Howard R. Hughes, Jr. and his Influence on the Transition from Gambling to Gaming
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Howard R. Hughes, Jr.
and his Influence on
the Transition from Gambling to Gaming
by Tyrus Mulkey
I wrote the following term paper gaming industry. A business that was
in 1994 for a class called “Sociology once isolated in the State of Nevada
of Gambling”, which I took at UNLV and run by the mob has grown into a
as part of my curriculum to earn a nationwide industry that is corporate
Bachelor of Science in Hotel controlled. It will soon be a half-tril-
Administration. Dr. Frey gave me an lion dollar a year industry; with casi-
‘A’ and placed the paper on reserve in nos not only in Nevada, but on river-
the Special Collections Department at boats in the Mississippi, on Indian
the UNLV library. It is still there reservations throughout the nation,
today. I conducted heavy research and land based casinos in a few
when I wrote this paper, but, as you states. The mob may have run Las
can tell by some of Mr. Maheu’s Vegas with a strong hand from the
comments, there is a lot of inaccuracy forties through the sixties, but they
out there. were not capable of transforming the
sawdust floored gambling joints of
Earlier this year, I was able to yesterday into the billion dollar gam-
spend some time with Mr. Robert A. ing resorts of today. It was corpora-
Maheu, who was Howard Hughes’ mend it. Next To Hughes, published tions that were able to raise the capi-
right-hand man during the Las Vegas by HarperCollins, was printed in tal needed to grow; and the corpora-
chapter of his life. He graciously 1992. It is often available on ebay. tions could not have done it without a
offered to critique my paper and gave law that was passed in 1969 to
me permission to include his com- “Howard Hughes has put a Good accommodate Howard Hughes and
ments in this publication. Thanks Housekeeping Seal of Approval on The Hughes Tool Company. [RAM:
Bob! I have indicated his comments Las Vegas gambling and “Hughes did not need this law and, in
in italics with his bolded initials pre- has exorcised the last ghosts of the fact, opposed it.” ToolCo was owned
ceding them. While some are exact bad old mobster days.” 100% by him, so he didn’t need the
quotes, others are paraphrased from Nevada Governor Paul Laxalt 1969 law. When the law passed, it allowed
my memory and, since Mr. Maheu other deep pocket corporations, like
has a heavy hand as a bartender, may Introduction Hilton, to come in and compete with
not be exact. If I’ve remembered him. Without the law, he had very lit-
incorrectly, I apologize. I have no Today's casino business is an tle competition.]
doubt Mr. Maheu will let me know industry that is respected throughout
and I’ll pass it along! the world. Casinos might not have This paper will examine the events
been accredited today had it not been that led to the legitimization of the
Thanks again to Mr. Maheu for for the actions of an eccentric recluse casino business. In particular, this
taking the time to read and critique and a government that was over-anx- report will explain why officials in
my paper and spending several after- ious to rid the state of a criminal ele- Nevada "bent the rules" to allow
noons with me going over the details ment. The marriage of Howard R. Hughes to enter into casino opera-
and telling me some great stories of Hughes, Jr. and the State of Nevada tions and how their decision changed
his life. He should write a book. Oh brought about changes in ideas, poli- the industry into an acceptable
wait, he has – and I highly recom- cies, laws, and perceptions for the American institution.
CASINO CHIP AND TOKEN NEWS | July · August · September 2004 61The Transition from Gambling to In 1959, the Gaming Control Act was that first caught his attention.
Gaming passed and the Gaining Commission Whatever the reason, by the mid
was created to work with the Gaming 1960’s, Hughes was a different man.
What a difference there is between Control Board.2 This new system of He was now more interested in priva-
the gaming industry of today and the gaming control was a step in the right cy than anything else. He was also a
gambling business just a short 30 direction, but it was not enough to restless man.
years earlier! In the 1960's, organized discourage organized crime from the
crime controlled casinos. Financing gambling business. Hughes had spent most of the pre-
came from the pension fund of the vious two years in hiding. As majori-
Teamster’s Union, and “skimming” The pressure to rid the state of ty stockholder of TWA, he was sued
and cheating were rampant. Today, organized crime continued to grow. In for mismanagement when the airline
casinos are operated by corporate May of 1963, the FBI sent the Justice nearly folded. As a result, manage-
management teams. Financing is Department a two volume document ment of TWA had been taken away
made possible through the stock mar- titled “The Skimming Report.” It from him by a judge and the new rep-
ket and banking institutions. There is explained skimming and stated that it resentatives of the airline were trying
no cheating and the industry enjoys a was taking place at an alarming num- desperately to subpoena Hughes.
