From Maverick to Mafia to MBA: gaming industry leadership in Las Vegas from 1931 through 2007.

This article presents a historical analysis of three eras in the history of Las Vegas gaming industry leadership: a maverick era, a mafia era, and an MBA era. Within each period, the article highlights the roles of key figures that shaped the industry's evolving landscape. The second section examines

management applications that emerged from each of these periods, with a focus on four areas: (1) operating principles, (2) government relations, (3) "backlash management," and (4) the ways in which the mythologies of these eras have actually been used in the selling of the city itself. The article concludes by summarizing the successes and failures of this evolution.

Keywords: Las Vegas history; casino management; mainstream acceptance of gaming.

The early leaders in Las Vegas were attracted in part by its wide-open atmosphere, but their skills at running games of chance were at a premium. Many were also avoiding the authorities in other jurisdictions. The "wild west" theme of the early casinos was replaced by "carpet joints" starting in the 1940s, when Midwestern crime families became interested in the opportunities found in the casinos' cash flow. The mafia brought a different style of management to the casinos, one often based on personal connections. In addition, the families' connections in the entertainment industry allowed them to bring first-class entertainers to their casinos, a model that continues today. Efforts by the Nevada authorities to eliminate the criminal element were abetted by legislation that paved the way for corporate ownership of the casinos. Corporate investment allowed most crime families to gracefully cash out. The corporations brought in their own style of sophisticated, educated leaders who have built Las Vegas into a world-renowned destination.

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This article discusses key events in the history of leadership in the Las Vegas gaming industry and explores the effects of these events on casino management. When examining the history of those who have led Las Vegas gaming, we can identify three distinctive (if not completely distinct) eras: a maverick era, a mafia era, and an MBA era. In this article, we rely heavily on academic works to explore the dynamics of each of these eras.

Previous academic articles have focused upon the evolution of Las Vegas (Findlay 1986; Gottdiener, Collins, and Dickens 1999; Moehring 2000; Rothman 2001) or on gaming operations management as a whole (Kilby, Fox, and Lucas 2004). To date, however, we have seen no academic studies that systematically explored the evolution of Las Vegas's gaming management leaders. This does not mean that the subjects of this study have been neglected: portrayals have flourished in popular films (e.g., Bugsy, Casino) and numerous journalistic accounts (Reid and DeMaris 1963; Sheehan 1997; Smith 1997, 2001; Fischer 2005). As Sheehan (1997) has noted, most of the legendary Las Vegas gaming leaders came from elsewhere, but each of the individuals mentioned here became quintessential Las Vegans.

In the next section, we describe what we perceive as key characteristics of gaming leadership in each of these three periods, by highlighting the most important historical figures in each. In the second section of this article, we speak to applications and meanings of these chapters and characters, focusing especially on (1) the impacts on operating principles, (2) government relations, (3) "backlash management," and (4) the selling of the city itself. In the final section, we provide concluding summaries and discuss future research questions.

Part 1. The Maverick-to-Mafia-to-MBA Model

The Maverick Era: 1931 through the late 1940s

To the degree that it was established by those who often found themselves on the wrong side of the law, Las Vegas in the maverick era could be effectively described as an outpost for outcasts--a place where those who did not fit in elsewhere could play leadership roles in the development of an industry and its surrounding community.

The original mavericks--typically, outcasts from other places--arrived in Las Vegas following the Nevada legislature's approval of open gambling in 1931. The business elites who backed the legislative action were acting not out of a Depression-era panic or concern with illegal manifestations of gambling, but out of a desire to broaden investment in tourism (Earl 1981; Moody 1994, 1997; Hopkins and Evans 1999; Whitely 2005). Hence, in the beginning, this was hardly the "gambling-as-a-savior" strategy later employed in other jurisdictions (Cabot 1996).

With the legislation allowing wide-open gambling, a maverick leadership chapter emerged, beginning in 1931 and running through the mid- to late 1940s (though eras in Las Vegas tend to blend into each other). In this era, leadership was imported from California and Oklahoma, and the city's leaders began earnestly marketing the city against a "wild west" backdrop. As we discuss in the next section of this article, the concept proved enticing to vacationers. Casinos took on a distinctly western U.S. style--often exaggeratedly so, with saloon-style decor, western garb, and wooden, sawdust-filled floors. The marketing slogans of the day ("Las Vegas Nevada: Still a Frontier Town" and "The Old West in modern Splendor") reflected this spirit (Moehring and Green 2005).

The gaming leaders in this era were also mavericks in another sense: they refused to conform to societal norms that governed more respectable business environments elsewhere. The individual responsible for coining the term "The Las Vegas Strip" provides a prime example. Guy McAfee was a Los Angeles vice cop who ran illegal casinos in that city. After a reform mayor chased him out of Los Angeles, few places would have eagerly embraced an outcast with such a tarnished reputation (Smith 2005; Sitton 2005; Wright 2005). In Las Vegas, however, gaming was beginning to flourish, and the industry desperately needed managers with the skills to operate the growing but poorly understood industry (Denton, Green, and King 2001; Wright 2005).

