January 29, 2023


Business leisure

How politics and religion handicapped Hot Springs in the race to become America’s chief gambling resort

LOOKING BACK: In the 1940s and 1950s, oddsmakers would have seen Hot Springs as more likely to emerge as the country’s top gambling destination than Las Vegas.

“On behalf of your children and yourselves, remove this cancer from your county!” Dr. William Brown was a 75-year-old retired preacher, but on that Sunday in 1964 he was very much in his element, preaching from the pulpit of the Grand Avenue Methodist Church in Hot Springs. As executive secretary of the Christian Civic Foundation, the successor to the Temperance League of Arkansas, Brown had shifted his focus from alcohol to what he saw as the new scourge among the weaker-willed of his humble state: gambling. “A wave of gambling is sweeping across America with all the fury of a prairie fire and in an infinite number of manifestations. God save us from a Las Vegas in the heart of Arkansas!” 

Brown had good reason to be worried. At the time of his sermon, gambling was the main industry in Hot Springs, despite the fact that it was illegal in the state of Arkansas. So much so, in fact, that all around the Grand Avenue Methodist Church that day stood more than $18 million worth of towering hotel construction projects, hurriedly being erected to receive what by then numbered more than 5 million visitors to Hot Springs per year. Over the previous decade Hot Springs was locked in a de facto arms race with the city of Las Vegas over who would be the beneficiary of a flood of investment in the gambling industry. That money flowed from two main sources: the investments made by organized crime into the gambling industry of Cuba now orphaned by the revolution, and the Teamsters Central States Pension Fund, which had invested more than $120 million in real estate projects, and was prepared to invest double that into casino projects alone. This, too, surely worried Brown because both of these sources were controlled by organized crime. My book “The Vapors: A Southern Family, the New York Mob, and the Rise and Fall of Hot Springs, America’s Forgotten Capital of Vice,” tells the story of how Hot Springs nearly won that arms race and, if not for a couple of nefarious bombs and a couple of elections that went the wrong way, nearly became America’s undisputed gambling resort. 

By 1964, however, much of that battle was already lost, and the gamblers of Hot Springs weren’t so much fighting to become Las Vegas as they were fighting to keep up. Internecine struggles between rival gambling factions in Hot Springs in the early 1960s allowed Las Vegas to get the upper hand. While Hot Springs locals battled each other, they also began to shun the involvement of outsiders who had once connected the town to the broader gambling infrastructure, and instead rejected their help. When mob boss Frank Costello flirted with moving to Hot Springs to quell the warring factions and take over as “Boss Gambler,” the governor of Arkansas, Hot Springs native Sid McMath, publicly warned him to stay out. Even Teamsters president Jimmy Hoffa, who invested Central States Pension loans into high-profile luxury hotel projects in Hot Springs like the Jack Tar Hotel and the Aristocrat Manor, was once closely connected to the leaders of Hot Springs. But Dane Harris, who as the owner of the city’s flagship gambling club, The Vapors, became the town’s Boss Gambler in the 1960s, had his differences with Hoffa. Contemporaries of Harris told me that until his dying day he blamed Hoffa for every bad thing that ever happened to Hot Springs. (The conspiratorial among you might find it interesting that after Hoffa vanished in 1975, the FBI spent two weeks searching for his remains near Hot Springs and questioning gambling leaders.)

picture of Jimmy Hoffa

HOFFA: The notorious president of the Teamsters Central State Pension Fund (right) invested in luxury projects in Hot Springs, and when he disappeared in 1975, the FBI spent two weeks in Hot Springs looking for him and interviewing gambling leaders.

But the likeliest obstacle to attracting the hundreds of millions of dollars that would rain down in the desert of Las Vegas in the coming decades was that, unlike in Arkansas, gambling in Nevada was legal. This was why William Brown was preaching in Hot Springs that morning. He had helped start an organization called Churches United Against Gambling to combat the gambling leaders of Hot Springs’ final effort at catching up with Las Vegas: a statewide ballot initiative to pass Constitutional Amendment 55, which would make casino gambling legal in Garland County.

