Wealthy people playing game

Wealthy people playing game

There was a wire running to the south which left the Ritter Hotel. The first tie-in was a Western Union pole, and then it proceeded down the alley on the side of the building riding the top of the Rumor Motel or hotel, and then there was a drop in there to the Blue Ribbon Club. We traced the Blue Ribbon Club wire from the inside to the outside tying into this wire. It went on down to the Citizens Club, which is approximately a half block, and then it crossed over the top of the buildings, crossing on the east side of Central Avenue, on the Spencer Building, which is, I believe, about four or five stories high. The wires went over the top of it. ‘We could trace it from the edge of the building over to the Pensioners Club, which is about a block, maybe, to the south…It crossed by hanging onto an old tin building, then onto Arkansas Power & Light Co. poles, then across from the depot, the Missouri Pacific depot tracks, I believe on three Western Union poles, then over to a Bell Telephone pole, then to the buildings, tracing up to Tim’s Place…It was twisted in a haphazard manner all the way through.

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This testimony from IRS agent Michael Connaughton in 1961 to a U.S. Senate committee investigating gambling and organized crime went on like this for many more minutes, describing how this wire was twisted around nails and wrapped around tree branches. Senators asked him about the type of wire that was used, how far it hung over the streets, and what kind of current ran through it. U.S. senators were fixated on the wire, which ran for hundreds of yards all over downtown Hot Springs in the 1950s and early 1960s, because they believed it was carrying information about the results of horse races and delivering that information to gambling shops. And while these shops were paying taxes to the IRS as well as the city of Hot Springs, they were possibly in violation of federal anti-gambling laws. And if they weren’t, then Congress was considering passing new laws to make it so they were.

In 2018, Arkansas voters approved a measure to bring full-scale, live commercial casinos to the state, as well as sports betting at those facilities. The first legal sportsbooks are likely to soon open at Oaklawn Racing Casino Resort in Hot Springs and Southland Casino Racing in West Memphis. With these two sportsbooks, Arkansas will join a wave of states that, in the wake of the U.S. Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act of 1992, have turned to sports betting as a way to bring in new tax revenue. It makes sense, given that some estimates put the amount of money Americans bet each year with offshore or local bookies in the hundreds of billions of dollars. That’s money that has only grown year after year, despite the U.S. government’s varied attempts to squelch illegal bookmaking with an effort that was perhaps at its most intense in the late 1950s and early 1960s, when Robert Kennedy, first as counsel to a Senate committee and later as attorney general, tried to shut down the race wire, which he believed had largely fueled organized crime’s fortunes. He made shutting the wire down his mission, and that mission brought Kennedy and the FBI to Arkansas more than once.

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The wire was the direct line of communication between the racetracks around the country and the bookmakers in any city. The owners of the wire service paid the racetracks for exclusive access to the results of the races, or kept runners at the tracks near payphones to call in the results. Those results were sent out over leased Western Union telegraph wires that crisscrossed America. Local bookies paid big money, sometimes as much as $4,000 or $5,000 a week, for access to the results.

The information was valuable because having the results instantly meant you could book more action in a day. Gamblers didn’t want to wait for the next day’s papers to come out to get paid. They wanted to know if they’d hit a race before making a bet on the next one. In a big city, you might have had a hundred bookies paying for that wire every week. It was a good business, and it wasn’t built by the mob. It was originally built by the newspaper tycoon Walter Annenberg. But the mobster Meyer Lansky was quick to understand how crucial the wire was to the gambling business. He believed the mob’s future lay in gambling, but rather than being bookmakers, the mob would control the bookmaker’s access to the information they needed. If they could do that, they would control the bookmakers themselves. Because once you controlled the wire, you could shut a bookmaker down by literally flipping a switch. From Miami to Los Angeles and all the way down in Hot Springs, that kind of power could make you the boss. And you didn’t need to pay off any judges or win any big city-wide elections. You didn’t even have to kill anyone. (Though they did need to kill a few people to get control of it.) 

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After Annenberg died in 1942, the Chicago mob approached the man who inherited the wire service, James Ragen, to see if he’d sell it to them. He refused, and was later gunned down in his car in broad daylight. Ragen survived that attack, only to die later after someone snuck into his hotel room and jammed a fistful of bichloride mercury tablets into his mouth.

Hot Springs had been a wide open gambling town since the election of Leo McLaughlin as mayor in 1927, and by 1961 had grown to become a bustling tourist resort with millions of visitors every year. In addition to over a dozen casinos operating in Hot Springs, there were more than half a dozen standalone sportsbooks that took bets on horse races and sporting events, all despite the fact that gambling was technically illegal in Arkansas. But nobody in the state seemed to mind. Rich and powerful people in Arkansas frequented the city’s nightclubs and casinos to watch entertainers from all over the world and rub elbows with famous people.

