November 25, 2025 • 38 mins
Step inside the high-stakes world where luck, power, and organized crime collide. In this episode, The Mafia and Gambling: How the Underworld Built an Empire of Luck, Vice, and Power, we explore how Cosa Nostra turned everyday bets, backroom card games, Las Vegas casinos, and even modern sports books into one of the most profitable criminal enterprises in history. From the early numbers racket to the glittering Vegas skim, this story reveals how the mob mastered the art of making sure the house always wins.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the deep dive, where we take a stack
of dense sources and well we distill the knowledge that
truly matters, giving you the shortcut to being well informed.
Speaker 2 (00:10):
And today we are really opening the vault on something huge.
Speaker 1 (00:14):
We are we're looking at one of the greatest and
I think maybe one of the most misunderstood aspects of
American organized crime history. We are talking about the Mafia's
gambling empire.
Speaker 2 (00:25):
Yeah, and it's essential right from the jump to define
what we're talking about here, based on all our source
material for Kosenovstrat gambling wasn't just one revenue stream. Was
this a side hustle, Oh, not at all. It was
frequently the core business. It was the stable, reliable engine
that financed the entire operation for almost a century.
Speaker 1 (00:44):
More than drugs, more than racketeering in many ways.
Speaker 2 (00:47):
Yes, it was often more profitable and certainly you know,
more enduring than drug trafficking, extortion, or even murder for
higher schemes. It was the bedrock.
Speaker 1 (00:56):
Okay, let's unpack that, because that's a huge thesis. We're
not just looking at the flow. Actually, you know, neon
lights of Las Vegas, are.
Speaker 2 (01:02):
We Oh no, we have to go way back.
Speaker 1 (01:05):
We're tracing the evolution of this industry from the dusty
illegal bookie joints of the early nineteen hundreds, through the
numbers rackets in places like Harlem.
Speaker 2 (01:16):
And Little Italy, right into the high glamour casinos and
then and this is the interesting part, right up to
the opaque world of modern offshore digital betting.
Speaker 1 (01:25):
So the mission for this deep dive is to really
get the.
Speaker 2 (01:28):
Mechanics, exactly, the mechanics of its endurance. I mean, how
did they structure an operation that could defy federal law
for so long? We need to look at the money flow,
the key individuals.
Speaker 1 (01:39):
Who built it, and maybe the most important question, why
people kept coming back?
Speaker 2 (01:42):
Yes, why did human beings keep coming back to the
mob for their betting fix even when legal options you know,
eventually started popping up.
Speaker 1 (01:50):
So this is really a look at how the underworld
just mastered human risk taking.
Speaker 2 (01:55):
They optimized it for their own profit. And you take
away just one thing before we start, it's this the
success of this entire empire rests on a really powerful foundation.
Gambling generated the three things organized crime needs to not
just survive, but to truly thrive. What are they untraceable,
instant cash, ironclad leverage over your customers, and finally, pervasive
(02:19):
political influence.
Speaker 1 (02:20):
That synergy, that's the whole.
Speaker 2 (02:22):
Game right there, that three pronged attack. It made it
an unstoppable force for decades.
Speaker 1 (02:28):
Okay, so if we're going to start at the beginning,
let's talk about the early nineteen hundreds. The United States
is going through this big societal reckoning with vice, with morality.
Speaker 2 (02:38):
It is, but gambling was different. It wasn't like prostitution
or theft, which we're seeing, as you know, inherently predatory
gambling existed in this crucial legal vacuum, a.
Speaker 1 (02:48):
Vacuum, so it was widespread. People were doing it, but
it wasn't quite legal exactly.
Speaker 2 (02:51):
It was almost accepted in certain pockets, but on the
books generally illegal.
Speaker 1 (02:56):
And that lack of clarity, Yeah, that's the opportunity.
Speaker 2 (02:58):
That is pure opportunity for an org organized mind. Ye.
State and local governments they were in a bind. They
knew what was happening everywhere. You had illegal bookies taking
bets on horse racing, which was exploding in popularity. You
had saloons running card games in the back, and the
policy racket or the numbers game was becoming huge in
poor urban neighborhoods. So what could the cities do well,
(03:20):
they had two bad options. They could ban it, which
created this massive, unwinnable enforcement nightmare, or they could just
tolerate it turn a blind eye, and most of them,
frankly did the latter.
Speaker 1 (03:32):
So that lack of any uniform enforcement was basically a
green light. It's an invitation for organized crime to step in.
Speaker 2 (03:39):
Engraved invitation. And before the formal mafia really consolidated its power,
you had these brilliant criminal minds, figures like Arnold Rothstein
in New York the brain, the brain exactly. They stepped
in to manage this unmanaged market. They saw it as
the simplest, most consistent way to generate cash flow without
and this is key, without bringing the full weight of
(04:00):
the federal government down on their heads.
Speaker 1 (04:02):
Right, that's a really critical distinction. They didn't have to
invent the desire to gamble.
Speaker 2 (04:07):
No, that's innate. They just had to professionalize the existing market.
They provided the infrastructure, the security or the threat of it,
and the standardized rules.
Speaker 1 (04:16):
So tell me more about that calculation. Why was running
a numbers racket in say nineteen twenty five, so much
less risky than running and drug ring.
Speaker 2 (04:24):
The risk to reward ratio was I mean, it's not
even comparable, really not at all. Look if you got
caught running an illegal dice game or collecting numbers slips,
what was the charge. It was a misdemeanor, a local infraction.
Speaker 1 (04:38):
So a slap on the risk, slap on the risks.
Speaker 2 (04:40):
You're facing a minor fine, maybe a few months in
the county jail if you were unlucky. Now compare that
to a federal offense like trafficking or a conspiracy charge
under later laws, that could get you decades in a
federal penitentiary.
Speaker 1 (04:55):
The whole legal system was just built to handle low
level vice, not a systemic, organized creme enterprise distracting millions.
Speaker 2 (05:02):
Precisely, the mob just internalized that cost a raid wasn't
a threat to the business model. It was an operational expense.
Speaker 1 (05:09):
You just budget for the fue you.
Speaker 2 (05:10):
Budget for the fines, you pay the fine, you bribe
the arresting officer if you can, and you move the
operation two blocks down the street the next day. The
whole enterprise was incredibly resilient because the penalties were just
so soft.
Speaker 1 (05:22):
But the real genius and our sources really hammer this
home was the cash itself. It's not just about the
amount of profit, it's the kind of profit.
Speaker 2 (05:31):
Yes, the liquid nature of gambling. Cash is the absolute
central point of this whole story. Explain it, Okay, So
imagine you're running any other business, legal or illegal. You're
selling goods, you're extorting protection money. There's usually a time delay, right,
or a paper trail, some kind of accounting.
Speaker 1 (05:48):
Sure, in voices, ledgers.
Speaker 2 (05:50):
Gambling, especially the numbers game or a backroom casino, is pure, immediate,
untraceable currency changing hands.
Speaker 1 (05:59):
And that simple currency, that liquidity, What does it buy you.
Speaker 2 (06:03):
In a word, everything. First, it eliminates the paper trail.
That's that's the cornerstone of successful tax evasion and money laundering.
Speaker 1 (06:10):
Right. You can't tax what you can't see exactly.
Speaker 2 (06:12):
Second, it provided instant capital for corruption. If a police
captain needs a payoff to look the other way on
a liquor shipment, the cash is there in a bag
in a few hours, not days.
Speaker 1 (06:22):
Not weeks, So it speeds up the whole cycle of.
Speaker 2 (06:24):
Corruption, it accelerates it exponentially. And Third, that constant flowing
river of cash that liquid wealth. It was used to
fund every single other criminal venture the family was involved in.
Speaker 1 (06:35):
So the numbers game in Harlem is paying for a
union racket on the docks in.
Speaker 2 (06:39):
Brooklyn, precisely, it's financing everything. And the scale of this,
even at the street level, is just staggering. When you
look at the numbers.
Speaker 1 (06:46):
The sources had a detail that really floored me. A
single mid level numbers banker, not even a boss in
the nineteen forties.
Speaker 2 (06:53):
Could pull in thousands of dollars a week.
Speaker 1 (06:55):
Thousands a week in nineteen forties money. That's incredible purchasing power.
Speaker 2 (07:01):
And you have to multiply that by thousands of similar
operations in every major city in the country. It was
this decentralized, robust, high volume income generator.
Speaker 1 (07:11):
It's like a franchise model.
Speaker 2 (07:13):
It really is. And there's one more point about the
cash flow that people often miss. It wasn't just for
funding things. It was the primary mechanism for drawing people
into the entire underworld ecosystem. It was the front door,
the welcoming lobby. You walk into place, a five dollars
bed on a horse. You lose, you lose again, you
need money to cover it and suddenly you're being introduced
(07:33):
to the loan shark. Gambling was the entry point for
all the other vices.
Speaker 1 (07:37):
Okay, let's drill down on that specific enterprise you mentioned,
the one that really laid the groundwork in urban America,
the numbers game.
Speaker 2 (07:45):
Right. It was often called the policy racket in the
earlier years, and you have to think of it as
basically the direct predecessor to the modern state run lottery.
Speaker 1 (07:55):
But way more personal and way more lucrative for the operator.
Speaker 2 (07:59):
Oh, infinitely more lucrative. And the mechanism was just it
was beautiful in its simplicity. That was the genius of it.
Speaker 1 (08:07):
So how did it work?
Speaker 2 (08:08):
People would bet on a three digit number. You could
wager as little as a penny or a dime or
a dollar.
Speaker 1 (08:13):
And how is the winning number picked? I assume it
had to seem fair.
Speaker 2 (08:17):
It had to have the veneer of fairness, absolutely, so
the number was often derived from a public, verifiable source,
things like the last three digits of the daily stock
exchange results, or the total payout amounts at a local
horse race track, something anyone could look up in the newspaper.
Speaker 1 (08:32):
The genius of collecting pennies. It sounds so small time,
but the sheer volume.
Speaker 2 (08:37):
The volume was astronomical. Just picture it. You have thousands
of collectors, they were called runners, canvassing entire working class
neighborhoods on foot, door to door, door to door, in factories,
on street corners. They're collecting thousands upon thousands of individual
wagers every single day. Those pennies and dimes, they add
up to millions very very quickly.
