th wealthiest man in the world and that’s why each candidate kowtows publicly to this one man’s agenda. That’s also why this event is informally known as the Adelson Primary.

Adelson’s political contributions alone can keep an irrelevant candidate’s campaign afloat long after the music has stopped, just as it did for Newt Gingrich in 2012. You would naturally assume that Adelson handpicks candidates who will support future proposals to legalize more forms of gambling, thereby expanding his gambling empire. However, that isn’t the case. Adelson prefers a protectionist approach by bankrolling moral politicians who oppose expansions of legalized gambling. These kinds of charades to crush competition are a recurring and well-documented theme with the politics of gambling.

Adelson is far from the exception to the rule. There is often much more to the picture than what meets the eye with gambling legislation. You have to follow the money. With most anti-gambling bills, there is usually a casino lobbyist not far in the background filling the campaign coffers of the conservative politician who wrote the proposal. You will read many interesting examples of high profile names, like Donald Trump and Jack Abramoff, who have tried to stifle their competition through unusual means.

Casino industry lobbyists are often the strongest advocates for cracking down on illegal gambling, i.e. protecting their turf. For example, the American Gaming Association (AGA) held a conference, the Stop Illegal Gambling – Play it Safe initiative, with top law enforcement officials and some state Attorneys General. The motivations of these industry insiders become clearer when they use the same alarmist talking points of moralist conservatives. For instance, Geoff Freeman, President/CEO of the AGA, told reporters at that same conference, This (illegal gambling) isn’t a victimless crime. The AGA even asserted that illegal gambling proceeds fuel human trafficking.

The Stop Illegal Gambling – Play it Safe initiative took place in a very symbolic location for the gambling debate—Biloxi, MS. Legalized gambling created such a positive economic boom for the poorest state in the 1990s that it was dubbed by economists as the Mississippi miracle. However, Mississippi’s gambling industry isn’t as lucrative twenty years later because there is much more competition from other states where casino gambling has been legalized.

According to the AGA, the legal gambling industry now generates $240 billion in revenues, $38 billion in taxes across 40 states, and supports 1.7 million jobs. The net positive economic benefits are obvious, but legalized gambling is first and foremost a matter of personal freedom. The vast majority of Americans, 86%, believe that you have a fundamental right to gamble your own money. That means that the gambling debate shouldn’t be focused on legalization versus prohibition. Instead, the debate should focus on how to properly tax and regulate the industry to protect consumers.

Proper regulation is the key to minimizing the issue of pathological gambling. The prevalence of gambling addiction is far less than what you might expect. This addiction affects a very small percentage of the adult population, roughly 1%, and the figures are derived from a variety of credible sources, including the Harvard Medical School’s Division on Addictions, the National Research Council, among others. Therefore, it doesn’t make sense to punish the rest of society. Like the drug war and the prohibition of alcohol, history has proven that outlawing gambling has barely affected the demand.

You would be utterly flabbergasted if you were looking for consistency with our country’s gambling laws. There are only two states without a single type of legal gambling. Nevertheless, our police often conduct wasteful, undercover investigations into social gambling among friends. Gambling raids aren’t nearly as common as drug raids; but, as it is true with the drug war, our criminal justice system is corrupted by the revenues that gambling busts can generate through asset forfeiture. Convictions for vices, like drugs and gambling, represent the easy path for the government to portray an image of law and order. However, these cases are a waste of taxpayer money and squander resources that could reduce actual crime.

Meanwhile, almost every state government benefits from the most exploitative form of gambling, the lottery. In fact, the government actively encourages this type of activity with mass advertising campaigns. With that said, even when accounting for all of the inherent flaws associated with the lottery, it certainly beats the alternative. Legalization, taxation, and regulation eliminated the bloodshed of the past when this same activity was operated by organized crime syndicates via the policy or numbers rackets. 

There is a long and well-documented history of organized crime dominating black market gambling. Consequently, the potential harms and dangers associated with gambling were exacerbated by their control. With that in mind, folklore has chronicled the backroom con artists and Mississippi steamboat card cheats from America’s early days. Suffice it to say, they were the true winners when gambling remained in the shadows of the black market without regulation. Consequently, the revenues from illegal gambling resulted in rampant political corruption. Thus, the local crime bosses often handpicked their favored candidates. Some of the most extreme examples of these unofficial primaries resulted in the political machines of Tammany Hall in New York City and Nucky Johnson’s Boardwalk Empire in Atlantic City.

Corporate CEOs have replaced the mafia bosses who controlled the various gambling rackets. Americans are understandably fascinated with the history of the mafia and how deeply intertwined it is with the history of gambling. The true story of gambling can’t be told without profiling people such as Meyer Lansky, Bugsy Siegel, Frank Rosenthal, Arnold Rothstein, among several others. There is a popularized, Hollywood version of events leading to Las Vegas’ earliest casinos, but those accounts aren’t entirely reliable. After all, you may be surprised to learn that one of the first pioneers of modern Las Vegas was a corrupt Los Angeles cop who skipped town to sidestep the local authorities.