healthy relationship with both state ber of Las Vegas casinos. This embar- [RAM: “It was not the judge who
and federal governments. rassed Nevada by showing the federal took away control.” Bankers in NY
government that the rigid license kept raising the interest rates on
These changes happened because standards and enforcement that were Howard. They pressured Howard to
of a transition in the industry. The supposed to free the gaming industry put his stock into a voting trust. At
date the transition began cannot be of any criminal element were simply that time, he owned 78% of TWA
pinpointed. The exact reason is even myths. Then in the summer of 1966, stock. When he put his stock in the
difficult to say. However, it is safe to the Chicago Sun-Times disclosed trust, it was valued at $10/share.
assume that it started with a man skimming to the public. This started a When he was forced to sell, it was at
named Estes Kefauver over fifteen barrage of unfavorable publicity that nearly $83/share. An interesting note
years before the arrival of Howard gambling profits in Las Vegas were is that when TWA was suing Hughes,
Hughes. being funneled into organized crime.3 he was in a position where he paid
The federal government threatened to for both sides of the lawsuit. He was
In the early 1950’s, Estes Kefauver take action if Nevada did not shape paying 70% of TWA lawyer fees suing
was a U. S. Senator from Tennessee. up. The state was not happy about the him and 100% of his lawyer fees
He was chairman of the senate com- possibility of federal intervention. defending himself!.] He was terrified
mittee investigating the influence that Nevada has always preferred to regu- of being seen in public and because
organized crime had on America. The late itself. The governor, the State he refused to appear in court, he was
final report issued by the committee Gaming Control Board, and even a ordered to sell all his shares in TWA.
was highly critical of gaming regula- private citizen started thinking of It is ironic that this “penalty” earned
tions in Nevada. In testimony before ways to legitimize both Nevada and him a profit of over $546,500,000!4
the committee, Nevada officials the casino industry. The pressure was [RAM: “Not quite correct.” He was
admitted that little or no effort had being applied from all sides. not ordered to sell the shares.]
been used to screen applicants. It was
a great boost to the career of Senator Howard Robard Hughes, Jr. The TWA failure put tremendous
Kefauver and a black eye to the State pressure on Hughes and his health
of Nevada.1 Howard Hughes was not a stranger deteriorated. Not only did he fail at
to Las Vegas. Before he became a business, but his wife, Jean Peters,
It was the Kefauver hearings that recluse, he visited Las Vegas several was threatening to divorce him. He
led to the creation of the Gaming times. [RAM: He actually spent a lot moved himself and his entourage to
Control Board in 1955. The sole of time in Las Vegas.] He was a mem- Boston under the assumption of seek-
responsibility of the board was to ber of the Hollywood social scene ing medical attention. However,
keep undesirables out of gaming, but and Las Vegas was one of the hot while in Boston, Hughes never saw a
it basically grandfathered in the unde- spots. Perhaps it was the 24 hour doctor. Instead, he plotted where he
sirables that were already in gaming. activity or the opportunity to blend in was going to live and what he was
62 CASINO CHIP AND TOKEN NEWS | July · August · September 2004going to do with his $546 million. in the Castro deal, which was in mob. Actually, he had absolute con-
Hughes despised paying taxes and he 1958/59. I moved to CA. in 1961 to tempt for the underworld. The hoods
knew he would have to invest the work for Hughes.] While Robert were wary of him and the mob bosses
money in order not to pay taxes. He Maheu’s life is extremely interesting, knew how he felt about them.12
had bought 25,000 acres of desert it is beyond the scope of this paper Hughes was furious when he found
near Las Vegas in the early 1950’s for and is only mentioned to stress the out that Dalitz owned the Desert Inn.
