Boardwalk Empire: The Birth, High Times, and Corruption of Atlantic City

Compounding the threat posed by increased competition was the response of the business community and city planners. During its prosperous years there had developed a “core area” within the city, which traditionally had an 8- to 10-month economy. The area bounded by the Boardwalk and Virginia, Atlantic, and Arkansas Avenues contained a heavy concentration of family-owned and -operated hotels, boardinghouses, restaurants, and shops. It was the most vital section of the town. Within this 20-square-block portion of the city there were hundreds of prosperous family businesses. These families were the people who had built the resort’s hotel and recreation industry. This core was the backbone of the economy, providing a majority of the jobs and paying the bulk of the real estate taxes.

In an attempt to capture a greater portion of the market traveling in cars, the city permitted real estate developers to construct new motels along the highways into town and other parts of the city outside of the core area. It was the traditional Atlantic City response, “Give ’em what they want.” But the decision was shortsighted and contributed to siphoning off customers from the core area. The new motels made money at first, but there weren’t enough customers to go around, and over the long haul, everybody lost.

The owners of the hotels and boardinghouses within the core area saw the gradual decline. For several generations their families had cultivated regular customers from throughout the Northeast. They were proud of the service they provided and went out of the way to please their guests, making an effort to satisfy individual tastes and wants. Hoteliers kept lists of their regular patrons and did such things as send greeting cards during the holidays in winter months and special invitations as the summer season was starting up. Each hotel and boardinghouse had its own dining room and amenities peculiar to it. It might be just a pleasant front porch or an intimate cocktail lounge, or a grand ballroom or indoor swimming pool, but each one had its own special character.

A large percentage of Atlantic City’s visitors were repeats who enjoyed returning each summer to the familiar surroundings of their favorite hotel. Year after year these patrons vacationed at the resort. It was common for one generation to follow the other and return to the same hotel where they had vacationed as children with the family. But the world changed and Atlantic City didn’t, and as these children became adults, they began to view the resort as second rate. When the core area businessmen noticed the fall off of repeat customers they grew uneasy. When things didn’t improve, they panicked. By the late ’50s and into the ’60s many of the local hotel owners began selling out. The owners knew that as the number of visitors dwindled, their town would eventually fade into oblivion. They were going to get out before things got worse.

The resort’s third- and fourth-generation hotelkeepers were replaced by investors from out-of-town who still believed in Atlantic City’s reputation as a national resort. They got an unpleasant surprise. The volume of patrons they had expected wasn’t there. The response of these new hotelkeepers was to slash the overhead. The first thing to go were the hotel dining rooms. Many of the new proprietors did not have the experience needed to turn a profit on serving meals, so they did away with them. This robbed the small hotels of their individuality, contributing further to their decline. The offseason months became slower and slower, and despite past practice, the new owners couldn’t justify remaining open year-round. Their operations were curtailed, with a majority of the small hotels and boardinghouses closing down in October and not reopening until May. The core area no longer had a year-round economy. The backbone of the economy was broken.

The hotels not only became antiquated but fell into neglect. Shrinking profits meant less money for maintenance. Vacationers who travel to a resort expect something more than what they have at home, but Atlantic City’s visitors had to settle for less. The construction boom of single-family homes during the 1950s and ’60s gave America’s middle class a degree of comfort and privacy in their home life that their grandparents never dreamt possible. The vacationer’s standards had changed, but the resort’s had not. The modern world vacationer refused to share a bathroom with someone else, sleep in a small room without air conditioning, or walk two blocks to park his car when he didn’t have to at home. Atlantic City’s reputation could still lure first-time visitors, but few of them returned.

The decline in repeat business meant a rise in vacancies, and empty hotel rooms couldn’t make money for their owners. To generate income many of the hotels and boardinghouses were converted into either nursing homes for the aged or shelter care facilities for the poor and transient. Atlantic City has always had a shortage of permanent housing, especially for its poor. These boarders couldn’t pay the same rates vacationers had, but they made for year-round occupancy. With the presence of long-term, low-rent tenants, maintenance of the smaller hotels and boardinghouses all but ceased. What had once been gay and colorful places were now shabby and broken-down. The old buildings were as sad-looking as their new tenants.

The deterioration wasn’t limited to the physical structures of the city. Atlantic City’s population base was eroding. More and more Whites were abandoning their town. The out-migration of the city’s White population was significant, nearly doubling every 10 years. Between the years 1940 and 1970, the percentage of Whites declined from nearly 80 percent to 50 percent. During the same time, total population dropped from 64,094 to 47,859. The decade of the ’60s was devastating with the resort losing a full one-third of its White population. The exodus of Whites, most whom left their businesses and took their money with them, meant that unskilled workers in the tourist economy, particularly Blacks, had to fend for themselves.

The economic well-being of the African-American community had always been tenuous. They were the muscle and sweat needed to run the hotel and recreation industry, and their financial status rose and fell with the prosperity of the tourist trade. When jobs grew scarce, Blacks discovered they had competition from White workers. Hotel employment was no longer exclusively “Negro work.” As the resort’s fortunes declined, Blacks found themselves trapped in a city that had no use for them. The grandchildren of the Black workers who had played such a crucial role in transforming Atlantic City from a beach village to a national resort were now a burden and an object of scorn. This disdain was a cruel irony for people whose families had been a major building block in developing the town.

Along with the change in its racial makeup, Atlantic City’s population was becoming increasingly elderly, with nearly a third of its population over 65. During the ’60s the resort became second only to the Tampa-St. Petersburg region of Florida as the area having the highest percentage of senior citizens. While older persons were moving into Atlantic City, younger persons, the wage earners, were moving out. Many of the senior citizens attracted to the resort were former weekend visitors who recalled the glory days of Atlantic City during their youth. They came in search of a retirement of happy weekends seven days a week. Rather than years of bliss, strolling the Boardwalk and enjoying the sea breezes, they found urban decay with its squalor and violence. Some became prisoners in their own homes. The city’s housing stock, of which two-thirds was constructed prior to 1940, was becoming physically obsolete and unsafe. For many of the newly arrived seniors, their dream of an idyllic retirement soon became a nightmare.

In 1964 the painful reality of this sad state of affairs was broadcast to the entire nation. In the summer of that year the Democratic National Convention came to Atlantic City. It was a catastrophe for the resort. The 15,000 delegates, newsmen, and technicians found a town unable to meet their needs. Hotel services broke down under the demands of the Convention. “By mid-morning switchboards would collapse and the flustered operators refused to take messages for political guests whose message mating and communication are of the essence; promised television sets did not work, and promised air conditioning proved nonexistent.”

To make matters worse, local hotels and restaurants jacked up their prices during Convention week. Out-of-town politicians and media people had never been favorites of Atlantic City. Resort businesspeople viewed Convention week as a chance to grab a few extra dollars from people they would never see again. Their greed had its price—most of the delegates were outraged at having been exploited. The news media transmitted the delegates’ tales of contempt for the resort to the entire nation. “Never had a town and a Chamber of Commerce made a greater effort only to end by exposing themselves to ridicule.”

Following the campaign, Presidential historian Theodore White summed up the resort’s plight:Of Atlantic City it may be written: Better it shouldn’t have happened … time has overtaken it, and it has become one of those sad gray places of entertainment which one can find across America, from Coney Island in New York to Knott’s Berry Farm in California, where the poor and the lower middle class grasp so hungrily for the first taste of pleasure that the affluent society begins to offer them—and find shoddy instead. Frequented now by old people on budget, by teenagers who come for a sporting weekend, by families of limited means trying to squeeze into cramped motel rooms, it is rundown and glamourless.

The resort was used to negative publicity, but this was different. After the Democratic Convention the criticism became derisive. The major magazines and newspapers ridiculed Atlantic City whenever the chance presented itself. Whether it was a snafu at the Miss America Pageant, a weekend visitor who had been ripped off at a Boardwalk auction, or a disgruntled Elk, Moose, Tall Cedar, or businessperson in town for a convention, it found its way onto the wire services. Typically, such stories would contain negative background information for the main embarrassing event and made a mockery of the resort.

A common theme found in these articles was the pseudoanalysis that Atlantic City’s problems were of its own making. The resort itself was to blame for its decline. In one way or another, which was never quite explained, the town had stopped doing something that had made it a national success. What these critics failed to comprehend was Atlantic City hadn’t fallen; it was abandoned. Time had left the resort behind.

Although his town was caught in a downward spiral, Hap Farley’s political power appeared invincible. Following the heated city commission race of ’52, the next election in ’56 produced token opposition of three independent candidates against the organization slate of five incumbents. Farley’s people won handily. By 1960 the opposition had been so thoroughly subdued that there was no contest. Not a single person filed as a candidate to run against Farley’s slate.

The understanding between the Republican organization and local Democrats, forged by Nucky Johnson and Charlie Lafferty, continued under Farley. In time, Lafferty was replaced by William Casey and Arthur Ponzio. These “Democrats” were unabashedly Farley supporters. Each time there was a city commission election, the organization ticket consisted of three Republicans and two “Farleycrats.” This arrangement also carried over into county elections, insuring Hap never had more than token opposition. And with each re-election, Farley’s power in Trenton grew stronger, making him master of the State Capitol.

After more than 20 years as leader of the majority party of the senate, Hap Farley had succeeded in making alliances that transcended partisan politics and any one person’s term in office, giving him complete control over the legislative process. As the most powerful person in Trenton, he had a veto over any program sought by the executive branch and rarely had difficulty obtaining the governor’s support. When he did, he simply waited until the right issue came along and put up a roadblock until he got what he wanted. The key was in knowing how to pick his fights. There was no one in Trenton to challenge the senator from Atlantic County. To become governor would have meant a loss of power. But there were forces at work that in time scaled him down to size.

One of the keys to Hap Farley’s power in the state house was the composition of the senate. Regardless of population, each of New Jersey’s 21 counties was represented by a single senator. It was a situation that had prevailed since the original State Constitution of 1776. During his years in the senate, Farley was able to count the votes of his six fellow senators from South Jersey as his own. He never needed more than four votes of the remaining 14 to control the senate. Consistent Republican majorities and his dominance of the GOP caucus ensured Farley’s mastery of the senate.

The decade of the ’50s saw enormous growth in New Jersey’s metropolitan areas. The 1960 census produced numbers that aroused the politicians from the urban counties. The population figures revealed glaring disparities. A study prepared by Rutgers University presented the following conclusions: The senators from the 11 smallest counties, who constituted a majority of the State Senate, represented only 19 percent of the state’s total population; Essex County, with the state’s largest city, Newark, was 219.7 percent underrepresented in terms of relative population; Cape May County was 83 percent overrepresented using the same standard. With a population of approximately 160,000, Atlantic County was 44 percent overrepre-sented. These numbers were typical of many state legislative districts throughout the United States, and they added up to trouble for the status quo.

In 1962 the U.S. Supreme Court decision of Baker v. Carr established the principal of “one person, one vote,” ordering federal and state voting districts to be of equal size. The Baker decision had an almost immediate impact. Never before had there been such a flurry of political action in response to a Court’s decision. Within hours of the ruling, lawsuits were filed in both state and federal courts challenging the existing schemes of legislative representation. One of the lawsuits spawned by the Baker decision was brought by Christopher Jackman, a union leader and Democratic political activist from Hudson County, who later became speaker of the New Jersey Assembly. Jackman was seeking to force the state legislature to reapportion its districts based upon population. The State Supreme Court ruled unanimously that the districts of both the senate and assembly must be based upon population.

One of the Justices was Farley’s old ally, Vincent Haneman, whom Farley had recommended for appointment to the Supreme Court. Haneman voted with the Court but didn’t join in its opinion, choosing to write one of his own. His opinion begins, “There comes a time in the career of practically every judge when he must embrace a theory of law to which he does not personally subscribe.” Haneman continued, tracing New Jersey history from pre-Revolution days when the colony was divided into East and West Jersey. He explained that New Jersey had always had an upper and lower house in its legislature. Representation in the senate had been “based upon territory as distinguished from population” throughout state history. Each time the State Constitution was revised, this practice was preserved. Haneman saw no reason it shouldn’t continue but knew he had to yield to the U.S. Supreme Court. Justice Haneman’s opinion reads like an apology to an old friend.

The Court’s decision was a political disaster for Hap Farley. Being one of 40 with control over no more than a dozen votes was a major setback from being one of 21 with the power to produce a majority for any bill he wanted.

