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Sports Betting: Past, Present and Future - Part 3 by Jeremy Martin
Nevada Opens the Doors to Sports Betting
Gambling was legalized in Nevada in 1931, but it wasn't until years later that sports betting would become commonplace across the state. Before gambling, Nevada was in big economic trouble. The state's main industry had been mining, but that trade had diminished by the late 1800s and Nevada was in a dire financial situation. Most of the state's cities, which had boomed during the mining apex, were virtual ghost towns. Reno was the state's biggest city with approximately 15,000 residents and Las Vegas had nearly 5,000 citizens. But legalized gambling, boxing, effortless divorce and prostitution made Nevada an attractive tourist destination. The economic condition changed dramatically -- almost overnight -- once gambling was added to the state's coffers.
While casino-style gambling was deemed legal, sports betting was still illegal until a regulation was passed by Congress in 1951 imposing a 10 percent tax on all sports bets. Of course, in an atmosphere that revolved around gambling, it was probably not difficult for visitors or residents to find someone to take a bet before the new law was passed. But the new regulations allowed the bookmakers to come out from the shadows and work their trade openly in the public eye.
The first legal sports books in Nevada were stand-alone shops which were independent from any of the large casinos. They were called 'turf clubs' and had names like the Del Mar, Churchill Downs and the Rose Bowl. These small operations were sometimes referred to as 'sawdust rooms' because of the wood chips that were spread across the floor to soak up spilled beer and to remove some of the foul odors. Betting options were posted on chalkboards and cigar smoke was heavy in the air.
After the office in Minneapolis shut down, these turf clubs filled the oddsmaking void left by Hirschfield's departure from the industry and the first 'Las Vegas Line' was established. It was during this time that a man named Jimmy 'The Greek' Snyder became the world's most visible linesmaker. Snyder, who formulated his numbers out of the Saratoga Club, was known by most industry experts as more of a public relations whiz than an astute oddsmaker. He is, however, often credited as the being the individual that brought sports betting into the public eye like no other before him. Snyder, who ran his own PR firm, wrote a syndicated newspaper column that was published across the county and even landed a lucrative gig on the CBS-TV football pre-game show, where he would make his game selections live on the air every Sunday.
"One thing that [Snyder] was able to do that no one has been able to do before and no one has been able to do after him is get gambling on national TV on a regular basis," says Michael 'Roxy' Roxborough, who would later become the most prominent linesmaker in the world in the 1980s. "He was such a celebrity that he did a TV commercial where he would give people 5-2 odds that you could get a closer shave with some shaving cream and he was rolling dice in the commercial. That could never happen today."
Even though sports betting was becoming widely accepted, the turf clubs faced some problems from the outset. Because of the 10 percent tax, it was impossible for these betting shops to make a profit while offering 11/10 vigorish. Many of the books passed the tax on to their customers -- who were willing to lay the action no matter how steep the price -- in the form of 12/10 vig. Some say that enterprising book operators found other illegal ways around the tax. Despite the tax, the turf clubs evidently did quite well during the 1960s and early 1970s.
"They were all well organized," says Rosenthal of the turf clubs. "They used to bail their money [like hay]. It just kept rolling in. They were the only game in town and it was legit."
The turf club operators had an agreement with the larger casinos, according to Vaccaro. As long as the hotels would stay out of the sports betting business, the turf clubs promised not to add casino games into their operations. The two entities ran separately and in harmony until 1974.
It was during that year that legislation was passed that would change sports betting in the state forever. The 10 percent federal tax imposed on sports bets was deemed unconstitutional and Congress agreed to lower the tax to just two percent. This created a sports betting boom because operators could now legally make a profit while offering their customers 11/10 juice. It was a move that would also signal the beginning of the end for the turf clubs.
The casinos had decided to stay out of the sports betting game because it didn't offer the high profit margin of other casino games like blackjack, roulette, craps and slot machines. But after the tax was lowered (it would be dropped even further, to .025 percent in 1983), some casino executives began to see the potential advantages of opening a book in their outfit.
One of these men of vision was Rosenthal, the real life figure who was portrayed by Robert DeNiro in the movie "Casino." In 1975 Rosenthal, who was running the Stardust, appeared in front of committees of the state legislator in favor of new laws that would allow sports books to be located in casinos. "In this one situation it seemed like I had a crystal ball," remembers Rosenthal. "My premise [was] that it would create thousands of jobs and bring in millions of tourists and [the sports book] would just be another arm of the casino. [The commission] acted within two weeks and passed the ordinance."
This new law paved the way for what would become the standard for Nevada casinos. In 2004, nearly every large property in the state has a sports book. Back in the mid 1970s, after the new law was passed, the casino operators wasted no time in getting into the sports betting business. Jackie Gaughan opened a book at the Union Plaza Hotel and Casino in downtown Las Vegas in 1975 and Rosenthal opened his book at the Stardust the following year. Books subsequently "sprang up like cactus" in the casinos, according to Rosenthal.
"[Gaughan and Rosenthal], they are the pioneers of what you would call the new race and sports book," says Vaccaro. "They moved forward and took the backroom stigma out of race and sports by placing it in a high visibility property. Those two people had more to do with the way things are now than anybody."
The sports book at the Stardust became the prototype for what every designer after it would aspire for their book to be. Rosenthal created a plush environment for his customers with plenty of seating space and multiple television sets where patrons could keep tabs on their action. He replaced the old chalkboards with electronic boards to display up-to-the-minute on a multitude of sports.
Rosenthal's vision for the potential success of the sports book for the overall bottom line of the casino was correct. Customers herded into his book and the casino started to see increases in revenue across the board. "We knocked their socks off," he says. "It really wasn't rocket science. If you build an operation that contains horses and sports and do it properly and make it comfortable and luxurious, people will be coming in from various parts of the country."
Consequently, sports books began to show up in other casinos at a rapid pace. The turf clubs were not able to compete and they all eventually shut down. With the exception of Little Caesars, which was operated by the late Gene Mayday and stayed in operation until the early 1990s, the casinos rendered the turf clubs nearly obsolete by the mid 1980s.
"They held out for as long as they could," comments Vaccaro. "Those old guys who ran those joints, they were what you would consider just purist bookmakers. But they couldn't change with the times because they couldn't buy hotels. The hotels could buy them."
One of the holdovers from the turf club era was the late Bob Martin, who ran the Churchill Downs book and was eventually hired on by Gaughan to run the book at the Union Plaza. Martin had established a reputation as a shrewd oddsmaker. According to Vaccaro, Martin was the "greatest bookmaker that ever wrote down a point spread." In fact, he was so well respected that most of the lines used throughout the country originated from his office. After Snyder's reputation had diminished, Martin's numbers became the Las Vegas Line.
"At Monday around noon, the sports book at the Union Plaza would have hundreds of people there and then once the line went up, the sports book - one or two minutes later - would have about six people in there," remembers Martin's son-in-law, Eric St. Clair, who is currently a Las Vegas bookmaker. "It was people all running to the phone to call their people and saying 'here's what the line is' so they could put it up all across the country."
Part 4: Roxy comes on the scene and the future of the industry looks bright.