the same reason.5 It cannot be stated complicated and involved acquain- [RAM: “Wrong!” Howard knew
that this is the reason Hughes moved tances and circumstances that led to Dalitz owned the DI. He knew
to Las Vegas. He was a very private Hughes becoming a casino owner. Dalitz’s background. He did not dis-
man who did not share his ideas or Hughes was a very political man and, like the mob, he even asked Moe for
strategies with anyone. What is indeed, politics makes strange bedfel- advice several times.] As the holiday
known, however, is that he was con- lows. Maheu was very “politically season grew closer, Hughes refused
tacted while in Boston by a Las connected”, and he constantly used to leave and Dalitz kept raising the
Vegas man who was embarrassed of those connections for the benefit of rates.13 Dalitz became frustrated
his city and its’ connection with Howard Hughes. when his demands that Hughes leave
organized crime. fell on deaf ears. Dalitz told Hank
From the beginning, Maheu had to Greenspun he was fed up and ready
Hank Greenspun was the publisher make special request to his contacts to sell. Greenspun notified Ed
of Las Vegas’ smaller newspaper, The to accommodate Hughes. Las Vegas Morgan, the Washington attorney, and
Sun. He stated publicly that he would hotels are not in the hotel business, Morgan called Robert Maheu.14
like for his children to be able to tell they simply provide rooms to people
people that they were from Las Vegas who are there to gamble. When Dalitz’s partner in the Desert Inn
without being embarrassed. He noti- Hughes insisted on occupying an was Ruby Kolod, who had recently
fied Hughes that he would be wel- entire floor and the rooms directly been convicted on federal conspiracy
come in Las Vegas. He pointed out beneath his, no hotel wanted him. charges growing out of an extortion
that Nevada had no personal or cor- Maheu contacted Washington attorney case. The Nevada Gaming Control
porate taxes, no gift or inheritance Ed Morgan, a friend. Morgan repre- Board was determined to force Kolod
tax, and tax on real estate was limit- sented Jimmy Hoffa of the Teamster’s out of the gambling business. Maheu
ed. He also assured Hughes that his Union. The Teamster’s had financed contacted John Roselli, an important
privacy would be honored.6 Whether Cleveland mobster Moe Dalitz in mob boss in Las Vegas who was
this was the reason or not, Hughes acquiring the operating rights to the associated with Maheu during the
notified his right hand man, Robert Desert Inn.9 (The physical property Castro assassination attempt, and
Maheu, that he was going to Las was actually owned by Harry together they persuaded Kolod to sell
Vegas. Helmsley.)10 Hoffa asked Dalitz to let to Hughes. Over the next several
Hughes stay there. Dalitz reluctantly months, Maheu and Dalitz negotiated
Robert Maheu played an integral agreed, but only on the condition that the multi-million dollar deal. Maheu
role of Hughes’ Las Vegas Hughes would be out by mid had never met Howard Hughes, and
operations.7 He had recently left long December. The holidays have tradi- did not have written authorization
time positions with the CIA and FBI tionally been the busiest time of year from Hughes to represent him.15 The
and was now working for Hughes. for the casinos and the Desert Inn had wheels were in motion.
His duties with the CIA included a group of high rollers coming in for
counter espionage, Washington poli- New Year’s Eve and needed the The Gaming License
tics, and assisting members of organ- rooms. In the early morning hours of
ized crime in a failed assassination November 27, 1966, Howard Hughes Because tourism is the industry
attempt on Cuban leader Fidel arrived by private train and was trans- that supports the entire state, it is
Castro.8 [RAM: I left the FBI in ported to the top floor of the Desert imperative that the public perception
1947. In 1954, I started Robert A Inn. Only a handful of people knew of Nevada, and gambling, is positive.
Maheu & Associates and continued a he had arrived.11 The recent hostile publicity was dis-
relationship with the CIA. The CIA couraging tourism. Nevada needed a
was my 1st client. I did not assist Howard Hughes not only disliked way to repair the state’s tarnished
organized crime, I assisted the CIA paying taxes, he also despised the image. In January 1967, Paul Laxalt
CASINO CHIP AND TOKEN NEWS | July · August · September 2004 63took office as Governor of Nevada Hughes’ intention of donating money Harold’s Club in early 1969.] Within
and decided to be Hughes’ ally. The for a medical school, the Nevada one year, Hughes had spent $65 mil-
Justice Department was still cracking State Senate sponsored and enacted a lion in Las Vegas. His hotels – the
down on mob involvement in casinos resolution praising Hughes for his sixth, eighth, twelfth, and fourteenth
and Laxalt felt that Hughes’ presence generous offer to give the Silver State largest on the Las Vegas strip – had
would discourage further investiga- a medical school. That same day, 2000 rooms, representing twenty per-
tions.16 Hughes’ incomplete application for a cent of all hotel accommodations on
gaming license was unanimously the strip. Hughes was advised by his
The negotiations between Hughes approved.21 The next day, the Clark attorneys not to buy any more casinos
and Dalitz were finally settled in County Licensing Board granted the for fear of federal intervention con-
March of 1967 for $13,250,000.17 local license. Effective 12:01 A.M. on cerning antitrust laws.25 [RAM:
Hughes applied for a gaming license. April 1, 1967, Howard Hughes, 61 Howard’s attorneys did not want him
He also started political maneuvers. years old, was Nevada’s newest casi- to get involved in a lawsuit with the
Hughes had read in the paper that no boss. No one in the Hughes’ government.]