Speaker 1 (08:59):
And the odds were of course stacked in favor of the.
Speaker 2 (09:01):
House, always just slightly. But with that kind of volume,
it was a guaranteed profit stream day in, day out,
and the.
Speaker 1 (09:09):
Immediate payout that must have cemented the trust with the community.
Speaker 2 (09:13):
That was the other piece of the puzzle. Unlike a
state lottery today, which can feel bureaucratic and slow. If
you hit your number, say you won sixty bucks on
a ten cent bet, the runner paid you in cash,
usually the very next day, instant gratification and reliability. It
built this enormous sense of trust and loyalty, especially within
communities that were often very skeptical of big banks or
(09:35):
official institutions. This was their lottery.
Speaker 1 (09:38):
And we see all the biggest names in the mob
getting their start here or at least perfecting their systems.
Speaker 2 (09:44):
Absolutely. You have figures like Dutch Schultz, who just completely
dominated the Harlem numbers racket. He was making millions a
year before the big Italian families, the Genevies, the Gambino,
the Lutazi, really consolidated and formalized their control over Little
Italy and other districts.
Speaker 1 (10:00):
And it wasn't just New York, oh No.
Speaker 2 (10:01):
This was national. The Chicago outfit, especially after Capone, maintained
a vice like grip on the numbers games all throughout
the Midwest.
Speaker 1 (10:10):
And this whole massive operation was shielded not just by
bribed cops, but by a lack of federal interest for decades.
Speaker 2 (10:17):
That's right. Our sources are clear on this. It was
viewed purely as a state or local policing problem, a
ice issue. There was no concerted federal law, no specific
statute designed to shut down the numbers racket until much much.
Speaker 1 (10:30):
Later, which allowed these vast criminal networks to just grow
and mature, completely shielded from the real threat in Washington, DC.
Speaker 2 (10:37):
It was the perfect incubator.
Speaker 1 (10:39):
So this brings us right into the nineteen twenties. You've
got this safe, reliable, highly profitable local business in the
numbers game, Why on earth would the mafia families take
on the huge risk of bootlegging during prohibition? That was complex, dangerous,
and a primary federal target.
Speaker 2 (10:57):
That's a critical question, and it's all about strategic growth.
The numbers game gave them reliable cash flow, yes, but
bootlegging provided two new things, incredibly high margin goods and
a pathway to national expansion and logistics.
Speaker 1 (11:11):
And the speakeasy was the place where those two worlds met.
Speaker 2 (11:14):
The speakeasy was the nexus. It was the perfect synergy.
If you owned the bar selling the illegal liquor, it
was just it was the most natural thing in the
world to run high stakes poker, blackjack and dice games
in the back rooms. It was exponentially more profitable.
Speaker 1 (11:29):
So the liquor gets the crowd in the door, and.
Speaker 2 (11:31):
The gambling extracts every last dollar from their pockets while
they're there. You're multiplying the profit streams from a single
physical location.
Speaker 1 (11:38):
And the cash from one fed the other.
Speaker 2 (11:40):
It was a beautiful symbiotic financial loop. The immediate, untraceable
cash profits from the gambling tables were liquid assets. A
bootlegger could instantly reinvest that money into supply chain, buying.
Speaker 1 (11:53):
More raw materials for stills, paying off truck drivers.
Speaker 2 (11:57):
Greasing the palms of customs officials to let a ship
of scotch. Through gambling cash stabilized the volatile, high risk,
high reward nature of the liquor trade.
Speaker 1 (12:06):
And the end result of all this new money from
both liquor and gambling was the institutionalization of corruption.
Speaker 2 (12:12):
It just became too big to fight. The amount of
money flowing from these combined activities was simply too vast
for most local authorities to even comprehend, let alone resist.
Speaker 1 (12:21):
So corruption went from being a cop here there taking
a bribe being systematic.
Speaker 2 (12:26):
You had entire police precincts and often city politicians on
the mobs payroll. The gambling cash, being so easy to
access and so hard to trace, became the primary fuel
for those bribes. It ensured that both the bootlegging operations
and the backroom games could continue to operate completely unhindered.
Speaker 1 (12:44):
All right, So as we move out of the prohibition
era and into the mid twentieth century, we see this
huge shift. We go from the quiet, steady river of
the numbers game to this spectacular flood of cash that
was Las Vegas.
Speaker 2 (12:58):
And the name that is each eternally and tragically attached
to that pivot is Benjamin Bugsy.
Speaker 1 (13:03):
Siegell, a New York associate, famously handsome, famously violent, and in.
Speaker 2 (13:07):
A criminal sense, a true visionary. He had the vision
to look at the empty, dusty Nevada desert and see
not just sand, but a blank check, an unregulated canvas.
Speaker 1 (13:19):
And he had backing. This wasn't a solo project, oh
not at all.
Speaker 2 (13:22):
He had heavy funding from the real power players on
the East Coast Meyer Lansky, his childhood friend, and the Mobs,
financial genius, and various New York families who basically wanted
to build an unregulated home base far away from their
established and heavily policed cities.
Speaker 1 (13:37):
And that project became The Flamingo, which opened in nineteen
forty six.
Speaker 2 (13:41):
Right, And you have to understand, the Flamingo wasn't just
another casino. What Seagull did was revolutionary. It set the
standard for the entire Las Vegas strip for the next
fifty years.
Speaker 1 (13:50):
So what did he do differently? What made it so special?
Speaker 2 (13:53):
He completely changed the target market and the perception of gambling.
He understood that the future wasn't smoky, the sordid backroom
dens for hardened criminals. It was high end entertainment for
the middle and upper classes.
Speaker 1 (14:07):
He made it respectable.
Speaker 2 (14:08):
He made it a destination, a luxury experience. The Flamingo
introduced these at the time mind blowing concepts, full air
conditioning and the oppressive desert heat. That alone was a
massive luxury draw.
Speaker 1 (14:22):
I can't even imagine.
Speaker 2 (14:23):
He flew in high profile entertainers from Hollywood, Jimmy Durante,
Rose Marie. He had gourmet dining. He essentially invented the
modern luxury resort casino where gambling was just one part
of a larger, glamorous vacation package.
Speaker 1 (14:36):
Now, the sources are clear that it was an initial failure.
It was bleeding money, and that failure ultimately led to
Siegal's murder in nineteen forty seven. It did.
Speaker 2 (14:44):
The bosses were not patient. But the crucial thing is
they didn't give up on the idea. They saw that
the blueprint was solid, even if Seagull's management wasn't. They
didn't scrap the project. They doubled down.
Speaker 1 (14:54):
And that's when the real systemic mob involvement begins.
Speaker 2 (14:57):
Post Seagull, it becomes an industry. From the nineteen fifty
all the way through the nineteen seventies, Cosa Nostra controlled
or had significant financial interests in virtually every major property
on the Strip.
Speaker 1 (15:08):
Give us some names.
Speaker 2 (15:09):
We're talking about the Stardust, the Tropicana, the Riviera, the
Desert inn the Sands. These were the crown jewels of Vegas.
And they were, for all intents and purposes, mob run operations.
Speaker 1 (15:21):
And this wasn't just a New York operation anymore. This
is a truly national collaborative effort from the families, wasn't it.
Speaker 2 (15:28):
It absolutely was. The seed money often came from the
East Coast, from the New York families, but the operational control,
the day to day running of these places was often
delegated to families from the Midwest. Why them, they were
seen as well more business like the Chicago outfit, which
was arguably the most gambling focused family in the country,
had vast interests, But so did the mob families of Detroit,
(15:50):
Cleveland under figures like Modalits who was a gambling genius?
And Kansas City.
Speaker 1 (15:55):
And what was their role?
Speaker 2 (15:56):
These Midwestern families often acted as the operational They were
the ones managing the skim and they were the funnel
for the profits. Moving back to the leadership in New
York and Chicago.
Speaker 1 (16:08):
Let's talk about that the ultimate goal here, and this
is where the mechanics get really fascinating. It wasn't just
about winning money from gamblers on the casino floor.
Speaker 2 (16:17):
No, that was just the public facing business. The real
goal was maximizing the ability to skim profits, to take
cash off the top before those earnings were ever officially
logged or recorded.
Speaker 1 (16:27):
This was pure, untaxed, untouchable money.
Speaker 2 (16:31):
Skimming was the crown jewel of the mafia's entire financial portfolio.
They weren't just taking a cut of the profits reported
to the IRS. They were physically removing raw cash from
the river of revenue before anyone could account for it.
And the scale was just it's hard to even fathom.
Millions and millions of dollars every year sent back to
bosses across the country.
Speaker 1 (16:51):
Okay, this is a crucial point for anyone listening. We
need to break down the mechanics of the casino skim logistically,
step by step. How they do it, how did they
manage to intercept cash? And what you think would be
a high security environment like accounting room.
Speaker 2 (17:06):
The whole operation relied on one thing people, specifically, the
installation of deeply trusted MOB connected employees in key sensitive positions.
So not just dealers on the floor, no, much higher
up the food chain. We're talking pit bosses, shift managers,
and most critically, counting room supervisors. These had to be
(17:29):
guys who were either made members of the organization or
men who were owned completely by it, usually through gambling
debts of their own.
Speaker 1 (17:36):
Okay, so the cash flows from the tables on the
casino floor into the count room where it's supposed to
be tallied up.
Speaker 2 (17:42):
What happens next, So before the entire cash hall for
a shift is run through the official counting machines and
recorded on the internal ledgers, the stuff that makes the
money official and taxable, the mob's supervisors would intervene, under
the guise of say a random spot check or a reconciliation,
or simply during the sorting process, they would physically pull
(18:03):
bundles of unrecorded currency. This money was never ever meant
to hit the books.
Speaker 1 (18:08):
And they could do this without surveillance catching them.
Speaker 2 (18:10):
Well, this was the fifties sixty seventies. Surveillance was primitive
by today's standards. But yes, the operation was done in
specific blind spots or during shift changes that were engineered
by the mobs inside men. The cash was often put
into specialized containers, maybe a briefcase with a false bottom,
or just into sealed drop bags that looked identical to
(18:30):
the legitimate cash drops. The key was that the official
accounting logs for that day would only reflect the remaining cash.
The skim was already gone.