The message of CUAG was simple: Las Vegas was a sinful, crime-ridden city. The group’s advertisements claimed that legal gambling was “a stark picture of moral wrong, economic wastefulness, political corruption, social destructiveness and educational deception.” The ministers would have their way. Amendment 55 was defeated 247,978 to 166,626. Vapors owner Harris had invested much of his time and money in the campaign to pass the amendment. He was proud of the industry that he and his partners had helped build in the little resort town, and felt that Hot Springs presented to the rest of America a different version of Arkansas than one might have expected: a place that was rarefied, cultured and cosmopolitan. He saw legal gambling as the key to growing Hot Springs’ quasi-clandestine gambling operation into America’s own Monte Carlo, a place that — unlike the desolate and inhospitable desert valley of southern Nevada — the whole world could come and comfortably enjoy the best America had to offer. The failure of Amendment 55 all but killed any hope of expanding the city’s gambling business, which had already grown too large to contain in willful violation of the law anymore. Harris expressed his disappointment after the vote by lamenting “We’re 49th and 50th in everything. I guess we’ll just stay that way. Proud but poor.” 

As Hot Springs spent the next five years slowly winding down its gambling operation, Las Vegas was already well on its way to building the desert metropolis we all know today. The transformation was truly remarkable, and unparalleled in modern American history. In the 1940s, Hot Springs was booming, and Las Vegas was barely a town at all, let alone a tourist destination. In those days, despite it being legal in Nevada, gambling took place in dingy saloons and pool halls. In 1940 fewer than 10,000 people lived there. But by 1960 the city had more than 130,000 residents and nearly 10 million tourists who collectively gambled $100 million a year and spent over $150 million more. In 1963, while Arkansans debated whether or not gambling was sinful, the governor of Nevada sent a delegation of 37 business and civic leaders on a three-week barnstorming tour of Europe to solicit foreign investment in the state and particularly in Las Vegas. The McCarren Airport was expanded to accommodate jet travel. Nevada was the fastest-growing state in the country. 

The only thing holding Las Vegas back, other than the challenges presented by its extreme climate and living conditions, was that the growth and development was being funded by criminals. In 1962 the Supreme Court even threatened to shut down gambling in Nevada because of the prevalence of organized crime figures in the gambling business. At that time, gambling was a business that had been illegal everywhere in America other than Nevada, so it made some sense that it would be largely controlled by the mob. In fact, gambling was the mob’s single biggest source of revenue. The problem was that anyone in America who knew how to run a gambling operation was likely involved with organized crime in one way or another. And the only people willing to fork over the eye-popping sums of money required to develop casino resorts in Nevada were people with mob ties. The Teamsters Central State Pension Fund, which not only funded casino construction but even hospitals and other civic projects, was a crucial source of money for Las Vegas’ early development, and the loans from the fund were being directed by not only Hoffa but mob leaders, giving organized crime significant power and influence in the rapidly growing city. But what choice did Las Vegas have? Few banks would loan money to casino projects in those days. And few people outside the gambling underworld were interested in going into the legitimate gambling business. 

What allowed Las Vegas to begin to break free of its mob connections were two Nevada laws passed in 1967 and 1969 that allowed for corporate ownership of casinos. Once the Las Vegas experiment began to take root and flower in the desert, deeper pockets started paying attention to the potential for profits, and legitimate money started moving in. Slowly but surely, corporate investment was able to dilute the influence of organized crime. And corporate investments helped build massive casino resort projects that would employ more than 40,000 people to wait on, deal to and clean up after tens of millions of yearly visitors. In 1971 one of those corporations, Hilton Hotels, purchased the International Hotel in Las Vegas and renamed it the Las Vegas Hilton. Five years later, 43{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} of Hilton’s revenues from all of its 163 hotels around the world came from Las Vegas alone. At that time, 300,000 people lived in the Las Vegas area, a community that 20 years before barely had a working sewer. 

Hot Springs struggled to find its footing in the years following the end of casino gambling. Still dependent on tourists to fill its many hotel rooms and patronize its many service and entertainment establishments, it tried to reinvent itself as a family-friendly resort. During the 1970s a visitor to Hot Springs could spend a day at a new 118-acre amusement park, visit a new $7 million science museum, or even visit the famous Southern Club, once a popular and rollicking casino, now a wax museum for the whole family. 