While McAfee's operational expertise was substantial, his most lasting contribution derives from his recollection of the famed Los Angeles Sunset Strip as he drove down the Las Vegas highway where his new casino stood. McAfee started facetiously calling the dusty new road the "Strip"--and the name stuck. He hardly could have imagined that by the time Las Vegas celebrated its centennial in 2005, the Las Vegas Strip would be better known around the world than its Southern California counterpart (Balboni 1996; Green and Penn 2006).

Later in the 1930s, the flood of immigrants continued thanks to the actions of California Attorney General Earl Warren, who shut down casino cruise ships operating off the coast (Findlay 1986; White 1982; Sitton 2005). As would often happen during this period, the mavericks were not so much "voluntary" emigrants as they were chased from more prohibitive jurisdictions.

One of McAfee's partners in the Golden Nugget hotel-casino, J. Kell Houssels, was also a Southern California expatriate--albeit one who has been woefully neglected in most historical accounts of the city. After running games in Pismo Beach, California, Houssels also found Las Vegas to be more congenial and came to the city to operate the original Las Vegas Club. By the time of his death in 1979, he had owned and operated the E1 Cortez downtown, the Tropicana on the Strip, and the Showboat off the Strip--meaning that Houssels played an influential and pioneering role in the each of Las Vegas' gaming sectors: downtown, the Strip, and neighborhood casinos.

Yet, Houssels's reach extended beyond casino gaming in Las Vegas. He eventually accumulated ownership stakes in a bus line, a taxi company, and a popular downtown restaurant, as well as being active in local politics (J. Kell Houssels Jr., interview by Michael S. Green, May 7, 2005, Las Vegas, Nevada). In doing so, he anticipated later efforts among gaming leaders to consolidate travel, to diversify holdings and investments, and to exert influence in government affairs. Like many leaders in the maverick days of Las Vegas, Houssels moved back and forth between the traditionally legitimate and the traditionally illegitimate, although much of what had been traditionally illegitimate elsewhere was perfectly legal in Nevada (Edwards 1982; Greenspun and Pelle 1966).

Another maverick, Tony Comero, exemplifies this era's tension between legitimate and illegitimate enterprises. Cornero had been active in the Southern California bootlegging, prostitution, and gambling trades when he came to Las Vegas in 1931 to open The Meadows casino. This casino was unusual in its day. Located on the outskirts of town, it rejected the conventional wooden and sawdust floors and was instead a "carpet joint"--foreshadowing later efforts to attract an upscale clientele to the city. For his part, Cornero donned a tuxedo for opening night, and if that stamped him as different, so did his motivations. He allegedly was far more interested in controlling the local prostitution and bootlegging trades than in gambling (Balboni 1996; Hopkins and Evans 1999).

One of the few leaders not from California was Sam Boyd, an Oklahoma native who moved up the ranks to become an innovative casino operator as well as a community patriarch. Reflecting Boyd's community influence as well as the city's embrace of leaders who might be shunned elsewhere, he was the first exclusively gaming executive to head the city's Chamber of Commerce. Unlike the other mavericks, Boyd's business legacy continues to flourish on a sizable scale, and as of this writing, Boyd Gaming remains one of the city's "big six" operators (along with Las Vegas Sands, Wynn Resorts, MGM MIRAGE, Harrah's Entertainment, and Station Casinos).

One final maverick forced from his California cruise ship during Earl Warren's raids was Marion Hicks, who built the E1 Cortez and the Thunderbird casinos--both of which constituted important steps in the evolution of Las Vegas gaming. Opened in 1941, the E1 Cortez was Fremont Street's biggest hotel-casino and the first built east of Fifth Street. The Thunderbird, which opened in 1948, was only the fourth hotel-casino on the Strip and the first to commit to a theme--though its Navajo Native American western decor was not as thorough as its more famous successors in the 1990s. In developing these projects, Hicks often relied on an association with the famous--or infamous--organized crime figure Meyer Lansky (Sheehan 1997; Reid and DeMaris 1963).

The Mafia Era: 1940s through the early 1980s

Lansky's story informs the mafia era, which we consider to be misunderstood or, perhaps more accurately, misrepresented. With one notable exception, the leaders during the mafia era were what longtime state gaming regulator Robbins Cahill called "velvet glove" types--businessmen who understood the realities of casino operations in that particular day, but who were not violent men themselves (Cahill 1977).