Trenton wasn’t the only place where Farley’s power was slipping. While on the surface the local Republican organization appeared as potent as ever, with its candidates sweeping one election after another, its foundation was crumbling. The cornerstone of Farley’s empire had been ravaged. Gradually, almost imperceptibly, the political ward system was falling apart. Government reforms emanating from federal and state government had finally taken their toll. Nucky Johnson’s finely tuned system for dispensing services and patronage, and grooming political workers and candidates was destroyed by social welfare programs and civil service.

The underpinnings of the political ward system were the delivery of constituent services and control of political spoils. The social welfare programs instituted by Roosevelt’s New Deal during the Depression grew and multiplied until Atlantic City’s downtrodden no longer had to go to the precinct captain every time they had a problem. Unemployment and welfare payments meant Atlantic City’s poor could make it through the winter without having to ask the Republican Party for a handout. It took more than a generation for the effects of Roosevelt’s social liberalism to make an impact on the ward system, but when they did, the result was permanent. Constituent services were no longer a political plum for voters loyal to the party; now they were a right.

Control over patronage was also a problem. Although Jimmy Boyd and his lieutenants kept a tight rein over every person hired, civil service gave city and county employees a degree of freedom they had never known. At first Boyd worked around civil service by limiting the number of classified positions and manipulating eligibility for promotion tests, but gradually it took hold, and as it did his discipline over the ward workers diminished. A city employee could now thumb his nose at the ward leader. Failure to perform one’s political chores no longer meant dismissal. Involvement in ward politics was now voluntary.

The final blow to the power of the ward system was the change in the voting attitude of the resort’s Black community. For more than 50 years the Northside could be counted on for large pluralities for the organization ticket. But Hap never had the loyal following among Blacks the way the Commodore and Nucky had. And again, Roosevelt’s New Deal played a decisive role. For millions of disadvantaged Americans, in particular African-Americans, FDR was a beacon of hope. Roosevelt’s presidency forged a coalition dedicated to making government work for the have-nots, and Black voters were a keystone of this national coalition. Locally, Blacks had no one to vote for other than the organization’s candidates. However, as America entered the ’60s and African-Americans began the battle for civil rights, Atlantic City’s Blacks became involved in partisan Democratic politics. The switch in loyalties came in part as Blacks recognized the racist tactics of the Republican machine. An investigation of county voter registration records, published by The Press, revealed that voting cards had been marked to indicate race. When news of this hit the street, the Black community was outraged. African-American voters were now beyond the control of the ward workers. They could no longer be herded to the polls and their votes sold to the Republican Party. Black voters needed only the right Democratic candidate in order to become a threat to Farley and his machine.

Hap Farley knew the world was growing hostile toward his brand of politics, yet he refused to retire or change his methods. In 10 campaigns no one even came close to defeating him. It didn’t matter that his opponents were Farleycrats; in fact, the ability to select opposition candidates was proof of how totally he controlled Atlantic City’s politics. That kind of power is intoxicating and only an extraordinary person could have given it up voluntarily.

The first real challenge to Farley’s reign as senator came in 1965. It was the first election after the Jackman decision and the initial plan for legislative reapportionment called for Atlantic and Cape May counties to be lumped together creating a single senate district.

Several years after the 1952 City Commission election, Farley’s foe, Marvin Perskie, moved out of town, relocating his law practice to Wildwood in Cape May County. Farley used his influence with the local judges and his contacts in the business community to ensure that Perskie had no future in Atlantic City as a politician or an attorney. Marvin Perskie was not a beaten man, just realistic. There was no point continuing to bang heads with Hap’s machine. Perskie left town, but he never forgave Farley. The two were bitter enemies. By 1965 Perskie had established himself in Wildwood and was eager to make another run at Farley. Despite the influence of the Farleycrats, Perskie was certain of gaining the Democratic nomination from the support of the Democrats of Cape May County and mainland Atlantic County.

Farley remembered the campaign Perskie had waged in ’52 and wasn’t anxious to face him head on. According to one observer, “Farley was scared to death of Marvin.” Shortly before the filing date for the primary, the senate gerrymandered the districts and combined Gloucester County with Atlantic and Cape May counties to create an unusual district. This new voting district was too large to meet the equal population requirement, but Farley solved this problem by having two senators elected from the three counties. Farley chose Gloucester County because at the time it was represented by a popular incumbent, Republican John Hunt. With a running mate like Hunt, Farley had a substantial advantage over Perskie, who had no base of support in Gloucester County. Farley had stacked the deck against Perskie. Rather than go down to defeat in the senate contest, Perskie chose to run for assembly, where he won handily.

Through the efforts of a small but growing number of independent Democrats, Perskie’s place on the Democratic slate was filled by Leo Clark, a former FBI agent. Clark was born and raised in Atlantic City, having attended Holy Spirit High School where he was a star athlete. He went on to graduate from Notre Dame University, followed by an impressive career with the FBI. More importantly, Clark wasn’t a Farleycrat and he made a strong candidate who was not afraid to attack Farley.

With prompting from Perskie and local attorney Patrick McGahn, Leo Clark banged away at Farley charging him with corruption and conflict of interest. Clark zeroed in on the sad state of the resort’s deteriorating economy and blamed one-party rule for the town’s ills. Apparently someone was listening and Clark gave Farley the biggest scare of his life. Clark beat Farley by more than 500 votes in Cape May County and made a respectable showing in Gloucester losing by a similar tally. The difference in the election was in Atlantic City where Jimmy Boyd’s Fourth Ward could still crank out the votes. Clark lost by little more than 4,000 votes, which was the closest Farley had come to defeat in 28 years. While the Leo Clark campaign ended in defeat, it was the beginning of a legitimate Democratic Party in Atlantic County.

The next election in 1967 was a farce. There had been a second court ruling and another redistricting approved by the legislature and the voters at a general election. Again it had been proposed that Cape May and Atlantic counties would form a senatorial district. Perskie had been chosen as a Democratic candidate and spent that spring and summer attacking Farley. Perskie labeled Farley a “political dinosaur” and charged that he headed “one of the vilest political machines that still exists in the United States.” Perskie was on target, but his efforts were for naught. This time it was the State Supreme Court that came to Farley’s rescue. In response to a lawsuit challenging the senatorial districts in Union and Passaic counties, the Court inexplicably decided to do a complete redistricting of the entire state. The Court hadn’t been asked to consider anything but Union and Passaic counties, but revamped the districts of all 21 counties on its own initiative. As a result of the Court’s ruling, Cape May was placed with Cumberland County, leaving Atlantic County by itself. Marvin Perskie was denied again.

The Court’s ruling came in July, and neither Leo Clark nor any other independent Democrat would jump into the campaign at such a late date. The Farleycrats were the only ones organized, and they chose a political unknown, Harry Gaines, who dutifully went to the slaughter. Predictably, Farley was re-elected to a four-year term by a margin of more than 13,000 votes.

Farley’s re-election didn’t frighten his critics. They felt Perskie would have beaten him if the Supreme Court hadn’t toyed with the senate districts. Hap was responsible for the appointment of Vincent Haneman and as a longtime member of the Judiciary Committee had reviewed every court appointment for more than 25 years. Rather than being discouraged, Farley’s detractors strengthened their resolve. They received assistance from the local media, in particular, the Atlantic City Press. In late 1969 and early ’70, Atlantic City’s only newspaper ran a series of articles based on the investigative reporting of Bernard Izes and John Katz. Corruption had been the norm in Atlantic City’s government for so long that bribery, graft, and payroll padding were standard practices of doing municipal business. Three generations of Atlantic City residents had known nothing but dishonest government. The Press decided to shine some light on Farley’s organization.

Izes and Katz didn’t have to be detectives to uncover material for articles on political corruption. The Republican machine was an open book. The reporters began with the city’s uniformed employees, where they found that 9 out of 10 Atlantic City firefighters made annual contributions to the Atlantic County Republican Committee. Of the 221 men listed on the 1968 fire department payroll, all but 19 were contributors. In response to these reports, Fire Chief Warren Conover stated that all the contributions were voluntary and said that there was no pressure, with the firefighters merely being told, “If they want to pay, it is time to get it in, but there is not any retribution against anyone who doesn’t want to pay.” Contrary to Conover, the Press investigation revealed that deputy fire chiefs were given lists of names of those who had refused to contribute to the organization. These firefighters were routinely skipped over on the civil service promotion lists. In one instance, a firefighter was passed over for nine years while a vacancy he was qualified to move into went unfilled.

Izes and Katz’s investigation revealed that payroll padding with political hacks was rampant in city and county government. No-show employees were found to exist in every department of city hall. The reporters established there was a direct link between the no-show employees and the precinct workers. As had been the tradition for nearly 70 years, the loyalty of the Republican political workers was rewarded at the expense of the local taxpayers. A sampling of the payroll padding exploited by Farley’s machine ran the gamut: An investigator in the revenue and finance department spent 100 percent of his time either selling insurance out of his home or working at the Republican Party headquarters; a luxury tax investigator had a fulltime job as a bus driver and never reported to city hall except to receive his check; an assistant supervisor of weights and measures had never made a single inspection and spent all his time as a car salesman; a health inspector, who was a loyal precinct captain, worked full-time at a local hotel and had someone pick up his checks for him.

Another area exposed by Izes and Katz was graft on public contracts and extortion of businesses regulated by the city. They revealed that nothing had changed in city hall since the conviction of the Commodore. Everything had its price and if you wanted to do business with city hall, you had to kick back a percentage of your profits or you were blacklisted. Businesses that were regularly inspected for potential health or fire violations didn’t get a clean bill of health unless they paid. If you didn’t pay the inspector, you were shut down.

If it involved city hall, no business transaction was routine. A liquor license could only be transferred by using Stumpy Orman as the broker for the sale. Eddie Helfant or Ed Feinberg had to be used as the attorney to make the application to the city. If you didn’t use the proper people or grease the right wheel, you got nothing out of city hall. Izes and Katz’s articles ultimately prompted an investigation by the U.S. Attorney’s office resulting in the indictment of Mayor William Somers and several commissioners and city officials. These defendants were dubbed by the local media as the “Atlantic City Seven” and were all convicted by a federal jury of bribery, extortion, and abuse of the public trust. Each of the convicted defendants remained silent and Farley was never indicted.

The sun was setting on Frank Farley’s career, but he refused to accept it. The first half of his life had been devoted to sports, the second half to elective politics, and he was a champion in both worlds. For nearly 70 years the gratification derived from excelling in competitive activities had been Hap Farley’s life. He had never known life without the excitement of combat, whether on the playing field or in politics. It wasn’t possible for him to step down gracefully. Like an aging boxer who believes he can win one more title bout before retiring, Hap Farley was destined for a knockout.

Farley’s fortunes were tied to those of his city. As the boss of his town’s politics, he was the one the voters would eventually hold accountable as things got worse for the resort. It was only a matter of time before Farley’s constituents would turn on him and seek a new leader in hopes that someone else could turn things around.

In addition to the resort’s deteriorating economy and exposure of corruption in its government, there was growing discontent within the Republican organization. The exodus of middle-class Whites from Atlantic City during the ’50s and ’60s to the mainland communities along Shore Road, namely Absecon, Pleasantville, Northfield, Linwood, and Somers Point, produced a dramatic change in the county Republican organization. These mainlanders didn’t have the loyalty to Farley’s machine their parents and grandparents had for the political ward system. They were more educated, more affluent, employed at jobs unrelated to tourism, and not beholden to the Republican Party. Atlantic City’s influence in county politics had been diluted. The power was now more evenly distributed, and the Shore Road Republicans were growing tired of Farley. They wanted a change in party leadership.

Politicians begin thinking about the next election as soon as the last one is over. Once the polls have closed and the votes are tallied, would-be candidates and their supporters begin vying for position in the next contest. Coalitions are formed and commitments made early in this unending process. The several months after an election may appear uneventful to the general public, but this is the time when politicians make their decisions concerning who will be rewarded or punished for their role in the previous campaign. It’s a critical period in the political process. What the public sees later is window dressing. While Hap Farley had worked tirelessly in the 1970 general election and his candidates were all victorious—albeit by slim margins—there were those within the Republican organization who began to view him as a liability to the party. Before the month of November was over, the dissatisfaction that had been simmering for several years boiled to the surface.

Less than 10 days after the ’70 election, Farley had a revolt on his hands. It began with a resolution adopted by the Linwood Republican Club. The Linwood group was only one of several mainland Republican clubs that was growing restless with the Farley-Boyd stranglehold on the party. The statement endorsed by the Linwood GOP called for “political and governmental reform in Atlantic County” and warned that their party was “in need of more enlightened leadership to meet head-on the needs of today. Policies of the past must be abandoned.” It was a bolt of lightning.

