History of Sports Betting in Las Vegas

During the early years of the 20th century, Las Vegas and the state of Nevada were facing real economic hardships. Then in 1931, Nevada made the decision to legalize gambling, forever changing the state. At first the impact was actually fairly minimal, but with time gambling began to spread throughout the state and eventually became commonplace. Prior to this point, the state had been home to a collection of mining towns, including Reno which was the state’s largest mining town in terms of populous. With the legal passing of effortless divorce, gambling, boxing, and prostitution, the state began to make the shit from being focused on mining to being a major tourist destination. In the blink of an eye the economic landscape of Nevada changed forever.

For another twenty years legalized gambling allowed the state of Nevada to see continued growth and prosperity. However, sports betting was still illegal until 1951, when a regulation was finally passed allowing it with the imposition of a ten percent tax on all bets. With the passing of this regulation, it made it extremely easy for people to be able to place bets on a variety of different sporting events because bookies no longer needed to hide on the black market.

In the beginning, the original sports books were just small brick and mortar stores and were mainly independent from the major casinos. Many people referred to them as “turf clubs”. The Rose Bowl, Churchill Downs, and the Del Mar were just a few of the first ones to gain traction and recognition in the beginning. In general the majority of the original sports betting shops were small, dirty, smoke filled, stalls where the betting options were written out on chalkboards and the air was heavy with odors from beer and wood chips.

By the 1980’s sports betting had become popular and widespread. However, many of the “turf clubs” were still struggling to make it due to the ten percent tax that was still being placed on all bets. In many cases, that tax was actually making it impossible for many of the shops to turn any kind of profit at all. In order to try to offset the cost of the tax, many of the shops started to try and place the cost on the customers since many of them were willing to pay in order to get a piece of the action. Other shop owners developed illegal methods of avoiding or getting around paying the tax. Those shops that managed to do so managed to turn pretty good profits.

One of the largest and more unspoken elements of the sports betting industry in Las Vegas was the unspoken relationship between the “turf shops” and the major hotels and casinos. The shop owners had negotiated agreements with the hotels and casinos to keep them out of the sports booking business and keep the two businesses as separate entities. In turn, the bookies promised to keep any other forms of gambling or casino style games out of their shops. This arrangement worked well until 1974 when additional legislation passed deeming the ten percent tax unconstitutional. That ruling forever changed the landscape of sports betting in Nevada. Once that passed, making the tax just two percent, the state saw a huge boom in sports betting which was the beginning to the end of the turf clubs.

Originally, the casinos and hotels were happy to keep their hands out of the sports betting industry because the ten percent tax made it so difficult to turn any kind of real and legal profits off the betting. However, once Congress passed the legislation making the tax just two percent, the temptation to offer sports betting on-site was just too powerful. Eventually that tax was dropped down even further in 1983 to just 0.025 percent making the potential profit margin too strong to ignore for casino operators.

One example of a casino operator, eventually portrayed in the movie “Casino” by Robert DeNiro was Rosenthal. During the mid-seventies, Rosenthal was running the famed Stardust Casino, and went before the state legislator to try and persuade the passage of the new laws that would permit casinos to take sports bets. “In this one situation it seemed like I had a crystal ball. My premise was that it would create thousands of jobs and bring in millions of tourists and the sports book would just be another arm of the casino. The commission acted within two weeks and passed the ordinance” Rosenthal remembers.

His efforts paid off in a big way and forever changed the way that gaming would be operated in Las Vegas. Rosenthal developed a sports book that would not just serve as a prototype but would become something for all other casino operators to aspire to attain in their sports betting businesses. He recognized that until that point customers were used to being in less than attractive and fairly uncomfortable environments while placing sports bets. So he decided to treat customers to a more luxurious environment for sports betting by outfitting the environment with lots of televisions, plenty of comfortable seating, and lots of open space. Rosenthal said that the reactions of the customers was clear. “We knocked their socks off,” he says. He said it was all about giving the people what they wanted in a way that made them comfortable adding, “it really wasn’t rocket science”.

There is no doubt about it that sports betting has come a long way over the last hundred years. It has not only helped shape the economic landscape of Las Vegas, but has fed the economy of many other cities as well. It has also allowed for sports enthusiasts and responsible gamblers to be able to place bets in a safe, fun, clean, and comfortable environment rather than having to seek out an illegal bookie with which to place their bets. Sports betting in Las Vegas is now a major industry and one of the corner stones of any successful gambling operation.