Speaker 1 (18:39):
So the books looked clean. Is maybe a little less
profitable than they should have been.
Speaker 2 (18:43):
Exactly, And now you have this massive pile of untraceable
cash in a briefcase. It needs to get back to
the bosses in New York or Chicago or Cleveland. That
journey sounds incredibly risky. Courier phase the highest risk phase, yes,
but they mitigated that risk throughout absolute trust and subterfuge.
They used highly trusted and often seemingly legitimate couriers.
Speaker 1 (19:07):
Like who not just some guy in a trench code, No.
Speaker 2 (19:09):
That's Hollywood. Think lawyers, doctors, business executives who had private
jet access or traveled frequently between Vegas and other cities
for business. The cash, often packed tightly, would leave Las
Vegas via small private airports, or even just in a
suitcase on a commercial flight, where the courier just looked
like any other affluent tourists coming home from a weekend trip.
Speaker 1 (19:30):
And because the money was pulled before it was ever recorded.
Speaker 2 (19:32):
In Vegas, when it arrived in New York, there was
no paper trail. You couldn't trace it back to the
sands or the stardust. It was just a pristine, untaxed
and visible flow of pure profit.
Speaker 1 (19:42):
It was a perfect crime.
Speaker 2 (19:44):
It was the genius of untraceable wealth generation, and it
funded the mafia's golden age.
Speaker 1 (19:49):
We just talked about the Vegas operation, the massive overhead,
the spectacle, the sheer complexity of it. But now we
have to shift gears to what was really the backbone
of the mafia's gambling empire, day in and day out.
Speaker 2 (20:00):
The quiet, low overhead stream that just never ever.
Speaker 1 (20:03):
Dried up illegal book making.
Speaker 2 (20:05):
Right, And the contrast with Vegas is just it's enormous.
Running at casino requires billions in infrastructure today millions back then.
You have complex licensing. Even if you're bribing people, you
have thousands of employees, huge physical locations that the government
can seize book making on the other hand, book making
requires what a telephone line, a network of street guys,
(20:28):
and the ever present threat of violence to collect debts.
It was the definition of cash flow efficiency.
Speaker 1 (20:33):
So how did this operation, which is so decentralized, a
bookie on every other street corner in every major US city,
how did it function as an integrated part of Cosinostra.
Speaker 2 (20:45):
It was structured like a pyramid. It was a beautiful
business model. At the very base, you had your street
level bookie, he's the neighborhood guy, the guy in the
bar who actually takes the bets.
Speaker 1 (20:53):
The public face of the operation.
Speaker 2 (20:55):
Exactly above him, you had a controller who would manage
several bookies in a territory. His job was to balance
the books and collect the profits. But at the very
top of that pyramid was the organized crime family. And
they provided two absolutely essential services. What were they First
protection from arrest through their network of corrupt police and politicians.
(21:16):
And second, and this is the most important part, financially,
they provided the layoff bank.
Speaker 1 (21:21):
The layoff bank, Okay, that's a key term. Explain what
that does.
Speaker 2 (21:24):
The layoff bank is what guarantees the stability and long
term profitability of the entire network. Think about it. If
a single independent bookie takes too many bets on one team,
say ninety percent of his customers in Boston bet on
the Patriots, and the Patriots win. That one bookie goes bankrupt,
she's out of business.
Speaker 1 (21:41):
Right, you can't cover all the payouts.
Speaker 2 (21:43):
The layoff bank, controlled by the Mob family prevents that
the local bookie would layoff a portion of those lopsided
bets to the central bank. This redistributed the risk across
a vast national network, ensuring that no single bookie could
ever lose enough to fail. It made the entire enterprise
in d instructible.
Speaker 1 (22:01):
And beyond just the house advantage, you know the fact
that most betters lose over time. What else gave the
Mob this fool proof market edge.
Speaker 2 (22:11):
It came down to three things. First, as we discussed
with the numbers game, very low legal risk. Second, the
complete lack of paper trailsmanth they controlled the debts completely.
But third and most important was debt enforcement.
Speaker 1 (22:24):
The consequences.
Speaker 2 (22:25):
The consequences if you lose ten thousand dollars to a
legal sports book today, they might sue you. It's a
civil matter. If you lost ten thousand dollars to the
Mob's bookie. The consequences involved physical violence, intimidation, and an
immediate threat to your business, your livelihood, and your family.
That guaranteed collection.
Speaker 1 (22:42):
This is what's so fascinating. We fast forward to today
and sports betting is being legalized rapidly all across the country.
You can do it on your phone, Yet illegal book
making is still thriving. Why why would anyone choose the
Mob over a legal, official.
Speaker 2 (22:55):
App Because the underworld still offers distinct market advantages that
the legal regulated market cannot and will not ever touch.
Speaker 1 (23:03):
And the number one reason.
Speaker 2 (23:04):
Is credit, absolutely number one. Legal sports books require you
to put cash up front. You have to deposit money
from your bank account. The Mob, however, allows you to
bet on credit, often for days or even weeks.
Speaker 1 (23:18):
You can bet money you don't have.
Speaker 2 (23:19):
You can bet money you don't have. If you're a
high roller and you want to place a quarter million
dollar wager on a game, but you don't have the
immediate liquidity, the Mob's Bookie is your only option.
Speaker 1 (23:28):
Every what else beyond credit? What's the appeal?
Speaker 2 (23:30):
Privacy? Total absolute privacy? Any large cash transaction or a
big win at a legal casino or sports book is
instantly flagged. It's reported to the government, you get tax forms,
there are suspicious activity.
Speaker 1 (23:43):
Reports ah with the mob.
Speaker 2 (23:44):
With the mob, the transaction is completely invisible. There are
no betting limits, no government tracking, and no tax implications,
provided of course, that you pay what you owe. That
deep seated appetite for anonymity and zero regulation is incredibly enduring.
It proves the mobs still maintain, means a very lucrative
niche market.
Speaker 1 (24:02):
And we have to talk about horse racing here. Before
the NFL became the absolute king of betting in America,
horse racing was colossal.
Speaker 2 (24:09):
Horse Racing was the original mass market betting sport, and
the mafia's control went so far beyond just taking bets
on the races. They infiltrated the entire ecosystem. Of course,
they controlled the illegal off track betting, the OTB operations
that were everywhere, but their real power was in their
ability to engage in race fixing. They could manipulate jockeys
(24:31):
and trainers, usually through debt or intimidation, ensuring that certain
horses would win or more often lose. They controlled the outcome.
Speaker 1 (24:39):
Itself, so they're profiting both ways. They're taking the bets
from the public, and they're also cashing in huge on
a long shot that they knew was going to win.
Speaker 2 (24:48):
It was a beautiful circular flow of profit for them.
And Modelitz, who we mentioned earlier in Cleveland, he was
a master of this. He ran a vast multi state
gambling operation that was heavily focused on the lead casinos
and horse betting, long before he transitioned his legitimate interest
to Las Vegas. The horse track was really the proving
ground for the high stakes logistics they would later need
(25:09):
in Vegas.
Speaker 1 (25:10):
Okay, we need to make a really important pivot. Now
we've been talking about gambling is this incredible profit center,
but we have to look at its far more sinister function.
Speaker 2 (25:19):
As a mechanism for control.
Speaker 1 (25:21):
Exactly. Gambling generated debts, and those debts were the engine
that turned casual customers into permanent enslaved assets of the mafia.
Speaker 2 (25:31):
This is the true dark power of the enterprise. When
someone loses big at the tables, or they over extend
their credit with a bookie, their immediate and often only
recourse is the loan shark, and.
Speaker 1 (25:45):
The loan shark is of course controlled by the same
family that runs.
Speaker 2 (25:48):
The game it's all part of the same system. This
is the mechanism that binds the victim to the organization forever.
Speaker 1 (25:54):
So let's detail the economics of loan sharking. Our sources
call it loan sharking one oh one. And the rates
are just they're brutal.
Speaker 2 (26:02):
They are predatory by design. These loans often carry interest
rates of five to twenty percent.
Speaker 1 (26:07):
Per week per week, not per year.
Speaker 2 (26:09):
Per week. So let's run a quick, horrible hypothetical. Say
a gambler is desperate. He needs to cover his rent,
so he borrows five hundred dollars in the loan shark
at ten percent interests per week. Okay, that means his
interest payment alone the vig is fifty dollars every single week. Now,
if he only pays that fifty dollars interest payment, which
is what usually happens, and never touches.
Speaker 1 (26:31):
The principle, he's just trading water.
Speaker 2 (26:33):
He's treading water forever. That five hundred dollars debt will
cost him twenty six hundred dollars over the course of
a year, and at the end of that year he
still owes the original five hundred.
Speaker 1 (26:43):
The principle becomes functionally impossible. To ever pay off. The
victim is just trapped in a permanent cycle of servitude,
just paying this crippling weekly interest to stay alive, to
not get hurt.
Speaker 2 (26:55):
And that's the point. The mafia isn't interested in a
quick payoff of the loan. They're interested in the long
term leverage. Once a person is caught in that debt cycle,
they've lost their financial independence and more importantly, their psychological fortitude.
They're broken, and.
Speaker 1 (27:09):
This leads directly to the critical consequence forced employment. The
gamblers who couldn't keep up with the weekly vig they
stopped being customers.
Speaker 2 (27:19):
They transitioned from customers to forced employees of the mob.
They became the organization's expendable and deniable labor force.
Speaker 1 (27:26):
So they're forced into tasks based on whatever.
Speaker 2 (27:28):
Skills they have, whatever skills or connections they had in
their previous life. A stockbroker who lost his fortune might
be forced into laundering money. A union official caught in
a debt trap might be forced to steer contracts to
mob owned companies. And a regular guy, a low level
guy with no special skills, he becomes an informant, a
drug courier, and accomplice in violent crimes, His debt obligation,
(27:52):
which could be tens or even hundreds of thousands of dollars,
becomes a permanent shackle that ensures his compliance. Gambling directly
fueled the human resource needs of the entire criminal empire, and.
Speaker 1 (28:04):
This web of control extended beyond just individuals. The cash
and the leverage generated by gambling acted as this powerful
lubricant for systematic political corruption.
Speaker 2 (28:14):
It was a very layered system. At the street level,
you have the immediate liquid cache used for weekly payoffs
to local police to get them to ignore the numbers runners,
simple stuff.