In calling for Farley to step aside, the Linwood faction shattered the public image of unity that Farley had so carefully maintained. Hap was only able to hold the pieces together by consenting to the creation of a countywide executive committee. The committee would have input on the selection of candidates and setting party policy. Sharing power was a major concession for Farley, but it wasn’t enough.

While Hap Farley was doing everything he could to keep the lid on his troubles, the county Democrats were finally putting together an organization. The Leo Clark campaign in ’65 and the several following elections saw the Democrats begin to make inroads on the local level by electing candidates in several mainland communities. Nevertheless, the growth of an independent Democratic organization was pathetically slow. The Republican Party had held every governmental position in its grip since the beginning of the 20th century. The only persons who would ally themselves with an independent Democratic organization were idealists opposed to boss rule, Democrats who had moved into Atlantic County from out of the area, or disgruntled Republicans who had been rejected by the party power structure. No practical person who might ever want something from city or county government would register as a Democrat. One of the disgruntled Republicans upon whom the Democratic organization was built was resort attorney Patrick McGahn. His rites of passage into the Democratic Party illustrate how stifling Farley’s power had become.

Patrick McGahn was born in Atlantic City in 1928. His father was a native of Ireland and was the owner of “Paddy McGahn’s,” a local bar at Iowa and Atlantic avenues. Hap Farley was the McGahn family’s attorney, and both of Pat’s parents were strong supporters of the senator. Paddy McGahn was active in the Fourth Ward Republican Club and at the time of his death in 1949, his honorary pallbearers included Nucky Johnson, Hap Farley, Jimmie Boyd, and Mayor Joseph Altman. After graduating from college and starting his first year of law school, Pat McGahn was called up by his Marine Reserve Unit to fight in the Korean War. He served with distinction and was a decorated war hero. Upon returning to the resort in 1953, McGahn gave thought to getting involved in local politics prior to returning to law school. He had grown up under ward politics and the boss rule of Johnson and Farley. He understood the scheme of things and was prepared to become a foot soldier in Farley’s organization in hopes of rising through the ranks. At the urging of his mother, McGahn sought a meeting with the senator to get Farley’s advice on how he should go about becoming active in the party.

Hap Farley was “very pleasant” to McGahn but advised him that “there were too many ahead of me and that it would be wise if I went to law school and then seek another area out of Atlantic County to start my career.” McGahn found Farley “very gracious” as he closed the door on future involvement. “He had to take care of the people that were already involved. There was no room in the inn.” Farley rejected McGahn without even knowing what he had to offer. Thus did Pat McGahn become a Democrat; there were many more frustrated Republicans who found their way to the Democratic Party in a similar fashion.

The frustration felt by Atlantic City’s residents as their town deteriorated with no end in sight came to a head in 1971. The beneficiary of this emotional tidal wave was Joseph McGahn, Pat’s older brother. Dr. Joseph L. McGahn was the ideal candidate to oppose Farley. An Irish-Catholic, born and raised in Atlantic City, McGahn attended Our Lady Star of the Sea School and Holy Spirit High School. He was valedictorian of his college class and received his medical degree from the University of Pennsylvania. Before entering politics, McGahn had played a positive and highly visible role in the greater Atlantic City community. He had been a Little League Commissioner for more than 10 years, and as an obstetrician/gynecologist, McGahn and his partner had delivered more than 12,000 babies. Intelligent, articulate, witty, and personable to all his patients, his following included thousands of entire families. It was an excellent base for an aspiring politician.

Joe McGahn’s first run for political office was for Absecon City Council in 1966. He was elected the lone Democrat on a seven-member council. Two years later he ran for mayor and scored a startling victory, winning by a margin of two to one in a city with almost no registered Democrats. It was a phenomenal accomplishment and made “Doc Joe” a leader among the independent Democrats. With Joe serving as the spokesman and Pat as strategist, the McGahn brothers devoted their time and spent their money building up the County Democratic organization, all the while aiming toward the ’71 Senate race. After the 1970 election, there finally was a legitimate second party with the Democrats having four mayors and 25 councilmen holding office throughout Atlantic County. While a far cry from the cohesive unit that the Republicans had assembled over the years, it was all the McGahns needed as a base for their battle with Farley.

The McGahn brothers took their battle right into Farley’s backyard. They knew their campaign needed much more than the support of Democrats and Independents. The edge in registered voters was so huge that to be successful, Joe McGahn needed the votes of a large percentage of rank-and-file Republicans. Building on relationships they had made over the years, Pat and Joe McGahn reached into the Republican organization and whittled away at Farley’s core of strength. The natural place to begin was on the mainland.

The Shore Road Republicans had little difficulty supporting Joe McGahn. In many ways he was one of them. He had re-established his home on the mainland to escape Atlantic City’s urban rot. Like them, he saw no future in a city or political organization dominated by an aging autocrat whose practices were better suited for the old style ward politics of 30 years earlier. These mainlanders wanted a change even if it meant voting for a Democrat. Any reluctance they might have had in supporting McGahn was eliminated by Farley’s refusal to step aside. They had given him his chance. He could have bowed out gracefully and maybe even chosen his successor. It’s likely someone such as County Freeholder Director Howard “Fritz” Haneman, son of Hap’s crony, Vincent Haneman, would have been acceptable to Farley’s critics. But Farley wouldn’t consider passing the reins and that left the Shore Road Republicans with no choice. In their view, Farley had to go.

With Shore Road Republicans on board, the McGahns turned to Atlantic City. That front was handled deftly by brother Pat. Both the McGahns were born and raised in the Fourth Ward and had strong ties there, but it was Pat who was his father’s son, the bartender who could read his customers in a single glance. As a politician, Pat had much in common with Nucky Johnson. Streetwise and tough nosed, Pat McGahn understood what it took to survive in Atlantic City politics. Like Nucky, Pat was as nasty as an alley cat to his enemies, and generous and loyal to his friends.

There was almost no one in Atlantic City who didn’t know Pat McGahn and that he was the force behind his brother’s campaign. Their association was comparable to the division of responsibilities that existed between Hap Farley and Jimmy Boyd; Joe was the candidate and good guy; Pat was the tactician and enforcer. As was true with Boyd and Farley, Pat didn’t have to confer with Joe before making a commitment. Meeting individually with dozens of precinct workers and ward heelers, Pat exploited the discontent of Atlantic City Republican Party regulars and persuaded them to support the Democratic slate.

He knew that many of them had counseled Farley against seeking re-election, and they saw his defeat as inevitable. Pat McGahn wooed them on terms they understood; this was a watershed election, there was going to be a major transfer of power, and they could be part of the new regime. In short, the train was leaving the station and this was their chance to get on board. His appeal was effective. While there were few publicly announced defections, there were many ward workers who quietly urged their neighbors to dump Farley.

And dump him they did. It was a humiliating defeat. Farley was beaten almost three to two, losing by a margin of nearly 12,000 votes. The entire ticket went down in 18 of 23 municipalities in Atlantic County. Hap lost Atlantic City by more than 2,000 votes. In Jimmy Boyd’s vaunted Fourth Ward, where Farley had consistently received pluralities by as much as 5,000 votes, the McGahns fought him to a standoff, with Hap edging Joe McGahn by less than 200 votes. For the first time in his life, Hap Farley had been whipped. It was something beyond his experience and left him numb with disappointment. Despite the hurt, Farley conceded defeat graciously. There were no harsh words nor recriminations. He congratulated Joe McGahn and wished him well. Through it all he remained a gentleman.

If Hap Farley had any regrets about the ’71 campaign, he never expressed them. Had he stepped down voluntarily, he could have been the resort’s distinguished elder statesman; instead, after his defeat—with the exception of a critical election in 1976—he was shoved aside like a worthless relic. There were still those who sought his counsel, but they were few in number and it was always privately. The stigma of his rejection by the voters ostracized him from the political mainstream; however, Farley didn’t permit bitterness to consume him and he accepted his fate. For the next several years, until his death to cancer in 1977, Farley was a booster for his city whenever he had the chance.

Of the three bosses who reigned over the corruption of Atlantic City, it was Francis Sherman Farley who ruled with the most knowledge of government and restraint on unlawful excesses. Hap Farley was a giant. In the history of New Jersey politics, he is in a league of his own.

9

Turn Out the Lights

The windows hadn’t been washed in months. The seats were grimy and the entire place had a damp stench about it. The marquee was dark and blank, save for the words “Coming Soon.” Only Skinny D’Amato, owner of the 500 Club, could recall the last name act to appear in his nightclub.

Paul “Skinny” D’Amato was a local hero. A grade school dropout, running numbers at age 11, he had his own gambling room by the time he was 16. A successful racketeer since the Nucky Johnson era, D’Amato was held in esteem by the entire community. Skinny seemed to know everyone, from the guy slicing lunchmeat at the corner grocery to entertainers in Hollywood. Handsome, dapper, and charming in a way expected of a nightclub owner, D’Amato was a nocturnal creature. A coffee-drinking chain smoker, Skinny hardly ever awoke before noon and routinely had breakfast in bed. The 500 Club was his life’s work, offering all kinds of entertainment, from singers and comedians to women and boys. In its prime, the acts at the 500 Club rivaled the best in Vegas and the Big Apple. Dean Martin and Jerry Lewis got their start there, and Frank Sinatra was a frequent performer. But the 500 Club was no longer a nightclub; it was a seedy bar, attracting a handful of old regulars and a trickle of first-timers lured by its reputation. D’Amato was having trouble meeting payroll and taxes, remaining open for lack of anything better to do. The same was true of most of his customers, especially the female patrons.

Rita was the only woman sitting at the bar. Platinum blonde hair and rings on every finger but her thumbs, she wasn’t easy to mistake. Her new jeans were so tight they looked as if she had been poured into them. Her sweater was a gaudy green and despite the money she’d spent on her bra, her breasts sagged unmercifully. The years hadn’t been kind and no amount of Maybelline helped. It was a young crowd, most of whom came to the 500 Club out of curiosity, hoping to find the hot times they’d heard about from their fathers. A few of them looked her over, but Rita wasn’t their idea of action. Within a couple of hours the bar was empty, but for the regulars, leaving Rita with no choice but Pacific Avenue in search of a score.

By 1974 Atlantic City was one with Rita—a broken-down old whore scratching for customers. What once was a prosperous and bustling seaside resort was now a sleazy saltwater ghetto struggling to get by on a hollow reputation. No one who knew better, or who could afford to go elsewhere, would choose Atlantic City as a place to vacation.

Jonathan Pitney’s dream had become a nightmare, and his town was collapsing. The core area, once the bustling center of the hotel industry, was a squalid, decaying embarrassment. In the off-season, the town was dead. There were days between September and June when a bowling ball could have rolled from one end of Atlantic Avenue to the other without hitting anything. The profile of the streets leading to the beach resembled a garbage pile. Beginning with the battered, towering hotels along the Boardwalk, and sloping to the grungy motels of the beach block, the streets continued across Pacific Avenue lined with abandoned churches, rundown boarding-houses, discount liquor stores, and greasy-thumb eateries that closed by dark. Across Atlantic Avenue and onto Baltic and Mediterranean, the buildings blurred into a huge pile of rubble making up a vast ghetto. Most of the residential neighborhoods looked like Dresden after World War II. But there had been no bombs, just decay. Street after street, there were thousands of row houses needing painting and repairs, some occupied—the occasional home to vagrants—most vacant, punctuated by burned out ones.

The spirit of the community was burned out, too. As the middle class made its exodus, the town’s social fabric unraveled. Schools and churches closed or were forced to consolidate. Service clubs disbanded as their members relocated to the mainland, sapping the city of civic leaders. Little League baseball, teenage basketball, and youth clubs saw their numbers dwindle until many dissolved. The city was rife with street crime. Corner grocers and family-owned clothing, jewelry, and hardware stores packed it in as robberies gobbled up their profits. Barbers and beauticians retired and no one took over their shops, leaving “Sale or Lease” signs all over town. Movie theatres closed for lack of customers and vandalism, and every office building in town had space for rent. With no prospect of a turnaround, despair was the dominant mood.

For nearly a generation Atlantic City’s leaders were helpless in dealing with the deterioration. Between 1950 and ‘74, tourist income shrank from more than $70 million annually to less than $40 million; thousands of hotel rooms were torn down or boarded up, reducing the rooms for visitors from nearly 200,000 to less than 100,000, hardly any of which could be considered modern. “How could you get anyone to stay in a hotel where the mattresses were 40 years old and guests had to share a bathroom?”