In contrast to the mavericks, mafia-era leaders typically hailed from the big Midwestern cities, especially Chicago, Detroit, Cleveland, and Kansas City. Despite corporatization, federal prosecutions, and enhanced state regulation, this era ended only when federal and state officials finally "cleaned up" the Stardust in the early 1980s (Kavieff 2000, 2001; Hopkins and Evans 1999).

Bugsy Siegel remains the best known of those linked to organized crime. His legend was portrayed in the Academy Award-nominated eponymous film. The film's suggestion that Siegel had a "vision" of Las Vegas while stopped alongside a highway in the middle of nowhere is pure myth. When Siegel conducted his apocryphal groundbreaking for the Flamingo (kicking the dirt),the city's teeming downtown was already filled with casinos. Furthermore, Siegel had already taken over a race wire service and become involved in downtown operations before opening the Flamingo (Jennings 1992; Wilkerson 2000; Lacey 1991).

Siegel's arrival on the Las Vegas management scene coincided with at least three major developments. First, while criminal elements had been involved earlier in Las Vegas, Siegel's management marked the beginning of a new degree of involvement among the major families (primarily those out of Chicago) and thus began four decades of varying degrees of organized crime management (Whitely 2005; Hopkins and Evans 1999). Second, the Flamingo offered an unprecedented level of opulence, abandoning the old west theme for a more luxurious, Caribbean-inspired offering. As such, this era could be seen as introducing the "next step" beyond carpet joints--pointing toward today's five-star megaresorts. Finally, Siegel's notorious affinity for Hollywood did a great deal to meld the entertainment world and the gambling world. Aided by Billy Wilkerson, the Hollywood businessman who teamed with Siegel, the Flamingo combined big-name draws with the city's established gambling offerings--a combination that continues to inspire gaming and entertainment developments in Las Vegas today (Wilkerson 2000).

At the same time, Siegel's life diverged substantially from those of other important leaders in the mafia era. Other operators in this era frowned on Siegel's visibility and open thuggery, realizing that his behavior was hardly helpful to their objectives of achieving respectability and larger-scale profitability. (This sensibility still echoes in the current-day MBA business discourse in Las Vegas, as casino gaming leaders seek to "normalize" in their self-portrayals to Wall Street and to policy makers around the world.) Many believe that Siegel's underworld financier Lansky recognized this shortcoming, a realization that may have contributed to Siegel's murder (Jennings 1992; Lacey 1991).

Siegel's replacements at the Flamingo provided a telling contrast. Siegel succeeded largely through his willingness to use violent means to achieve his goals, despite his lack of basic business sense (for instance, he was unable to control the Flamingo's construction costs, which skyrocketed from $1 million to an astonishing $6 million). In contrast, Siegel's successor, Gus Greenbaum, though certainly tied to Lansky and other organized crime elements, was a businessman with a sophisticated understanding of how to operate a casino. Greenbaum "knew that discretion was the better part of survival" in the heavily scrutinized casino gaming industry (Moehring and Green 2005). Of course, his management team did include some members known for their muscle--including Davie Berman, who reputedly could strangle a man with one hand, and Ben Goffstein, a veteran of sometimes violent newspaper circulation wars (Berman 1981, 1996). All, however, had substantial experience in operating casinos and other, legitimate businesses. Despite the Flamingo's rough start and construction cost overruns, Greenbaum's keen business sensibilities enabled it to grow and ultimately post substantial profits.

Other mafia-associated Las Vegas leaders also possessed subtle and diverse business skills. In 1950, Wilbur Clark's Desert Inn opened its doors under the control and management of Cleveland's Mayfield Road Gang, which had provided the capital that Clark needed to finish his dream property. The leader of this group, Moe Dalitz, spent most of his career alternating between roles as a leading mob moneymaker and as a businessman trying to escape the mob's clutches. He faced accusations throughout his life about his organized crime past, but he also went into residential and commercial development in the burgeoning city, building shopping malls, country clubs, and housing tracts in tandem with local businessmen (Hopkins and Evans 1999; Davies 1998; Smith 2005; Sheehan 1997).

The Sands opened in 1952 and quickly became a center for Strip entertainment, thanks largely to the entertainers who became known as the Rat Pack, notably, Frank Sinatra, Dean Martin, and Sammy Davis Jr. Thus was realized the late Siegel's vision of gambling and entertainment. Though the Sands was imploded in 1996 to make room for the Venetian, it retains nostalgic fans worldwide. For its part, the Venetian is operated by Sheldon Adelson, a veteran businessman and exemplar of the current professional management era, whose casino holdings place him among Forbes magazine's wealthiest Americans (Weatherford 2001; Levy 1998; Smith 2005).

