From Carpet Joints to Racinos: How Midwest Gambling Went Legit

By Vince Guerrieri

Wherever my paternal grandfather is – and if it’s his idea of Heaven, it probably looks like the old Dairy Queen in Lisbon, Ohio, with a couple pool tables – he’s got to be laughing his ass off.

In September, a new horse track opened in Austintown – not far from the apartment where he went to sleep on Grandma’s 70^th birthday and didn’t wake up. The track has slot machines, so while its formal name is Hollywood Gaming at Mahoning Valley, it’s informally called a racino.

Our family history could charitably be called checkered. My great-grandfather made wine during Prohibition. Family lore tells of a night where my great-grandfather was plying law enforcement officials with Italian cookies and coffee in the living room as one of his sons was bashing in barrels of wine below them in the basement, letting potential evidence spill down the drain.

My grandfather Charlie and his brothers ran “the bug,” the illegal lottery financed by organized crime. And my grandfather was an inveterate gambler. He’d fill my head with tales of the Jungle Inn, a mob-run gambling casino outside the city limits of Youngstown.

[blocktext align=”right”]”At least when the mob ran the numbers, you knew where the money went.”[/blocktext] Prohibition was repealed when Charlie was a youth, and at middle age he witnessed the lottery get co-opted by the state – which pays out less than the mob on a straight pick-three win. My grandfather, a smart if not educated man, told me, “At least when the mob ran the numbers, you knew where the money went.” But in his wildest dreams, he couldn’t have foreseen that gambling would be extended, legalized, legitimized, and embraced as an economic engine.

Charlie’s game of choice was craps. There’s a picture of him in his World War II uniform, throwing dice. He wrote at the bottom, “The only thing to do in this man’s army.” When he returned home to Youngstown after World War II, he found plenty of places to fill that need.

Youngstown, Ohio, was a 20^th-century boomtown. The city was filled with steel mills and other factories, and immigrants from Southern and Eastern Europe flocked to them like pilgrims to Mecca. The immigrants brought with them their own culture. Carmen Policy, who grew up in an Italian-American household on the South Side of Youngstown, and whose client list as a lawyer included some organized crime figures before he went to San Francisco to run the 49ers, once said, “This is a working-class area. Gambling is not considered a vice.”

People were able to walk into any variety of newsstands, pool rooms, or other businesses downtown to place a bet on a horse or a ballgame. And there was the Jungle Inn.

It was started as a house of ill fame, but the Jungle Inn received most notoriety as a “carpet joint,” a term for a casino that was fancy enough to have carpeted floors. The opposite was a “sawdust joint,” which was essentially a roadhouse with gambling – and, as the name implies, sawdust on the floor. It was in a municipality formed by an act of the Ohio Legislature, Halls Corners, making it untouchable by any other area law enforcement.

Ray Sprigle won a Pulitzer Prize in 1938 for his coverage with the Pittsburgh Post-Gazette of Supreme Court Justice Hugo Black’s ties to the Ku Klux Klan. Sprigle said he thought he’d seen everything – until he visited the Jungle Inn in 1939, “the biggest and most insolently wide-open gambling joint between New York and Chicago.” Sprigle was able to pick up a ride from a regular shuttle from downtown Youngstown, and in his travels, he saw a parking lot big enough to accommodate 500 cars, more than 50 slot machines, a prosecutor who said, “I’ve got nothing to do with law enforcement,” and a sheriff who seemed indifferent to the whole operation.

The Jungle Inn offered transportation to and from downtown Youngstown – and armed escorts for those who felt particularly insecure taking home a large amount of cash. There was a machine gun nest above the front door, overlooking the casino floor on one side and the parking lot on the other. And the Jungle Inn had entertainment, including regular appearances by a boxer-turned-singer from Steubenville, who wasn’t above dealing blackjack between sets. He made it big in Hollywood with an Americanized name – Dean Martin.

Charlie used to throw dice there as well, on the “ornate polished walnut tables” Sprigle described. Charlie would tell stories of winning a grand on a particularly good night, and then losing it and another grand. “We had to mortgage the family house on Albert Street three times,” he said with a laugh – the kind of laugh that only comes with the knowledge that you fucked up badly and lived to tell about it.

In 1947, Charles P. Henderson was elected mayor of Youngstown. He was a Princeton alumnus who served as a municipal court judge prior to serving in the U.S. Army in World War II. He was also scrupulously honest, especially for a Youngstown mayor (the city once elected a disbarred judge as mayor, and the current mayor is under indictment). He hired Edward J. Allen from Erie as police chief. Allen’s father was a former president of the National Fraternal Order of Police, and he and his brother were both officers in Erie. Allen also helped the FBI investigate sabotage and espionage in World War II, and went to the FBI National Academy for police officers.

Henderson and Allen, with help from the Vindicator, the only newspaper in Youngstown, embarked on a “smash racket rule” campaign. The Jungle Inn was closed in 1949, not by Youngstown police, but by the state fire marshal as a fire hazard. Halls Corners voted to unincorporate a year later. No place would operate as brazenly in the Youngstown area again. But then again, no place would have to.

***

Until the 1970s, the only place where gambling was legal was Nevada. After World War II, Las Vegas had become a vacation destination, with air-conditioning making the desert heat palatable, jet airplanes that made the trip easy and comfortable, and casinos and hotels built by organized crime with Teamster money.

First came the lotteries. New Hampshire became the first U.S. state to offer a lottery in modern times in 1964. The lottery came to Ohio in 1973, with a pick-three being offered beginning in 1979. Proceeds are earmarked for education, but really, the game was started to co-opt organized crime.