THE SOUTHERN CLUB: Once one the city’s prominent gambling halls.

While the rehabilitation of the city’s image was working, the economy struggled without the revenue gambling created — or at least the revenue casino gambling created. Gambling on horse racing was still alive and well, and was a desperately needed lifeline for the economy of both Hot Springs and the entire state of Arkansas. The tourists who traveled to Hot Springs to gamble at Oaklawn Park spent more than $200 million each year in Garland County, money that created over 5,000 jobs. In 1983 Oaklawn set all-time attendance records, but those numbers fell in each subsequent year as tourism began to fall. A combination of technology and a proliferation of legal forms of gambling in states across the country contributed to a decline in the number of tourists traveling to Hot Springs for the race meet each season, and the town’s various hotel housekeepers, restaurant servers, bartenders, shop owners and even the folks who parked racetrackers’ cars in their front yards in the neighborhoods around Oaklawn all took a hit to their pocketbooks. By the end of the 1980s, with a national unemployment average at about 5{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be}, the lowest in 15 years, Arkansas’s sat at 8{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be}, and had been as high as nearly 10{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} during 1986, when the state’s Employment Security Division said that Oaklawn, even with its declining attendance, had saved the state’s employment numbers and “had a major impact on the economy.” 

Las Vegas struggled in the 1980s as well. At long last another state challenged Nevada’s monopoly on legal gambling, and in 1978 Atlantic City, New Jersey, opened the first of what would grow to become 11 casino resorts along the boardwalk on the shore of the Atlantic Ocean. The proximity to the population centers of the East Coast peeled a significant number of customers away from Las Vegas, and during the early 1980s there was very little new development. Many of the Las Vegas casinos languished, its mid-century Rat Pack charm grew dated and uncool, and the city lost a bit of its step. 

In 1986, all of that would begin to change. A developer named Steve Wynn, backed by Michael Milken’s junk bonds, planned to build the biggest and most expensive hotel in the world in Las Vegas. His $630 million, 3,000-room resort was called The Mirage, and it opened in 1989 to great fanfare. What was unique about The Mirage, beyond its size and price tag, was that it intended to make money from more than just its gambling tables. The Mirage was a full-scale luxury resort with world-class restaurants, shopping and a 1,500-seat showroom. Wynn would court conventioneers over weekend gamblers, and the other casino owners in Las Vegas quickly followed his lead. 

Convention and exposition business wasn’t attractive to the old-school gambling leaders of Las Vegas, because conventioneers didn’t come to town to gamble, and spent little money. But the bet that Wynn was making was that convention business would bring fewer gamblers to Las Vegas but more tourists overall. In a few short years, Las Vegas overtook Chicago as the top convention destination in America, and has held that top spot ever since. And gambling revenue at casinos on the Las Vegas strip went from just under 60{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} of total revenues in the years before The Mirage opened to less than half of total revenues by the end of the decade. Today the number is roughly one-third. In 2013, MGM CEO James Murren said 70{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} of their income came from nongambling revenue, including 7 million show tickets sold in one year alone. Las Vegas was transforming from “sin city” to America’s premier resort destination — precisely the kind of place Hot Springs aspired to be. But rather than throwing out the slot machines and burning them, Las Vegas was using the gambling revenues to build stately showrooms, ritzy shopping malls, lush swimming pools and water parks, and telling visitors to bring the entire family. Twenty-five years on, and Dane Harris’ dream for Hot Springs was coming to life in Las Vegas. 

The Mirage inspired more mega-resorts. The 1990s saw a massive building boom in Las Vegas, with old casinos being demolished and replaced with newer, larger, more luxurious resorts, each one trying to top the last. And each of these massive casinos required a workforce equal to its size. By the end of the decade, the typical Las Vegas casino resort employed 3,000 to 5,000 workers. A couple even topped 10,000 employees. People were moving to the desert in greater numbers than ever before. In 1996, the population of Las Vegas eclipsed 1 million. It was once again the fastest-growing city in America, with 7,000 new arrivals every month. 