As the grand hotels were pulled down, they left gaps along the Boardwalk as startling as missing teeth in a smile. Instead of a grand promenade and showcase for popular culture and industry, the Boardwalk was home to schlock houses, gyp joints, and panhandlers. The unemployment rate was about 25 percent for nine months of the year, with a full one-third of the population on welfare. More than 90 percent of the housing stock had been built prior to 1939, with the majority substandard. Of the nine New Jersey cities included in the Federal Model Cities Program, Atlantic City had the highest percentage of families (33.5 percent) earning less than $3,000 per year. A report prepared by a local antipoverty group disclosed that the resort had the highest divorce, venereal disease, tuberculosis, and infant mortality rates of any city in the state. According to the FBI’s Uniform Crime Report, among 528 American cities in the 25,000 to 50,000 population group, Atlantic City had the highest total number of crimes in the seven standard categories. The criminals were poor people stealing from the less poor. No new money of any kind was coming to town. There had been no major construction for nearly a generation. The only activity on the rise was arson.

In an attempt to revive the resort’s sagging economy, advertising agencies for some of the hotels tried promoting Atlantic City as a “family resort.” The wide-open days were gone, and Atlantic City was now supposed to be a place where mom and pop could bring the kids. What a joke. People like Skinny D’Amato who could still remember Atlantic City in its glory days knew better. They understood their town could never compete as a family resort.

As early as 1958, the resort’s Women’s Chamber of Commerce, at the urging of local hotel owner Mildred Fox, had gone on record in support of legalized gambling. A feisty little redhead with an Italian temperament—she was Fox née Logiovino—Mildred was forever banging heads with the local power establishment. Politically active, she was a dyed-in-the-wool FDR-JFK Democrat, not a Farleycrat. Atlantic City was her home and she wasn’t leaving. Plucky but savvy, Mildred pushed the idea of legalizing gambling to anyone who would listen. “It was our only hope for saving the city. We were on our way to becoming a ghost town.” Fox, the mother of four, was the owner and operator of the Fox Manor, a small Pacific Avenue hotel specializing in honeymoon packages. At the time, there was still a small network of backroom gambling operations and for her efforts, Fox and her children received death threats. The FBI took the threats seriously and, with her permission, tapped her phone but were unable to trace any of the calls. For half the year special agents escorted the Fox children to and from school.

By the early 1960s, the gambling rooms were gone, and gradually there developed a mentality that argued that if Atlantic City was ever to regain stature as a national resort, it needed an edge, the only logical one being casino-style gambling. Las Vegas had casinos and look what they were able to do in the desert. Think of what could be done with gambling in a town with the ocean and the Boardwalk, or so the logic went.

Toward the end of his career when the idea was first suggested, Hap Farley refused to sponsor casino gambling. It may have been the only instance in which Farley put his political interests ahead of his city’s, or maybe he was weary with the battles to hold onto power and pessimistic there was any one cure. People intimate with Hap believe he was concerned over the scrutiny that would be brought to bear on his regime. Were the resort to become the Las Vegas of the East, state and federal law enforcement agencies would pay even closer attention to Atlantic City’s corruption, and Farley wanted none of that.

With Farley gone, Fox’s idea was able to surface. She and like-minded business people kept the hope alive. But bringing gambling to the resort was a major undertaking. The legalization of casino-style gambling could only come about by means of an amendment to the New Jersey Constitution, which required approval at a statewide referendum. And there could be no referendum without an act of the legislature and support from the governor’s office. That took serious clout, something Atlantic City was short on with Farley gone from the scene. To make matters worse, the governor’s chair was occupied by a priggish former Superior Court Judge who, as a criminal prosecutor, had established a reputation as a “Mr. Clean.” Brendan Byrne was hardly what Atlantic City needed in the way of a governor to help bring in legalized casino gambling.

Brendan Byrne’s first run for political office was his election to governor in 1973. Plucked from the Superior Court bench, he was the handpicked candidate of a group of wealthy North Jersey Irish Democrats, the same clique responsible for the election of two other governors. Byrne was the ideal candidate: trim, handsome, well-spoken, and well-connected; Princeton University undergraduate; and Harvard Law School. He was the antithesis of the Farley-style politician. Upon graduation from law school he served as a clerk to a Superior Court Judge. From there he became assistant prosecutor in the Essex County Prosecutor’s office and eventually prosecutor and judgeship. During his days as prosecutor, Byrne gained a reputation as a crime fighter and was referred to by the mob as someone who “couldn’t be bought.” He savored his reputation and effused self-righteousness.

With the traditional problem of corruption in New Jersey, Byrne would have been welcomed by either political party in much the same way Woodrow Wilson was 60 years earlier. The leading Democrats supported him and he won the primary easily. His campaign was short on substance and consisted essentially of a pledge to “restore integrity” to New Jersey government—a tall order for anyone. Byrne’s opponent was Congressman Charles Sandman of Cape May. Charlie Sandman was a perennial candidate and wannabe governor most of his career. In June 1973, he upset incumbent Governor William Cahill in a bitter primary dividing the Republican Party. Sandman would later be Richard Nixon’s most loyal supporter during the Watergate hearings, and his uncompromising conservative message had limited appeal. He was no match for Byrne and the election was a landslide. As Brendan Byrne began his first year in office, legalizing gambling wasn’t one of his priorities. It wasn’t even on his agenda.

But gambling was a priority for the resort’s legislative team. 1974 was the year Atlantic City was to begin its comeback. State Senator Joe McGahn took his cue from the local media as well as business and civic leaders. They had one item on their legislative agenda. This was the year casino gambling was to become a reality. For the first time in Atlantic County’s history, its legislative delegation was entirely Democratic and there was a Democrat in the governor’s chair. As the year began, hopes were high. The Atlantic City Press took the lead in expressing confidence: “Governor Brendan Byrne has said he is receptive to a referendum aimed at removing the present constitutional ban on gambling, and a newly elected legislature presumably is willing to vote it onto the ballot. Public approval is regarded as certain.” But Joe McGahn knew better.

Joe McGahn had spent most of his life watching his hometown crumble. Now as senator, he had a chance to reverse the downward spiral. While having none of Farley’s gifts as a horse-trader, he could think on his feet and had the personal maturity needed to stay focused on a single issue. McGahn’s partner, in truth the leader in pursuing a constitutional referendum, was Democratic Assemblyman Steven Perskie. On his first election to the assembly in 1971, at age 26, Perskie was the youngest state legislator ever elected from Atlantic County, having been swept into office on McGahn’s coattails in his win over Farley. Upon arriving in Trenton, the young assemblyman needed no one’s coattails and learned his way around quickly. Nephew of Farley nemesis Marvin Perskie, Steve Perskie was a third generation attorney from a family of respected lawyers, the son and grandson of judges. Of medium height and build with shaggy black hair and thick horn-rimmed glasses, he was the picture of intensity. Perskie exuded confidence—almost cocksure—and had an innate ability for the legislative process. Brilliant, fast-talking but articulate, and with an engaging personality, he was a tireless advocate of casino gaming and the resort’s best spokesperson for the cause. More importantly, Steve Perskie had ingratiated himself with Brendan Byrne. He was one of Byrne’s earliest supporters in the Democratic primary and raised the gambling issue with Byrne early on. After the election he visited the governor’s office frequently, building important ties with Byrne’s staff. Between McGahn and Perskie, the resort had as effective a legislative team as it could hope for.

As the city launched its drive for a constitutional referendum, the watchword was “don’t oversell our case.” The prevailing mentality produced a caution and restraint in presenting the case for gambling, which could come only from overconfidence. Atlantic City and its leaders felt all they had to do was keep a low profile and things would just fall into place as they planned.

At that time, New Jersey was struggling with statewide tax reform. A State Supreme Court decision on the funding of local public schools had made an income tax inevitable. Some proponents of gambling spread the word that legalizing gambling might eliminate the need for an income tax. To preclude such talk, the Atlantic City Press in almost lecturing tones told its readers, especially the politicians, “The state can expect to profit very little, if at all, directly, and gambling opponents and proponents alike know it … it should not even be mentioned in the same breath with an income tax. It must be sold on the very sound argument that it is a much needed stimulant for the capital investment that can bring Atlantic City back to its days of glory.”

Another pitfall was the specter of Atlantic City becoming a “Las Vegas of the East” with a casino on every corner and slot machines in supermarkets, drugstores, and gas stations. Somehow, Atlantic City was supposed to be better than Vegas. The reputation of mob influence and the garishness of Las Vegas were something to be avoided in a statewide campaign. With an almost fairy tale quality, Atlantic City’s leaders hoped to present a more dignified image. They talked of gambling in terms of class and elegance comparable to the low-key operations in the Bahamas and Monte Carlo. According to its supporters, Atlantic City was above doing business like Las Vegas. There would be no glitz or glitter or slot machine grind joints. Upon gambling being legalized, it would be quiet and sophisticated—civilized games of chance for gentlemen and ladies only.

A final concern for gambling proponents was the fear that were it limited to Atlantic City alone, other communities in the state might resent it and sabotage the referendum. The resort was prepared to share the opportunity with other communities in the hopes no one else would be interested. In an attempt to neutralize potential opposition, McGahn and Perskie proposed a referendum that would permit gambling casinos throughout the state. Upon approval of the initial constitutional amendment, gambling could be permitted in any community where the voters of both the municipality, and the county in which it was located, approved a second referendum. To prevent mob infiltration, casinos would be owned and operated by state government; no matter that no one in state government was experienced in operating a casino. They would simply adopt regulations and everything would go smoothly. As for new private construction, there wouldn’t be much. Casinos would be located in existing hotels or state-owned properties. Additionally, advertising would be prohibited and only properly attired patrons would be permitted to gamble. By creating such a frame in which to view their proposal, Atlantic City’s leaders hoped the opposition would have little basis for an attack.

In the report of a study released by the staff of the Senate Conference Committee in May 1974, the Byrne administration’s view of how casino gambling should work was outlined for the legislature. It was envisioned that the first casino would be built on the Boardwalk at the state’s expense. Following the initial casino, two others would be located in space leased from existing hotels. The hours of operation would be from 8:00 P.M. to 4:00 A.M. The sale of alcoholic beverages would be prohibited as would credit for betting by casino patrons. Private investment of any kind would be prohibited. A rosy picture typical of government, it was assumed the casinos would be staffed and operated by state employees—just one more task for the bureaucracy. The potential of gambling everywhere didn’t have the initial support of Governor Byrne and as the constitutional amendment began making its way through the legislature, Byrne made his thoughts known. Prompted by his Attorney General William F. Hyland, Byrne questioned the language of the referendum.

The governor suggested that gambling should be limited to Atlantic City. He went so far as to threaten opposition to the referendum legislation if gambling was permitted anywhere other than Atlantic City. Some observers believe Byrne was looking for a face-saving way out and hoped that by limiting gambling to the resort, he would alienate other regions of the state, killing any chances of the referendum’s approval. The resort’s leaders were beside themselves, but Steve Perskie refused to quit. Relying upon his personal relationship with Brendan Byrne, Perskie launched a private campaign that resulted in the governor’s modifying his position. Byrne agreed to support the referendum as proposed, provided that for the first five years after its approval, casino gambling would be confined to Atlantic City alone. It was a major concession, which only Perskie could have obtained.

With Byrne’s support, McGahn and Perskie were successful in obtaining the legislature’s approval for a constitutional referendum. In all, it took less than five months to get the question put on the November ballot. While McGahn and Perskie made their moves in Trenton, the folks back home did nothing. When the year began, the pro-gaming forces knew they would have 10 months to organize their campaign for the November referendum. They also knew they could expect opposition.

The New York Times and Wall Street Journal, together with most of the local newspapers throughout New Jersey, as well as the New York and Philadelphia television networks, had editorialized against legalizing gambling. Senior U.S. Senator Clifford Case, State Senators Anne Martindell, Raymond Bateman, and John Fay, and Assemblymen James Hurley and Thomas Kean had all fought the question whenever it was discussed in the legislature. Kean, the Assembly Minority Leader, was a vocal opponent. “You are talking about changing the very character of New Jersey. Gambling would become our primary business, we would become known as the gambling state, and all legislation would be discussed in terms of how the gambling interests feel about it.” Additionally, the state’s two highest law enforcement officials, Attorney General William Hyland and U.S. Attorney Jonathan Goldstein, spoke against the measure.