Even as Las Vegas corporatized in the late 1960s, vestiges of the old order survived. Howard Hughes and Del Webb bought several hotel-casinos but retained staffers who skimmed money for their underworld "partners." Although the state enacted the Corporate Gaming Act of 1969 in hopes of attracting publicly traded companies, Hughes and Webb were not entirely free from some mob taint, deserved or not (Brill 1978; Hopkins and Evans 1999; Sheehan 1997; Barlett and Steele 1979; Maheu and Hack 1992; Drosnin 1985). Indeed, Hughes helped rid the gaming industry of mob ownership, albeit not of mob operators.

Opening Las Vegas to corporate ownership alone did not protect Las Vegas from organized crime. As Governor Grant Sawyer had feared when he opposed the original move toward corporate gaming, the mob found ways around the new regulations (Sawyer, Elliott, and King 1993). The Argent Corporation, headed by Allen Glick, technically owned the Stardust, Fremont, and Hacienda, but the real operator was Frank "Lefty" Rosenthal (forever immortalized by the portrayal by Robert DeNiro in the film Casino). After surviving a car bomb, Rosenthal "retired" (a rare feat in those days) to operate a sports wagering business out of Florida. On the other end of the Strip, chemical heiress Mitzi Stauffer Briggs and then Ramada Inns owned the Tropicana, but Kansas City boss Nick Civella had substantial connections in the hotel-casino operation in show producer Joe Agosto and veteran casino executive Carl Thomas (Davies 1998; Rothman and Davis 2002; Hopkins and Evans 1999).

Ultimately, the hunch of the Nevada governor who most ardently backed corporate gaming, Paul Laxalt, proved to be correct: legislative and economic pressures would eventually lead to the demise of the mafia era. At a time when the mob was feeling pressure from the law to get out of the business, corporate money provided an opportunity for mob leaders to sell at what they felt were inflated prices. But it took until the mid-1980s, when the state forced a change in ownership at the Stardust, for mob control of casino operations to disappear (Laxalt 2000; Davies 1998; Burbank 2000). The combination of corporate ownership and organized crime's departure helped usher in the current-day MBA era.

The MBA Era: Late 1960s to the Present

Las Vegas has always valued leaders with "smarts" and operational expense. The city's business leadership ranks now feature an unprecedented number of well-educated members. In this new era, leadership has been "imported" from educational environments such as Harvard Business School (Harrah's CEO Gary Loveman), the University of Pennsylvania (Steve Wynn), and the University of Southern California (MGM MIRAGE chief executive J. Terrence Lanni). Moreover, former Mandalay Bay CEO Glenn Schaeffer attended the highly prestigious Iowa Writers Workshop, widely reputed to be the most exclusive program in the country.

Many of today's leaders have a background in law. Sam Boyd asked his son William S. Boyd to leave his successful law practice to join the gaming business, and the younger Boyd went on to build the company into one of the world's largest. Similarly, J. Kell Houssels Jr. did legal work for his father's properties before moving into the Tropicana's executive offices and went on to run the firm himself.

The academe-to-gaming transfer has been beneficial to the industry. Loveman, for instance, applied the database management breakthroughs he espoused while a professor at Harvard to everyday operations at Harrah's. Meanwhile, Schaeffer has founded a program at the University of Nevada, Las Vegas, that supports and houses persecuted writers from around the world. Needless to say, these developments would never have been imaginable to these leaders' "forefathers" in gaming leadership--or to their critics.

It is no coincidence that these developments have taken place during an era of change not only for Las Vegas, but also for the business of gambling in America as a whole. Gaming has become an enterprise that is well known if not entirely accepted. Some form of gaming is now legal in forty-eight of the fifty states. Respected leaders such as Lanni, Schaeffer, and Loveman have no doubt brought Wall Street credibility to an industry that needed it (especially in light of the eras that preceded them). This credibility has allowed it to attract and spend unprecedented amounts of capital: MGM MIRAGE, for instance, has more than $7 billion in active construction development projects at this writing, including "Project City Center on the Strip," while Boyd Gaming plans to implode the Stardust and replace it with a $4-billion-plus complex of casinos, hotels, residences, and shopping.

The most prominent and visible Las Vegas gaming leader is Steve Wynn, who well represents this era, but has also been connected with the city's previous eras. The dream that Wynn realized at the Mirage in 1989 stands as the most important development in Las Vegas in the past twenty years. At the same time, as Moehring and Green (2005, 207) put it, "Wynn is today the one figure whose knowledge bridges the past seven decades of Las Vegas gaming, because he knew all of the major people from the early days and knows all of the major people today"

Wynn's audacious accomplishment was to open the Mirage at a time when no major new Strip resort had been built in a decade and a half. Pulling a page from his predecessors' book, he did it unconventionally, by relying on financing assistance from the controversial (but undeniably brilliant) junk bond king Michael Milken (Moehring and Green 2005; Hopkins and Evans 1999). This audacity combined with sophisticated expertise would be appreciated by leaders of all three eras.