The boom in Las Vegas wasn’t just good for the corporations that owned the casinos. In the 1990s, the hotels and casinos created over 100 new jobs every month, and although those jobs were mostly entry-level service jobs — among the lowest paid jobs in America — in Las Vegas the hotel and casino workers made some of the highest wages in the country. That’s because Las Vegas, going all the way back to its early days when it was built by union loans, had always been a union town. And the city’s main union, the Culinary Workers Local 226, had been a part of the city’s history from the very beginning. The man who built that union, an Arkansan named Al Bramlet, helped grow Las Vegas by literally driving through Arkansas recruiting sharecroppers — and anyone else looking for work — and bringing them to the then-largely uninhabited Las Vegas to work in the new casinos. The result was that the earliest establishments were union shops, and remained union as the businesses grew through the decades. 

As the industry boomed in the 1990s, the union fought hard to make sure that workers would get their fair share of the profits. Just like in the 1940s, the casinos were once again desperate for a stable and well-trained workforce, and they were willing to agree to higher wages and better working conditions in exchange for the well-trained and experienced members of Local 226. By that time the union’s membership numbered in the tens of thousands, and the local ran workforce training schools, so that members could take classes and work their way up from the lower-paid, less-skilled jobs to the higher-paid, highly skilled ones. Courses were offered on high-end table service, sommelier training or bartending. Some union hospitality jobs paid as much as $90,000 a year. And the union members had free top-of-the-line health care and a defined-benefit pension plan. Thanks to the union, Las Vegas was a town where cocktail waitresses and housekeepers were able to buy their own homes, put their children through college, and retire with a pension. 

Las Vegas wasn’t a city without problems, however. There were more people moving to Las Vegas than there were good jobs, which created high levels of inequality. That inequality in turn beget crime, homelessness, inadequate schools and unaffordable housing. And because Las Vegas, like Hot Springs, depended so heavily on tourism, it was susceptible to boom-and-bust fluctuations. The booms and busts of the last two decades have stretched Las Vegas like a rubber band. In the years after the September 11 terrorist attacks, Las Vegas experienced a sharp decline in tourists. The financial crisis of 2008 also took a toll on the city. Today, with COVID-19 restrictions in place, unemployment in Las Vegas is the highest among all large metropolitan areas. The once-perpetually bustling Las Vegas strip has sat nearly empty for the past year. Experts believe it may take three years for Las Vegas to recover from the financial hit the coronavirus pandemic has delivered to the city. Still, in mid-March, as casinos and hotels were allowed to lift their capacity limits from 35{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} to 50{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be}, and hotel and restaurant workers were moved up on the vaccination priority list, visitors desperate to escape lockdown flocked to the city, and the Las Vegas strip was once again crowded with tourists — for better or for worse. 

While Las Vegas adapted to the myriad curveballs thrown at it throughout the 2000s, Hot Springs tried to keep its head above water ­— first with “instant racing machines,” which looked and quacked like slot machines but operated off of databases of historical horse races in order to qualify under existing state laws governing horse racing, and then with “electronic games of skill,” legalized by the state legislature in 2005. The addition of these crypto-slot machines to Oaklawn led to the construction of a modest casino on one end of the racetrack. It bore no resemblance to the plush gambling dens of the Spa’s heyday, to say nothing of the opulence and excess of the modern Las Vegas strip resorts. But in 2018, more than a half-century after the defeat of Amendment 55, voters in Arkansas finally passed a constitutional amendment legalizing casino gambling, and Oaklawn is now in the final stages of a $100 million expansion that includes a luxury hotel, convention center and casino. Even Governor Hutchinson, who opposed the gambling measure, praised it as one of, if not the largest, tourism-related projects in state history. Neither the Hot Springs of past nor present has ever seen anything quite like it, and hopes are riding high that the city’s own Las Vegas strip-style resort isn’t 57 years too late. 

A question I am often asked by readers of my book is whether I truly believe Hot Springs could have been the kind of city Las Vegas is today. To most, it seems an unlikely proposition. After all, Las Vegas has become one of America’s truly quintessential cities, and Hot Springs is but a speck in that grand shadow. But I do believe it could have been otherwise. 

