“There is no such thing as good money or bad money. There’s just money.” —Charles “Lucky” Luciano
Las Vegas had a rich history of mob influence in its early years and one aspect of that story had to do with how the casinos in Las Vegas were financed. The names of Jimmy Hoffa, Allen Dorfman, and the Teamster’s Central States Pension Fund are all a part of that story—as are numerous accusatory newspaper articles, books, movies, and organized crime hearings held long ago in our nation’s capital.
Many years ago I had the opportunity to talk about much of this with the first chair of the Nevada Gaming Control Board (Robbins Cahill, appointed 1955), the third (Ed Olsen, appointed 1961), and a past U.S. Senator from Nevada (Alan Bible 1954 to 1974). It was suggested by these gentlemen that there were challenges brought on by unsavory people in the early days of the Las Vegas casino experience, but there were certain advantages to having the Central States Pension Fund (and other such funds) used in the financing of casinos. These three gentlemen all suggested it was very hard to find finance capital for casinos because many of the normal sources would or could have nothing to do with the industry. In that sense, the Teamster’s money was one of the more convenient ports in a storm.
A second advantage to having union money involved in the casino industry is a bit more nuanced. One must understand that using a law-and-order platform to launch a political career is not a new shtick, and back in the day many national politicians found it convenient to attack Nevada as a means of establishing their credentials as crime fighters. It has also been suggested that some of these attacks were what we might today call fake news – that is, they were a bit wide of the target or exaggerated. Moreover, attacking Nevada had little consequence for there were few people in the state, and while Nevada had two senators, it only had one congressman, and this was a very small congressional delegation to fight off any national attacks on the state or the casino industry. It must also be remembered that at this time, Nevada was the only state with legal casinos.
What this meant is the three members of the Nevada congressional delegation often needed friends in high (or low) places. By having money in the state from the Teamster’s Pension Fund, and similar groups, the Nevada delegation gained the support of those states that had strong union representation. In short, if a national politician were to attack the casino industry, Nevada could rely on its union-aligned friends from Illinois or Michigan, to mention two examples, to come to the state’s defense on the legislative and political side of things.
It is admitted that Nevada did have some curious people involved in the financing of some of the casinos in the state, and it was both this perception and reality that resulted in an ever-increasing effort on the part of the Nevada regulators to ensure that sources of finance had something that could be defined as good character. In other words, the regulatory scrutiny to ensure suitability was cranked-up, and this, when combined with a public relations campaign asserting this was all “gold standard” stuff, created a great deal more comfort that the sources of finance for casinos in Nevada was all copacetic.
Of course, all of this was back in the day—or so that is what has been sold to the world.
Imagine my surprise then when it was recently announced that Leon Black, of Apollo Global Management—which controlled several gaming companies at the time, including the mighty Caesars Entertainment—had paid Jeffrey Epstein $158 million for advice on things, understanding Epstein had been jailed as a sex offender in relation to an incident with a teenager. Beyond this conviction, a great deal of additional information has surfaced to suggest that Epstein possibly did not learn his lesson from this one event and potentially had developed a bad habit of sex trafficking with underage girls—and it was for this reason that he was locked up in the cell where he committed suicide in August 2019.
$158 million! Who knew that Jeffery Epstein could give such good advice? And who knew one of the richest people in the world, a man who could choose advisors from anywhere on the planet, would pick Jeffrey Epstein? Now I understand why President Clinton, Kevin Spacey, Prince Andrew and others liked to fly on Epstein’s plane, nicknamed the Lolita Express, to his estate in the Virgin Islands—it was all about getting good… advice.
I would guess that those readers like me who were born at night, but not last night, will find this story fascinating.
I have submitted about 120 gaming applications in my life and it is my sense that if I had a transaction sending a bunch of money not evidenced by a contract, to a person who had been jailed as a sex offender with a teen victim, it would have become an issue—even if he did give me good advice on things. But then it appears that the people who first discovered the massive amounts of money flowing from Mr. Black to Mr. Epstein were not with one of our gold-standard regulatory agencies, but rather this discovery was accomplished by an enterprising newspaper reporter. It is interesting what a curious person can find by looking.
I also found it interesting that a founder at TPG Capital, Mr. William McGlashan, will be spending a bit of time in prison and paying $250,000 for wire fraud and honest services wire fraud. Unfortunately, he did not pay Mr. Epstein for advice, for had he, he may have understood that it is unusual to get your son into USC profiled as a football player when he really isn’t qualified to play football for USC, and that the person who takes the ACT test is supposed to be the person whose name is on the test.
The biggest crime of Mr. McGlashan, of course, is doing this to his son. It is never cool for a father to take an action to ensure that a son clearly understands that his father thought he was not good enough on his own merits.
All of this proves one of my favorite theories about gambling and that is that the involvement of organized crime in regulated gaming is over. What is happening now is very unorganized.
What makes this all very interesting to me as a student and observer of regulation for almost five decades is that the regulators used to look for this sort of thing. I am curious if they still do.