How a Few Regulators Saved the Nevada Gaming Industry

The efforts of a handful of men on the Nevada Gaming Commission in the early 1960s kept Nevada’s gaming industry from crapping out

Nevada Governor Grant Sawyer and gaming adversaries U.S. Senator Estes Kefauver and U.S. Attorney General Robert Kennedy. | Illustration by Cierra Pedro

Nevada Governor Grant Sawyer and gaming adversaries U.S. Senator Estes Kefauver and U.S. Attorney General Robert Kennedy. | Illustration by Cierra Pedro

Grant Sawyer deserves much of the credit for Nevada taking its current shape. In his first year as governor in 1959, Sawyer created the Nevada Gaming Commission, taking the responsibility for issuing licenses and directing policy away from the state’s Tax Commission. According to Sawyer’s then-executive assistant Bob Faiss, who would go on to shape gaming law in the 1970s, Sawyer had a simple directive for the new body: “If there are any members of the underworld in the gaming industry, get them out. If they are not here, keep them out. I want you to hang tough!”

Sawyer’s “hang tough” policy emerged at a crucial time: Bobby Kennedy’s Justice Department would ratchet up pressure on Nevada casinos starting in 1961, and without the good-faith efforts of Sawyer’s appointees to clean house, more sweeping federal action seemed inevitable.

While the Gaming Commission was a key part of the equation, the Gaming Control Board—created in 1955—was actually empowered to investigate and police the industry and its applicants. That body—which included three members appointed by the governor, as well as administrative, accounting and enforcement staff—would in large part decide just how tough to hang.

Ed Olsen, chairman of the Gaming Control Board from 1961 to 1966, was an unlikely choice for such a prominent role at such a perilous time. Born in New York in 1919, he worked as a journalist in California, Nevada, Idaho and Oregon before Sawyer asked him to serve as an intermediary between the Board and the Gaming Commission. An intermediary was needed because things were not as peaceable at the time as one might imagine; apparently there was some tension between Milton Keefer and James Hotchkiss, two members of the Commission (Keefer was chairman), and Ray Abbaticchio, Sawyer’s pick for Board chairman; all three were former FBI agents. Olsen managed to smooth things over between the regulators, but ultimately Abbaticchio’s unpopularity led to his removal. Needing a replacement, Sawyer turned to Olsen, who was as surprised as anyone to get the call from the governor.

Olsen certainly had no problem adhering to Sawyer’s “hang tough” directive: He stared down Frank Sinatra over the singer’s decision to host Sam Giancana at the Cal-Neva. Sinatra blinked. But he also knew when to keep an open mind. Teamsters Union head Jimmy Hoffa was, at the time, locked in a death struggle with Attorney General Kennedy. Should the Board recommend that the union’s pension fund be prohibited from investing in Nevada casinos? Olsen and the board took a calculated risk by allowing Teamster loans, a risk that gave casinos an infusion of capital at a critical juncture.

Olsen also was instrumental in seeing that Nevada’s gaming industry kept true to its pledge (and legal obligation) to desegregate. Olsen deputized an African-American man as an undercover agent, and made it known that denying anyone access to casino facilities would not be tolerated. That wasn’t a universally popular action in 1961, but one Olsen saw as vital to ensuring the integrity of the industry.

Richard Schuetz, a gaming industry veteran and current member of the California Gambling Control Commission who interviewed Olsen in the former regulator’s final days, was struck by Olsen’s ethics and personal strength. “His greatest significance,” Schuetz says, “was that he realized the threat to the industry imposed by the federal government and ensured that these threats did not [destroy] the industry. When one looks at the lineup of people who were antagonistic toward Nevada gambling, including Senators [John] McClellan and [Estes] Kefauver, [FBI Director] J. Edgar Hoover, Robert Kennedy and a national press led by the Chicago Sun-Times, it really is amazing that Nevada gaming survived.”

With another man at the helm of the Gaming Control Board, it’s possible that the 1960s would have ended with Nevada gaming in shambles, instead of being on the cusp of the corporate era. As today’s Board and Commission face new challenges, it’s important to realize that much of their regulation is not about blindly enforcing statutes, but making tough—though necessary—decisions.

David G. Schwartz is the director of UNLV’s Center for Gaming Research.

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