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The Jewish Gangster Who Founded the Gambling State in Las Vegas

Benny “Bugsy” Siegel hoped to turn the remote and dusty city of Las Vegas into the gambling capital of the United States of America. This man of the underworld bet all of his cards on this city and managed to rack up many enemies from the crime world along the way. His intuition, history has taught us, was one hundred percent correct, but unfortunately for this Jewish gangster, it wasn't his house that cashed in the riches.

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The city of Las Vegas in the state of Nevada was founded in May 1905. This was not a typical city; for the first forty years of its existence, Las Vegas was a sparsely populated city located in a dusty desert state. The first generation of residents never imagined the tourist paradise their city would eventually become.

 

If the Second World War had wreaked total destruction upon large swaths of Europe and Asia, the war economy in the US had actually reawakened the Depression Era economy, bringing in its wake unprecedented prosperity. The American century began with an enormous economic boom and the middle class was at last able enjoy the good life that until then had been the preserve of America’s wealthiest, which included some of the more suspect activities like gambling, prostitution, and the consumption of drugs and alcohol.


Most of the illegal gambling places were in the hands of the American Crime Syndicate—an umbrella for the American underworld controlled by “Lucky” Luciano, an Italian immigrant, and Meyer Lansky, a Russian-Jewish immigrant. Gambling joints and casinos were situated in two main locations: Miami and Cuba. The new technology of air flight had made America smaller and the fact that Nevada was the only state in the union where gambling was legal placed it on the investment map of the criminal world.


One of the most notorious personalities of the American crime world was Benny “Bugsy” Siegel, who already in 1941 had visited Nevada in the hope of finding an ideal location that he could turn into the legal gambling capital of America. Bugsy came up empty-handed after his first scouting mission. While he recognized Las Vegas’s potential, the owners of the city’s first casino refused the Jewish gangster’s offer to buy out their shares. Eventually Bugsy found the right seller and along with throwing around a lot of cash and threats he purchased a small gambling hotel in the downtown part of the city. Meyer Lansky did not share his long-time partner’s optimism regarding the future of the desert town, but he decided to support him and invest along with other figures from the crime world.


From the start of his work on the project, Bugsy’s ostentatiousness knew no bounds: he hired the best interior designers money could buy, equipped the hotel with the most expensive furnishings, and he himself undertook the design of the deluxe suites. Above all, he invested in the casino and the bar, which he believed would provide the main income of the new Flamingo Hotel.

 

Police mug shots of the gangster Benny “Bugsy” Siegel

 

Within the first month of opening, Lansky’s misgivings proved correct. Las Vegas did indeed grow over the years and moved away from its image as a sleepy, dusty town. But it did not have the power to draw continuous streams of tourists beyond the Christmas holiday season—the date set for the grand opening. The Flamingo Hotel closed within a month. The hotel and Siegel’s angry investors incurred heavy losses. The gangster refused to give up and in order to get back in the game he borrowed additional funds from banks and outside investors, doubling the usual investment in a hotel in the city, which stood at around one million dollars. The main funding once gain came from members of the Jewish underworld. This time along with the investment came a warning: The “Flamingo” had better make good on the investment and turn a handsome profit for the investors or else...

 

Bugsy brushed off the threats and invested the money in more renovations, but still the casino business in Las Vegas would not take off. First Bugsy thought that it was just a slow period that would pass, but as the losses continued to pile up he could not ignore the hard truth—the business was simply not working.

His partners (who also suspected him of having sabotaged a drug deal) were convinced that either their friend was swindling them, or he had lost his business touch. Whatever the reason, Las Vegas was becoming more and more of a burden.

On June 20, 1947, the violence that had followed Bugsy Siegel his whole life, finally caught up with him. During a vacation in Las Vegas, Siegel was shot in the head from short range and died instantly. Photographs of his body were published across the United States and afterward across the world. In the weeks and months following his assassination, the story was reported about the Jewish gangster who had chosen the dusty and sparsely populated city of Las Vegas as his crime empire.  While he may have failed in his mission, in his death he contributed to the city’s reputation for mystery and corruption, a reputation which a few years later transformed Las Vegas into Sin City.

 

Only after the Cuban revolution in 1959, in which the casino belonging to Lansky and other gangsters was nationalized, damaging his other businesses in Miami, did the leader of the Jewish mafia in America turn his attention to Las Vegas, the city that had been so dear to his late friend.

 

Meir Lansky, worried by the Cuban takeover of his businesses and the continued harassment of the police.  Miami, turns his sights on Las Vegas

 

This story has an Israeli angle. It is known that Lansky contributed money to the Jewish yishuv during the War of Independence. But besides that, in the 1970s he even asked to be allowed to immigrate to Israel under the Law of Return in an attempt to escape a federal investigation against him back in the United States. He visited Israel on a number of occasions and during his stays identified the potential in Eilat, another dusty town far away from the center of the country, only this time it was in Israel.

 

Meir Lansky visits the Western Wall, in an attempt to persuade the immigration authorities that he was simply a Jew yearning from his homeland (from the book Meyer Lansky: Mogul of the Mob)

 
The Israeli government rejected his request, fearing that his presence would attract the attention of the American crime world. Did Eilat miss out on an opportunity to become the Las Vegas of the Middle East? We will likely never know. Lansky, of course, had another spin on this story. In an interview with the journalist Dan Raviv, the old gangster said that all he wanted in his retirement years was to live in Israel “just like any other Jew.”

 

Meyer Lansky during an interview with the Israeli journalist Dan Raviv (from the book Meyer Lansky: Mogul of the Mob)