Sometime in the late 1930s or early 1940s, mobster Benjamin, "Bugsy," Siegel looked out at the barren deserts around Las Vegas and imagined yet another way for organized crime to make money from gambling. He was already good at exploiting opportunities.
He'd come West in 1937, partly to avoid the heat in New York and partly to expand the New York Mob's influence to the Pacific Coast. He took over unions, made bookmaking operations more productive, and took over some of the gambling ship operations that thrived just three miles off the coast of Los Angeles. He even established a nationwide bookmaking wire service.
As Los Angeles went through a reform cycle, there were less and less opportunities there. Besides, most illegal activities had been pushed about as far as they would go. Las Vegas offered different opportunities.
Siegel understood that casinos and organized crime were like a match made somewhere, though probably not in heaven. Casinos could function like giant money laundries for the cash that illegal enterprises generated. And, because they also made money, they offered lots of opportunity to skim profits.
There was a lot unattractive about Las Vegas then. It was small and very rustic. It was hotter than blazes in the summertime. But there were two things about Las Vegas that drew Bugsy Siegel.
First, it was close to Los Angeles. People in LA who wanted to gamble could get to Las Vegas. The other reason was that gambling was legal in Nevada.
The Nevada Legislature had legalized gambling in 1931. That meant you could have a gambling operation that operated out in the open. Bugsy had exploited all the illegal ways he could to make money for the Mob from illegal gambling. Legal gambling would provide additional opportunities.
Bugsy started building his casino, the Flamingo in 1945. Other casinos followed. There was another building boom in the mid-1950s, another in the mid-1960s and one in the 1980s. Each time the casinos got bigger and more elaborate. But lately there's been all kinds of competition.
Indian tribes have set up casinos on their land. States have instituted their own forms of legal gambling including lotteries and off-track betting. And then came the Internet.
Technically, gambling on the Internet is illegal. State laws say so. So does the Federal Wire Act of 1961. But that hasn't stopped people from gambling. That should not be a surprise. Throughout time, no matter what the laws said, people have continued to gamble.
That's still true in the Digital Age. A December 2002 report by the US General Accounting Office (GAO) estimates that there are 1800 gambling sites. Christiansen Captial Advisors estimates that they will take in $6 billion in 2003.
Some of today's Internet gambling sites are like Bugsy's gambling ships. They operate outside the jurisdiction of the US. And, they're a lot like Bugsy's original idea for Las Vegas, too, a site that one jurisdiction says can have legal gambling, but easily reachable from another spot where gambling is illegal. 73 governments have authorized Internet gambling in some form.
This situation has resulted in a contest between individuals who want to gamble on the Net and a government that wants keep them from it. There have been virtually no prosecutions of individuals for gambling under existing law. Instead, the pressure is put on credit card companies to get them to refuse authorization of payment to known gambling sites.
The largest US banks, including Citibank, Bank of America and Wells Fargo will not let their credit cards be used for online gambling. Even the card issuers who are often more willing to make risky transactions, folks like MBNA, Capital One and Providian have climbed on the no-gambling-sites bandwagon.
Why? Well, for one thing there have been lawsuits where card holders have refused to pay their gambling charges because that gambling is illegal. But that doesn't represent a whole lot of money.
The big fear of those card issuers is that they will be prosecuted under the Racketeer Influenced and Corrupt Organizations (RICO) statutes. Those would be serious, federal criminal charges.
That won't stop the folks who really want to gamble. They'll find that there are numerous ways to get around having an online casino charge their credit card. They include charges by what are supposedly third parties and cash transfer services. As long as there are folks who want to gamble online there will be other folks willing to help them find a way to do it.
It's not clear how this will all come out, but the stakes are pretty high. That same GAO report estimates that online gambling revenue will climb to $14.5 billion by 2006. By that time, though, other countries will have more folks gambling online than they have now and the US share of online gambling will fall from half to one quarter.
Ultimately, the stakes got pretty high for that suave sociopath, Bugsy Siegel. He took the opportunities presented to him to skim some personal revenue from the Flamingo Hotel project. Meyer Lansky and the other mob folks who were paying the tab didn't like that very much at all.
On June 20, 1947, Siegel was gunned down at his home in Beverly Hills. At just about the same moment, 300 miles away in Las Vegas, three of Meyer Lansky's men showed up at the Flamingo Hotel and declared that they were taking over.