Nevada officials desperately wanted a organization was investigated or had
new medical school, but did not have any experience in gaming. [RAM: “I Hughes as a Casino Owner
the money, Hughes notified Laxalt was investigated and licensed.”
that he would give $4 - 6 million to When I was fired, the 7 casinos oper- Howard Hughes was the first to
establish Nevada’s first medical ated over 2 years without a license. I admit he knew nothing about operat-
school. Two days before the Gaming was asked to transfer my license to ing a casino. His first move was to
Control Board met to decide Hughes’ the Board of Directors of ToolCo, but find someone to run the Desert Inn
license, Laxalt announced Hughes’ refused.] No one in Nevada govern- for him. He chose Moe Dalitz! Dalitz
donation.18 ment had proof that Hughes was even ran the casino operations for Hughes
alive.22 Governor Laxalt stated that without salary. [RAM: Dalitz only
The Gaming Control Board has Hughes’ donation for a medical ran the hotel for the two week interim
strict requirements for approving school “had nothing to do with the period from the close of sale in mid
gaming licenses. This includes an in- application for a gaming license.” 23 March until April 1st when Hughes
depth personal investigation of the took over at the start of the new quar-
applicant, submission of financial Buying Las Vegas ter.] He stated he thought Hughes
statements, fingerprints and photo- was good for the gambling industry
graphs of the applicant, and a person- In July of 1967, Hughes bought and the state of Nevada and was
al appearance before the board. the Sands for $14.6 million. His buy- happy to help him.26 This is ironic
Basically, an applicant is subject to ing spree had begun. The Frontier considering the feelings Hughes had
“full disclosure” of his life to the was his next purchase. The sale was for the mob bosses.
board.19 made on September 22,1967.
However, the license was not When Hughes started acquiring
Howard Hughes was an exception. approved until two months later. In a other properties, he took more of an
He is the only person to receive a special midnight meeting using a con- interest in operations and started
gaming license without appearing ference call, the Gaming Control implementing new policies. [RAM:
before the board. He never submitted Board, without all of the members “Wrong.” I immediately set up the
a photograph and an old set of finger- present, granted Hughes the license cages with full accountability. I
prints was used. Gaming Control for the Frontier. He then bought the brought in Haskins and Sells, which
Board Chairman Alan Abner admitted Castaways ($3 million) and the Silver is now Deloitte and Touché, to control
no Nevada gaming authorities had Slipper ($5.3 million). In September the cages, so no one else, from the
ever met Howard Hughes. He stated, 1968, Hughes bought the half built old-timers to any of Howard’s repre-
“Howard Hughes’ life and back- Landmark ($17.3 million), but it was sentatives, including me, were
ground are well known to this board not approved until January of 1969.24 allowed in the cage. To this day, I
and he is considered highly quali- [RAM: Sequence is wrong. DI, have never been inside a casino
fied.” 20 Sands, Castaways, Frontier (Bought cage.] When Hughes bought the
land & building first, then the Sands, he tightened security at both
Two days after Laxalt announced license), Slipper, Landmark, then the Sands and the Desert Inn. He
64 CASINO CHIP AND TOKEN NEWS | July · August · September 2004allowed no skimming. Before early 1968 that trouble began. When is that sin is rampant here. Anything
Hughes, the mob had skimmed off Hughes attempted to purchase the this man does, from the gaming
thousands in undeclared revenue. Stardust, the Department of Justice industry all the way down the line,
Now, the casinos were as tightly run intervened, saying that Hughes would will be good for Nevada.” 34
as any banking institution. He had be in “violation of anti-trust laws.”
