Hot Springs: Gamblers' Haven

The gamblers of Hot Springs are locked in a struggle with the Federal Government to maintain their control of the biggest illegal gambling opera­tion in the United States.

The enterprises flourish with the support of the 30,000 residents of Hot Springs. Gambling has been a major feature af life here since Civil War times.

The gambling places are wide open. They are on the pattern developed in the legal casinos operated in Nevada.

The conduct of gambling is defined by Arkansas statute as a felony, punishable by up to three years in the State Peni­tentiary. But no gambler is prosecuted in Hot Springs.

The state liquor laws also are ignored in Hot Springs. Last month the investigations by Federal agents were stepped up, and top officials of the Depart­ment of Justice have announced that they intend to push still harder.

The only cloud on the horizon for the men who control these gambling and bootlegging oper­

“This is the largest illegal gambling operation in the United States. It is difficult to feel that it is self‐contained.”

Local officials and the gam­blers themselves in Hot Springs insist that there is no connec­tion with national underworld syndicates.

“The day anybody brings me any reliable information that the Mafia or any out‐of‐state people are involved in Hot Springs is the day I'll get on the radio and television and in the press and take the battle to the public to attempt to bring about a complete reform

John Ermey, the chief of po­lice, said of the question of outside interests:

“If there ever was any, I don't know of it. The fellows who run the two big clubs were born and raised here.”

There are two main gambling combines. The names of mem­bers of each group are well known to the officials who have control of law enforcement here.

By Nevada standards, the op­eration is small. One Las Vegas Strip casino will win several times as much in a year as the total winnings of the three ma­jor casinos operated here.

Estimates of winnings here are difficult to get. But they must be sizable. One place pays up to $10,000 a week for the supper club entertainments that it furnishes in a frank imitation of the Nevada casinos. Last week Mickey Rooney was a main attraction.

Gambling provides about 500 jobs in Hot Springs, while the existence of the casinos attracts some of the two million persons

The two other major casinos are The Southern Club, a gam­bling institution that has ex­isted almost continuously for nearly three‐quarters of a cen­tury, and The Belvedere, a casino operated only during the seven‐week racing season at Oaklawn Park, a horse track at Hot Springs.

The Southern Club and the Vapors onerate all vear.

Chief Ermey, a native of Hot Springs, has been a policemanfor 30 years, and for most ofthat time his next door neigh­bor has been Owen Vincent(Owney) Madden, now 72 yearsold who was a major figure inthe prohibition­era underworldin New York.

Madden for many years pro­vided an argument for observ­ers that gambling activities here had roots in other states. Madden came here on his re­lease from Sing Sing in 1933, married an Arkansas girl, had an interest in all bookmaking carried on here, then control of a race‐wire service, visited with his friends when they came through either for the baths or to hide out, and once owned a part of one of the casinos.

Now he lives more or less in retirement, visiting almost daily with friends in The South­ern Club.

U. S. Action Fails

The Federal Government tried about 18 months ago to move against the proprietors of The Southern Club. The attempt was a failure because a Federal grand jury refused to indict. The case was presented as a violation of a statute of 1961 that forbids interstate com­merce to further the operation of gambling places in states where gambling is illegal.

Federal investigators compiled long lists of the checks cashed at the gambling places on ac­counts in banks outside Arkan­sas. Then witnesses were inter­viewed and some of those who said they bought gambling chips with their checks were brought before the grand jury.

This was an attempt to prove that the gamblers—illegally op­erating under Arkansas law—had violated Federal law by moving the checks through in­terstate commerce.

The grand jury was instruct­ed that it should have evidence that the gambling profits moved into interstate commerce before it could find that evidence point­ed toward a Federal law viola­tion. Federal officials believe this instruction prevented the jury from bringing in indict­ments.

Since then the gambling op­erators have tried to stay out of interstate commerce. They are at ease with local and state law enforcement. But they are frightened of the Federal au­thorities. Their advertising never mentions gambling, al­though they buy radio spots to promote their supper club shows. The greater part of their business comes from outside Arkansas.