Speaker 1 (28:23):
But it goes higher, much higher.
Speaker 2 (28:25):
At the higher levels. That money flowed as large, untraceable
campaign donations. We're just outright bribes to city council members,
judges and mayors.
Speaker 1 (28:33):
And what did that buy them?
Speaker 2 (28:34):
It bought them everything, favorable zoning laws for casinos or
mob fronted businesses, protection for their organized labor rackets, and
it guaranteed that major investigations would die on the vine
before they ever reached the top echelons of the criminal organization.
Speaker 1 (28:49):
And then, of course you have the glamour of Vegas.
That high stakes environment gave the mob bosses access to
celebrities to high profile figures, which added this veneer of legitimacy.
Speaker 2 (29:01):
It was social capital, n psychological capital. Running the biggest hotels,
controlling the nightlife, hosting stars like Frank Sinatra and the
rat Pack. It gave figures like the Chicago Boss, sam
Gy and Khana an access and an influence.
Speaker 1 (29:16):
They desperately craved the legendary ties between Sinatra and Giancana,
especially around the count Nava Lodge casino, for example.
Speaker 2 (29:23):
That's a perfect illustration of how the mob leveraged the
glamour of gambling. It allowed them to gain intelligence, to
meet powerful people from business and politics, and to increase
their own social standing, which further insulated them from law enforcement.
Speaker 1 (29:36):
We should really pause here just to reinforce the scale
of this gambling wasn't a side business for a few families.
This was a core, centralized business for every major family,
even if they had slightly different specialties.
Speaker 2 (29:50):
That's a vital point. The Chicago outfit, as we've noted,
was almost obsessed with efficiency. They wanted to dominate the
high yield skimming operations out of Vegas and run vast
sports bedding rings across the entire.
Speaker 1 (30:01):
Midwest and the New York families.
Speaker 2 (30:03):
The New York families, particularly the Genevees and the Gambino.
They held tight control over the classic urban rackets, the
numbers game, the loan charking that grew out of it,
and the high stakes underground casinos in the city itself.
Speaker 1 (30:17):
Any others, the.
Speaker 2 (30:18):
Lacheese family often focus heavily on the logistics of race
tracks and the associated labor racketeering, leveraging their control over
the unions there and even the smaller but still key
families in places like Detroit, Cleveland, and Kansas City. They
were instrumental in running the Vegas infrastructure. This was truly
the universal mafia business model, just customized for local opportunities.
Speaker 1 (30:41):
So given the sheer scale and the profitability we've been
talking about, it really does sound like this empire was untouchable.
But starting in the nineteen seventies and really ramping up
into the eighties, the federal government finally found the legal
teeth to challenge it.
Speaker 2 (30:55):
They did, and they made the gambling empire the absolute
centerpiece of their war against organized crime.
Speaker 1 (31:02):
The entire federal strategy just it fundamentally.
Speaker 2 (31:06):
Changed, and the single biggest legal shift the real game
changer was the introduction of the Racketeer Influenced and Corrupt
Organizations Act RICO in nineteen seventy.
Speaker 1 (31:17):
Before Reiko, a prosecutor had a much harder job.
Speaker 2 (31:19):
A much harder job. They'd have to charge a booky
for illegal gambling, a separate guy for loan sharking, and
yet another for a related murder. They couldn't legally connect
them all as a single criminal body, even if they
knew they were.
Speaker 1 (31:30):
So how did Reiko change the game specifically for these
gambling offenses.
Speaker 2 (31:34):
Reicho was brilliant. It defined illegal gambling, along with other
crimes like murder, extortion, and bribery, as predicate acts of
racketeering credic acts, meaning if a prosecutor could prove that
a defendant committed two or more of these acts let's say,
running an illegal numbers game and then using loan sharking
to enforce the debt within a ten year period as
(31:55):
part of a continuous criminal organization.
Speaker 1 (31:58):
They could charge the entire family as a criminal enterprise exactly.
Speaker 2 (32:01):
And this meant that the high level bosses, the guys
who never got their hands dirty with a number slip
or a casino cash drop, they could now be convicted
simply by proving that they directed the enterprise that committed
those predicate acts down below.
Speaker 1 (32:14):
It shifted the entire focus from the street soldier who
gets caught up to the leadership who gives the orders.
Speaker 2 (32:19):
It cut the head off the snake. And the famous
Commission trial in New York and the numerous Vegas related
cases in the nineteen eighties, like the one that inspired
the movie Casino, they proved the power of ARCO. Federal
investigators could now use the complex conspiracy of skimming.
Speaker 1 (32:34):
Which they could prove with surveillance and testimony.
Speaker 2 (32:37):
Right, They could use that to take down the leadership
of the Chicago, Kansas City, and Cleveland families. All at
the same time. Gambling ironically provided the clear pattern of
racketeering activity that was necessary for the convictions that crippled them.
Speaker 1 (32:52):
And at the same time this is happening, Las Vegas
itself was changing dramatically. The mob was being forced out
by a combination of this eral pressure and really market forces.
Speaker 2 (33:02):
It was a perfect storm against them. The transition was
dual pronged. Financially, you had major corporate interests, led initially
by the eccentric acquisition spree, of Howard Hughes, who started
buying up the property.
Speaker 1 (33:15):
They didn't want to deal with the Mob.
Speaker 2 (33:16):
You didn't want to deal with anyone. He hated them,
and following him, Wall Street money began to pour in
Corporate America demanded stability, legitimacy, and public trust, things the
Mob could never provide. Corporate money replaced mob money, and.
Speaker 1 (33:30):
The FEDS capitalized on this transition. They got smarter with
their surveillance.
Speaker 2 (33:34):
They went straight for the heart of the operation, the
counting rooms. The sources detail how the FBI utilized really
sophisticated covert surveillance. We're talking hidden cameras, audio recording devices
planted by insiders right inside the sensitive areas where the
skim took.
Speaker 1 (33:50):
Place, so they could see it happening.
Speaker 2 (33:52):
They could see it, they could hear it. They tracked
the couriers, They flipped low level dealers and count room
employees who are now facing severe prison sentences under Arico.
They documented the entire physical movement of the cash, and
once the mechanics of the skim were exposed on tape,
the mob's financial life blood was severed. By the early
nineteen nineties, the corporate takeover of Vegas was essentially complete.
Speaker 1 (34:15):
So that brings us to the burning question for anyone
listening today. Is the mafias still involved in gambling or
is this just a solved historical problem.
Speaker 2 (34:23):
The answer is that the empire has evolved, but the
demand for their specific product is just as strong as
it ever was, so.
Speaker 1 (34:29):
Illegal sports betting is still huge.
Speaker 2 (34:31):
It's enormous, even with full legalization in so many states.
The mob's core advantages, credit, high betting limits and absolute
privacy ensure that the biggest gamblers, the whales and anyone
who wants to operate anonymously. They still seek out the underworld, and.
Speaker 1 (34:48):
They've leveraged technology to replace the old school methods.
Speaker 2 (34:51):
They've completely replaced the physical pounting room with the Internet.
The modern mobster uses sophisticated offshore websites, encrypted communication apps,
and cryptocurrency betting rings to run international money laundering and
illegal bookmaking operations.
Speaker 1 (35:06):
So they can run a global sports book from a
laptop somewhere.
Speaker 2 (35:09):
They can run it without needing a single physical location
that the FBI can ever raid. It's become a distributed
digital empire now.
Speaker 1 (35:16):
And yet the sources confirm some of the old habits
die hard.
Speaker 2 (35:20):
They do. Underground high stakes poker rooms still operate in
the back of seemingly legitimate businesses in all the major
hubs New York, LA, Chicago, Miami.
Speaker 1 (35:29):
And they provide the same old benefits.
Speaker 2 (35:31):
The same three benefits as always, a source of liquid,
untraceable cash, a way to get leverage over high value
individuals who get into debt, and an easy source of
bribery funds. They're smaller, more discreete than a Vegas casino,
but still highly profitable.
Speaker 1 (35:48):
And finally, we have to acknowledge the new competition, the
vacuum that was left when the Rio takedowns dismantled the
old Italian American mob structure. It's been filled, hasn't it.
Speaker 2 (35:58):
It has a landscape of por is a vacuum. International
organized crime groups have moved in, specifically Russian Bulkan and
various sophisticated Asian organizations. They've rapidly adopted and in some
cases optimized these modern, technologically advanced gambling operations.
Speaker 1 (36:14):
So it might not have the same history as Cosinostra.
Speaker 2 (36:16):
They don't have the deep historical roots, but they have
the global reach and the technical expertise to manage the
digital cross border complexity of modern illegal gambling. It's a
whole new world hashtag tag outro. So if we're going
to synthesize this entire vast history, it's pretty clear that
the mafia's gambling empire is really the single most defining
feature of organized crime in America.
Speaker 1 (36:38):
It really is the thread that ties it all together.
Speaker 2 (36:41):
It's the constant thread. It runs from the early blackhand extortionists,
through the massive political corruption of Prohibition, the construction and
absolute control of Las Vegas, the creation of all that
debilitating personal debt through loan sharking, and its ultimate evolution
into this digital global enterprise.
Speaker 1 (37:00):
It built everything.
Speaker 2 (37:01):
It was the financial foundation. It's what built the fortunes,
and it's what fueled the wars between the families.
Speaker 1 (37:07):
So the empire didn't really disappear, It just yeah, it
shed its physical body, the casino, and it optimized itself
for the digital age. It's proven to be incredibly resilient
to new technology and new laws. It has and I
think the ultimate takeaway here is that organized crime built
its incredible wealth and influence not on some complex, arcane scheme,
(37:28):
but on America's simple, powerful, and absolutely insatiable appetite for
risk and reward.
Speaker 2 (37:34):
That's it exactly. So we'll leave you with this final
provocative thought to consider. Las Vegas today is entirely corporate.
It's sanitized, it's heavily regulated, it's a publicly traded industry.
But consider this. As long as there is a persistent
human demand for the things that the legal, regulated world
cannot and will not provide, namely, immediate, unlimited credit when
(37:55):
you're desperate, absolute total privacy when you're making huge bets,
and the ability to skirt tax laws, the underworld will
always have an inherent, persistent and profitable market advantage. In
the market of chance. The house always wins, and for
a century, that house belonged to the mob.