[blocktext align=”right”]Then gambling started to expand, because it’s a lot harder to have principles when you can’t make your nut.[/blocktext]Then gambling started to expand, because it’s a lot harder to have principles when you can’t make your nut. Atlantic City, New Jersey, had fallen on hard times. The Jersey shore was not the vacation destination it once was, as race riots and white flight took its toll on the city. And why go to the Jersey shore when you could fly in as much time to Florida … or take in the spectacle Las Vegas had become? Residents and leaders in the Garden State saw an oasis grow up out of the desert in Nevada, and thought the same could happen for them. Residents voted down legalization of gambling across the state in 1974, but legalized casinos, restricted to Atlantic City, in 1976. The first casino opened on the boardwalk two years later, and it seemed to bring the desired results: No less than 80 percent of the Atlantic City municipal budget came from property taxes on casinos, and more than 50,000 jobs were created. By 2000, more than two-thirds of the city’s eligible workforce was in the gaming industry.

A decade later, the Indian Gaming Regulatory Act passed, allowing American Indians to operate gambling operations on tribal lands or lands within a tribe-state compact. And then something strange happened: The states that had banned gambling for so long started to accept it, with the rationale being, “Well, if they’re going to spend money gambling, they might as well do it in-state.”

Casinos were suddenly being touted as job creators, and after Atlantic City, started to pop up in de-industrialized areas. There are now three casinos in Detroit. There are four in Northwest Indiana.

About 15 years ago, a state representative from the Pittsburgh area suggested adding slot machines to the horse tracks in Pennsylvania. Purses had dropped as people were going to tracks in nearby West Virginia – which had slot machines. From there the idea spiraled into adding casinos, with money being used for everything from a new Penguins arena in Pittsburgh to helping offer senior programming. West Virginia responded by adding table games. The arms race was on.

***

The idea of gambling in Ohio had been pitched before. Issue 1, a constitutional amendment that would have allowed riverboat gambling in eight locations throughout the state, failed in 1996 by more than a million votes out of 4.2 million cast. There would have been four casinos in the Cleveland area (three in Cleveland and one in nearby Lorain) and three in Hamilton County (two in Cincinnati and one outside of the city but in the county). The other one would have been in Mahoning County, where Youngstown is located.

Individual casinos had been proposed in Lorain in 1990, and in 2008 at a 97-acre site off Interstate 71 in Wilmington. The Wilmington plan was opposed by Penn National Gaming, which operated a casino in Indiana that was about a half-hour’s drive from Cincinnati.

But in 2009 an amendment passed allowing casinos in Cleveland, Toledo, Columbus, and Cincinnati. Concurrent with that, Governor Ted Strickland signed an executive order allowing for slot machines at the state’s racetracks, after a 2006 referendum failed allowing just that.

What had suddenly made gambling so palatable? The state could no longer afford to be proud. Ongoing budget issues were compounded by the biggest economic crash since the Great Depression. The whole state was starting to slip into an economy like that of Youngstown – and now they were trying to save themselves, but Youngstown was left out.

The casino amendment didn’t include Youngstown, and there was no racetrack in Mahoning County. An effort was made in 2012 to put a constitutional amendment on the ballot to build a fifth casino in Youngstown, but it didn’t make the ballot.

However, Penn National – the company that opposed the Wilmington casino – would come to the rescue. They own and operate the Hollywood Casino in Columbus, and Beulah Park, a horse track in Columbus that would get video lottery terminals. They then decided to move the track from Columbus to the Youngstown area, which welcomed Penn National with open arms.

Penn National paid $50 million for the slots license, $75 million in a moving fee and in September, the 100,000-square-foot racino opened off Ohio 46, not far from Interstate 80, in Austintown. There’s a food court, a sports bar, and a gift shop, but if you want table games, you have to go to Cleveland. Or Pittsburgh. Or West Virginia. The racino features a horse track and video terminals – for now. Doubtless the arms race will continue as revenues decline.

And if the past is any indicator, they will. More than 27,000 people went into the racino on the first day, dropping more than $5 million. Through the end of October, more than $132 million had been played at the casino. But if the past is any indication, the novelty will wear off. Every casino in Ohio has seen a spike in revenue after the casino opens and then a slight but noticeable decrease. Hollywood Casino in Toledo did more than $20 million in business in its first full month of operation, June 2012. It hasn’t even approached that figure since. Horseshoe Casino in Cincinnati had $21 million of play in its first full month in March 2013, and has only cracked $20 million once – and less than $14 million in October.

Some of the casinos – like the Hard Rock Rocksino, another racino at Northfield Park – are hedging against this with entertainment venues. That’s a struggle the Austintown racino is currently undergoing. The racino got a zoning change to permit a small outdoor concert venue, but it’s being challenged in court by the owners of a nearby nursing home.

But the worst part about the casino boom is what’s missing. If Atlantic City is any indication, it demonstrates once again the folly of trickle-down theory. Las Vegas continues to draw customers as a destination, but Atlantic City is hurting. With the rise of the casinos, Atlantic City had become a one-industry town, and like other once-prosperous one-industry towns, such as Youngstown, Toledo, and Detroit, saw market changes crush the industry.

Revenues declined drastically. The casinos swelled the coffers of the companies that ran them, but Atlantic City didn’t see much improvement beyond the boardwalk, remaining one of the poorest cities in the country, little more than a slum with 12 casinos in it. Four of those casinos shut down in 2014, leaving the historic boardwalk, as one writer put it, looking like a smile with teeth missing. History had repeated itself as the tragedy Karl Marx envisioned.

Will Ohio be the farce?

Vince Guerrieri has spent pretty much his whole life in the Rust Belt. He was born in Youngstown three weeks before the mills started closing, and left there without really escaping. He’s a Bowling Green State University graduate, spent 15 years in newspapers, and lives with his wife and daughter in suburban Cleveland, where he’s slowly trending toward respectability (and he’s just as surprised by that as you are).

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