Today we have come to accept the current incarnation of Las Vegas as a fact of our lives. But without the benefit of hindsight, it would have been impossible in 1959 to imagine the herculean degree of ingenuity, engineering and gumption (not to mention untold billions of dollars) it would take to transform the desert outpost into what it is today. Even the simple task of providing water to the city was likely akin to Egyptians building the pyramids. Hot Springs, on the other hand, would have required a far less steep learning curve to get from 25,000 to a million people. And when the time came to figure out how to lure visitors for more than just gambling, Hot Springs with its lush landscape of mountains and lakes would have been better suited for that as well. If you had told a visitor to both cities in 1959 that one of them would one day have over 1 million residents, the largest hotels on Earth, visitors from around the world and billions of dollars of investments, they would have surely handicapped Hot Springs as the odds-on favorite. In fact, when Dane Harris visited Las Vegas in 1959 with his family and was offered the chance to become a partner in the Frontier casino, he turned down the offer. He couldn’t imagine Las Vegas was a better bet than Hot Springs. 

It’s tempting, however, to think gambling itself would have been a bad bet. Look at the example of other cities who dipped their toe in the gambling waters after Las Vegas made it look so easy: from Atlantic City to Tunica, Mississippi, to Detroit, many cities that turned to gambling to help ease their economic woes didn’t fare so well. But the fact remains, today there is some form of casino gambling in 40 states, and Las Vegas reigns as America’s leisure capital. Even now, at arguably its lowest point, it’s still a city visited and beloved by people all over the world. Clearly there was something to be said for being first to market in this particular instance. Casinos today are a dime a dozen. They come and go. Las Vegas, however, is permanently woven into the fabric of America. 

It isn’t a perfect city, and it’s possible that residents of Hot Springs may feel they would never want to trade places with Las Vegas, billions of dollars and millions of visitors be damned. This, I feel, is a reasonable position. Hot Springs is a quiet and eclectic community, with an abundance of charm and character. Rare is the visitor who doesn’t leave pleasantly surprised. But I also believe there is no contradiction in sincerely loving the one you’re with, while secretly lamenting the one you let get away. 

IN THE HEYDAY: Vapors owner Dane Harris was given an opportunity to invest in a casino in Las Vegas in 1959, but turned it down. He thought Hot Springs was the surer play.

After the shutdown of gambling in Hot Springs, Dane Harris tried his hand at running a casino in Istanbul, of all places, only to run afoul of religious objections to gambling again — Muslims this time, rather than Southern Baptists. He died in 1981. His 28-year-old son, Dane Harris Jr., refused to surrender his father’s fight. In 1984 the younger Harris led a coalition of Hot Springs business and civic leaders to try once more to legalize casino gambling in Arkansas with yet another statewide ballot measure. The same forces of Southern Baptists and Methodists reorganized to fight them, rebranding from Churches United Against Gambling to Citizens United Against Gambling. Dane Jr. sounded just like his father from 20 years prior as he campaigned in support of the measure, arguing that gambling would help lift the ailing city (and the rest of the state as well) out of poverty: ‘’People are tired and embarrassed of being 48th, 49th and 50th in this state, with other people saying, ‘You’re from where? You mean you wear shoes?’ ” Opponents argued that Las Vegas was one of the most violent, crime-ridden cities in America and that gambling would bring that criminal element to Hot Springs. Everything old is new again. 

Despite 64{540ccc4681f92a8237c705b0cdebbb9da373ec200da159e6cc1fd9f393be00be} of Hot Springs residents believing the local economy to be in bad shape, the measure was opposed by the mayor of Hot Springs, Jim Randall, who said, “I love this community and I don’t want to see it destroyed.” Then-Gov. Bill Clinton, a former son of Hot Springs, whose own mother was a regular fixture at The Vapors in the gambling days, said, “I know we’d make a lot of money, but it would not create the climate or image we want here.” After a bruising fight, the amendment failed 561,000 to 236,000. It even lost in Garland County. 

As the dust settled, the victorious local Baptist clergy prepared to attend the upcoming annual meeting of the Southern Baptist Convention. As the roughly 15,000 delegates from across the South planned where to hold their convention, there were only a few cities with enough hotel rooms and exhibit space to accommodate them. Naturally, they chose Las Vegas.