Part 2: Management Applications and Meanings

Turning to the management applications and meanings of each of these periods, we offer a necessarily condensed discussion of these "chapters" projected against the following constructs: operating principles, government relations, backlash management, and the ways in which each of these eras has been used to sell the city itself.

Operating Principles

As might be expected, the period between 1931 and 2007 saw a general evolution toward sophisticated operating principles. In the maverick era, the customer base for casinos was hardly complex: Las Vegas gambling clubs were for men. Specifically, they catered first to "frontier men" who braved the searing heat, and then to workers who sought employment in construction at Hoover Dam. Of course, this customer focus reflected society as a whole: before the modern women's movement, separate recreational spheres were a fact of life, and gambling remained among the most conventionally masculine recreations (Evans 2003; Cott 1997; Watson 2000).

The maverick casino operators' operational expertise often came from a background in illegal enterprises, though not necessarily from the casinos that leap to mind when considering the mafia era. Maverick operators functioned in a different way than did most of the veterans of organized crime: profits were not skimmed and sent to the Midwest, but the operators themselves were tainted by crime through their very involvement with the gaming industry. In both the maverick and the mafia eras, though, hiring those with illegal casino experience made sense. Few other people knew how to run a casino.

More recently, the MBA leaders implemented a more conventionally corporate approach. Today, leaders such as Gary Loveman emphasize a new approach to "frequent flier"--type databases--a colder, more calculating focus that the lead mafioso character in the film Casino famously laments. No longer is a personal connection the key to the penthouse suite.

Although we have set this discussion in the context of the changing of the Las Vegas guard, the MBA conversion is far from complete, even if it is impressive. This situation is highlighted by a comparison to a business model that is more familiar to lay observers: insurance. Although the two businesses seem similar--because they involve chance and probabilities--they have a key difference. For the insurance industry, actuarial science sets premiums to produce cash flows greater than the magnitude of predicted losses. But the probability of the events in question remains an estimate that, no matter how expert, invariably includes some degree of error.

In contrast to this insurance model, the odds of casino games are known. Despite this knowledge and their analytical expertise, gaming managers still hearken back to earlier eras with their deals, promotions, and programs--many of which carry negative expected values. Instead of relying on the known house advantage of the games, managers modify or affect a casino's earning power based on their own suppositions and observations.

To understand why this happens, we can review the record of earlier periods. In the maverick and mafia eras, the Las Vegas market produced enormous profits, in part because casino executives awarded room, food, and beverage comps only to high rollers, which kept acquisition costs low. However, as competition increased for high rollers, so too did acquisition costs. The problem with that approach is that the complexity of incentives made these costs difficult to calculate. Despite these rising costs, many casino executives assumed that this market remained as lucrative as it had been in the past. Eventually incentives, such as actual loss rebates and dead chip programs, became too complex to calculate accurately--damaging profits (Kilby, Fox, and Lucas 2004; Lucas, Kilby, and Santos 2002; Salmon et al. 2004).

The problem extended beyond the high roller market. Although slot systems are fairly effective at capturing transaction-level data, for instance, it remains difficult to measure the specific effects of most casino promotions and direct mail campaigns. The contributions of these efforts can be measured by way of advanced statistical modeling, but few casino operators have taken advantage of such tools. As a result, most casinos run slightly modified versions of marketing promotions that date from the time when Nevada enjoyed a virtual monopoly in the U.S. gaming market. At that time, all demand was absorbed by the Nevada supply, and those historical times were profitable due largely to favorable supply and demand conditions. This is one (rare) instance in which leaders might best be advised to "forget" history.

In this situation, blind adherence to historically successful policies and a general inability to conclusively measure player acquisition costs together constitute one of the most significant operational failings of the current gaming era.

Government Relations

Given government's control over supply, government relations are especially important to the gaming industry. Once again, these strategies have grown increasingly sophisticated over the years. The Las Vegas of the maverick era was a small town; before the city's wartime growth spurt, the population was just eighty-four hundred in 1940. Politics, like the population and the business community, was largely confined to downtown, enabling casino operators like Houssels, Boyd, and McAfee to involve themselves in local campaigns--and to face charges that they were part of a political machine, much as their successors would (Moehring 2000).

The mafia-era leaders were remarkably astute when it came to political matters, using money as much as muscle. Gus Greenbaum led a group of local residents in a grassroots effort to fend off government annexation plans, as well as proposed tax increases (Moehring and Green 2005). Taking a more direct approach in 1962, Moe Dalitz and his colleagues spent hundreds of thousands of dollars to defeat the gubernatorial candidacy of Las Vegas Sun publisher Hank Greenspun, who was a critic of casino operators allegedly tied to organized crime. Later, Dalitz spent approximately as much against incumbent Governor Grant Sawyer, whose efforts to strengthen regulatory policies offended Dalitz and his partners (Reid and DeMaris 1963).