Business Interest

The business people here are convinced that if the gamblers were put out of business, the community would suffer. They believe that Hots Springs' eco­nomic health is dependent on thecontinuance of gambling.

This is a scenic little

Scene of Federal‐State Conflict on Gambling Issue

There is a little more than this to the town of Hot Springs, but not much. Distributive op­erations to serve the sparsely settled agricultural areas to the east, south and west provide some jobs. Total employment is about 12,000 in Garland County.

About 2,200 jobs are classified as industrial, 3,500 as service and 3,500 as retail and whole­sale. Just over half the county's 50,000 population lives in Hot Springs.

But mainly Hot Springs is a resort, and the bath house business has declined because of changes in medical practice. This slack has been taken up by persons who come here to gamble. They also come here to drink, for Arkansas has a liq­uor law that forbids the sale of mixed drinks. No one pays any attention to it in Hot Springs.

Gambling Taxed

The city has an ordinance taxing the gambling and liquor operations and has dis­regarded a state ruling that the tax is illegal and cannot be collected. The gamblers and bootleggers also ignore the rul­ing and pay the tax. This is good public relations, and not very expensive.

Places that serve mixed drinks pay $100 a month li­cense fees to the city. This goes up to $150 next year. Some other current fees include slot machines, $10 a month each; bingo, $100 a month; bookmak­ers. $200 a month; businesses that specialize in distributing results of races and sports events, $50 a month.

The ordinance describes “places where craps, blackjack, roulette, chuck‐a‐luck, poker, rummy or other games of chance” are played. This year places with more than five tables are taxed $500 a month and smaller places $300. Next

Last year the city collected $78,780 in fees. The total since the licensing system was adopt­ed in 1958 has been $419,705, which includes the interest on invested funds.

Before the fee system was devised, the gamblers built two swimming pools for the city. One was for Negroes, the other for whites. Hot Springs is a seg­regated town, and the only Ne­groes seen in the main casinos are those serving food and drinks.

“They have their own gam­bling places,” one official ex­plained.

The dimensions of the na­tional park squeeze Hot Springs business district into two parts. To the south is the main center, with the stores, the Federal Building, the City Hall, and most of the retail business.

This is connected to the north part of town by Bathhouse Row, which is a line of big, brick bathhouses to which dwindling numbers of the aching and pained go for submersion and treatment. This stretches for the equivalent of three or four blocks toward the north. Across the street a row of commercial buildings backs up to a canyon wall.

Gambling Sites

At the north end of Bath­house Row the town resumes again, and it is here that the gambling casinos are situ­ated, and the hotels and mo­tels and the center of activity connected with the high living that attracts so many visitors to Hot Springs.

The venerable Arlington Ho­tel, an underworld meeting spot for many years, sits at the end of Bathhouse Row. Across the street is the Southern Club.

A great building activity goes on here. About 1,000 new motel and hotel rooms are just fin­ished, under construction or planned.

Up the street The Vapors draws the nightly gambling crowd, and first‐class rooms are hard to get, now that the racing season is open.

Many of the two million visi­tors attracted to Hot Springs each year come during the seven weeks of racing. The sea­son begins in mid‐February and

The leading gambler in Hot Springs is Dane Harris, a tall and husky man of 46 years who exudes confidence and competence.

“Public opinion in Hot Springs is for this,” he said. “This business of gambling in Hot Springs is so old and so ingrained in the public's mind that it isn't looked on as a de­grading business.”

Harris insisted that no out­siders owned interests in The Vapors or The Belvedere. He was born in Hot Springs, and once ran a “liquor exporting company” at Fort Smith, Ark., on the Oklahoma border.

Brief Interruptions

Hot Springs developed some­what on its present resort lines after the Civil War, and has had gambling ever since, except for brief interruptions about 1900, just before World War I and for two years after 1946.

That last interruption came when a group of veterans led by Sid McMath took over local politics in the elections of 1946. Mr. McMath was elected prose­cutor and closed the gambling houses. In 1948 he was elected Governor, but his colleagues in the reform movement were voted out of office in Hot Springs.