Speaker 1 (38:12):
That's our deep dive for today. We hope you feel
thoroughly informed on the history and the mechanics of this
incredibly powerful criminal force.
Welcome to the deep dive, where we take a stack
of dense sources and well we distill the knowledge that
truly matters, giving you the shortcut to being well informed.
Speaker 2 (00:10):
And today we are really opening the vault on something huge.
Speaker 1 (00:14):
We are we're looking at one of the greatest and
I think maybe one of the most misunderstood aspects of
American organized crime history. We are talking about the Mafia's
gambling empire.
Speaker 2 (00:25):
Yeah, and it's essential right from the jump to define
what we're talking about here, based on all our source
material for Kosenovstrat gambling wasn't just one revenue stream. Was
this a side hustle, Oh, not at all. It was
frequently the core business. It was the stable, reliable engine
that financed the entire operation for almost a century.
Speaker 1 (00:44):
More than drugs, more than racketeering in many ways.
Speaker 2 (00:47):
Yes, it was often more profitable and certainly you know,
more enduring than drug trafficking, extortion, or even murder for
higher schemes. It was the bedrock.
Speaker 1 (00:56):
Okay, let's unpack that, because that's a huge thesis. We're
not just looking at the flow. Actually, you know, neon
lights of Las Vegas, are.
Speaker 2 (01:02):
We Oh no, we have to go way back.
Speaker 1 (01:05):
We're tracing the evolution of this industry from the dusty
illegal bookie joints of the early nineteen hundreds, through the
numbers rackets in places like Harlem.
Speaker 2 (01:16):
And Little Italy, right into the high glamour casinos and
then and this is the interesting part, right up to
the opaque world of modern offshore digital betting.
Speaker 1 (01:25):
So the mission for this deep dive is to really
get the.
Speaker 2 (01:28):
Mechanics, exactly, the mechanics of its endurance. I mean, how
did they structure an operation that could defy federal law
for so long? We need to look at the money flow,
the key individuals.
Speaker 1 (01:39):
Who built it, and maybe the most important question, why
people kept coming back?
Speaker 2 (01:42):
Yes, why did human beings keep coming back to the
mob for their betting fix even when legal options you know,
eventually started popping up.
Speaker 1 (01:50):
So this is really a look at how the underworld
just mastered human risk taking.
Speaker 2 (01:55):
They optimized it for their own profit. And you take
away just one thing before we start, it's this the
success of this entire empire rests on a really powerful foundation.
Gambling generated the three things organized crime needs to not
just survive, but to truly thrive. What are they untraceable,
instant cash, ironclad leverage over your customers, and finally, pervasive
(02:19):
political influence.
Speaker 1 (02:20):
That synergy, that's the whole.
Speaker 2 (02:22):
Game right there, that three pronged attack. It made it
an unstoppable force for decades.
Speaker 1 (02:28):
Okay, so if we're going to start at the beginning,
let's talk about the early nineteen hundreds. The United States
is going through this big societal reckoning with vice, with morality.
Speaker 2 (02:38):
It is, but gambling was different. It wasn't like prostitution
or theft, which we're seeing, as you know, inherently predatory
gambling existed in this crucial legal vacuum, a.
Speaker 1 (02:48):
Vacuum, so it was widespread. People were doing it, but
it wasn't quite legal exactly.
Speaker 2 (02:51):
It was almost accepted in certain pockets, but on the
books generally illegal.
Speaker 1 (02:56):
And that lack of clarity, Yeah, that's the opportunity.
Speaker 2 (02:58):
That is pure opportunity for an org organized mind. Ye.
State and local governments they were in a bind. They
knew what was happening everywhere. You had illegal bookies taking
bets on horse racing, which was exploding in popularity. You
had saloons running card games in the back, and the
policy racket or the numbers game was becoming huge in
poor urban neighborhoods. So what could the cities do well,
(03:20):
they had two bad options. They could ban it, which
created this massive, unwinnable enforcement nightmare, or they could just
tolerate it turn a blind eye, and most of them,
frankly did the latter.
Speaker 1 (03:32):
So that lack of any uniform enforcement was basically a
green light. It's an invitation for organized crime to step in.
Speaker 2 (03:39):
Engraved invitation. And before the formal mafia really consolidated its power,
you had these brilliant criminal minds, figures like Arnold Rothstein
in New York the brain, the brain exactly. They stepped
in to manage this unmanaged market. They saw it as
the simplest, most consistent way to generate cash flow without
and this is key, without bringing the full weight of
(04:00):
the federal government down on their heads.
Speaker 1 (04:02):
Right, that's a really critical distinction. They didn't have to
invent the desire to gamble.
Speaker 2 (04:07):
No, that's innate. They just had to professionalize the existing market.
They provided the infrastructure, the security or the threat of it,
and the standardized rules.
Speaker 1 (04:16):
So tell me more about that calculation. Why was running
a numbers racket in say nineteen twenty five, so much
less risky than running and drug ring.
Speaker 2 (04:24):
The risk to reward ratio was I mean, it's not
even comparable, really not at all. Look if you got
caught running an illegal dice game or collecting numbers slips,
what was the charge. It was a misdemeanor, a local infraction.
Speaker 1 (04:38):
So a slap on the risk, slap on the risks.
Speaker 2 (04:40):
You're facing a minor fine, maybe a few months in
the county jail if you were unlucky. Now compare that
to a federal offense like trafficking or a conspiracy charge
under later laws, that could get you decades in a
federal penitentiary.
Speaker 1 (04:55):
The whole legal system was just built to handle low
level vice, not a systemic, organized creme enterprise distracting millions.
Speaker 2 (05:02):
Precisely, the mob just internalized that cost a raid wasn't
a threat to the business model. It was an operational expense.
Speaker 1 (05:09):
You just budget for the fue you.
Speaker 2 (05:10):
Budget for the fines, you pay the fine, you bribe
the arresting officer if you can, and you move the
operation two blocks down the street the next day. The
whole enterprise was incredibly resilient because the penalties were just
so soft.
Speaker 1 (05:22):
But the real genius and our sources really hammer this
home was the cash itself. It's not just about the
amount of profit, it's the kind of profit.
Speaker 2 (05:31):
Yes, the liquid nature of gambling. Cash is the absolute
central point of this whole story. Explain it, Okay, So
imagine you're running any other business, legal or illegal. You're
selling goods, you're extorting protection money. There's usually a time delay, right,
or a paper trail, some kind of accounting.
Speaker 1 (05:48):
Sure, in voices, ledgers.
Speaker 2 (05:50):
Gambling, especially the numbers game or a backroom casino, is pure, immediate,
untraceable currency changing hands.
Speaker 1 (05:59):
And that simple currency, that liquidity, What does it buy you.
Speaker 2 (06:03):
In a word, everything. First, it eliminates the paper trail.
That's that's the cornerstone of successful tax evasion and money laundering.
Speaker 1 (06:10):
Right. You can't tax what you can't see exactly.
Speaker 2 (06:12):
Second, it provided instant capital for corruption. If a police
captain needs a payoff to look the other way on
a liquor shipment, the cash is there in a bag
in a few hours, not days.
Speaker 1 (06:22):
Not weeks, So it speeds up the whole cycle of.
Speaker 2 (06:24):
Corruption, it accelerates it exponentially. And Third, that constant flowing
river of cash that liquid wealth. It was used to
fund every single other criminal venture the family was involved in.
Speaker 1 (06:35):
So the numbers game in Harlem is paying for a
union racket on the docks in.
Speaker 2 (06:39):
Brooklyn, precisely, it's financing everything. And the scale of this,
even at the street level, is just staggering. When you
look at the numbers.
Speaker 1 (06:46):
The sources had a detail that really floored me. A
single mid level numbers banker, not even a boss in
the nineteen forties.
Speaker 2 (06:53):
Could pull in thousands of dollars a week.
Speaker 1 (06:55):
Thousands a week in nineteen forties money. That's incredible purchasing power.
Speaker 2 (07:01):
And you have to multiply that by thousands of similar
operations in every major city in the country. It was
this decentralized, robust, high volume income generator.
Speaker 1 (07:11):
It's like a franchise model.
Speaker 2 (07:13):
It really is. And there's one more point about the
cash flow that people often miss. It wasn't just for
funding things. It was the primary mechanism for drawing people
into the entire underworld ecosystem. It was the front door,
the welcoming lobby. You walk into place, a five dollars
bed on a horse. You lose, you lose again, you
need money to cover it and suddenly you're being introduced
(07:33):
to the loan shark. Gambling was the entry point for
all the other vices.
Speaker 1 (07:37):
Okay, let's drill down on that specific enterprise you mentioned,
the one that really laid the groundwork in urban America,
the numbers game.
Speaker 2 (07:45):
Right. It was often called the policy racket in the
earlier years, and you have to think of it as
basically the direct predecessor to the modern state run lottery.
Speaker 1 (07:55):
But way more personal and way more lucrative for the operator.
Speaker 2 (07:59):
Oh, infinitely more lucrative. And the mechanism was just it
was beautiful in its simplicity. That was the genius of it.
Speaker 1 (08:07):
So how did it work?
Speaker 2 (08:08):
People would bet on a three digit number. You could
wager as little as a penny or a dime or
a dollar.
Speaker 1 (08:13):
And how is the winning number picked? I assume it
had to seem fair.
Speaker 2 (08:17):
It had to have the veneer of fairness, absolutely, so
the number was often derived from a public, verifiable source,
things like the last three digits of the daily stock
exchange results, or the total payout amounts at a local
horse race track, something anyone could look up in the newspaper.
Speaker 1 (08:32):
The genius of collecting pennies. It sounds so small time,
but the sheer volume.
Speaker 2 (08:37):
The volume was astronomical. Just picture it. You have thousands
of collectors, they were called runners, canvassing entire working class
neighborhoods on foot, door to door, door to door, in factories,
on street corners. They're collecting thousands upon thousands of individual
wagers every single day. Those pennies and dimes, they add
up to millions very very quickly.
Speaker 1 (08:59):
And the odds were of course stacked in favor of the.
Speaker 2 (09:01):
House, always just slightly. But with that kind of volume,
it was a guaranteed profit stream day in, day out,
and the.