The 1950s also marked the beginning of government actions to end organized crime's control of local casinos. While the Senate committee chaired by Estes Kefauver gained headlines, it did little to reduce organized crime's influence in Las Vegas. If anything, the committee's attacks on mobsters in other cities prompted them to move to Las Vegas, where they could ply their gambling trade legally. Instead, the 1970 Racketeering Investigations and Corrupt Organizations (RICO) Act allowed great strides, as federal prosecutors gained latitude to obtain and use evidence against alleged mobsters. The result was indictments and convictions of leaders of the Chicago, Kansas City, and Milwaukee families (Russo 2001; Jacobs 2006).

At the state level, an investigative report by the Las Vegas Sun revealed Meyer Lansky's hidden ownership in the Thunderbird, ostensibly operated by veteran casino operators Marion Hicks and Cliff Jones, who was then Nevada's lieutenant governor. This led to the 1955 creation of the Nevada Gaming Control Board and the 1959 creation of the Nevada Gaming Commission, established to police (or at least to give the impression of policing) the actions of the shadier characters within state's gaming industry (Glass 1981; Hulse 1986). Today, the Nevada regulatory model serves as a foundation for gaming jurisdictions worldwide.

Nevada's Corporate Gaming Act of 1969 also had a lasting effect, because this act enabled corporations to invest capital in casinos. (2) With outside capital, the industry simply outgrew its need for executives who had criminal records. Wall Street's capital resources dwarfed the money that other operators could bring to the table. Thus, despite its political influence, the mob was unable to realize a "government relations strategy" that could offset the flood of capital.

The Corporate Gaming Act ushered in the MBA era, and the rise of corporations introduced a new generation of leaders with sophisticated government relations sensibilities. Beyond that, in an often-overlooked but vital development, deregulation of the airline industry introduced more carriers and lowered ticket prices--thus bringing more tourists to southern Nevada. Conceived by economist Alfred Kahn, deregulation was championed in the Congress by Nevada's Democratic Senator Howard Cannon. Later, Reagan-era deregulation of the banking industry further opened up investment capital opportunities for this once-shunned industry (Gottdiener, Collins, and Dickens 1999; Titus 1989).

Interestingly, the MBAs face local government entities that are perhaps reacting to the dominance of the gaming industry. The 2003 Nevada legislative session was the first in memory in which the industry's agenda failed to rout that of its opposition. Instead, nongaming businesses such as banking and construction (two industries that owed their wealth and influence to the exploding gaming industry) sought and received benefits usually reserved for gaming (Simpson 2003; Berns 2003).

It seems ironic that the gaming industry's contributions to Las Vegas's growth have apparently lessened its political influence. Gottdiener, Collins, and Dickens (1999) astutely noted that in contrast to previous eras, gaming does not constitute a truly unified "governing elite":

   As normalization has progressed, a second
   political force in the business community has
   emerged, namely, the growing power of residential
   and commercial real-estate developers
   in the local economy. Their interests have
   coincided with those of suburban residents to
   create a force that is often in opposition to the
   gambling and tourism industry.... Although
   developers and casino owners both push for
   growth, they are often interested in different
   aspects, leading to political conflict. Casino
   owners seek to maximize the tourist trade
   and want local government to support tourist
   infrastructure.... Real-estate developers, on
   the other hand, seek government infrastructure
   improvements for residences.... In
   sum, while it is true that local politics in Las
   Vegas, like other metropolitan regions, is
   dominated by business interests, it is by no
   means the case that these are unified into a
   single governing elite. (Pp. 233-34)

This diffusion of power is perhaps best reflected today in a number of populist ballot initiatives that would force the gaming industry to pay more taxes. This never could have happened without the industry's wildfire success, as developers no doubt owe much of their own success to that of the casinos. Furthermore, as is the case with many themes explored in this article, this reduction in local political influence must have been unfathomable to the leaders of the generations that preceded it.

Backlash Management

At the same time, today's backlash is not the only one faced by the gaming industry, even if the source is unexpected. The history of Nevada's gaming industry--often misunderstood as a tale of linear growth and expansion--is in fact better characterized as a roller coaster history of popularity and prohibition. To wit: Nevada has legalized gambling three times and banned it twice. Most notable for our purposes, significant public backlash has fed each of the periods of decline (Rose 1980). Hence, for the gaming industry, public moral backlashes have been a constant threat--a reality that mandates sound "backlash management" strategies (Bernhard forthcoming-a). Interestingly, the maverick, mafia, and MBA periods have each dealt with challenges posed by those whose views were opposed to Las Vegas specifically or gaming in general.

In the maverick period, for instance, one of the primary controversies that plagued the gaming industry pertained to its direct and indirect associations with prostitution. In this early period, the backlash came primarily from the federal government, which had achieved significant power through its investments in Hoover Dam; an army air corps gunnery school (later Nellis Air Force Base); and Camp Sibert, a marine base that the War Department established to guard the dam (Moehring and Green 2005).