This book has a heavy focus on the two main forms of black market gambling remaining in the U.S., Internet poker and sports gambling. Also, the growth of the daily fantasy sports industry is examined. The details will demonstrate the tremendous benefits our country would receive from legalizing these activities and expose the hypocrisy of the corporate interests that keep it illegal. The U.S. government continues to conduct lengthy and costly investigations into illicit gambling companies that operate legally in sovereign nations. Additionally, you will learn the intriguing backstory of how the offshore gambling industry began and the stories of that industry’s pioneers.

These offshore companies used to operate within the gray area of the law while avoiding much dissent from the American public. Nonetheless, a small group of Congressmen responded by attempting to shut down the industry as a pet project. They tried persistently for nearly a decade, but they couldn’t get their proposals passed in an honest manner. They even made desperate and dubious claims that offshore gambling was linked with terrorism, yet they still couldn’t garner enough support. In the end, this small group of Congressmen was able to pass their anti-gambling bill, which violates international treaties, through nefarious means. The details surrounding that bill illustrate how our political system truly functions and America’s larger problem with extensive legalized corruption.

The myths and stereotypes surrounding gambling provide the fuel for that kind of sanctimonious lawmaking. One of the focal points of this book is to lift the fog of mystery surrounding Internet poker, sports gambling, and the professionals who have consistently made their living from what most people consider a recreational game of chance. What’s more, there is a fascinating history surrounding the formation of the point spread. After all, there is a perception disconnect that labels the sportsbook industry as illicit when the real mechanics of the sports betting market are nearly identical to the financial markets. The main difference is that gambling is stigmatized. In fact, some of Wall Street’s leaders are now the head operators of the gambling industry.

Again, the issue of legalized gambling shines a light on the corruption and hypocrisy of our government. And there is no better example than the build up to the financial crash of 2007 and the simultaneous crackdown on illegal gambling. These true events unwound like a conspiracy from a dime novel and the irony and coincidences are absolutely uncanny. There is an interlocked web of malfeasance involving the revolving door between the government, private sector, and corporate lobbyists who quietly determine the laws in this country.

The too big to fail banks that launder money for the drug cartels are the same companies that crashed the economy from a form of ultra-high stakes gambling insured by the taxpayers. In an ironic twist, the moralist politicians who rallied to protect Americans from the dangers of gambling were the same people who drafted the laws that facilitated the financial crash. Another key point is that the most profitable offshore gambling company, which was located in a country where few Americans can point to on a map, was held to higher standards of regulation than the most well-known Wall Street titans.

The crimes committed by Wall Street collectively defrauded unsuspecting Americans out of billions of dollars. Nevertheless, our nation’s top prosecutors have given these corporate gangsters a free pass. The Department of Justice determined that offshore gambling operators, who are merely guilty of committing crimes between consenting adults, merited punishment to the full extent of the law. In the end, the reward for these double-dealing civil servants came about when they left their government jobs. Upon return to the private sector, they were welcomed back with lucrative positions at the top law firms representing the too big to fail banks. Coincidentally, those same law firms are the power brokers that lobbied for key anti-gambling legislation. To sum up, gambling is an all-encompassing issue with far-ranging, unforeseen ramifications and the following chapters were inspired with the hope of doing this issue justice.

1 The Failure of Outlawing Gambling and the Connection with Organized Crime

How was I to know those gambling joints were illegal? There were so many judges and politicians at the tables, I figured they had to be all right.

Moe Dalitz, former bootlegger and Las Vegas casino pioneer[1]

The fascination and allure of gambling has a long tradition in America, long before this country declared its independence. Spanish conquistadors introduced playing cards to the Native Americans.[A][2] Likewise, card and dice games were popular among the settlers, but horse racing was arguably the most prominent form of gambling in the colonies. The first American race track was built in Long Island, NY in 1665 and many more emerged throughout the colonies, particularly southern colonies.[3] Notably, some of our founding fathers were fans of the sport, including George Washington who even documented his gambling wins and losses.[4] This English tradition, dubbed the sport of kings, had an air of exclusivity. Thus, rules were put in place with prohibitively high minimum bets to ward off gambling from the masses, but the lower classes simply bet privately among themselves.[5]