Speaker 1 (09:09):
Immediate payout that must have cemented the trust with the community.
Speaker 2 (09:13):
That was the other piece of the puzzle. Unlike a
state lottery today, which can feel bureaucratic and slow. If
you hit your number, say you won sixty bucks on
a ten cent bet, the runner paid you in cash,
usually the very next day, instant gratification and reliability. It
built this enormous sense of trust and loyalty, especially within
communities that were often very skeptical of big banks or
(09:35):
official institutions. This was their lottery.
Speaker 1 (09:38):
And we see all the biggest names in the mob
getting their start here or at least perfecting their systems.
Speaker 2 (09:44):
Absolutely. You have figures like Dutch Schultz, who just completely
dominated the Harlem numbers racket. He was making millions a
year before the big Italian families, the Genevies, the Gambino,
the Lutazi, really consolidated and formalized their control over Little
Italy and other districts.
Speaker 1 (10:00):
And it wasn't just New York, oh No.
Speaker 2 (10:01):
This was national. The Chicago outfit, especially after Capone, maintained
a vice like grip on the numbers games all throughout
the Midwest.
Speaker 1 (10:10):
And this whole massive operation was shielded not just by
bribed cops, but by a lack of federal interest for decades.
Speaker 2 (10:17):
That's right. Our sources are clear on this. It was
viewed purely as a state or local policing problem, a
ice issue. There was no concerted federal law, no specific
statute designed to shut down the numbers racket until much much.
Speaker 1 (10:30):
Later, which allowed these vast criminal networks to just grow
and mature, completely shielded from the real threat in Washington, DC.
Speaker 2 (10:37):
It was the perfect incubator.
Speaker 1 (10:39):
So this brings us right into the nineteen twenties. You've
got this safe, reliable, highly profitable local business in the
numbers game, Why on earth would the mafia families take
on the huge risk of bootlegging during prohibition? That was complex, dangerous,
and a primary federal target.
Speaker 2 (10:57):
That's a critical question, and it's all about strategic growth.
The numbers game gave them reliable cash flow, yes, but
bootlegging provided two new things, incredibly high margin goods and
a pathway to national expansion and logistics.
Speaker 1 (11:11):
And the speakeasy was the place where those two worlds met.
Speaker 2 (11:14):
The speakeasy was the nexus. It was the perfect synergy.
If you owned the bar selling the illegal liquor, it
was just it was the most natural thing in the
world to run high stakes poker, blackjack and dice games
in the back rooms. It was exponentially more profitable.
Speaker 1 (11:29):
So the liquor gets the crowd in the door, and.
Speaker 2 (11:31):
The gambling extracts every last dollar from their pockets while
they're there. You're multiplying the profit streams from a single
physical location.
Speaker 1 (11:38):
And the cash from one fed the other.
Speaker 2 (11:40):
It was a beautiful symbiotic financial loop. The immediate, untraceable
cash profits from the gambling tables were liquid assets. A
bootlegger could instantly reinvest that money into supply chain, buying.
Speaker 1 (11:53):
More raw materials for stills, paying off truck drivers.
Speaker 2 (11:57):
Greasing the palms of customs officials to let a ship
of scotch. Through gambling cash stabilized the volatile, high risk,
high reward nature of the liquor trade.
Speaker 1 (12:06):
And the end result of all this new money from
both liquor and gambling was the institutionalization of corruption.
Speaker 2 (12:12):
It just became too big to fight. The amount of
money flowing from these combined activities was simply too vast
for most local authorities to even comprehend, let alone resist.
Speaker 1 (12:21):
So corruption went from being a cop here there taking
a bribe being systematic.
Speaker 2 (12:26):
You had entire police precincts and often city politicians on
the mobs payroll. The gambling cash, being so easy to
access and so hard to trace, became the primary fuel
for those bribes. It ensured that both the bootlegging operations
and the backroom games could continue to operate completely unhindered.
Speaker 1 (12:44):
All right, So as we move out of the prohibition
era and into the mid twentieth century, we see this
huge shift. We go from the quiet, steady river of
the numbers game to this spectacular flood of cash that
was Las Vegas.
Speaker 2 (12:58):
And the name that is each eternally and tragically attached
to that pivot is Benjamin Bugsy.
Speaker 1 (13:03):
Siegell, a New York associate, famously handsome, famously violent, and in.
Speaker 2 (13:07):
A criminal sense, a true visionary. He had the vision
to look at the empty, dusty Nevada desert and see
not just sand, but a blank check, an unregulated canvas.
Speaker 1 (13:19):
And he had backing. This wasn't a solo project, oh
not at all.
Speaker 2 (13:22):
He had heavy funding from the real power players on
the East Coast Meyer Lansky, his childhood friend, and the Mobs,
financial genius, and various New York families who basically wanted
to build an unregulated home base far away from their
established and heavily policed cities.
Speaker 1 (13:37):
And that project became The Flamingo, which opened in nineteen
forty six.
Speaker 2 (13:41):
Right, And you have to understand, the Flamingo wasn't just
another casino. What Seagull did was revolutionary. It set the
standard for the entire Las Vegas strip for the next
fifty years.
Speaker 1 (13:50):
So what did he do differently? What made it so special?
Speaker 2 (13:53):
He completely changed the target market and the perception of gambling.
He understood that the future wasn't smoky, the sordid backroom
dens for hardened criminals. It was high end entertainment for
the middle and upper classes.
Speaker 1 (14:07):
He made it respectable.
Speaker 2 (14:08):
He made it a destination, a luxury experience. The Flamingo
introduced these at the time mind blowing concepts, full air
conditioning and the oppressive desert heat. That alone was a
massive luxury draw.
Speaker 1 (14:22):
I can't even imagine.
Speaker 2 (14:23):
He flew in high profile entertainers from Hollywood, Jimmy Durante,
Rose Marie. He had gourmet dining. He essentially invented the
modern luxury resort casino where gambling was just one part
of a larger, glamorous vacation package.
Speaker 1 (14:36):
Now, the sources are clear that it was an initial failure.
It was bleeding money, and that failure ultimately led to
Siegal's murder in nineteen forty seven. It did.
Speaker 2 (14:44):
The bosses were not patient. But the crucial thing is
they didn't give up on the idea. They saw that
the blueprint was solid, even if Seagull's management wasn't. They
didn't scrap the project. They doubled down.
Speaker 1 (14:54):
And that's when the real systemic mob involvement begins.
Speaker 2 (14:57):
Post Seagull, it becomes an industry. From the nineteen fifty
all the way through the nineteen seventies, Cosa Nostra controlled
or had significant financial interests in virtually every major property
on the Strip.
Speaker 1 (15:08):
Give us some names.
Speaker 2 (15:09):
We're talking about the Stardust, the Tropicana, the Riviera, the
Desert inn the Sands. These were the crown jewels of Vegas.
And they were, for all intents and purposes, mob run operations.
Speaker 1 (15:21):
And this wasn't just a New York operation anymore. This
is a truly national collaborative effort from the families, wasn't it.
Speaker 2 (15:28):
It absolutely was. The seed money often came from the
East Coast, from the New York families, but the operational control,
the day to day running of these places was often
delegated to families from the Midwest. Why them, they were
seen as well more business like the Chicago outfit, which
was arguably the most gambling focused family in the country,
had vast interests, But so did the mob families of Detroit,
(15:50):
Cleveland under figures like Modalits who was a gambling genius?
And Kansas City.
Speaker 1 (15:55):
And what was their role?
Speaker 2 (15:56):
These Midwestern families often acted as the operational They were
the ones managing the skim and they were the funnel
for the profits. Moving back to the leadership in New
York and Chicago.
Speaker 1 (16:08):
Let's talk about that the ultimate goal here, and this
is where the mechanics get really fascinating. It wasn't just
about winning money from gamblers on the casino floor.
Speaker 2 (16:17):
No, that was just the public facing business. The real
goal was maximizing the ability to skim profits, to take
cash off the top before those earnings were ever officially
logged or recorded.
Speaker 1 (16:27):
This was pure, untaxed, untouchable money.
Speaker 2 (16:31):
Skimming was the crown jewel of the mafia's entire financial portfolio.
They weren't just taking a cut of the profits reported
to the IRS. They were physically removing raw cash from
the river of revenue before anyone could account for it.
And the scale was just it's hard to even fathom.
Millions and millions of dollars every year sent back to
bosses across the country.
Speaker 1 (16:51):
Okay, this is a crucial point for anyone listening. We
need to break down the mechanics of the casino skim logistically,
step by step. How they do it, how did they
manage to intercept cash? And what you think would be
a high security environment like accounting room.
Speaker 2 (17:06):
The whole operation relied on one thing people, specifically, the
installation of deeply trusted MOB connected employees in key sensitive positions.
So not just dealers on the floor, no, much higher
up the food chain. We're talking pit bosses, shift managers,
and most critically, counting room supervisors. These had to be
(17:29):
guys who were either made members of the organization or
men who were owned completely by it, usually through gambling
debts of their own.
Speaker 1 (17:36):
Okay, so the cash flows from the tables on the
casino floor into the count room where it's supposed to
be tallied up.
Speaker 2 (17:42):
What happens next, So before the entire cash hall for
a shift is run through the official counting machines and
recorded on the internal ledgers, the stuff that makes the
money official and taxable, the mob's supervisors would intervene, under
the guise of say a random spot check or a reconciliation,
or simply during the sorting process, they would physically pull
(18:03):
bundles of unrecorded currency. This money was never ever meant
to hit the books.
Speaker 1 (18:08):
And they could do this without surveillance catching them.
Speaker 2 (18:10):
Well, this was the fifties sixty seventies. Surveillance was primitive
by today's standards. But yes, the operation was done in
specific blind spots or during shift changes that were engineered
by the mobs inside men. The cash was often put
into specialized containers, maybe a briefcase with a false bottom,
or just into sealed drop bags that looked identical to
(18:30):
the legitimate cash drops. The key was that the official
accounting logs for that day would only reflect the remaining cash.
The skim was already gone.
Speaker 1 (18:39):
So the books looked clean. Is maybe a little less
profitable than they should have been.