This pressure culminated in the U.S. Army's demand that the city shut down its red-light district, "Block 16." Las Vegas leaders resisted at first, but they capitulated after the army issued a series of threats. Sometimes falsely characterized as a "you can have one, but you can't have the other" ultimatum to choose between two sinful industries, in fact the sex industry seemed the bigger evil at the time, thanks to skyrocketing venereal disease rates among servicemen. In the end, the gaming industry actually benefited from the decision to ban the sex industry: the money once left in prostitution houses often wound up in the city's gambling joints (Moehring and Green 2005). Hence, in this instance, by acceding to federal demands, the city's gaming industry managed a politically powerful backlash in a manner that actually increased their revenues.

While mafia leaders faced backlashes in the form of the aforementioned investigations by Senator Kefauver and the Las Vegas Sun, the outcome of these backlashes was also positive from a broader historical perspective, although not so for the families themselves. While the original mafia-tainted leadership resisted these backlashes for obvious reasons, the enhanced regulatory structure that resulted and the awareness of Nevada's image problems contributed to the "cleaning out" of the mob--which ultimately allowed mainstream capital to be invested in the city and ushered in today's remarkable developments. Once more, like a fortunate gambler, Las Vegas has turned even seeming "losses" into long-term victories.

The MBA generation has had to deal with a backlash that would have baffled those of an earlier time. Few gaming industry critics remain concerned about the morality of gambling, and the specter of organized crime involvement no longer looms. Instead, criticisms of gaming rest on concern for problem gamblers and those whose lives they affect. The "medicalization" of problem gambling has meant that academic rather than moral voices now drive a significant portion of the current backlash (Bernhard forthcoming-b).

Faced with the threat of tobacco-type lawsuits, industry rollbacks, or outright prohibition in some areas, gaming industry leaders have united in response to this most recent challenge. In fact, one of the primary reasons the American Gaming Association (AGA) was founded in 1995 was to deal with the issue of problem gambling, and the AGA has since taken a series of proactive (and appropriately academic) steps to address this issue. Most prominently, the AGA has moved to establish an independent research organization, housed at Harvard Medical School's Division on Addictions. This entity uses a model based on the National Institutes of Health's research arm to distribute research funding on gambling problems via a rigorous peer-review process. This approach stands in contrast to the tobacco industry's mishandling of its own research issues.

At this writing, this approach seems to have worked: in the United States, there has not been a major public backlash (or consequent rollback of gaming offerings) based upon the problem gambling issue. Contrast that situation to those in Australia and Canada, where the gaming industry has not coalesced into an organized voice via a lobbying organization. At this stage, the MBA era's backlash management strategies appear to have been a success, at least from the gaming industry's perspective.

Selling the Three Chapters: The Utility of Mythology

It is worth noting that the leadership narratives in each era have been used most effectively by Las Vegas leaders in their efforts to "sell" the city to travelers, policy makers, and Wall Street. The mavericks touted their concept of a "wide open" desert escape; the mafia leaders helped inspire the public's almost hypocritical admiration for antiheroes; and today's leaders have drawn on both traditions to promote Las Vegas as an all-American city, while still giving a nod to its longtime naughty reputation.

In the maverick days, the Las Vegas Chamber of Commerce responded to the promotional challenge by hiring major national advertising agencies (such as J. Walter Thompson and especially Steve Hannagan) to promote the city as a "desert getaway" emphasizing western themes familiar to the real and ersatz cowboys who had run the city's casinos (Moehring and Green 2005; Hopkins and Evans 1999). Most important, these cowboys served as colorful embodiments of the occasionally reckless fun to be had in the city. It is impossible to miss the endurance of these messages, and it is reasonable to suggest that these impulses can be detected today in the "what happens in Las Vegas, stays in Las Vegas" advertising campaign. The echoes of yesterday, it seems, continue to reverberate in the marketing messages of today.

The mafia leadership was obviously a tougher public sell in its heyday, but subsequent winks and nods (in Hollywood portrayals, books, and now by Las Vegas mob-attorney-turned-mayor Oscar Goodman) have been prominently featured in unofficial and official sales pitches for the city. Americans and Las Vegans alike possess a paradoxical admiration and affection for the antiheroes of mafiadom. Las Vegas--more accurately, the state of Nevada--has officially discouraged (via its gaming regulatory structures) these kinds of actors and actions, while simultaneously extending a knowing welcome to those who romanticize these figures and their actions.

The narratives of mafia morality are well known in American culture, and Las Vegans themselves are known to enthusiastically endorse them. Many still lament the passing of the days when the mafia ran the town, while some go so far as to believe that "no one got killed who didn't deserve it," as longtime Las Vegas entertainer Debbie Reynolds put it. Today, this peculiar marketing strategy is perhaps best epitomized by the city's efforts to transform its original post office into a "Mob Museum" for tourists.