Jonathan Goldstein was a forceful spokesman for the opposition. Together with clergymen from the New Jersey Council of Churches, he spoke at hundreds of gatherings throughout the state. Goldstein barnstormed across the state with the local newspapers and radio stations spreading the word. Everywhere he went he warned that the only group that would benefit from the legalization of gambling was organized crime. “I am concerned that the very same interests which have allowed Atlantic City to deteriorate will be those who will be the sole beneficiaries of casino gambling.” Goldstein was one of the prosecutors of the Atlantic City Seven, and he had a keen grasp of the traditional partnership between local politicians and the racketeers. He played on the suspicions of the average voter that all gambling was controlled by the mob. To the average person, Goldstein’s comments had a ring of truth and with the exposure they received, it damaged the resort’s cause.

Aside from the crime issue, there was a second basis for opposition expressed by State Senator Anne Martindell. The resort didn’t deserve special treatment. According to Martindell, the State Constitution shouldn’t be amended to satisfy the needs of one city. Statewide referenda and the amendment of New Jersey’s most basic legal principles should be limited to issues of statewide concern. Martindell argued that if Atlantic City wanted to make a comeback, it should pull itself up by its bootstraps. Let it diversify its economy. Let it seek out light industry and commercial uses other than resort-oriented businesses. The resort wasn’t entitled to a quick fix. It should battle urban decay just as every aging city in the Northeast was battling to do. Speaking at a press conference on the Boardwalk several weeks prior to the referendum, Martindell stated, “I am concerned with the future of Atlantic City. I want the city redeveloped on a solid future, not the dangerous shifting sands of gambling. Plans, real plans, have to be made to attract a diversity of industry and investments in order to create new jobs to solve Atlantic City’s deep-rooted economic and social problems.”

To the resort’s leaders, Martindell’s comments read like something out of a fantasy. They understood their town’s singular purpose. If the resort didn’t have a gimmick to revive vacationers’ interest, all would be lost. Unfortunately, Martindell’s pitch appealed to voters throughout the state, especially those in New Jersey’s decaying urban areas. Many politicians from other cities could see no reason why Atlantic City should be the lone beneficiary of a Constitutional Amendment.

The opposition found the media sympathetic to their views and despite the lack of resources—the pro-gaming effort outspent them 20 to 1—Goldstein, Martindell, and others were able to spread their message without the need of financing. An example of the message sent to the voters by the New Jersey’s media is an editorial of the Vineland Times Journal, which was reprinted in newspapers throughout the state:Once again the public is being conned, though this one must rank as one of the great con jobs of all time. What we’re being asked to believe is that by making it easier for farmers, wage earners, business owners, housewives, and retirees to lose their shirts at the crap table, the roulette wheels, the blackjack games, or slot machines (now, one must fly all the way to Nevada) this will be a stronger, healthier state, a better place in which to live.The big promotion of this colossal swindle comes from Atlantic City, whose politicians assert with a straight face that a century of racism, political and police corruption, exploitation of the poor, prostitution, and general sleaziness all will be reversed by the installation of gambling. Why, the finest folks in the country will all flock to Atlantic City, and Absecon Island will be restored to the ranks of the noble and the pure and well-fed.

Ignoring such vocal opposition, the supporters of gambling squandered the first six months of the campaign. Despite the tinsel and glitter, and the hype and hustle of Atlantic City’s past, it was still a laid-back town. Seventy years of corrupt one-party rule had produced a complacent mentality; whatever the problem, the Republican machine, in partnership with the racketeers and hotel owners, would solve it.

Grassroots-level social activism was nonexistent in Atlantic City. As far as resort voters were concerned, politics was the work of professionals like Kuehnle, Johnson, and Farley. With the disintegration of the Republican political ward system, there was nothing to hold things together. With no one to take charge, Atlantic City couldn’t find its way.

When things finally did get organized in mid-July, it was a feeble effort. A pollster hired by the campaign organization warned that the election would be close, but no one was listening. The initial fund-raising goal of $1 million was never reached; half that amount was spent. A first-rate public relations firm to sell the issue wasn’t retained and, more importantly, a statewide, county-by-county organization was never formed. Steve Perskie, Joe McGahn, and others criss-crossed the state debating Goldstein and the ministers, like a traveling vaudeville show, but there was no follow-up. The audiences who attended the debates received no mailings or phone calls from the supporters of gambling. No doors were knocked on and there was no coordinated effort to get out the vote. The pro-casino forces didn’t establish a single campaign headquarters outside of Atlantic County. Finally, the campaign had no soul, no theme, no rallying cry. There was nothing to grab the voters to make them vote YES.

The referendum failed miserably. It was defeated by a margin of more than 400,000 votes, carrying only two counties, Atlantic and Hudson. The question was crushed everyplace else. It was like a kick in the ass to a tired old whore who had lost her charm. A wave of despair washed over the city. For many area residents it was hard to imagine a future for their town.

There were brave statements of how the resort would have to move onto other ideas, but for many of Atlantic City’s residents, the defeat loomed as the final chapter of their town’s history. Those who could afford to relocate their businesses and homes out of the area were making plans to do just that. It seemed all was lost. In the weeks that followed, a bumper sticker summing up the town’s plight became popular. It read, “Last one off the island, turn out the lights.”

10

A Second Bite at the Apple

It began to rain as she was getting off the bus, and her umbrella was at home. The walk was only two blocks, but her hip slowed her down and by the time she reached city hall she was drenched. Lea Finkler was a transplant from New York City, but everyone knew her and respected her commitment to Atlantic City’s senior population. Hunched over by age yet slender, almost petite, she was a frail, bespectacled, shabbily dressed woman with an ashen complexion and short gray hair. Despite her appearance Lea’s eyes gave her away; she was no one to mess with.

Lea Finkler was a “gray panther” long before the term was coined or senior citizens organized into interest groups. Her contempt for politicians was notorious, and Atlantic City’s elected officials cringed at the thought of confronting her. She had come to the city commission meeting and, as usual, bullied her way onto the agenda demanding to be heard. She was there to complain about street crime. Two days earlier, one of her friends was beaten and robbed outside her apartment house at mid-afternoon by several teenage thugs. Lea was in a rage. “We’re prisoners. It’s been years since we’ve been able to walk the street or stroll the Boardwalk after dark. Now we can’t even leave our homes to buy bread and milk. What are you bums going to do about it?”

They heard her, but no one was listening. They were used to Lea and tuned her out the instant she opened her mouth. When she was finished one of the commissioners asked her to be patient and promised he’d speak with the police. He told her there were no easy answers but that the long-term solution was to rebuild the resort’s economy through casino gambling. A second referendum was being prepared, and after it passed, the streets would be safe for everyone. Rather than hurling insults, she was told to organize her friends to support gambling. Lea was unimpressed and left grumbling in disgust.

For those people serious about rebuilding Atlantic City, there never was a thought of abandoning the quest for casino gambling. While the first referendum was a debacle, it was a valuable learning experience for the pro-casino forces. The months following the 1974 defeat were spent analyzing the campaign, and in a short time most people realized what had gone wrong. Joe McGahn and Steve Perskie had misread the voters’ fears about gambling. They were overly sensitive to the public’s perception of Atlantic City, concerned that singling out the resort as the only community to be permitted gambling would appear to be greedy. Nevertheless, polls taken shortly after the election revealed that was what the voters feared most, namely, the potential of gambling everywhere. The voters had visions of slot machines in drugstores and gas stations in every community and they were turned off to the idea. They wanted gambling restricted to Atlantic City.

Another misconception dealt with the private ownership of casinos. It was thought that by proposing state-owned and -operated casinos, voters would have more confidence that they’d be run honestly and efficiently. But the voters knew better. They didn’t want bureaucrats running casinos and believed the only people who would invest any serious money in Atlantic City were private developers. Thus, by narrowing the focus of their new question to Atlantic City alone, and permitting private development of casinos, it was felt that the resort would be able to face the state’s voters a second time on more favorable terms. But McGahn and Perskie knew these changes weren’t enough.

For several months prior to the 1974 referendum, New Jersey’s clergy went to their pulpits each Sunday and preached against the evils of gambling. The ministers and priests were tough adversaries and their dire warnings of moral decay had a heavy impact, especially among the senior citizens, most of whom went to the polls to oppose casinos.

In a stroke of genius, as clever as anything conjured up by Nucky Johnson, McGahn and Perskie wrote language into their proposal that would not only win the support of senior citizens, but eventually neutralize the churches’ opposition as well. The language of the second referendum required the tax revenues generated from Atlantic City’s new casinos to be earmarked for a special fund. The money would be used exclusively for subsidizing the payment of utility bills and property taxes of New Jersey’s senior citizens and handicapped persons. On the second time around, a vote against casino gambling would be more than a vote against moral decay and special treatment for Atlantic City; it would be a rejection of aid to the elderly and the disabled. The old and the handicapped would be used as a rallying cry in the campaign. Atlantic City couldn’t have anyone better to run interference.

There was a sense of urgency to the second gambling referendum from its inception. It was like nothing else in the Atlantic City’s history. When the pro-casino forces proposed a second run at New Jersey’s voters, long-time residents viewed it as a life or death proposition, and it was. This was their town’s last hope to keep from sinking into oblivion. If Atlantic City failed again, there wouldn’t be a third chance.

Packaging and timing are everything in politics. McGahn and Perskie decided 1976 would be the year to make another pitch to the voters. Presidential elections traditionally draw more people to the polls, and the pro-casino forces were confident that a larger turnout would benefit their cause. Politicians know there is a class of voter who typically abstains from state and local elections, choosing to vote only for national office. This voter is generally uninformed, having no real grasp of most campaign issues, the kind of person who probably didn’t even know about the ’74 Casino Gambling referendum. A well-delivered message to such an unsophisticated group could make a difference in the outcome of the next election. In 1976 this block of voters totaled nearly three-quarters of a million persons. When combined with more than one-quarter million senior citizens and handicapped voters, the pro-casino forces had the basis for a turnaround on the second referendum.

The only other ingredients needed for success were money and a well-engineered campaign. By reframing the issue from government-operated to privately owned casinos, financing was no longer a problem. In the ’74 campaign there were only eight large contributors of $5,000 or more. In 1976 there were 33 such contributors. More importantly was the amount of new money coming from outside of Atlantic City. The total of out-of-town contributions exceeding $100 in the first referendum was a mere $10,150. In the second referendum drive that class of contributors donated more than $518,000. Some 43 percent of the money raised came from out-of-town businesses speculating on what casino gambling could do for them.

The largest single financial source was a little-known firm based in the Bahamas, Resorts International, which contributed more than $250,000. In all, the pro-casino forces more than doubled their campaign fund, from less than $600,000 in 1974 to more than $1.3 million in 1976. With that kind of money available, there would be no difficulty finding a slick promoter to peddle Atlantic City’s new package to the state’s voters.

The search for a professional campaign strategist began in earnest once the legislature approved the final wording of the ballot question in early May. With commitments for the necessary financing assured, a steering committee was appointed. Within a week’s time it evolved into the Committee to Rebuild Atlantic City. There were no dilettantes among the members of “C.R.A.C.,” as it became known. It was a talented group, which quickly became a potent force.

In addition to McGahn and Perskie, some of the people included in this bipartisan alliance were James Cooper, a respected attorney and the president of Atlantic National Bank; Murray Raphel, a former county freeholder and merchandiser par excellence; Charles Reynolds, publisher of the Press and a shrewd and capable person, whose newspaper was the second-largest contributor at nearly $50,000; Mildred Fox, a long-time hotel operator and one of the original proponents of casino gambling; Pat McGahn, the senator’s brother, who had contacts of his own in Democratic circles statewide; Frank Siracusa, an insurance broker who could hold contributors by the ankles and shake loose every last dollar; and finally Hap Farley, who had been shut out of the ’74 campaign.

Hap became involved with C.R.A.C. in an unlikely manner. Steve Perskie reached out to Atlantic County Republican Chairman Howard “Fritz” Haneman, son of Farley’s friend and ally, retired Supreme Court Justice Vincent Haneman. A date and time for a meeting between the three politicians was scheduled by Fritz Haneman. At the last moment, Haneman was ill and, knowing the importance of getting Farley involved in the campaign effort as early as possible, Perskie went to meet with Hap on his own. Farley received Marvin Perskie’s nephew better than Steve Perskie had hoped. “He was most gracious and advised me that we should let him work where he could help the most—behind the scenes, working privately with his contacts throughout the State.” Perskie and C.R.A.C. were only too happy to have Hap’s help. This time around, Farley hosted dozens of private meetings, placed scores of phone calls, and made many one-on-one visits with political leaders of both parties from throughout the state, calling in IOUs he had built up during 34 years in the legislature.

The ’76 effort would be led by a powerful nucleus. Once the key players were assembled, C.R.A.C.’s first job was a national search for someone to manage their campaign. Their choice was right on target.