security watch the dealers so they Governor Laxalt and the Clark Next, Hughes bombarded the news
could not steal and he installed hid- County District Attorney rebutted. media with great things he was going
den cameras. Hughes stopped the tra- They said the Justice Department had to do for the State of Nevada. He pro-
ditional use of cocktail waitresses or no jurisdiction because the purchase posed building an electronics indus-
showgirls as prostitutes. He forbade did not involve interstate commerce. try, expanding his hotels into large
the girls to have sex with the high At the same time that Laxalt was scale resorts, turning McCarran air-
rollers.27 The business decisions defending Hughes, he and the port into a major hub for supersonic
made by Hughes during his stay in Gaming Commission started to show air travel, and building a high speed
Las Vegas changed the industry. concern that Hughes was not doing a train to Southern California. [RAM:
good job with his casinos. They also Hughes was going to buy McCarran,
Profit was never a main concern expressed concern about a possible build a supersonic air travel airport
for the Hughes organization in any of monopoly.31 Others in the industry near Jean, then connect the two with
his business ventures, including Las were concerned as well. According to a high speed train. I actually signed a
Vegas. [RAM: “Not quite right.” a casino worker employed at the contract to buy McCarran.] For twen-
Hughes’ ToolCo, always made money. Frontier when Hughes purchased it, ty years, Nevada had tried unsuccess-
Hughes Aircraft also made money “Hughes ruined this town! It used to fully to encourage an industrial devel-
until Howard stuck his finger in it.] be no problem changing jobs. opment boom, and now, overnight,
This showed as his casinos never Overnight, Hughes came in and if you Howard Hughes did it.35 There was a
made any money. Most Las Vegas got fired, you were banned from half public outcry of praise for Hughes.
casinos were earning 10 - 25% profit, the casinos in town.”32 While this “Hughes has made a major contribu-
but Hughes’ casinos earned 1%.28 was happening, a small group of state tion to the state by forcing other
The Landmark, Castaways, and legislators called for an investigation industrialists to take an objective look
Frontier all lost money under Hughes’ of state licensing practices. The legis- at Nevada’s potential. This, along
ownership. Only the Desert Inn and lators were concerned with Hughes’ with the nationwide publicity Howard
the Sands made money out of all his casinos and also about the mysterious Hughes has generated since his
1967 purchases. But their combined circumstances under which the gam- arrival, promises to give our economy
profits for 1967 and 1968 totaled less ing license was issued for the a giant boost,” said the Las Vegas
than $5 million. This was a fraction Frontier.33 Hughes’ political expertise Review Journal. It went on to say,
of what the Sands alone had formerly surfaced. “We have managed to acquire a super
earned in a single year.29 The reasons salesman as a resident, and the results
Hughes did not make money in his Howard Hughes knew how to play will undoubtedly be exciting and
casinos are only speculative. It could the game. He was used to getting profitable.”36 Las Vegas Sun publish-
have been that Hughes appointed what he wanted and this was no er Hank Greenspun came to Hughes’
executives from his other industries to exception. Hughes used political ties defense and publicly supported the
run the casinos. These executives and public relations to turn things sale of the Stardust.37 The usually
knew nothing about the gambling favorably. Hughes first turned to savvy New York Daily News did a
business. Nepotism was rampant, and Governor Laxalt. After a lengthy talk feature story suggesting that Hughes
it is believed that skimming and steal- on the phone, the governor publicly had gone to Las Vegas to drive out
ing were widespread.30 Nevertheless, boasted of Hughes’ Nevada interest. organized crime.38
Nevada had a hero and there were His praise of the invisible casino
people ready to defend him when oth- owner was effusive. Laxalt said The state legislators backed down
ers were ready to condemn him. Hughes’ presence, “has added a and on April 30,1968 the Gaming
degree of credibility to the state that it Commission approved Hughes’
Doubt would have taken years of advertising license for the Stardust. The Justice
to secure. Let’s face it, Nevada has an Department expressed concern and
It was during the spending spree in image problem -- the typical feeling requested Hughes delay the $30.5
CASINO CHIP AND TOKEN NEWS | July · August · September 2004 65million purchase for ninety days hand of one of the world’s greatest it was the letter written by Mr.
while they investigated. In August of industrialists has steadied the city’s Greenspun, or, perhaps, he kept Las
that year, the purchase plans were economic outlook and brought to it a Vegas in the back of his mind ever
voluntarily terminated.39 President financial and industrial solidarity since being fascinated by a casino in
Lyndon Johnson’s administration was never before experienced.”41 One Brussels at the tender age of
not friendly with Hughes. [RAM: year later, in the report of 1969, the nineteen.45 Whatever the reason, the
“Not true.” Johnson was not Chamber of Commerce President’s state’s decision to accept him with
Howard’s choice to be President, but, message said, “The emergence of the open arms was a wise one. The tran-
once he was there, the relationship corporate structure within our world- sition from the mob to the corpora-
was good. Larry O’Brien was close famous resort hotels signifies further tion may have eventually happened,
to Johnson.] Richard Nixon had been expansion of the successful tourism- but Hughes and the cooperative
supported by Hughes for years. When convention industry.”42 The Gaming Control Board were able to
he was elected president, his attorney Tomorrow section then went on to do it virtually overnight.