The sportsbooks of Hot Springs had always received their results from Annenberg’s wire service through an office in New Orleans. After the mob took control of the wire they turned the New Orleans office over to the mobster Carlos Marcello, who used it to try to muscle his way into the Hot Springs gambling business, the same as other mobsters had done in cities all over America. But Hot Springs was being watched over by Owney “The Killer” Madden. Once one of the most powerful crime bosses in New York City, owner of the famed Cotton Club and king of “Rum Row,” Madden was now 70 years old and living in near-retirement in the freewheeling Arkansas resort. He appealed to the top underworld brass in Chicago to back off Marcello and his goons, and they did. Madden, in turn, built his own wire service, the handiwork of which was the subject of much congressional testimony in 1961. The bookies and gambling shops of Hot Springs paid Madden $150 a week for access to his results. He even supplied information to bookies in other parts of Arkansas, including to June Lytle, who was one of Little Rock’s top bookmakers, and to bookies as far away as Fort Smith.

One Arkansas bookmaker that didn’t buy his results from Owney Madden in Hot Springs was Barney Levine. Levine was the owner of the Westwood Club, Little Rock’s finest underground gambling club, located on the outskirts of town toward the Hot Springs highway. In the back of the Westwood, he kept a wire room where he received his own results and a bank of telephones where he made and received bets. Only Levine wasn’t booking action with locals like June Lytle. Levine was one of the three top “layoff men” in the United States. He took calls from other bookmakers who were too heavily invested in one side of a bet, looking to balance their action with a big bet on the other side. Levine would oblige them with those big bets. Because he was so attuned to where the money was being bet all over America, he was an important asset to Leo Hirschfield, the Minneapolis handicapper whose morning lines on sports and horses were considered the gold standard and copied by bookies everywhere who paid to subscribe to his service. Hirschfield would check in regularly with Levine, and then use that information to sharpen his morning dispatch.

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OWNEY MADDEN: In his younger days.

After Winthrop Rockefeller was elected governor in 1966, he set out to shut down illegal gambling in Arkansas, something that had stymied nearly all of his predecessors. He hired a former FBI agent named Lynn Davis to run the State Police and to take charge of the operation. Davis succeeded in shutting down the gambling industry in Hot Springs by confiscating equipment, burning it and burying what was left 20 feet underground. In Little Rock, he raided the Westwood and arrested Barney Levine, but Levine’s charge was reduced by Circuit Judge William Kirby to a misdemeanor and Levine was released, a testament to the gambling bosses’ political capital in Arkansas, even in the late 1960s. Davis made an angry speech criticizing Kirby and the justice system for going soft on the gamblers and allowing the business to continue to flourish in violation of the law. Shortly after making the speech, Davis was hauled into Kirby’s courtroom himself and asked to name the informant that tipped him off about when to raid the gambling clubs. Davis refused, and Kirby had the officer thrown in jail for contempt. In the end, State Police Commander Davis spent more time in jail than any of the gambling bosses of Arkansas he arrested. It confounded even the governor himself, who remarked, “It seems rather odd to me that the only people who see the inside of our jails are the reporters who report the facts and the officers who try to enforce the laws regarding gambling.”

In December 1967, a 34-year-old named Zakar Garoogian was arrested in Texas for burglary, and he offered the authorities information he thought might get him out of a jam. He told them that gambling leaders in Arkansas had hired him to sabotage Governor Rockefeller’s private airplane. Garoogian passed a number of polygraph tests and the FBI got involved. Perhaps the story carried some resonance with law enforcement because in August of that year the governor’s plane nearly crashed in Memphis after some kind of bar was wedged into the landing gear to prevent it from functioning. Three months later during a routine inspection, another of his planes was found to have been tampered with. Rockefeller later called both of these instances “sabotage.”

In the end, the wires all came down. Congress passed a number of laws throughout the 1960s to curtail the power of organized crime, including the Racketeer Influenced and Corrupt Organizations Act. In Hot Springs, various club owners and local political leaders’ homes were bombed by rival gambling factions. Though Hot Springs was one of the last bastions of illegal gambling and considered by the U.S. government to be the “largest illegal gambling operation in the United States,” the club owners and bookmakers eventually saw the writing on the wall. If keeping the wires going meant surviving bomb attacks while having the juice to get the state police chief hauled in jail or the governor assassinated, then perhaps the cost of doing business had just grown too high. By the time Rockefeller died in 1973 (peacefully, in his own bed, of natural causes) the once-mighty illegal gambling racket in Arkansas had vanished. The wire’s switch had been flipped for good.