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Shark Attack

Mises Daily: Thursday, October 20, 2005 by

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The city of Las Vegas is young, having just celebrated its 100th birthday. An old money aristocracy has not yet taken root. Back east, the JP Morgans and Henry Fords are long gone, leaving bloated corporations and reclusive trust fund babies behind. But, this town's movers and shakers mix amongst the hoi polloi. If you go to Drai's for dinner, Steve Wynn and his wife Elaine might be dining in the next booth. You might see Kirk Kerkorian dining at Piero's, or Sheldon Adelson at Kona Grill. In Las Vegas, the captains of industry are still with us, or have just recently departed.

It is these men and women who shaped and continue to form Las Vegas that are the subject of John L. Smith's Sharks In The Desert: The Founding Fathers and Current Kings of Las Vegas.

Smith's very readable story starts with, of course, Benjamin "Bugsy" Siegel. Legend has it that the mobster Siegel was driving through the desert, envisioned an oasis, built the Flamingo, and created Las Vegas. Well, not exactly.

Casino gambling was legalized in 1931, and Siegel's Flamingo flopped when it opened in December 1946, after successful premiers of other hotels. "In reality," Smith explains, "[Meyer] Lansky and several lesser-known racketeers, together with some plain old transplanted gamblers, played much greater roles than Siegel."

One of those gamblers was Benny Binion, who left his Dallas bookmaking and racketeering empire and set out for Las Vegas in 1946 with his wife and children. Binion's Horseshoe Club in downtown Las Vegas was a fixture from its opening in 1951 until his daughter, Becky, ran it into the ground in 2004.

Unlike the corporate manager types running casinos today, Binion was a gambler and allowed a player to set his maximum bet limit with his first wager up to $1 million.

Smith relates the story of a cowboy who brought two shopping bags full of money into the Horseshoe to make a single bet at the craps table. The dealers counted out $175,000 and the cowboy bet it all on don't pass. The shooter rolled a six. Another six and the bet would have been lost, but the shooter sevened out four rolls later.

When the cowboy was asked how he could make such a bet, he replied, "Well, I was watchin' inflation eatin' up my savings, so I decided to go for double or nothin.'" That cowpoke said a mouth full, explaining the public's infatuation with gambling, stock and real estate speculation.

Even as the 1980 MGM Grand Hotel fire raged, Smith writes, "At least two people died because they refused to leave the slot machines and their bodies were literally melted to the machine metal." The Federal Reserve's incessant printing of money makes us all want to go double or nothing.

Not all of the gaming titans leveraged mob connections to riches in Las Vegas. Just plain old hard work and financial acumen worked for Ralph Englestad and Margaret Elardi. Many outside of Las Vegas have never heard of these two billionaires who each started out as small building contractors. Smith describes Englestad as a self-made man, "[i]n a city of made men."

But it was Englestad's poor judgment to hold a birthday party honoring Hitler's birthday inside the Imperial Palace's auto museum that scars his legacy. Most people don't remember that he partnered with Bill Bennett to build the Las Vegas Speedway, or that he gave over $100 million to charity, or that the IP won the National Employer of the Year award for hiring the handicapped.

Margaret Elardi is best known for doing battle with the Culinary Union for six-and-a-half years while she and her sons owned and operated the Frontier Hotel. "In the land of behemoth egos," Smith writes, "they were content to grind out a profit and keep low profiles."

The strike with the Culinary Union was only settled when Elardi suddenly sold the property to Phil Ruffin. Strangely, out-of-towner Ruffin was approved for his gaming license in record time after only a 15-minute hearing. There is a lot to this story that Smith avoids, pointing to the book's primary weakness: Smith's Sharks is perhaps too ambitious. He attempts to tell the stories of the many people who have made Las Vegas what it is, but doesn't do them all justice.

But Sharks is a great reference for those looking for some background on the real players in Las Vegas who make headlines and billions.