Speaker 2 (18:43):
Exactly, And now you have this massive pile of untraceable
cash in a briefcase. It needs to get back to
the bosses in New York or Chicago or Cleveland. That
journey sounds incredibly risky. Courier phase the highest risk phase, yes,
but they mitigated that risk throughout absolute trust and subterfuge.
They used highly trusted and often seemingly legitimate couriers.
Speaker 1 (19:07):
Like who not just some guy in a trench code, No.
Speaker 2 (19:09):
That's Hollywood. Think lawyers, doctors, business executives who had private
jet access or traveled frequently between Vegas and other cities
for business. The cash, often packed tightly, would leave Las
Vegas via small private airports, or even just in a
suitcase on a commercial flight, where the courier just looked
like any other affluent tourists coming home from a weekend trip.
Speaker 1 (19:30):
And because the money was pulled before it was ever recorded.
Speaker 2 (19:32):
In Vegas, when it arrived in New York, there was
no paper trail. You couldn't trace it back to the
sands or the stardust. It was just a pristine, untaxed
and visible flow of pure profit.
Speaker 1 (19:42):
It was a perfect crime.
Speaker 2 (19:44):
It was the genius of untraceable wealth generation, and it
funded the mafia's golden age.
Speaker 1 (19:49):
We just talked about the Vegas operation, the massive overhead,
the spectacle, the sheer complexity of it. But now we
have to shift gears to what was really the backbone
of the mafia's gambling empire, day in and day out.
Speaker 2 (20:00):
The quiet, low overhead stream that just never ever.
Speaker 1 (20:03):
Dried up illegal book making.
Speaker 2 (20:05):
Right, And the contrast with Vegas is just it's enormous.
Running at casino requires billions in infrastructure today millions back then.
You have complex licensing. Even if you're bribing people, you
have thousands of employees, huge physical locations that the government
can seize book making on the other hand, book making
requires what a telephone line, a network of street guys,
(20:28):
and the ever present threat of violence to collect debts.
It was the definition of cash flow efficiency.
Speaker 1 (20:33):
So how did this operation, which is so decentralized, a
bookie on every other street corner in every major US city,
how did it function as an integrated part of Cosinostra.
Speaker 2 (20:45):
It was structured like a pyramid. It was a beautiful
business model. At the very base, you had your street
level bookie, he's the neighborhood guy, the guy in the
bar who actually takes the bets.
Speaker 1 (20:53):
The public face of the operation.
Speaker 2 (20:55):
Exactly above him, you had a controller who would manage
several bookies in a territory. His job was to balance
the books and collect the profits. But at the very
top of that pyramid was the organized crime family. And
they provided two absolutely essential services. What were they First
protection from arrest through their network of corrupt police and politicians.
(21:16):
And second, and this is the most important part, financially,
they provided the layoff bank.
Speaker 1 (21:21):
The layoff bank, Okay, that's a key term. Explain what
that does.
Speaker 2 (21:24):
The layoff bank is what guarantees the stability and long
term profitability of the entire network. Think about it. If
a single independent bookie takes too many bets on one team,
say ninety percent of his customers in Boston bet on
the Patriots, and the Patriots win. That one bookie goes bankrupt,
she's out of business.
Speaker 1 (21:41):
Right, you can't cover all the payouts.
Speaker 2 (21:43):
The layoff bank, controlled by the Mob family prevents that
the local bookie would layoff a portion of those lopsided
bets to the central bank. This redistributed the risk across
a vast national network, ensuring that no single bookie could
ever lose enough to fail. It made the entire enterprise
in d instructible.
Speaker 1 (22:01):
And beyond just the house advantage, you know the fact
that most betters lose over time. What else gave the
Mob this fool proof market edge.
Speaker 2 (22:11):
It came down to three things. First, as we discussed
with the numbers game, very low legal risk. Second, the
complete lack of paper trailsmanth they controlled the debts completely.
But third and most important was debt enforcement.
Speaker 1 (22:24):
The consequences.
Speaker 2 (22:25):
The consequences if you lose ten thousand dollars to a
legal sports book today, they might sue you. It's a
civil matter. If you lost ten thousand dollars to the
Mob's bookie. The consequences involved physical violence, intimidation, and an
immediate threat to your business, your livelihood, and your family.
That guaranteed collection.
Speaker 1 (22:42):
This is what's so fascinating. We fast forward to today
and sports betting is being legalized rapidly all across the country.
You can do it on your phone, Yet illegal book
making is still thriving. Why why would anyone choose the
Mob over a legal, official.
Speaker 2 (22:55):
App Because the underworld still offers distinct market advantages that
the legal regulated market cannot and will not ever touch.
Speaker 1 (23:03):
And the number one reason.
Speaker 2 (23:04):
Is credit, absolutely number one. Legal sports books require you
to put cash up front. You have to deposit money
from your bank account. The Mob, however, allows you to
bet on credit, often for days or even weeks.
Speaker 1 (23:18):
You can bet money you don't have.
Speaker 2 (23:19):
You can bet money you don't have. If you're a
high roller and you want to place a quarter million
dollar wager on a game, but you don't have the
immediate liquidity, the Mob's Bookie is your only option.
Speaker 1 (23:28):
Every what else beyond credit? What's the appeal?
Speaker 2 (23:30):
Privacy? Total absolute privacy? Any large cash transaction or a
big win at a legal casino or sports book is
instantly flagged. It's reported to the government, you get tax forms,
there are suspicious activity.
Speaker 1 (23:43):
Reports ah with the mob.
Speaker 2 (23:44):
With the mob, the transaction is completely invisible. There are
no betting limits, no government tracking, and no tax implications,
provided of course, that you pay what you owe. That
deep seated appetite for anonymity and zero regulation is incredibly enduring.
It proves the mobs still maintain, means a very lucrative
niche market.
Speaker 1 (24:02):
And we have to talk about horse racing here. Before
the NFL became the absolute king of betting in America,
horse racing was colossal.
Speaker 2 (24:09):
Horse Racing was the original mass market betting sport, and
the mafia's control went so far beyond just taking bets
on the races. They infiltrated the entire ecosystem. Of course,
they controlled the illegal off track betting, the OTB operations
that were everywhere, but their real power was in their
ability to engage in race fixing. They could manipulate jockeys
(24:31):
and trainers, usually through debt or intimidation, ensuring that certain
horses would win or more often lose. They controlled the outcome.
Speaker 1 (24:39):
Itself, so they're profiting both ways. They're taking the bets
from the public, and they're also cashing in huge on
a long shot that they knew was going to win.
Speaker 2 (24:48):
It was a beautiful circular flow of profit for them.
And Modelitz, who we mentioned earlier in Cleveland, he was
a master of this. He ran a vast multi state
gambling operation that was heavily focused on the lead casinos
and horse betting, long before he transitioned his legitimate interest
to Las Vegas. The horse track was really the proving
ground for the high stakes logistics they would later need
(25:09):
in Vegas.
Speaker 1 (25:10):
Okay, we need to make a really important pivot. Now
we've been talking about gambling is this incredible profit center,
but we have to look at its far more sinister function.
Speaker 2 (25:19):
As a mechanism for control.
Speaker 1 (25:21):
Exactly. Gambling generated debts, and those debts were the engine
that turned casual customers into permanent enslaved assets of the mafia.
Speaker 2 (25:31):
This is the true dark power of the enterprise. When
someone loses big at the tables, or they over extend
their credit with a bookie, their immediate and often only
recourse is the loan shark, and.
Speaker 1 (25:45):
The loan shark is of course controlled by the same
family that runs.
Speaker 2 (25:48):
The game it's all part of the same system. This
is the mechanism that binds the victim to the organization forever.
Speaker 1 (25:54):
So let's detail the economics of loan sharking. Our sources
call it loan sharking one oh one. And the rates
are just they're brutal.
Speaker 2 (26:02):
They are predatory by design. These loans often carry interest
rates of five to twenty percent.
Speaker 1 (26:07):
Per week per week, not per year.
Speaker 2 (26:09):
Per week. So let's run a quick, horrible hypothetical. Say
a gambler is desperate. He needs to cover his rent,
so he borrows five hundred dollars in the loan shark
at ten percent interests per week. Okay, that means his
interest payment alone the vig is fifty dollars every single week. Now,
if he only pays that fifty dollars interest payment, which
is what usually happens, and never touches.
Speaker 1 (26:31):
The principle, he's just trading water.
Speaker 2 (26:33):
He's treading water forever. That five hundred dollars debt will
cost him twenty six hundred dollars over the course of
a year, and at the end of that year he
still owes the original five hundred.
Speaker 1 (26:43):
The principle becomes functionally impossible. To ever pay off. The
victim is just trapped in a permanent cycle of servitude,
just paying this crippling weekly interest to stay alive, to
not get hurt.
Speaker 2 (26:55):
And that's the point. The mafia isn't interested in a
quick payoff of the loan. They're interested in the long
term leverage. Once a person is caught in that debt cycle,
they've lost their financial independence and more importantly, their psychological fortitude.
They're broken, and.
Speaker 1 (27:09):
This leads directly to the critical consequence forced employment. The
gamblers who couldn't keep up with the weekly vig they
stopped being customers.
Speaker 2 (27:19):
They transitioned from customers to forced employees of the mob.
They became the organization's expendable and deniable labor force.
Speaker 1 (27:26):
So they're forced into tasks based on whatever.
Speaker 2 (27:28):
Skills they have, whatever skills or connections they had in
their previous life. A stockbroker who lost his fortune might
be forced into laundering money. A union official caught in
a debt trap might be forced to steer contracts to
mob owned companies. And a regular guy, a low level
guy with no special skills, he becomes an informant, a
drug courier, and accomplice in violent crimes, His debt obligation,
(27:52):
which could be tens or even hundreds of thousands of dollars,
becomes a permanent shackle that ensures his compliance. Gambling directly
fueled the human resource needs of the entire criminal empire, and.
Speaker 1 (28:04):
This web of control extended beyond just individuals. The cash
and the leverage generated by gambling acted as this powerful
lubricant for systematic political corruption.
Speaker 2 (28:14):
It was a very layered system. At the street level,
you have the immediate liquid cache used for weekly payoffs
to local police to get them to ignore the numbers runners,
simple stuff.
Speaker 1 (28:23):
But it goes higher, much higher.
Speaker 2 (28:25):
At the higher levels. That money flowed as large, untraceable
campaign donations. We're just outright bribes to city council members,
judges and mayors.
