KVIG Informative

Nobody vetted Benjamin “Bugsy” Siegel before Nevada let him build and run a casino on the Strip — because for the first eighteen years after the state legalized wide-open gambling, nobody in state government had the legal authority to vet anyone. The licensing gap that let Siegel’s money and associates walk into the Flamingo unchecked is the reason Nevada eventually built the two-agency vetting system that still screens every casino sale in the state today.

Nevada legalized wide-open gambling in 1931, but licensing power stayed entirely with individual counties for the next 14 years, according to the Nevada State Library and Archives’ published history of the Nevada Gaming Control Board. No state agency reviewed who held a gaming license anywhere in Nevada during that period.

The state didn’t take over licensing until 1945, and even then the new state program existed to collect revenue, not to screen owners. The Nevada Tax Commission began collecting fees based on a share of casino winnings, in addition to existing per-device charges, according to the Nevada Resort Association’s own published history of gaming regulation. Nevada’s first statewide gaming tax, 1 percent of gross winnings, took effect in 1946 and generated $670,000 that year; the rate rose to 2 percent by 1947, the association’s history states.

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A license nobody had to earn

Benjamin “Bugsy” Siegel arrived in Las Vegas in the early 1940s at the direction of organized-crime associate Meyer Lansky, according to an entry on Siegel published by UNLV Special Collections’ Southern Nevada Jewish Community Digital Heritage Project. In 1945, Siegel purchased the El Cortez hotel-casino with partners including Lansky, Moe Sedway, Gus Greenbaum, Israel “Icepick Willie” Alderman, Chickie Berman and Davie Berman, the entry states.

The Flamingo wasn’t originally Siegel’s project. Billy Wilkerson began building it and sold his stake after running into debt, and Siegel took over construction and opened the Flamingo on Dec. 26, 1946, according to the finding aid for the Flamingo Hilton Hotel Records held by UNLV Special Collections. Nevada’s licensing system had no mechanism to screen Siegel, his backers or where their money came from: state regulators didn’t gain the authority to investigate a gaming license applicant’s background until 1949, according to the Nevada Resort Association’s history — three years after the Flamingo opened and two years after Siegel’s death.

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The Flamingo’s opening was rocky by any account. Construction costs ran well beyond the original budget, and the casino closed within a month of its Dec. 26, 1946 opening after a poor start; it reopened in March 1947 and turned a profit, according to the UNLV Special Collections entry on Siegel. He didn’t live to see much of that turnaround — Siegel was shot and killed at Virginia Hill’s home in Beverly Hills on June 20, 1947, in a killing that remains formally unsolved.

Nevada didn’t build a dedicated licensing agency with investigative power until the 1955 Legislature created the Gaming Control Board, and didn’t separate licensing decisions from tax collection until the 1959 Gaming Control Act, according to the Nevada State Library and Archives — reforms built specifically to close the kind of ownership vacuum that let Siegel and his associates into the Flamingo unchecked. Every casino sale in Nevada still runs through that same two-agency system, built to close a gap that, for Siegel, was never closed at all.