Today, the MBA tale is also used to sell Las Vegas. In an effort to convince present-day skeptics that Las Vegas has in fact "gone mainstream" and become "The New All-American City" (as a Time magazine cover story declared in the mid-1990s), some cite the educational and business credentials of Las Vegas's leaders as evidence of what must seem to many cynics to be an unbelievable transformation. Nevertheless, even if it is unbelievable, Wall Street certainly seems to have bought it. Without leaders who could relate the remarkable tale of Las Vegas in terms that investors could appreciate--and, more important, in terms that allowed them to justify investment--Las Vegas probably would have been unable to build its megaresorts on the scale that it has. Hence, the leadership "sales pitch" continues, albeit with a slightly different audience.

Interestingly, the MBA era's gaming leaders enjoy an unprecedented level of international visibility when compared to their maverick and mafia predecessors. While the maverick-era cowboys were not even blips on the nation's cultural radar screen, the mafia-era gangsters actively avoided popular attention, for obvious reasons. Today, corporate leaders like Donald Trump, Bill Gates, Jack Welch, and Warren Buffett are often "business celebrities" in their own right; for leaders like Steve Wynn and Sheldon Adelson to have achieved a similar status testifies to the industry's increasingly mainstream and respected status.

Part 3: Conclusions and Future Implications

While we wish to reemphasize that these "chapters" are hardly distinct, they do provide a useful framework for understanding the broad trends of Las Vegas leadership. Like the city itself, those who are currently leading Las Vegas have normalized and no longer can be accused of representing the less reputable classes of business leaders. Whereas Las Vegas once was a distant desert outpost, today the city has earned grudging respect across the globe.

As we have explained above, however, despite this fame, not all is well with Las Vegas's industry leaders. In operational settings, we think of the leadership development in the gaming industry as being similar to that of professional baseball management. As depicted, for instance, in Moneyball (Lewis 2003), much of baseball's leadership still relies on intuition and unscientific management styles, while others use systematic approaches. Similarly, while skilled and undeniably visionary leaders have introduced new approaches to gaming leadership, we see many who still rely on "trusty" old operational methods that embrace intuition and comfortable (but perhaps dated) methods, rather than knowledge and research-based policies. In the future, gaming leaders would be well advised to take full advantage of the sophisticated, quantitative techniques available.

The government relations strategies discussed here reveal similarly mixed results: while the gaming industry has enjoyed an extraordinary period of deregulation and expansion, a closer look reveals fissures emerging at the state level in the industry's status as an unchallenged "governing elite" in Nevada. Meanwhile, a critical examination of the backlash management and "sales" tricks of Las Vegas gaming industry leaders reveals a number of successful long-term developments.

The maverick-to-mafia-to-MBA evolution in Las Vegas has been dramatic. In a brilliant stroke, a push into the mainstream has broadened the city's appeal (and its potential customer base) by an order of magnitude. Today, even culturally conservative visitors from Des Moines or Damascus can brag to their neighbors that they look forward to their Las Vegas vacation. Furthermore, to a significant degree, other, newer brick-and-mortar gaming jurisdictions and internet gaming also owe a debt of gratitude to the considerable effort Las Vegas's leadership put into housecleaning. Without these developments in Las Vegas, newer U.S. jurisdictions would certainly have been far more reluctant to embrace gaming. To extend this point, when an internet gambler credulously signs on to a website based in Antigua, his faith in that site can be traced back to the notion developed in Las Vegas that the gaming industry offers its customers a square deal, even if his perception about that website is incorrect. In sum, though it may seem less sexy than volcanoes, Broadway shows, and pyrotechnic naval battles, the MBA conversion of Las Vegas's leadership played no small role in turning the city and its key industry into the global giant that it is today.

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(1) Of course, we do not wish to suggest that all current Las Vegas leaders have MBAs. Like any industry, the gaming industry includes leaders who rose without the pedigree. Jay Sarno merits a mention here: as the visionary who dreamed up Circus Circus at the low end and Caesars Palace at the high end, his brilliance was clear, even if he did lack educational initials on his business card.

(2.) The law eliminated the requirement that the state investigate and license all stockholders (Gottdiener, Collins, and Dickens 1999; Farrell and Case 1995).

Bo J. Bernhard, Ph.D., is a professor and director of gaming research at the William F. Harrah College of Hotel Administration at the University of Nevada, Las Vegas (bo.bernhard@unlv.edu). Michael S. Green, Ph.D., is chair of the History Department of the College of Southern Nevada (greenml@nevada.edu). Anthony F. Lucas, Ph.D., is an associate professor in the hotel management department at the University of Nevada, Las Vegas (AFL2@cox.net).