general, John Mitchell, overruled his state, “The image is changing. The
own department and gave Hughes the rousing flamboyance of the gambler 1969 Corporate Gaming Act
okay to purchase his sixth and sev- is giving way to the ordered solidarity
enth casinos. [RAM: The Stardust of the corporation.”43 The immediate Prior to 1969, anyone that owned
deal never went through. John reaction by the Chamber was flatter- even part of a casino had to be
Mitchell ruled on the Landmark, ing to Hughes and was not a surprise. licensed. With a public corporation,
which they were able to buy because the licensing of thousands of stock-
of the bankruptcy. Mitchell wasn’t in However, a cover story from holders was impossible.46 This was
power when the Stardust decision was United States Equity Research in not a concern prior to Hughes arrival,
made.] The Landmark deal went 1992 gave indirect credit to what because corporations were not inter-
through, and, by 1970, with the last Howard Hughes accomplished twen- ested in owning casinos. Hughes
acquisition, Harold’s Club in Reno, ty-five years earlier. It stated, never actually purchased casinos; His
Hughes became Nevada’s number “Adding further momentum and cred- company, Hughes Tool Company,
one gaming boss.40 Doubt was no ibility to gaming is the growing domi- bought the properties. [RAM:
match for politics. nance of large, well-recognized pub- “ToolCo did not buy all the proper-
licly held firms…..Public ties.” ] This was not a problem when
Problem Solved Corporations now own most casinos - Hughes purchased the casinos.
more than subtly eliminating ties to However, when he decided to divest
The original problem for Nevada the netherworld of organized crime.” ownership in Toolco, problems arose.
was a strong influence on the gaming It went on to say, “With gaming more The Corporate Gaming Act was
industry from organized crime. This credible as a corporate activity, the approved to accommodate Toolco’s
led to threatened federal intervention industry has steadily broadened its’ multiple ownership.47 [RAM: Again,
and a lack of respect from the nation. appeal and market interest.” 44 Howard fought this. He could see
The state wanted Hughes to give that it was the genesis of him not
respect to the industry by cleaning Whether by accident or intent, being the biggest.]
out the mob. His personal finances Hughes’ transformation of Las Vegas
and ability to operate a casino were was a success. It will never be known The regulation was retroactive to
never a concern. In this respect, the why he came to Nevada. [RAM: July 1, 1967. Regulation 15.030,
arrival of Howard Hughes was a Howard told me that he was a small paragraph 1, subsection (a), states the
tremendous success. fish in a big pond in CA and he was policy is “To broaden the opportunity
tired of it. He wanted to be a big fish for investment in gaming through the
Positive reaction was not only in a small pond, where he could do a pooling of capital in corporate
heard in Nevada, but throughout the lot of stuff. There was a lot of compe- form.”48
nation. In the 1968 Las Vegas Report tition for political attention in CA
published by the Las Vegas Chamber with the movie studios and oil compa- Regulation 15.060, paragraph 1,
of Commerce, the city’s future was nies and banks, whereas there was no subsection (c) made it all possible. It
discussed in a section titled competition in NV.] It could have states, “Only those that own 5% or
Tomorrow. It stated, “The unseen been Nevada’s tax-free status. Maybe more of the equity securities of the
66 CASINO CHIP AND TOKEN NEWS | July · August · September 2004corporation must be licensed.”49 This Board of Directors.51 [RAM: Mike well as the government.
opened the door for corporations to and Phil went to Howard because his
enter into gaming, further legitimizing casinos had been operating without a Howard Hughes was the predeces-
the industry. license since I had been fired.] It was sor of the corporation. Hughes was a
his last display of concern for his legitimate and respected industrialist
Hilton was one of the first jump at casino interests. who had just profited $546,500,000
the opportunity. Previously, Hilton The condition of the Desert Inn from a legally forced sale of TWA.
could not have entered the gaming reflected Hughes attitude for the Hughes wanted to buy Las Vegas
industry because anyone who owned industry he had changed. “By the end because Nevada was a tax-free state.56
Hilton stock would have had to be of October 1974, ninety rooms in the The state government and the
licensed. This would have been an once-lavish Desert Inn had been Gaming Control Board were eager to
impossible task considering the thou- closed by the Department of Health, rid the state of the criminal element
sands of stockholders in the Hilton and Howard Hughes had become the to prevent federal intervention.