Our country would look quite different if the founding fathers had instituted more pious policies towards gambling. State sponsored lotteries funded several of the infrastructures that we take for granted. George Washington, along with many other founders, supported lotteries to finance the government without direct taxation. The proceeds paid for various public works projects such as schools, roads, bridges, canals, and public buildings.[6] For example, the Philadelphia Common Council started a lottery in 1746 at the behest of Benjamin Franklin to raise funds for defense.[B][7] Likewise, numerous private-enterprise lotteries funded a variety of projects such as colleges, including Harvard, Yale, Dartmouth, Princeton, and Columbia. In fact, many churches were built during this time period from the proceeds of private lotteries. Seemingly in an attempt to repress this newfound independence, the Board of Trade in England attempted to ban lotteries in the colonies. It then should be no surprise that the United States Board of Treasury established a national lottery in 1776 to help with the war effort.[8]

Many of the most popular casino games of today were originally introduced to Americans in New Orleans. Gambling in New Orleans had been tolerated or decriminalized since its formation and the city became the unofficial hub for American gambling after the Louisiana Purchase. Nonetheless, gambling was officially banned as a formality for Louisiana to become a state, but the ban didn’t last long. New Orleans began to license and tax gambling businesses in 1815.[9]

Gambling halls in the 19th century were generally drab places. However, New Orleans hosted the first American casino to feature some of the luxuries and amenities associated with modern casinos. John Davis, a man who moved in the city’s loftiest social circles, established the posh Orleans Ballroom and the Theatre d’Orleans. He added several gambling tables in 1827, thereby catering to the requests from the city’s aristocracy. John Davis also differed from most gambling operators in that his establishment didn’t cheat the customers.[10] Despite having a licensing system, gambling halls in New Orleans were notoriously untrustworthy at this time as there were no real regulations. The city’s only real regulatory concern was collecting licensing fees. New Orleans was tagged with a reputation for running crooked gambling halls and that didn’t change until 1881 when the Mayor Joseph Shakespeare threatened to shut down any casino that was guilty of ripping off their customers.[11]

The common thread running through most of the popular casino games was their French origin. Faro was introduced in New Orleans by French settlers. Few people play faro anymore, but in the 19th century it was the most popular card game. Poque was also introduced by the early French settlers. Americans initially mispronounced the name as poke, but the game was generally called poker by 1825.[12] Also, roulette (little wheel in French) first appeared in Paris in 1796 and that game was introduced to Americans in New Orleans as well.[13]

A Louisiana politician, Bernard de Marigny, is credited with introducing craps into American culture. He was taught a version of the English game hazard by a French monarch, Louis Philippe (the Duke of Orleans). Marigny simplified the game into the current game of craps. But even as an innovator of the game, he had no competitive advantage. Marigny lost so much money playing craps that he needed to sell some of his land, which was later turned into city blocks in New Orleans. One of the blocks was named Rue de Craps, but the street was later changed to Burgundy because of the history behind the former name.[14]

The popularity of these games spread throughout the country in large part due to wide-open gambling in the steamboat industry along the Mississippi River.[C][15] Various towns passed anti-gambling laws, but they weren’t thoroughly enforced. Despite a notoriety for crooked card games aboard steamboats, gambling was part of the allure. Steamboat captains typically didn’t object to the open gambling on their ships as long as the games were honest and many even considered it bad luck if there were no gamblers on board.[16]

These steamboat captains were known to take strong measures if a cheater, or blackleg as they were called then, was exposed. In one incident, a minister fell prey while the ship was docked in Natchez, MS, a popular gambling destination. This man of the cloth was fleeced of all his cash at a gambling hall located on the dock. The ship’s captain, John Russell, along with his crew, obviously viewed him as a compelling victim and they confronted the grifters. At first, these card cheats refused to return the money, but they changed their minds after Russell threatened to tear down the gambling hall by dragging it into the river attached to his boat.[17]

These kinds of scams were fairly commonplace and the people who benefitted the most from restrictive gambling laws were the card cheats or card sharps. (The term for this type of hustler has shifted over time to card shark.) The laws were well-intentioned, but they didn’t curb demand. On the other hand, it was also unrealistic to implement a proactive approach with government regulations at that point in American history.

Two of the most legendary Mississippi riverboat card sharps were business partners, George Devol and William Jones aka Canada Bill. Naturally, fist fights with disgruntled losers were commonplace in this line of work; however, Devol developed a dangerous reputation for using his head in fights. His headbutts were so vicious that he even knocked a circus performer, Billy Carroll, unconscious. Bear in mind, Carroll had previously broken doors and barrels with his head as part of his act.[18]

Professional gamblers often worked in groups, and to avoid suspicion they sometimes dressed in distinctly different ways, including as an immigrant, a preacher, or a cowboy, etc. As one of his ploys, Devol paid black people to refer to him as master to solidify the image of a wealthy southern plantation owner, rather than be openly identified as a hustler. Clearly, Devol had a profitable collection of schemes and one of his former employees, Pinckney Pinchback, eventually learned enough tricks to branch out on his own. Pinchback made enough money to run for political office and became the first non-white governor of Louisiana.[19]

