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Las Vegas was a small railroad town when Nevada formally established it in 1905. Five years after its founding, the U.S. census recorded only 800 residents. Yet by the 1950s, it was known as a gambling tourist haven, where visitors could see a show with celebrities like Frank Sinatra and Sammy Davis, Jr. in between trips to the baccarat tables.

Although Nevada’s legalization of gambling in 1931 opened the doors for this transformation, that alone doesn’t tell the whole story of how Las Vegas became the gambling mecca over its one-time rival, Reno. The story also includes an influx of workers to federal projects in Nevada, a crackdown on illegal gambling in Los Angeles and the mob’s migration to Vegas.

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Former Vice Cop Helped Build Gambling (Tax) Haven

View of Fremont Street in Las Vegas, Nevada, with a car racing down,  c. 1928

View of Fremont Street in Las Vegas, Nevada, with a car racing down,  c. 1928

Nevada’s legalization of gambling in 1931 coincided with the beginning of construction on the Hoover Dam, which brought thousands of workers to Boulder City. On pay day, these workers would travel the roughly 25 miles to Las Vegas to enjoy gambling on Fremont Street, which was the downtown hub of Vegas before the Strip.

“One of the sayings was that the town got very exciting for a couple of days a month,” says Michael Green, a history professor at the University of Nevada, Las Vegas. During World War II, the opening of a magnesium plant in nearby Henderson, Nevada also brought in a large population of workers looking for weekend recreation.

Still, an influx of gamblers every two weeks wasn’t enough to make Las Vegas a gambling mecca. For that, it needed people with experience running gambling businesses. Starting in 1938, these people began to move to Las Vegas as a new mayor in Los Angeles cracked down on illegal gambling. One of the most influential was Guy McAfee, an LA cop on the vice squad who fled California to escape prosecution for running gambling and prostitution rings on the side.

Another big turning point came in 1941, when the first combined hotel-casino, El Rancho Vegas, opened on a stretch of Highway 91 that McAfee later nicknamed “the Strip.” The El Rancho Vegas resort was important because it helped make gambling “something you could do on a vacation,” says David G. Schwartz, a gaming historian at the University of Nevada, Las Vegas. “And that was very successful.”

The resort’s success led others to open hotel-casinos. Some sprouted up on Fremont Street, nicknamed “Glitter Gulch” by the Chamber of Commerce in 1946, the same year McAfee opened the Golden Nugget there. Others were built on the Strip, an area outside of city limits where McAfee and other resort owners established the unincorporated township of Paradise, Nevada as a tax shelter.

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Mobsters Grew Business With Big Nightclub Acts

General view of Downtown Las Vegas from Fremont Street looking at the Golden Nugget Gambling Hall, The Mint, Pioneer Club, Lucky Strike, The Las Vegas Club and The Hotel Apache, c. 1958. 

General view of Downtown Las Vegas from Fremont Street looking at the Golden Nugget Gambling Hall, The Mint, Pioneer Club, Lucky Strike, The Las Vegas Club and The Hotel Apache, c. 1958. 

Around the same time that McAfee and his cohorts were building gambling resorts and finding ways to avoid taxes, a new group of people began to see the potential of opening their own Vegas casinos: the mob.

One of the first major mob figures in Vegas’s gambling industry was Benjamin “Bugsy” Siegel, who helped open The Flamingo in 1947 on the Strip. After Siegel’s murder that year, other mob figures began to get involved with the city’s gambling industry.

For organized crime operators, “Las Vegas presented two parallel opportunities,” says Geoff Schumacher, vice president of exhibits and programs at The Mob Museum in Las Vegas. The first was that mobsters who’d been running illegal gambling rings in other cities could make legal money from gambling in Las Vegas. Until the 1970s, Nevada was the only state with legal casino gambling.

“But the parallel concept that they came up with was skimming,” he says. This was the illegal practice of hiding the real amount of money a casino was earning. “The main money that was made by the mob [in Vegas] was money that was not taxed, was not accounted for.”

During the 1950s, the mob helped bring celebrity acts to Vegas as a way of enticing more people to the casinos. Because mobsters ran nightclubs in many major cities, they had connections to performers like the “Rat Pack” (Frank Sinatra, Dean Martin, Sammy Davis, Jr., Peter Lawford and Joey Bishop), Jerry Lewis, Judy Garland, Liberace and more. Clubs and resorts also competed to have the splashiest showgirl acts, with lines of women dancing in sync in skimpy costumes, feather boas and elaborate towering headdresses. At The Dunes in 1957, owner Harold Minsky introduced topless showgirls to the entertainment menu, helping underscore Las Vegas’s image as “sin city.”

In addition to celebrities and showgirls, many Las Vegas resorts started using nuclear testing as a way to draw tourists to casinos. The city was located about 65 miles away from the Nevada Test Site. On the nights before early morning atomic detonations, resorts would host parties that lasted until the visible nuclear explosion at dawn. Celebrations might involve special “atomic cocktails” or “Miss Atomic Energy” pageants.

READ MORE: Frank Sinatra's Mob Ties and Other Secrets From His FBI File

In Corporate Era, Gambling No Longer Center Stage

In the mid-1960s and ‘70s, the ownership of Las Vegas resorts began to change. Howard Hughes bought the Desert Inn in 1967, as well as many other properties there. Hughes’ purchases helped push out some of the mob figures who’d owned hotels and casinos. The same year Hughes bought the Desert Inn, Nevada also passed the Corporate Gaming Act, which made it much easier for corporations to run casinos. This paved the way for corporations to buy Las Vegas resorts, which again pushed out mob owners.

Beginning in 1978, when Atlantic City opened its first casino, Las Vegas began to face gambling competition outside of Nevada. As casino gambling became legal in more parts of the country, corporate resorts began to offer different types of attractions that weren’t solely focused on drawing people into the casinos.

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