Sanford Weiner was a modern-day Captain John Young. Like Young, he could sell anything. Rather than pandering to the tourist trade, Weiner made his living packaging candidates and causes. Located in San Francisco, he had been introduced to C.R.A.C. by Pat McGahn, who knew of Weiner through his efforts for Congressman Paul McCloskey of California. McGahn and McCloskey were old Marine buddies. It was Weiner who engineered McCloskey’s upset victory over Congresswoman Shirley Temple Black. Now, rather than destroying a fantasy, Weiner was being called on to create one.

At the time, there were few people equal to Sanford Weiner at manipulating the electorate. In 18 years as a political consultant he had orchestrated 172 campaigns, all but 13 of which were successful. On 54 political referenda his record was perfect. An incessant chain smoker, his speech was rapid but deliberate. Weiner was a brilliant strategist capable of pushing aside generalities and focusing on what it took to get his message across to the masses. Sanford Weiner was the professional needed to tie everything together for C.R.A.C. A reporter who covered Weiner’s role in the 1976 referendum campaign observed:The challenge, when Weiner took it on, was a heavy one: to repeddle a tired and unpopular cause—tainted still further through its image as a loser—and to present it somehow as fresh and palatable. But this is where Sanford Weiner has earned his stripes: in altering attitudes, manipulating appearances, reshaping realities to reflect the positive. He is a master of the science of collective persuasion. His success at it suggests a modern axiom: that the public can be induced to swallow any pill, so long as it is skillfully coated.

Sanford Weiner began his work by getting the lay of the land. He directed a team of volunteers and paid staff workers in compiling a vast amount of knowledge on the entire state, including financial information, demographics, and traditional loyalties among the voting public. From this research he made statistical overlays and ran them through a computer to analyze voting patterns in past New Jersey elections, i.e., what the turnout was and how various areas tended to vote. These facts plus Census Bureau information for individual regions gave him a generalized voting profile of every county and city in the state. Finally, through the use of sophisticated telephone polling techniques he learned the general attitude of the public toward the legalization of gambling. Financed by money from Resorts International, these polls were conducted throughout the campaign up to Election Day, and were relied on in the formulation of a week-by-week campaign strategy.

Weiner had to know what the voters were thinking prior to making his sales pitch. The ordinary person votes his prejudices; an effective campaign is one that appeals to what the voter already believes in, rather than trying to reshape his opinion through educating him. By early summer, weeks before he began his media blitz, Weiner learned that 34 percent of New Jersey’s voters supported the idea of casinos in Atlantic City; 31 percent opposed it, with the remaining 35 percent undecided. The first group would vote YES no matter was type of campaign was waged. The second group was a lost cause and there would be no effort wasted on them. It was the undecided voter who was the target.

Generally, it’s easier to get people to vote against someone or something than for a particular candidate or issue. When it comes to political elections, people are more strongly motivated by negative feelings. The voter who has made up his mind to oppose a person or question is more likely to get to the polls than someone who supports a cause. The only thing pro-casino forces were running “against” was Atlantic City’s poverty, hardly an issue that inspired strong feelings outside of the immediate region. Weiner knew he had to get to the undecided voters before someone else gave them a reason to vote NO. Thus, the appeal couldn’t be made to a negative attitude. If the campaign was to be successful, it had to be based upon a preconceived notion of the electorate strong enough to make the undecided voter go out and vote YES.

Weiner found what he was looking for in his early polling surveys. In reviewing his telephone polls Weiner learned that nearly eight out of 10 New Jersey voters believed that casinos had the potential to generate large amounts of revenue for state government. While the average voter didn’t know just how much revenue gambling would produce, they felt strongly it had to be a lot of money. After all, didn’t Nevada have one of the lowest tax rates in the nation? This was the core attitude upon which to build a sales campaign. The voters already believed gambling could be a positive thing to their wallets by minimizing the taxes they would have to pay to state government. Weiner had a ready-made audience. All he had to do was to bolster the voters’ faith with the right numbers.

One of several consulting firms hired by Weiner to reinforce his strategy was Economic Research Associates of Washington, D.C. Their study projected the economic impact casinos would have on Atlantic City. It didn’t matter that the figures could possibly have been different—they were good ones, and Weiner ran with them. According to the study, were gambling approved, the first five years would see $844 million on renovation and new construction in the resort, 21,000 permanent new jobs, 19,000 construction-related positions, and $400 million new wages. Equally important was the estimate that gambling would generate $17.7 million for senior citizens and the disabled by 1980. Having the numbers he wanted, Weiner proceeded to weave a wonderful tale: With the approval of casino gambling, Atlantic City would be reborn and the state treasury would overflow with money for the aged and the handicapped. The campaign was off and running.

By mid-summer Weiner moved into high gear, and C.R.A.C. was right in step. When the national political parties held their presidential nominating conventions, the resort’s politicians seized on the opportunity to court New Jersey’s power brokers. A contingent screened and prepped by C.R.A.C. was sent to each convention. There was a series of lavish receptions sponsored by Resorts International where the state’s leading politicians were stroked. The message delivered to Democrats and Republicans alike was the tack Hap Farley had used for years: “I need your support, but if you can’t help, whatever you do, please don’t hurt me.” Typifying the gains derived from such contacts was an exchange for benefit of the media between Pat McGahn and State Senator Anne Martindell. McGahn: “She said she’s made her last speech against casinos.” Martindell: “I didn’t say that.” “Then you said you would be too busy working for Jimmy Carter to campaign against it.” “That’s it.”

The state’s political leaders weren’t the only ones wooed by C.R.A.C. One of Weiner’s criticisms of the 1974 failure was that it was an elitist campaign. He decided to create a troupe of more than 100 average citizen volunteers from every walk of life and train them in public speaking. They were briefed on the campaign statistics, which Weiner wanted them to use in their talks to ensure every audience got the same message. Engagements were made for these people throughout the state to speak to groups of their peers: construction workers spoke to construction workers; teachers to teachers; doctors to doctors; accountants to accountants, and so on. In addition to getting out the message by ordinary people on common terms, Weiner had regional campaign headquarters established with primary emphasis on the populace in urban areas of northern New Jersey. Paid campaign workers, assisted by busloads of Atlantic City residents, hit the streets giving out literature and recruiting supporters. In many instances they had the help of the local political organizations who made casino gambling part of their campaigns. Weiner’s troops were on the move.

As Election Day approached, Weiner launched a media blitz that surpassed anything ever done in support of a referendum in New Jersey. From mid-October to November 2, C.R.A.C. bought more than $750,000 worth of advertising. High-powered commercials were placed on the area television networks, and airtime was bought on nearly every local radio station. During the last two weeks of the campaign, Weiner prepared 14 different television commercials and scheduled more than 1,200 spots on the Philadelphia and New York stations that covered New Jersey. As for radio, during the final 14 days there were nearly 4,500 ads on 70 different stations. In a typical radio spot a sincere voice described the plight of a 72-year-old woman. “Although old and alone, she can still be helped if only you vote YES for casino gambling in Atlantic City.” The announcer explained how the money raised by casinos would help this poor old woman with her rent and utility bills. Everyone had an aging mother, grandmother, aunt, or neighbor. It would cost the voter nothing to lend her a hand with her utility bills and prescriptions. It was Atlantic City marketing at its best.

In addition to the electronic media there were thousands of billboards, posters, and bumper stickers saturating the state’s highways and shopping centers. The main pitch was to the voters’ pocket-book—what casinos in Atlantic City will do for people all over New Jersey. The campaign slogan was “Help Yourself—Casinos Yes.” The telephone polling continued in order to gauge the campaign’s impact. Where the results showed a large percentage of undecided voters, television and radio spots were increased to saturation levels and campaign workers were sent door-to-door to distribute C.R.A.C. propaganda.

As a final measure of insurance, $170,000 in “street money”—the amount reported—was paid out on Election Day. Street money is a tradition in New Jersey politics; without it, voters in some areas don’t get to the polls. In many neighborhoods it takes paid Election Day workers to knock on doors, drag people out of their homes, drive them to the polls and, when necessary, buy them lunch, give them a bottle, or slip them a few dollars. C.R.A.C. saw to it that there was enough money on the streets of every major city in the state to guarantee that when these voters finally did get to the polls, they pulled the right lever.

Sanford Weiner left nothing to chance. By the end of the campaign, New Jersey’s electorate had been massaged to vote for the casinos. The election was a mere formality. The referendum was approved by more than 350,000 votes. Several days later Weiner returned to San Francisco. In less than four months he had played a major role in reversing Atlantic City’s fortunes.

In the years to follow there would be many winners in casino gambling. In the short term, the biggest winner was the one that had gambled the most to finance Weiner’s efforts—Resorts International.

There’s a lot to be said for being first. From the start of the referendum campaign there was never a doubt Resorts International would own the first casino to open its doors for business. What no one could foresee was the dominant role this newcomer would play in the early years of casino gambling. Not since Jonathan Pitney and his Camden-Atlantic Land Company had there been anyone with the opportunity to reap the type of profits realized by Resorts International. Ironically, Resort International’s beginnings were as foreign to casino gambling as Pitney’s were to the founding of a beach village.

The story of Resorts International begins with a family named Crosby and a company known as Mary Carter Paint. John F. Crosby was a businessman-lawyer who had served as Connecticut’s attorney general and as a deputy attorney general in the administration of President Woodrow Wilson. Crosby had four sons: One was a real estate developer, another a plastic surgeon, the third a convicted felon, and the last one a stockbroker. The Crosbys got involved in the business world through the Schaefer Manufacturing Company, a foundry business in Wisconsin. In 1955 the Crosbys purchased Schaefer and changed the name to Crosby-Miller. Several years later, Crosby-Miller, with the assistance of financing from an investment group headed by former New York Governor Thomas E. Dewey, purchased the Mary Carter Paint Company. The Crosby son behind this move was James Crosby, the stockbroker.

James Crosby was born in Long Island, New York, in 1928. Educated in prep schools and a graduate of Georgetown University, Jim Crosby’s first position was a brief stint with the management of a paint company. From there he moved to a New York City brokerage firm, buying and selling securities. Eight years later, Crosby went to work with Gustave Ring, a Washington, D.C. financier. It was while working with Ring that Crosby became interested in a New Jersey-based firm, Mary Carter Paint.

The thing most noteworthy about Mary Carter wasn’t its paint—it was mediocre—but rather its advertising techniques. The company engaged in a merchandising program in which it offered a second can of paint for every can purchased, advertising, “Buy one—get one free.” From the start, the company’s sales pitch was criticized by consumer groups as deliberately misleading. The Federal Trade Commission agreed and in 1955 filed a complaint, which eventually forced Mary Carter Paint to halt its novel approach to selling. Despite the notoriety, Crosby viewed Mary Carter as a good investment and urged his family to buy control of the company.

By 1960 the character of the corporation that would eventually become Resorts International was taking shape. Crosby recruited Harvard Business School graduate Irving “Jack” Davis to help manage things. Together, they headed a tightly knit group of family and friends who ran the business. Crosby’s determination to keep things a family affair was shown by the structure of the stock offered when they decided to go public. Two classes of stock were created: “A” and “B” shares. There were many more A than B; however, a B share had 100 times the voting power of an A share. Nearly all of the B shares were in the hands of Crosby’s inner circle. While outside investors were welcomed, real power in the corporation was kept beyond their reach. Because of this arrangement, which they continued as Resorts International, the stock was barred from trading on the prestigious New York Stock Exchange and was sold only on the American Stock Exchange.

With the resources obtained from their new shareholders, Mary Carter Paint reached out for more customers. By the early 1960s, it owned more than 70 stores and had franchised nearly 200 outlets. Despite the success in expanding Mary Carter’s operation, its share of the paint market was eroding. There were too many established competitors and the profit margin was slim. Crosby knew he’d have to diversify Mary Carter’s operation if his family’s business interests were to survive. Crosby and Davis found an opportunity in a world far removed from the American paint industry—the Caribbean.

When Fidel Castro deposed Cuban dictator Fulgencio Batista, he put an end to capitalism in every form. With his revolution, Castro drove Batista’s friend, Meyer Lansky, from the island. Under Lansky’s direction, organized crime had been making a fortune through operating gambling casinos in Cuba, catering to American and European tourists. With Batista gone, Meyer Lansky and company needed a new island to do business. They looked to the Bahamas.