But the control of the city's long‐time Mayor, Lou Mc­Loughlin, was broken. Mayor McLoughlin had directed the gambling operation, working through a man named W. S. Jacobs. Both men are dead now. When the system was destroyed by Mr. McMath and his col­leagues, it took a time for a new one to be constructed.

Generally no outbursts dis­turb the quiet control of the illegal gambling and boot­legging, although ripples dis­turb the surface occasionally. A year ago, when the leading madam went to jail as the pros­titution racket was forced un­derground, she rippled the wa­

After her outburst in court, the procuress was led away to the State Penitentiary and noth­ing further was heard of the “escrow deposit,” as she de­scribed her payment.

Chief Ermey explained how it comes about that some group of operators gets to run gam­bling and sell liquor illegally.

“It's all political,” said the chief. “Everybody who runs for office runs on a liberal policy. If one side gets in, their friends run, and if the other side gets in, its friends run.”

‘Want Open Town’

It is said here that the gambling is protected through a working agreement among the top people in politics.

“The citizens of Hot Springs and Garland County want an open town,” said Chief Ermey. “We've had, people run who want to close up and they get beat. A lot of people would like to see things legalized.”

One high official, who would not speak for attribution, said he opposed legalization of gambling. He thought this would bring in the underworld because of the high cost of investments in construction that would be required. He doubted that the local gambling operators had that much money.

This view was disputed by an observer who admitted his cynicism and suggested that a public official who opposed legalization and supported con­tinued law violation would not be needed if the protection sys­tem were abandoned.

There is little likelihood that a gambling legalization bill would be approved in the State Legislature, nor that it would withstand attacks from other parts of the state where anti­gambling sentiment is high.

Chief Ermey was asked how he knew which gamblers and illegal bars to harass and which to leave alone.

“Well, now, you got to read between the lines,” he explained. “If the Mayor or the sheriff or somebody calls you up and says ‘They going to be selling whiskey over there,’ or if he says ‘They going to be running over there,’ why then you figure it's all right and you let them alone.”

Dane Harris, the leader of the gamblers, was asked how it came about that he and his friends had been singled out for the favored position they hold. His answer was this:

“As far as the local people are concerned, someone is going to run the gambling and it can be us as long as we run it right. If we don't, we're going out.”

Harris and other gamblers are most reluctant to discuss their financial position. But a knowledgable observer suggest­ed that Harris was probably earning close to $100.000 a year for himself from the gambling operations. His associates also are thought to be doing very well, as are those who control the Southern Club.

The Southern Club is headed by Jack Pakis, and it is largely a Pakis family concern.

The Southern is in an older building and is less flossy than The Vapors. It has an upstairs casino, served by an escalator, and, like The Vapors, the South­ern has plenty of guards, al­though they are not in uniform.

The Southern has a smaller showroom, which doubles in early evening as a bingo parlor.

The impact of the Hot Springs gambling operation is felt throughout Arkansas. Last year, when Senator John L. Mc­Clellan was critical in a Senate committee session of some of the Nevada gambling operations, Gov. Grant Sawyer of Nevada replied that at least the Nevada gamblers operated legally. Gov­ernor Sawyer asked why Sena­tor McClellan did not do some­thing about the illegal gamblers in Hot Springs.

Gov. Orval E. Faubus has said

Prosecutor Whittington put the problem this way:

“Local residents here are completely convinced that their livelihood depends on this re­sort area operating as it does. In order to do the good things that I want to do in my office, I have to reconcile my position

“I have to work in the area in which I find myself. If I try to change things I'll be voted out of office and the public will elect any bum who will give 'em what they want.”

So the gamblers have the public officials at bay, except those from the Federal Govern­ment. The gamblers calculate that they can beat Federal in­tervention by staying out of in­terstate commerce.

“If I thought we were break­ing any Federal laws tonight, I'd close down right now,” said Dane Harris.

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