Faro was the card game of choice for suckering unsuspecting victims, stool pigeons, into confidence games or con games. The term stool pigeon (referring to the victim) derived from hunters placing dead birds on stools as bait. The meaning of this term has since changed into a label for a criminal informant.[20] Anyhow, crews of card sharps had various methods, often literally up their sleeves, to swindle unsuspecting strangers out of their money. Some were as simple as placing magnets under a roulette wheel or piercing playing cards to mark certain cards. Some had a system of signals, including the number of puffs from a cigar, scratching, or positioning a walking stick, etc.[21] Some dealt from the bottom of the deck or dealt seconds, a method that held the top card for a specific player.[22]

A writer, William C. Hall, detailed a scam that he fell for in Natchez, MS. Hall was challenged to a game of three card Monte by a seemingly drunk card dealer, but he didn’t want to take advantage of the man. A bystander who was dressed as a farmer approached Hall and told him that the drunk wouldn’t be satisfied until he had lost all of his money. The farmer then convinced Hall that he would hold the winnings and give it back to the drunk once he sobered up. However, the core element of the con game was that the dealer was only pretending to be drunk. The dealer immediately sobered up after Hall agreed to play and he subsequently won $500.[23] Again, these kinds of tales were commonplace.

A genre emerged in which reformed gamblers published books detailing the numerous methods of card cheats. One of those authors, Jonathan H. Green, was a supposedly reformed card cheat and born again Christian. He wrote a series of books that exposed various methods used to fleece unsuspecting gamblers. He toured the nation delivering lectures warning people about the dangers of gambling. In the process, he apparently preyed upon his listeners’ gullibility. During Green’s lectures, he convinced his audiences that there was a vast conspiracy in which all playing cards had secret markings. In order to prove his point, he guessed the correct card every time for the crowd. However, it turned out that Green was also pulling a scam. He used hidden mirrors to identify the cards correctly.[24]

In the 1830s, a social movement spawned with the purpose of suppressing gambling, and in particular, gambling con artists. In fact, the term professional gambler was widely synonymous with a thief during this era.[25] Again, at that point in history, the solutions for the pervasive fraud in the gambling industry, i.e. proper licensing and regulations, simply weren’t feasible. Hence, many people decided to take the law into their own hands. In one such case, Cincinnati’s Mayor needed to deputize hundreds of extra police in 1835 to prevent vigilante groups from burning down gambling halls and lynching the gamblers.[D][26]

Surprisingly, an anti-gambling sentiment thrived during an era in which an avid gambler such as Andrew Jackson was the President. Even while in office, Jackson had two stables of racing horses. His biographers labeled him as the most roaring, rollicking, game-cocking, horse-racing, card-playing, mischievous fellow that ever lived.[27] At one point in his life, Jackson wagered his entire life savings on a race in order to get himself out of debt. Jackson had even killed a man in 1806 in a duel that came about from a dispute over a horse race. The man he killed, Charles Dickinson, accused Jackson of reneging on a bet. Jackson was also shot in the chest during that duel and the bullet was never removed.[E][28]

Plenty of western towns passed anti-gambling laws in hopes of preventing the numerous gambling disputes that were settled with a quick draw gun duel. The term one-eyed-man, in reference to a cheater, came about during this era. As the story goes, a one-eyed man was caught cheating in a card game. His accuser pulled out a revolver warning, If I catch any sonofabitch cheating I will shoot his other eye out.[29] Likewise, the poker term dead man’s hand also originated during this period. James Butler Hickok or Wild Bill had a reputation for gun duels over card games and developed a lengthy list of enemies. That was why he always sat with his back to the wall. However, the only available chair for his last card game in Deadwood, South Dakota had its back to the door. Legend has it that Wild Bill was holding black aces and 8s when he was shot in the back of the head.[30]

Interestingly, there weren’t as many tales of quick draw disputes over card games in San Francisco due to the city’s reputation for fair games. In fact, the gambling establishments of San Francisco had an air of refinement. The card dealers were required to wear professional attire. Also, San Francisco was one of the first cities in the west to feature female card dealers.[31] According to the Annals of San Francisco:

Gambling was the essential amusement—the grand occupation of many classes. Judges and clergymen, physicians and advocates, merchants and clerks, tradesmen, mechanics, laborers, miners, and farmers, all adventurers in their kind—everyone elbowed his way to the gaming table, and unblushingly threw down his golden or silver stake.[32]

The gambling boom in San Francisco coincided with the gold rush. San Francisco’s first gambling establishment, El Dorado, was originally a 15 x 25-foot tent built in 1848. By 1850, there were over 1,000 gambling houses. And El Dorado was later constructed into a four-story brick gambling house that rented for $40,000 a year during the gambling boom.[33] All of the gambling halls in the city were licensed and the government collected a percentage of the revenue up until 1855. That’s when California law banned most open forms of