Lansky’s people found an ally in Sir Stafford Sands, the most powerful man in the Bahamas. In short order, several licenses for casinos were issued in the early 1960s to persons linked to Meyer Lansky. One of those people was convicted stock swindler Wallace Groves. When Groves opened his casino in 1964 the key positions were filled by people who had worked in Lansky’s casinos in Cuba. At about the same time Lansky’s henchmen were setting up shop, there was a legitimate investor trying, without success, to obtain a casino license. He was A&P heir Huntington Hartford. Groves, Hartford, and Mary Carter—you couldn’t find a more unlikely combination.

Crosby was introduced to the Bahamas as a place for real estate speculation in 1962 by a Miami attorney, Richard Olsen. That year, Mary Carter Paint made several purchases on Grand Bahama Island. Three years later, Olsen approached Crosby again. This time it was with Huntington Hartford’s failed resort development, Paradise Island.

Beginning in the late 1950s, Huntington Hartford had poured nearly $30 million of his personal wealth into what had previously been known as Hog Island. Hartford had done more than change the name; he had built a luxurious hotel, restaurant, golf course, tennis courts, swimming pools, and exotic terraced gardens. But without a gambling license, Hartford’s investment was doomed. After several rejected applications, he got word from the Bahamian government that in order to obtain a license he needed a suitable partner. Hartford was friendly with Richard Olsen and told him of his troubles with Sands. Olsen recalled Crosby’s interest in the Bahamas and made the contact on behalf of Hartford.

In February 1965, Crosby and company lawyer Charles Murphy met with Hartford in New York City. Hartford’s personality made the negotiations difficult, but they eventually came to an understanding. Before Crosby would put any money into Paradise Island, he needed assurances he’d receive a gambling license. Crosby went directly to Stafford Sands, who gave him the same routine he had given Hartford, namely, that a license could be obtained but that Crosby needed a suitable partner. This time Sands was more direct and told Crosby his partner would have to be Wallace Groves. Crosby agreed and after several months of negotiations in early 1966, the Mary Carter-Groves-Hartford partnership was formed.

It was necessary to create several new companies, and Stafford Sands was retained as the partnership’s lawyer. For his services, Sands was paid $250,000 by Mary Carter Paint. The arrangement engineered by Stafford Sands called for Mary Carter Paint to purchase a 75 percent interest in Paradise Island for the sum of $12.5 million. The remaining 25 percent would be retained by Hartford. As for the all-important casino, it would be operated by Groves who would own four-ninths of the business, with Crosby’s company controlling the rest. Mary Carter Paint was in the gambling business.

The machinations with Mary Carter, Groves, and Hartford didn’t go unnoticed by the United States Department of Justice. The federal government had dispatched a team of investigators to the Bahamas looking for investments in casino gambling by American organized crime families. Justice Department attorney Robert Peloquin—who later joined forces with Intertel, a security firm owned by Resorts International—reported to the government on the casino operation in which Mary Carter Paint was involved. In a memorandum that would later prove embarrassing, Peloquin detailed the arrangements made between the parties and concluded, “The atmosphere seems ripe for a Lansky skim.”

The Mary Carter Paint-Wallace Groves partnership didn’t last long. In early 1967 articles published in the Saturday Evening Post and Life Magazine exposed the corruption in the Bahamas casino licensing procedures. The articles focused on the criminal associations of people involved in the Bahamian casino industry, in particular Wallace Groves. Crosby was worried by the publicity and immediately obtained approval from the Bahamian government to purchase Grove’s interest. While Groves was gone, the casino staff he had hired, several with links to Meyer Lansky, remained in place running things.

As the paint business continued to dwindle and the gambling casino on Paradise Island prospered, Crosby finally left Mary Carter Paint behind. In 1968 the entire paint operation was sold and Resorts International was born. It wasn’t long before Crosby began looking elsewhere to establish new resort hotels and to expand his gambling operation. Inquiries were made around the world without success, and for the next several years Resorts International was confined to the Bahamas. But when the second gambling referendum allowing private investors surfaced in New Jersey, Crosby took a look at Atlantic City.

The city that Jim Crosby found waiting for him in the winter of 1976 was a bleak place, but the locals still knew how to roll out the carpet. When Crosby and his key associates toured Atlantic City for the first time, they were welcomed like conquering heroes. Arrangements were made for the contingent from the Bahamas to ride in a caravan of limousines escorted by local police. No one was sure why the locals were making such a fuss. What mattered was that the resort had an out-of-towner with money.

The squalor and desolation that greeted Crosby was a sobering experience. Within sight of the famed Boardwalk, there were entire city blocks that had been leveled with no signs of rebuilding—acres and acres of trash and rubble. There were hundreds of burned-out buildings and scores of rundown boardinghouses, occupied by poor, frightened old people. The Boardwalk hotels, which were of prime interest to Crosby, resembled huge abandoned caverns. None of them had turned a profit in years. For most of them, there wasn’t even enough money to knock them down. A person had to be either a visionary or a fool to see an investment prospect in Atlantic City. Crosby may have been a little of each. He decided Atlantic City would be the place for Resorts’ first expansion. Mary Carter Paint was coming back to New Jersey.

Characteristic of moves he made in the past, Crosby didn’t dabble when it came to sinking down roots in Atlantic City. He jumped in feet first. Within a short time, Resorts International signed a contract to purchase the Chalfonte-Haddon Hall, an aging, but still salvageable, 1,000-room hotel on the Boardwalk. Crosby’s company took title to the property prior to the gambling referendum and paid a purchase price of approximately $7 million. They also took an option on a 55-acre Boardwalk-front tract that had been condemned by the city. More important than its investments was Resorts International’s role in the 1976 campaign; C.R.A.C. would never have gotten off the ground but for upfront money contributed by Crosby’s firm.

Immediately following the referendum victory, Resorts International moved to secure its position in Trenton. Crosby hired the right people to guarantee he would be plugged into the state house as it began working on the legislation to regulate gambling. Three of the attorneys representing his interests in Trenton were Patrick McGahn, brother of State Senator Joseph McGahn; Marvin Perskie, uncle of Assemblyman Steven Perskie; and Joel Sterns, chief legal counsel to former Governor Richard Hughes and counsel to “Democrats for Byrne” in Brendan Byrne’s successful gubernatorial campaign.

By the time the legislature had finished its work, Crosby had little to complain about. Worries over tight controls on casino credit, complimentary liquor, hours, and minimum bets never became a reality. Each of these points was important to casino operators. They understood the psychology of gambling and feared tight controls would hurt the house’s take. When the Casino Control Act became law in June 1977, credit for gamblers was easy, drinks for players were permitted free of charge, casinos could operate 18 hours per day on weekdays and 20 hours on weekends, and minimum bets would be dealt with by the newly created Casino Control Commission through regulations that would benefit the casino industry.

There were also proposals talked about in the legislature, which Resorts International fought from becoming law. One early suggestion was that no casino should be permitted to open until a minimum of three casinos were ready for operation. Crosby’s lobbyists made sure this never saw the light of day. However short-lived its monopoly might be, Resorts International wanted to reap the profits from being the first casino to open in Atlantic City. Another provision originally discussed, but left out of the Casino Control Act, was language intended to prevent an Atlantic City casino from maintaining another operation outside of New Jersey. Resorts was permitted to continue with its Paradise Island casino, despite its questionable associations in the Bahamas.

A final issue vital to Resorts International was permission to use an existing hotel, the Chalfonte-Haddon Hall, as the site for a casino, rather than being required to construct a new facility. There were still those who believed the purpose of legalizing gambling was to spur the construction of new hotel facilities, not the renovation of old ones. But in the end, no one, not the legislature, the governor, nor the critics of casino gambling could overlook Resorts’ willingness to gamble on Atlantic City prior to the ’76 referendum. Resorts International would be open long before anyone else. But what Jim Crosby hadn’t bargained for was New Jersey’s bureaucracy.

The investigative agency, the Division of Gaming Enforcement, was created to screen casino applicants and report to the regulatory agency, the Casino Control Commission. From its inception, the Division was handicapped by internal disputes, questions about the competence of its staff, and friction between the Division and the Commission. Most of the investigators hired by the Division were former state troopers who didn’t have the background needed to pursue the questions raised by Crosby and Resorts’ financial practices. The skills needed weren’t those of a police officer, but rather the experience of an FBI or IRS agent. Working with these police officers was a collection of accountants, lawyers, and administrative personnel all equally inexperienced in the intricacies of a gambling operation. As the months wore on and the Division’s bureaucrats sank their teeth into the application process, it seemed their review would go on forever.

By early 1978, some 16 months after the voters had said YES, Resorts was still being investigated. Jim Crosby was upset. The length of the investigation began to draw criticism from the politicians and the media. To the average person, the delay in getting casinos going was bureaucratic foot-dragging. The fact that Resorts International was a complicated financial entity with a long history, various subsidiaries, and some shady relationships in the past meant nothing. The pressure mounted and Resorts’ lawyers persuaded the legislature that it had to act. The plan, for which Joel Sterns is given credit, was to give Resorts a temporary license to operate a casino.

Crosby’s company was given a six-month permit, renewable for 90 days, while the investigation continued. Having succeeded in making an end-run on the review process, Resorts opened its doors on May 28, 1978, to thousands of customers, literally waiting in line. Within several months time, Resorts International emerged as the most profitable casino in the world. In 220 days of business in 1978, Resorts had gross winnings exceeding $134 million. In 1979, its first full year of operation, Resorts grossed an incredible $232 million.

During the time Resorts was the only game in town, customer demand was phenomenal. Hordes of eager patrons waited in line for hours, in all kinds of weather, for the privilege of gambling. It was a sight to see. Resorts had no marketing problems. Its only concerns were logistical: crowd control, security, staffing, clean up, and counting money.

Resorts International had pulled off one of the biggest business coups ever. It was beyond anything Crosby had imagined.

While the temporary license proved to be a boon to Resorts, it was a nightmare to the Division. Under the Casino Control Act, the Anglo-Saxon tradition of presuming a person innocent until proven guilty is reversed. In order for Resorts’ application to be approved, it was supposed to show it was worthy of a license, namely, that it was free from any wrongful conduct or associations that might lessen the public’s confidence in its ability to run a casino honestly. However, once the temporary license was granted, the burden of proof was effectively reversed. It was thrown back on the Division to show Resorts was unfit.

The Division’s report was submitted to the Commission in December 1978, more than six months after the public had begun gambling in Atlantic City’s first casino. To the dismay of the procasino forces and the outrage of Jim Crosby, the Division recommended denial of a permanent license. In its report, the Division cited 17 “exceptions”—investigative findings—comprising the basis for its decision to oppose the granting of a license to Resorts International. A majority of the 17 exceptions dealt with Mary Carter Paint’s and Resorts International’s activities in the Bahamas. The report detailed Resorts dealings with Wallace Groves and the payments to Bahamian government strong man, Sir Stafford Sands. The Division charged that in establishing the Paradise Island Casino, Crosby’s firm had secured financing through persons of unsuitable character, including several whose licenses as stockbrokers had been revoked for manipulating the stock of Mary Carter Paint. There were others who had been disciplined for violating criminal banking laws.

The Division claimed that in operating Paradise Island, Resorts had continued its association with people linked to the underworld after informing the Bahamian government it had ended such relationships. The report accused Resorts of maintaining an unrecorded cash fund from which it made payments to government officials in the Bahamas in exchange for what Resorts described as “goodwill” treatment. Finally, the Division was critical of Resorts’s accounting and internal controls for both the Paradise Island and the “temporary” Atlantic City casino.

The report complained that the procedures used prevented an accurate accounting of the amount of cash flowing through the gambling operations. The Division noted that these practices had been criticized by Resorts’ own security agency, Intertel, as including procedures that create a “wide open area for theft” in the casino. The Division argued that by continuing these practices, after warnings from Intertel, Resorts’ management wasn’t fit to be licensed. Crosby and his attorneys responded to the Division’s charges by demanding an immediate hearing. They claimed there was nothing new in the report and it could all be explained. Commission Chairman Joseph Lordi set January 8, 1979, as the date on which hearings would begin. When the hearing began, Resorts was represented by Newark attorney Raymond Brown.

At the time, Ray Brown was New Jersey’s pre-eminent criminal trial attorney. A tall, thin, light-skinned black man in his mid-60s with a gray mustache, Brown was an unassuming figure. Usually attired in baggy suits and scuffed up shoes, his looks were deceiving. As an attorney he was a tiger and dominated every courtroom he entered. As a tactician, he was unsurpassed. Since the burden of proof lay with Brown’s client to show it was worthy of a license, Resorts had the chance to respond to the Division’s report prior to the state putting on its case. Rather than tackling the 17 exceptions head-on from the start, Ray Brown began his case by calling a list of witnesses whose testimony had nothing to do with the Division’s charges. Brown asked his witnesses questions about such things as banquet facilities, meeting rooms, parking spaces, and specifics on the hotel’s wiring, plumbing, ventilation, and numerous details on the renovation work at Resorts’ hotel.