organization. Only having to license first slum hotel owner on the glitter- Consequently, Hughes was given spe-
those with 5% or more ownership ing Las Vegas Strip.”52 cial treatment by the State and the
made it possible for Hilton to enter Board. The casino industry experi-
gaming. [RAM: The directors must Howard Hughes died April 5, enced incredible growth during the
also be licensed.] 1976. Hughes years. From 1966 to 1976,
Nevada’s taxable gaming revenue
Good-Bye Howard Hughes Summa Corporation increased 258%.57 Hughes is not
credited with this growth directly. His
In 1970, Hughes disappeared as Before Hughes died, his top aides casinos never made money. What
quickly as he had arrived. Hughes did persuaded him to form a new corpo- Hughes did do was open the door for
not like the boom he had created. ration. Summa was formed. After corporations to enter into the gaming
Hughes felt that being in Nevada was Hughes died, Summa took over his business, bringing with them standard
putting too much pressure on him. Nevada operations. Hughes had accounting practices and corporate
Because he owned so much of the owned seven casinos, the local CBS controls. This legitimized the industry
state, every little thing that happened affiliate KLAS-TV, several air-trans- and Wall St. took notice. Today, casi-
in Nevada affected him. Governor port facilities, the 548 acre Krupp nos are financed through public stock
Laxalt did not seek re-election. ranch, several houses, substantial offerings. This brought in a new era
Hughes supported Howard Fike. parcels of land, and nearly 28,000 of casino proliferation throughout the
When Fike lost to Mike O’Callaghan, acres of raw desert.53 nation, and in 1993, the gaming busi-
Hughes was distressed. At about the ness broke its’ previous growth
same time, Hughes suspected Robert Summa improved the Desert Inn records. Handle was up 17.12% to
Maheu of stealing from him and fired and the rest of the casinos before sell- $394 billion and revenue rose 14.2%
him. (Maheu was later declared inno- ing them.54 Summa now concentrates to $34.7 billion.58 The mob could not
cent in court and won a multi-million on land development and is a respect- have achieved these results.
dollar suit against Hughes.)50 Hughes ed corporation in Nevada. The 28,000
decided to leave. On Thanksgiving acres of desert is called Summerlin Hughes was a terrible business-
Eve, Hughes moved to the Bahamas. today. man. He never had profit as a goal.
Only a handful of people knew he Officials came to doubt his ability to
was gone. Conclusion operate casinos. However, Hughes
was a great manipulator of politics.
Hughes’ interest in casinos disap- The casino industry of the 1990’s [RAM: “He sure was!”] He con-
peared as quickly as he did. He came is substantially different than the casi- vinced his critics that the legitimiza-
out of seclusion on March 17, 1973 to no business of the 1960’s. Organized tion of the industry and the state was
meet with Governor O’Callaghan and crime has been replaced by corpora- more important than his daily opera-
Gaming Control Chairman Philip tions. Casinos are no longer consid- tions. They wisely agreed and let him
Hannifin in London concerning the ered a Pariah industry. They are being have his way. The 1969 Corporate
licensing of his attorney Chester legalized across the nation, and have Gaming Law was enacted to accom-
Davis, who was now on Toolco’s the respect of the financial world as modate The Hughes Tool Company,
CASINO CHIP AND TOKEN NEWS | July · August · September 2004 67but it allowed other corporations to as the casino business. It is also not Howard Hughes lost millions of
enter the business. [RAM: “Wrong possible to say that they are still dollars during the Las Vegas chapter
again, he did not need the corporate involved with gaming. However, if of his life. [RAM: “Wrong as hell.”
law.”] When Howard Hughes died, the mob is still connected with casino The DI was bought for $12.3 million,
his Summa Corporation sold his casi- gaming, they are forced to do busi- the Sands was bought for $23+ mil-
no interests and now concentrates on ness under a new set of rules. These lion. They were sold later without the
land development. Summa is a rules include disclosing income, pay- accompanying land for $116 million.]
respected corporation, continuing to ing taxes, and answering to the The state, the industry, and many
do great things for Nevada. Securities and Exchange individuals profited handsomely by
Commission. Whether or not the cor- his presence in Nevada. Hughes him-
The original problem was solved. poration is mob-influenced is not the self probably never realized that his
Nevada is no longer considered an issue. The issue is that the gaming actions would help the gaming indus-
outlaw state and the gaming industry industry is successful. The industry try prosper into a nationwide, accept-
is respected and trusted. The union of employs tens of thousands of people, able form of entertainment.
Howard Hughes and Nevada’s gam- provides entertainment to hundreds of
ing industry was a success. thousands of Americans and foreign
tourists, and pays millions of dollars
It would be naive to think that in taxes, both at state and federal lev-
members of organized crime would els. This would not have happened
just pack up their bags and leave had the mob kept control of the casi-
behind a cash business as profitable no business.