Speaker 1 (28:33):
And what did that buy them?
Speaker 2 (28:34):
It bought them everything, favorable zoning laws for casinos or
mob fronted businesses, protection for their organized labor rackets, and
it guaranteed that major investigations would die on the vine
before they ever reached the top echelons of the criminal organization.
Speaker 1 (28:49):
And then, of course you have the glamour of Vegas.
That high stakes environment gave the mob bosses access to
celebrities to high profile figures, which added this veneer of legitimacy.
Speaker 2 (29:01):
It was social capital, n psychological capital. Running the biggest hotels,
controlling the nightlife, hosting stars like Frank Sinatra and the
rat Pack. It gave figures like the Chicago Boss, sam
Gy and Khana an access and an influence.
Speaker 1 (29:16):
They desperately craved the legendary ties between Sinatra and Giancana,
especially around the count Nava Lodge casino, for example.
Speaker 2 (29:23):
That's a perfect illustration of how the mob leveraged the
glamour of gambling. It allowed them to gain intelligence, to
meet powerful people from business and politics, and to increase
their own social standing, which further insulated them from law enforcement.
Speaker 1 (29:36):
We should really pause here just to reinforce the scale
of this gambling wasn't a side business for a few families.
This was a core, centralized business for every major family,
even if they had slightly different specialties.
Speaker 2 (29:50):
That's a vital point. The Chicago outfit, as we've noted,
was almost obsessed with efficiency. They wanted to dominate the
high yield skimming operations out of Vegas and run vast
sports bedding rings across the entire.
Speaker 1 (30:01):
Midwest and the New York families.
Speaker 2 (30:03):
The New York families, particularly the Genevees and the Gambino.
They held tight control over the classic urban rackets, the
numbers game, the loan charking that grew out of it,
and the high stakes underground casinos in the city itself.
Speaker 1 (30:17):
Any others, the.
Speaker 2 (30:18):
Lacheese family often focus heavily on the logistics of race
tracks and the associated labor racketeering, leveraging their control over
the unions there and even the smaller but still key
families in places like Detroit, Cleveland, and Kansas City. They
were instrumental in running the Vegas infrastructure. This was truly
the universal mafia business model, just customized for local opportunities.
Speaker 1 (30:41):
So given the sheer scale and the profitability we've been
talking about, it really does sound like this empire was untouchable.
But starting in the nineteen seventies and really ramping up
into the eighties, the federal government finally found the legal
teeth to challenge it.
Speaker 2 (30:55):
They did, and they made the gambling empire the absolute
centerpiece of their war against organized crime.
Speaker 1 (31:02):
The entire federal strategy just it fundamentally.
Speaker 2 (31:06):
Changed, and the single biggest legal shift the real game
changer was the introduction of the Racketeer Influenced and Corrupt
Organizations Act RICO in nineteen seventy.
Speaker 1 (31:17):
Before Reiko, a prosecutor had a much harder job.
Speaker 2 (31:19):
A much harder job. They'd have to charge a booky
for illegal gambling, a separate guy for loan sharking, and
yet another for a related murder. They couldn't legally connect
them all as a single criminal body, even if they
knew they were.
Speaker 1 (31:30):
So how did Reiko change the game specifically for these
gambling offenses.
Speaker 2 (31:34):
Reicho was brilliant. It defined illegal gambling, along with other
crimes like murder, extortion, and bribery, as predicate acts of
racketeering credic acts, meaning if a prosecutor could prove that
a defendant committed two or more of these acts let's say,
running an illegal numbers game and then using loan sharking
to enforce the debt within a ten year period as
(31:55):
part of a continuous criminal organization.
Speaker 1 (31:58):
They could charge the entire family as a criminal enterprise exactly.
Speaker 2 (32:01):
And this meant that the high level bosses, the guys
who never got their hands dirty with a number slip
or a casino cash drop, they could now be convicted
simply by proving that they directed the enterprise that committed
those predicate acts down below.
Speaker 1 (32:14):
It shifted the entire focus from the street soldier who
gets caught up to the leadership who gives the orders.
Speaker 2 (32:19):
It cut the head off the snake. And the famous
Commission trial in New York and the numerous Vegas related
cases in the nineteen eighties, like the one that inspired
the movie Casino, they proved the power of ARCO. Federal
investigators could now use the complex conspiracy of skimming.
Speaker 1 (32:34):
Which they could prove with surveillance and testimony.
Speaker 2 (32:37):
Right, They could use that to take down the leadership
of the Chicago, Kansas City, and Cleveland families. All at
the same time. Gambling ironically provided the clear pattern of
racketeering activity that was necessary for the convictions that crippled them.
Speaker 1 (32:52):
And at the same time this is happening, Las Vegas
itself was changing dramatically. The mob was being forced out
by a combination of this eral pressure and really market forces.
Speaker 2 (33:02):
It was a perfect storm against them. The transition was
dual pronged. Financially, you had major corporate interests, led initially
by the eccentric acquisition spree, of Howard Hughes, who started
buying up the property.
Speaker 1 (33:15):
They didn't want to deal with the Mob.
Speaker 2 (33:16):
You didn't want to deal with anyone. He hated them,
and following him, Wall Street money began to pour in
Corporate America demanded stability, legitimacy, and public trust, things the
Mob could never provide. Corporate money replaced mob money, and.
Speaker 1 (33:30):
The FEDS capitalized on this transition. They got smarter with
their surveillance.
Speaker 2 (33:34):
They went straight for the heart of the operation, the
counting rooms. The sources detail how the FBI utilized really
sophisticated covert surveillance. We're talking hidden cameras, audio recording devices
planted by insiders right inside the sensitive areas where the
skim took.
Speaker 1 (33:50):
Place, so they could see it happening.
Speaker 2 (33:52):
They could see it, they could hear it. They tracked
the couriers, They flipped low level dealers and count room
employees who are now facing severe prison sentences under Arico.
They documented the entire physical movement of the cash, and
once the mechanics of the skim were exposed on tape,
the mob's financial life blood was severed. By the early
nineteen nineties, the corporate takeover of Vegas was essentially complete.
Speaker 1 (34:15):
So that brings us to the burning question for anyone
listening today. Is the mafias still involved in gambling or
is this just a solved historical problem.
Speaker 2 (34:23):
The answer is that the empire has evolved, but the
demand for their specific product is just as strong as
it ever was, so.
Speaker 1 (34:29):
Illegal sports betting is still huge.
Speaker 2 (34:31):
It's enormous, even with full legalization in so many states.
The mob's core advantages, credit, high betting limits and absolute
privacy ensure that the biggest gamblers, the whales and anyone
who wants to operate anonymously. They still seek out the underworld, and.
Speaker 1 (34:48):
They've leveraged technology to replace the old school methods.
Speaker 2 (34:51):
They've completely replaced the physical pounting room with the Internet.
The modern mobster uses sophisticated offshore websites, encrypted communication apps,
and cryptocurrency betting rings to run international money laundering and
illegal bookmaking operations.
Speaker 1 (35:06):
So they can run a global sports book from a
laptop somewhere.
Speaker 2 (35:09):
They can run it without needing a single physical location
that the FBI can ever raid. It's become a distributed
digital empire now.
Speaker 1 (35:16):
And yet the sources confirm some of the old habits
die hard.
Speaker 2 (35:20):
They do. Underground high stakes poker rooms still operate in
the back of seemingly legitimate businesses in all the major
hubs New York, LA, Chicago, Miami.
Speaker 1 (35:29):
And they provide the same old benefits.
Speaker 2 (35:31):
The same three benefits as always, a source of liquid,
untraceable cash, a way to get leverage over high value
individuals who get into debt, and an easy source of
bribery funds. They're smaller, more discreete than a Vegas casino,
but still highly profitable.
Speaker 1 (35:48):
And finally, we have to acknowledge the new competition, the
vacuum that was left when the Rio takedowns dismantled the
old Italian American mob structure. It's been filled, hasn't it.
Speaker 2 (35:58):
It has a landscape of por is a vacuum. International
organized crime groups have moved in, specifically Russian Bulkan and
various sophisticated Asian organizations. They've rapidly adopted and in some
cases optimized these modern, technologically advanced gambling operations.
Speaker 1 (36:14):
So it might not have the same history as Cosinostra.
Speaker 2 (36:16):
They don't have the deep historical roots, but they have
the global reach and the technical expertise to manage the
digital cross border complexity of modern illegal gambling. It's a
whole new world hashtag tag outro. So if we're going
to synthesize this entire vast history, it's pretty clear that
the mafia's gambling empire is really the single most defining
feature of organized crime in America.
Speaker 1 (36:38):
It really is the thread that ties it all together.
Speaker 2 (36:41):
It's the constant thread. It runs from the early blackhand extortionists,
through the massive political corruption of Prohibition, the construction and
absolute control of Las Vegas, the creation of all that
debilitating personal debt through loan sharking, and its ultimate evolution
into this digital global enterprise.
Speaker 1 (37:00):
It built everything.
Speaker 2 (37:01):
It was the financial foundation. It's what built the fortunes,
and it's what fueled the wars between the families.
Speaker 1 (37:07):
So the empire didn't really disappear, It just yeah, it
shed its physical body, the casino, and it optimized itself
for the digital age. It's proven to be incredibly resilient
to new technology and new laws. It has and I
think the ultimate takeaway here is that organized crime built
its incredible wealth and influence not on some complex, arcane scheme,
(37:28):
but on America's simple, powerful, and absolutely insatiable appetite for
risk and reward.
Speaker 2 (37:34):
That's it exactly. So we'll leave you with this final
provocative thought to consider. Las Vegas today is entirely corporate.
It's sanitized, it's heavily regulated, it's a publicly traded industry.
But consider this. As long as there is a persistent
human demand for the things that the legal, regulated world
cannot and will not provide, namely, immediate, unlimited credit when
(37:55):
you're desperate, absolute total privacy when you're making huge bets,
and the ability to skirt tax laws, the underworld will
always have an inherent, persistent and profitable market advantage. In
the market of chance. The house always wins, and for
a century, that house belonged to the mob.
Speaker 1 (38:12):
That's our deep dive for today. We hope you feel
thoroughly informed on the history and the mechanics of this
incredibly powerful criminal force.
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