Maintaining Gaming Integrity is Not Optional

When the Mob controlled Las Vegas, it counted on union president Jimmy Hoffa (l.) to steer millions in Teamster dues to casino owners who had no other way to finance their operations. And only when Nevada and later New Jersey began to insist on squeaky clean operators was it able to find traditional financing sources.

Maintaining Gaming Integrity is Not Optional

Here is a headline from the New York Times in 1978: “The Mob Gambles on Atlantic City.”

Here is a headline from the Organized Crime and Corruption Reporting Project in 2021: “Italian Mafia Bets on Illegal Online Gambling.”

History, it seems, does not necessarily move in a straight line. Sometimes, history is simply a loop. The relationship between organized crime and gambling has waxed and waned over decades, but the link between legal, regulated gaming and illegal, unregulated gambling has never been—and likely will never be—fully severed.

The similarity between those two journalistic examples is remarkable and jarring. Even though the reports were separated by nearly a half century, they underscore a necessary underpinning of gaming regulation: The need for vigilance and a reliance on strict requirements can never be relaxed.

This notable example of history repeating itself is made even more remarkable by what can only be deemed a willful misunderstanding of why gaming regulation exists and what it has accomplished.

From 1931 through the spring of 1978, legal casinos existed in only one state: Nevada. And the pre-1978 history of Nevada gaming was not pretty. This reality was succinctly summed up by none other than the Mob Museum, which notes on its website:

  • Las Vegas doesn’t have a statue of Jimmy Hoffa, but some folks think it should. Hoffa, the one-time president of the International Brotherhood of Teamsters union, helped steer millions of dollars to Las Vegas for investment in casinos and other projects.
  • With the Teamsters investments, however, came some big strings: Mob infiltration and sometimes outright control of those properties, including some of the biggest casinos in Las Vegas. Federal and state regulators (and legitimate investors) eventually wrested control of the casinos away from the Mob, but the link between organized crime and the Teamsters led to federal government oversight of the union.

New Jersey’s successful effort to end the Nevada monopoly was based on the simple principle that the influence and presence of organized crime needed to be fully excised from the licensed, regulated gaming industry. This extraordinary effort was founded on the simple principle that a gaming license should be a privilege granted only to those who affirmatively demonstrate their good character, honesty and integrity.

New Jersey, as well as Nevada and other states, determined to make that principle universal, and to put forth extraordinary law-enforcement efforts to make sure that organized-crime figures paid a price for such illicit activities.

Have such efforts worked? Consider that, pre-1978, casino operators depended on the Teamsters Central States Pension Fund and similar shady organizations for capital. Post-1978, casino operators could turn to Wall Street for financing.

The very fact that, in 2021, about 1,000 casinos operate legally in nearly every state is a similar testament. But the news out of Malta shows that this is no time to take a victory lap. Nor is it a time to forget history.

A trial balloon has been quietly floated to address the tensions between legal and illegal online gaming, including offshore sports betting operations, by allowing illegal operators to become legal.

At one level, that might be quite appealing, as it argues that those who have bent, twisted or ignored the rules that govern gaming can come in from the dark and participate in legal gaming operations, and pay their fair share of taxes.

At another level, however, that is a troubling suggestion that raises difficult questions:

  • Can those who have flouted the laws and regulations governing legal gaming meet the global standards for demonstrating their good character, honesty and integrity?
  • Would licensing those who do not meet those standards have an impact on the hard-earned image of legal, regulated gaming licensees?

Note that, when Nevada and New Jersey led the effort to clean up the industry and make it reputable and taxable, it did not simply license the unlicensable. Standards were established, and standards were maintained.

Requiring black-market or gray-market operators to pay taxes, or to have their platforms tested is not enough. That would send out the wrong signal that standards are being watered down and that, in the worst case, that crime can indeed pay.

To make that case, we can go back further than 1978. George Santayana, who died in 1952, put it bluntly: “Those who cannot remember the past are condemned to repeat it.” Like Jimmy Hoffa, Santayana does not have a statue in Las Vegas either. But in each case, it might be worthy of consideration.

Articles by Author: Michael Pollock

Michael Pollock is managing director of Spectrum Gaming Group (www.spectrumgaming.com), which has worked in 40 U.S. states and territories and in 48 countries on six continents. Its clients include 22 U.S. state and territory governments, six national governments and 22 Native American entities. Spectrum serves as executive director for the National Council of Legislators from Gaming States (NCLGS).