Cuba – Gambling in America

During the 1950s, Cuba offered the gambler several of the leading casino facilities in the world. There was little doubt, however, that the gaming was connected to organized crime personalities in the United States as well as to military dictator Fulgencio Batista, and both entities skimmed considerable sums from the operations. Cuba also had both public and private lotteries, a first-class racing facility, and jai alai fontons. All the gambling activity came to a halt after Fidel Castro engineered a successful rebellion and took over the reins of power in January 1959. Repeated attempts to negotiate a continuation of casino gaming were unsuccessful, and it has been suggested that U.S. crime interests were involved in attempts to overthrow the Castro regime, both in the abortive Bay of Pigs invasion and in several assassination attempts on the new dictator’s life. The entire tourism infrastructure has slipped into decay during the four decades of Castro rule. Today there are voices suggesting that Cuba may seek to restore its tourism industry and may even contemplate reopening casinos.
The island of Cuba was colonized and controlled by the Spanish government for four centuries, until a revolution developed to a major scale in the 1890s. When the United States declared war on Spain in 1898, the revolution became successful, and independence was gained for the Cuban people. Authorities in the United States, however, sought to keep many controls over the Cuban people. War troops were not removed until 1902, and even after the Cubans elected a new government under President Jose Miguel Gomez that year, the United States “negotiated” to have a major naval base at Guantanamo Bay. Other commercial interests in the United States also maintained an economic domination over much of Cuba, but these interests had been in Cuba for many years before the revolution. Many Americans looked at the seaside location called Marianao, ten miles outside of Havana, and found it to be a desirable place to live, engage in real estate transactions, and start tourism resorts.
A local group known as the 3 C’s (named for Carlos Miguel de Cespedes, Jose Manuel Cortina, and Carlos Manuel de la Cruz) formed a tourism company that sought to build a casino in Marianao. In 1910, they proposed legislation in the National Congress that would permit the casino and would also grant them an exclusive thirty-year concession to operate it. At a time when the Americans in Cuba saw the casino as “opportunity”, Americans in the United States were in a wave of anti-sin social reform. This was the same year that the casinos of Nevada closed their doors and the Prohibition movement was in high gear. U.S. president Howard Taft was lobbied hard by church interests to not allow gambling so close to our shores. During the Spanish American War, President William McKinley had decreed that there be no more bullfighting in Cuba, calling the activity a disgraceful outrage. Taft was expected to bully the Cuban Congress to follow U.S. wishes as well. The legislation failed to pass. A second attempt was made to have casino-tied revenues to support $1.5 million in construction of facilities for tourism in Marianao. One New Yorker, who had a contract to build a jai alai fonton and a grandstand for racing, sought to change Taft’s mind on the issue, but again, casinos were defeated as a result of a moralist campaign in the United States.
Gambling was in the cards for Cuba, however. In 1915, Havana’s Oriental Park opened for horse racing. In 1919, the casino promoters promised that they would build the streets and plazas for Marianao if they could have casinos. President Mario Menocal, who had been elected in 1917, supported a bill for casinos. The national legislature authorized a gambling hall for the resort on 5 August 1919. The 3 C’s group ran the facility. In addition to land improvements for tourism, they agreed to a national tax that was designated for the health and welfare of poor mothers and their children. At the same time, President Menocal’s family won the concession to have jai alai games in Marianao. The tourism push was on, and the United States was the primary market, especially after Prohibition began for the whole country in 1919. The Roaring Twenties roared outside of Havana. Several new luxurious hotels opened, each having a gaming room. Each successive presidency endorsed tourism and welcomed all investors. Even Al Capone opened a pool hall in Marianao in 1928. Then the Depression came.
The 1930s in Cuba were years of reform thinking. Leaders openly condemned the degradation of casino gaming and other sin activities that had been widely offered to tourists. In 1933, the casinos were closed, and Prohibition ended in the United States. The economy floundered. The next year, army sergeant Fulgencio Batista was able to oust President Ramon Grau San Martin and install his own government. He ruled as chief of staff of the army while another held the presidency. At first Batista tried to bolster the notion of cultural tourism, but he could not resist allowing casinos to reopen—under the control of the military. Batista was very concerned about the honesty of the games. For sure, he would be skimming. If players were being cheated, however, there soon would be no players. The house odds could give the casinos enough profits to pay off the generals and the politicians, but not enough to pay off all of the dealers. Games had to be honest. He turned to a person who understood this and other dynamics of the casino industry very well – Meyer Lansky. Lansky took over casino operations, and he imported dealers who would work for him and not behind his back. The Mob cleaned things up. Because of World War II and postwar disincentives for foreign travel by Americans, however, the casino activity was rather dormant through the 1940s. Nonetheless, Havana attracted more persons of bad reputation. In 1946, Salvatore “Lucky” Luciano moved in to conduct heroin trade and to be involved with the Jockey Club and the Casino Nacional. Lansky was influential in persuading the government to expel his competitor.