1
Kilby, Jim. 1993. Casino Management. Las Vegas, NV. Kinko’s Packet.
2
Ibid.
3
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton.291.
4
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV.10.
5
Dietrich, Noah. 1972. Howard, the amazing. Mr. Hughes. Greenwich, Cn: Fawcett. 4.
6
Davenport, Elaine., Eddy, Paul. 1976. The Hughes Papers. New York, NY: Ballantine.23.
7
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 12.
8
Barlett, Donald L., Steele, James B. 1979. Empire: the life legend, and madness of Howard Hughes. New York, NY: Norton.281.
9
Ibid.286.
10
Higham, Charles. 1993. Howard Hughes : the secret life. New York, NY: Putnam’s.217.
11
Barlett, Donald L., Steele, James B. 1979. Empire: the life. legend and madness of Howard Hughes. New York, NY: Norton.
12
Mathison, Richard R. 1977. His weird and wanton ways, the secret life of Howard Hughes. New York, NY: Morrow.50.
13
Higham, Charles. 1993. Howard Hughes: the secret life. New York, NY: Putnam’s.217.
14
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton.286.
15
Ibid.
16
Ibid.292.
17
Presswood, Gary A 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 14.
18
Gerber, Albert Benjamin. 1967. Bashful billionaire: the story of Howard Hughes. New York, NY: L. Stuart.
19
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 15.
20
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend and madness of Howard Hughes. New York, NY: Norton.293.
21
Gerber, Albert Benjamin. 1967. Bashful billionaire: the story of Howard Hughes. New York, NY: L. Stuart.
22
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 16.
23
Gerber, Albert Benjamin. 1967. Bashful billionaire: the story of Howard Hughes. New York, NY: L. Stuart.
24
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV.
25
Barlett; Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton.302.
26
Ibid.
27
Higham, Charles. 1993. Howard Hughes: the secret life. New York, NY: Putnam’s.228.
28
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV.23.
68 CASINO CHIP AND TOKEN NEWS | July · August · September 200429
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton. 367.
30
Presswood, Gary A. 1992. Howard Hughes alive and well in Las Vegas? Las Vegas, NV.23.
31
Ibid.28.
32
Personal Interview with John Pokrzyk. November 7, 1994. Las Vegas, NV.
33
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend and madness of Howard Hughes. New York, NY: Norton. 304.
34
Ibid.
35
Newsweek. January 19, 1968.25.
36
Las Vegas Review-Journal. January 22, 1968.
37
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV.29.
38
Phelan, James. 1976. Howard Hughes, the hidden years. New York, NY: Random House. 80.
39
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV.29.
40
Phelan, James. 1976. Howard Hughes, the hidden years. New York, NY: Random House. 101.
41
Las Vegas Chamber of Commerce. 1968. “Las Vegas Report”. 2.
42
W. Bruce Beckley, President Greater Las Vegas Chamber of Commerce. 1969. “Las Vegas Report”. 2.
43
Las Vegas Chamber of Commerce. 1969. “Las Vegas Report”. 3.
44
Vignola, Margo Levy. 1992. Gaming Industry: entering the mainstream New York, NY: Salomon Brothers.
45
Keats, John. 1972. Howard Hughes. New York, NY: Random House. 14.
46
Kilby, Jim. 1993. Casino Management. Las Vegas, NV: Kinko’s Packet. 14.
47
Phelan, James. 1976. Howard Hughes, the hidden years. New York, NY: Random House. 80.
48
Nevada Laws Statutes. July 1, 1969. Regulations of the Nevada Gaming Commission and State Gaming Control Board. Carson City, NV. 452.
49
Nevada Laws Statutes. July 1, 1969. Regulations of the Nevada Gaming Commission and State Gaming Control Board. Carson City, NV. 454.
50
Phelan, James. 1976. Howard Hughes, the hidden years. New York, NY: Random House. 104.
51
Ibid.152.
52
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton.557.
53
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 10.
54
Barlett, Donald L., Steele, James B. 1979. Empire: the life, legend, and madness of Howard Hughes. New York, NY: Norton.558.
55
Presswood, Gary A. 1992. Howard Hughes, alive and well in Las Vegas? Las Vegas, NV. 10.
56
Higham, Charles. 1993. Howard Hughes : the secret life. New York, NY: Putnam’s.217.
57
Las Vegas Chamber of Commerce. 1977. “Las Vegas Report”. 18.
58
Christiansen, Eugene. 1994. “1993 Gross Annual Wager.” Gaming & Wagering Business. 15:14
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