Fulgencio Batista won the presidency on his own in 1940. In 1944 and 1948, he permitted Grau San Martin and Carlos Prio Socarras to win open elections; however, he remained very much a controlling element. In 1952, while a candidate for the presidency, he sensed he had no chance of victory. Batista executed a coup and took the reins of power. Subsequent elections were rigged, and he remained in power until the beginning of 1959. During this latter period of rule, casino development accelerated.
The 1950s started out slowly for the casinos.  Prior to 1950, only five casinos were in operation, and a brief reform spirit in 1950 led the government to close them. Commercial pressures, however, led to a reopening before Batista conducted his coup. The casinos now offered large numbers of slot machines for play. By the mid-decade, new Cuban hotels were attracting large investments from the United States, as the gambling operations were quite lucrative. Foreign operators, however, still had ties to organized crime members. A major incentive for a renewed interest in Cuban gaming came from the Senate Kefauver investigations that were exposing illegal gambling operations in the United States. Organized crime members were being run out of places such as Newport, Kentucky; Hot Springs, Arkansas; and New Orleans, Louisiana. At first, they gravitated toward Las Vegas; then Nevada instituted licensing requirements that precluded their participation in operations there. Cuba, the Bahamas, and Haiti became desired locations. Four of the five largest Havana casinos were in the hands of U.S. mobsters. As newer properties such as the Havana Hilton, the Riviera, Hotel Capri, and the Intercontinental Hotel came on line, Mob hands were involved in the action. Meyer Lansky was always the leader of the group. He kept the games honest, and he kept the political skim money flowing in the correct directions. When someone got out of line, he gave the word, and Batista could make a great show about throwing a mobster out of the country. In addition to enhancing casino gambling, Batista also improved revenues of the national lottery by inaugurating daily games.
In 1958, things seemed to be on a roll just when Fidel Castro gathered strength for his military takeover. Revelations in the New York Times about Mob involvement in Cuban casinos dampened tourist enthusiasm, as did the fear of impending violence. The names of Jake Lansky, Salvatore Trafficante, and Joseph Silesi were added to the lists of unsavory participants in the industry.
Fidel Castro was born in 1926, the son of an affluent sugarcane planter. He attended a Catholic school in Santiago de Cuba before entering the University of Havana as a law student in 1945. There he began his career as a political activist and revolutionary. He participated in an attempt to overthrow the government of Dominican Republic strongman Rafael Trujillo and disrupted an international meeting of the American states in Bogota in 1948. He sought a peaceful way to power in 1952 as he ran for Congress; however, the contest was voided as Batista seized power and cancelled the election. In 1953, Castro took part in an unsuccessful raid on the government; he was captured and imprisoned for a year. He was released by Batista as part of a general amnesty program but kept up his revolutionary efforts, leading another unsuccessful raid in 1956. His third try was his charm, as he successfully moved through rural Cuba during 1958, attacking Havana at the end of the year and driving Batista from office.
When Castro’s forces descended on Havana on New Year’s Eve 1958, there were thirteen casinos in Havana. The hotel casinos represented a collective investment of tens of millions of dollars. Lansky’s Riviera alone cost $14 million. Owners and operators did not want to join Batista in his hasty exile out of the country, even after revolutionary rioters had smashed up many of their gaming rooms. They wanted to hold on to what had been a very good thing. That would be difficult, however. Castro had waged a revolutionary media campaign that condemned the sin industries of Cuba and their connections to the Batista government. Castro had pledged that he would close down the casinos.
Castro was true to his word on this score, at least at the beginning. He also stopped the national lottery from operating. Meyer Lansky, on the other hand, pledged that he would work with the new government, and casinos were temporarily reopened, ostensibly to protect the jobs of their 4,000 workers. The reopenings were short-lived, however. The casinos closed for good (under the Castro regime) in late 1960. Castro’s frontal attack on the Mob and its casino interests in Havana had political consequences in the United States, where the Central Intelligence Agency planned the 1961 Bay of Pigs invasion to overthrow Castro and also may have contracted with organized crime operatives to attempt to assassinate the new leader.
The fall of the Batista regime and the end of Cuban casinos had repercussions throughout the gaming industry.  Nevada lost its strongest competitive market, and Cuban operatives and owners had to move. The ones that could be licensed went to Las Vegas, as did many of the dealers and other casino workers. Others had to find unregulated or underregulated jurisdictions. Haiti and the Dominican Republic were close at hand, as were the Bahamas. Most of the gaming entrepreneurs in these jurisdictions had Cuban experiences, as did many who went to London to open casinos after 1960 legislation gave unregulated charity gaming halls a green light. Lansky, George Raft, and Dino Cellini were principals in London’s Colony Club until they were expelled from the country. Former Nevada lieutenant governor Cliff Jones of Las Vegas had been active in Cuba. He had made a choice between Nevada gaming and foreign gaming when the “foreign gaming” rule was adopted in Nevada. He chose to be involved in foreign gaming and therefore could not return to Las Vegas. Instead, he began campaigns in one small country after another to legalize casinos and then began operations that he would later sell to (or share with) local parties for high profits. Clearly, the activity of Castro in closing down Havana gaming caused a major spread of gaming elsewhere.