Brown’s strategy was calculated to lull the Commission and bore the media away from the hearings. It worked. At one point, G. Michael Brown, the deputy attorney general handling the state’s case, offered to dispense with the witnesses and formally agree that the hotel met the Commission’s requirements, but Ray Brown refused and proceeded with his case as planned. As the hearing wore on, Ray Brown eventually produced Jim Crosby and the other key corporate officers. They explained away Resorts’ past associations by testifying that once a person’s unseemly background was brought to management’s attention, the relationship was severed. As for the dealings with the Bahamian government, and the payment of $250,000 to Stafford Sands, that was just the way things were done in the Bahamas.

Ray Brown’s presentation to the Commission consumed nearly six weeks. The Division’s case, presented by Michael Brown, was completed in three days. It was hardly what was expected from reading the Division’s report. Michael Brown called several staff investigators who recounted interviews with individuals who had given them damning information about Resorts. Their statements were a poor substitute for direct testimony from the informants themselves. The Division’s presentation to the Commission never measured up to the advance billing of the 17 exceptions reported by the media prior to the hearing. In the end, the Commission voted unanimously to reject the Division’s recommendation and granted Resorts International a permanent casino license.

CBS News editorialized on the Commission’s decision by giving a mock lecture to future casino applicants:You should know it’s okay to have employees who gained their experience in illegal gambling operations … to have kept employees on the payroll even after you had good reason to suspect they had connections with organized crime … to have given payments to officials of a foreign country where you had a casino, and to have improperly recorded these payments on your company’s books … the trick is to admit these things and say sure, you did them, but that you don’t do them anymore.

Regardless of what the media had to say about Resorts International’s corporate ethics, it was right at home in Atlantic City. Nucky Johnson and Jim Crosby would have gotten along just fine.

Jonathan Pitney

Jonathan Pitney was a country doctor who yearned to be more. He dreamt of fortune and fame through the development of a “beach village” for the wealthy. Photo taken 1840.

Samuel Richards

Samuel Richards was part of South Jersey’s aristocracy in the mid-19th century. He was a mogul in lumber, bog iron, and glass. Richards latched on to Pitney’s plans, and with his wealth and political influence, made the dream a reality, and then some. Photo taken 1884.

Atlantic City “Pre“-Railroad

This was the virgin landscape out of which Pitney and Richards carved their beach village. Photo taken 1850.

Camden-Atlantic Railroad

The first train station built in 1854.

The Petrel

One of the early trains crossing the bridge connecting Atlantic City with the mainland. Photo taken 1866.

United States Hotel

Built by the Camden-Atlantic Railroad in 1854. At the time of its construction, its 600+ rooms made it the largest hotel in the country.

Atlantic & Vermont Avenues

View of the early inlet area from atop the Atlantic City Lighthouse in 1866.

Atlantic & Vermont Avenues

The same view, 20 years later, illustrates the impact of Samuel Richards’ second narrow gauge railroad.

Tent City

The second railroad launched a period of growth that lasted nearly 50 years. Each spring of the late 19th century a “Tent City” arose some place in the town. These provided temporary housing for hundreds of craftsmen and laborers needed to build Atlantic City. Photo taken 1912.

The Boardwalk

The early years, circa 1875.

The Boardwalk

Construction of the first permanent structure with the walk raised above the beach, 1884.

The Boardwalk

Erection of the first steel-supported Boardwalk, 1896.

“Captain” John Young

John Young was Atlantic City’s answer to P.T. Barnum. He made a fortune off nickels and dimes and dazzled patrons with his “deep sea net haul.” Photo taken 1891.

Hauling the Net

John Young’s “creatures of the deep” left his customers gaping and gave them something to talk about back home. Photo circa 1910.

Young’s Million Dollar Pier

It was a gingerbread castle that offered everything from popcorn and tutti-frutti to dancing girls and sea monsters. Photo circa 1905.

No. 1 Atlantic Ocean

John Young’s home at the seaward end of the Million Dollar Pier. Young and his pal Thomas Edison spent many afternoons fishing out the window. Photo circa 1910.

John Young Entertaining President Taft

Young loved to entertain at No. 1 Atlantic Ocean. This dinner honored President Taft and members of his cabinet. Photo taken 1910.

Hotel Windsor

This was the site of the first walkout/protest by African-American workers. It failed miserably. Photo circa 1890.

Ready to Serve

This group photo is typical of Atlantic City’s hotel work force, which was comprised of more than 95 percent African-American workers. Photo by Fred Hess; donated by Robert Gross, circa 1920.

The Cakewalk

This was a contest for Black participants only. The best dancing couple received a cake. Photo circa 1910.

Colored Excursion Days

At the end of each summer, African-Americans from throughout the Northeast region frequented Atlantic City visiting relatives and friends working in the hotel industry. Photo taken 1886.

Castles by the Sea

The hotels along the Boardwalk were grand, but their rooms were rarely sold out, running a fairly high vacancy rate. Photo circa 1930.

Boardinghouses

Built side-by-side, beginning the first block inland from the Boardwalk, these cottages/guest houses/hotels, i.e., boardinghouses, were the backbone of the town. During the summer season there were few, if any, vacancies in the resort’s boardinghouses. Photo taken 1900.

Louis “the Commodore” Kuehnle

The first “Boss” of the Boardwalk. Despite his hunger for power and money, the Commodore had a vision for his town and led in the creation of the infrastructure needed to make the resort a modern city. Photo circa 1910.

Kuehnle’s Hotel

The Commodore’s hotel was the birthplace of the partnership between the local Republican party and Atlantic City racketeers. Photo circa 1910.

Kuehnle and Friends

The Commodore accompanied by Congressman John Gardner, County Clerk Louis Scott, and Sheriff Smith Johnson. Photo circa 1910.

Alfred M. Heston

Atlantic City’s No. 1 cheerleader. For more than 20 years he published annual handbooks describing a life of enchantment waiting for all who came to the resort. Photo circa 1900.

Enoch “Nucky” Johnson

The master at wearing two hats, Nucky was both the most powerful Republican in New Jersey who could influence the destinies of governors and senators, and a racketeer, respected and trusted by organized crime. Photo circa 1938.

Enoch L. Johnson Benevolent Society

With the help of his supporters, Nucky maintained an elaborate social service program, which provided a safety net for Atlantic City’s working poor. Photo taken 1935.

Birthday Boy

Nucky celebrating his birthday and having one of the many times of his life. Photo taken 1949.

Francis S. “Hap” Farley

Possibly the most powerful legislator in the history of New Jersey. Despite being deeply involved in the workings of a corrupt organization, Hap exercised restraint and is remembered as a master of the Trenton legislative process. Photo taken 1937.

Hap and the Governor

Hap’s agenda always came first. Seen here with Democrat Governor Richard Hughes. Farley had an excellent relationship with Hughes and every governor he worked with. He wielded more power than they did and they knew it. Photo taken 1966.

Greetings from Richard Nixon

Hap was a key supporter of Richard Nixon at the 1968 Convention. Here he proudly waives a telegram announcing Nixon’s commitment to appear at a fundraiser.

11

It’s a New Ballgame

Not even Don Rickles’s raunchiest jokes could get their attention. The dinner honoring casino executive Tony Torcasio had drawn more than 700 people, but hardly anyone was listening to the comedian’s monologue. Atlantic City’s Mayor Michael Matthews was the main topic of conversation at every table, and Rickles’ jokes were lost on the crowd.

During the cocktail hour, word spread that earlier in the evening several FBI agents appeared at city hall with a warrant demanding entry to search the mayor’s office. Long-time Matthews enemy Patrick McGahn repeated gleefully to everyone with whom he spoke, “The little jerk is finally going to get what he deserves.” The people on hand knew immediately this was more than gossip. Many guests left the dinner early to catch the local television coverage on the mayor’s problems. Matthews’ reputation being what it was, everyone assumed the worst and many couldn’t wait to hear the news reports.

Each table had at least one person with a Mike Matthews story—whether philandering with showgirls (Joey Heatherton was a favorite), the betrayal of a supporter, or his drunken foolishness—there were more than enough stories to fill the evening. The only people who didn’t chime in were heavy contributors to Matthews’ campaign. Those who remained sat silent, barely touching their food, numb at the thought that Mayor Mike wouldn’t be around to deliver on their investment. One mumbled softly, in disgust, “Oh shit, now I gotta do business with the nigger,” referring to Matthews’s likely successor, James Usry.

Mike Matthews was like two people, and you could never be sure which one you’d find. Of medium height and slight build, he was a stylish dresser who wore his 52 years well. His looks favored his Italian mother, and many women found him boyishly handsome, his graying hair enhancing his appearance. Matthews liked to party, and his mornings after could be rough. On his better days he could pass for a maitre d’ at a fancy restaurant or the manager of a hotel, but after a long night on the town, he often looked like someone you’d expect to find scrubbing cars at a car wash or frying cheese steaks over a grill in a hoagie shop. Matthews was educated as an accountant, and as an officeholder he used his accounting skills to root out waste in government. He had the potential to be a serious reformer and while serving in county government fought corruption and forced badly needed changes. But he could also be coarse and crude, engaging in a shoving and spitting contest in public with a political opponent. Afterward, he saw nothing wrong with his conduct and wasn’t the least bit embarrassed.

Matthews’s political climb had been quick. In 12 years he moved from city council in the neighboring town of Linwood, to the Atlantic County Board of Freeholders, to the New Jersey Assembly, and then Atlantic City Commissioner, holding both positions at once. His election to the city commission followed several bitter court battles concerning his residency. Although a native of the resort, Matthews had moved out with thousands of others when Atlantic City’s fortunes were on the decline. Following the legalization of gambling, he gained a renewed interest in his town. His political enemies fought his return, but Matthews emerged from the courts as an eligible candidate. Finally in June 1982 after the adoption of a new form of government, which was likewise contested in the courts, Mike Matthews was chosen mayor by less than 200 votes in a run-off election.

Within a short time after his election, Matthews’ political ego burst its seams. He behaved as if there were no limits to his power. Never known for being gracious, Matthews rejected an offer from his opponent, James Usry, to pledge his cooperation publicly by participating in the mayoral inaugural. Matthews refused to share the limelight. The result was another bitter legal contest charging election fraud. Matthews won again, but the lengthy trial divided the community further. It generated daily headlines, but the trial made it impossible for him to work with city council, a majority of whom were Black.

Matthews relished the headlines generated by political infighting and cultivated his image as the maverick—a self-styled champion of the underdog. But beneath this veneer was a person too immature to compromise and so paranoid he was incapable of making a lasting alliance. There was no “inner circle” or continuum of personalities whom he relied on from one campaign to another. He remained aloof from the people who supported him. By the time he was elected mayor, Matthews had used up and discarded several valuable advisors who could have kept him out of trouble. Once in office, he followed his instincts, which led to his ruin.

As a former ally observed, “Mike Matthews was a creep. His independence was really paranoia. He never trusted anyone in politics and nearly everyone who trusted him got screwed sooner or later.” A supporter of social programs for senior citizens, Matthews had charmed thousands of aging voters. They were the mainstay in one election after another, with many of them showing up to work at his campaign headquarters. While the senior citizens licked stamps and made phone calls, he might be found in a back room receiving oral sex from a political groupie young enough to be his daughter.

As mayor, Matthews featured himself as a type of social lion in casino land. He identified with the celebrities who appeared at the casinos and sought them out to pose with him for photos he displayed in his office, and when they were willing, which wasn’t often, for a dinner date or a golf outing. He wanted to be the person everyone invited to the party. Had he been honest and kept to the duties of his job, Matthews had the ability to be a capable mayor. Instead, the number one thing on his agenda was his yearning to become a celebrity. People who knew him think that’s half the reason he fought so hard to become mayor. “Michael loved the glitter of the casinos and once gambling was legalized, he wanted to be top dog in casino city. He was like the firefly who couldn’t resist the flame.”

The affair honoring Tony Torcasio was just the type of gathering Matthews was sure to attend. Seated at the head table with the likes of Joe DiMaggio, Mickey Mantle, and Joe Theisman, throwing barbs back at Don Rickles, it was the sort of evening Matthews lived for. But the FBI disrupted the mayor’s plans that night. Before the Torcasio dinner was over, Mike Matthews was finished as a politician, having been written off by everyone in attendance. In the weeks that followed, the mayor gained notoriety on a scale to match his ego.

An FBI agent, who didn’t even look Italian, came to town posing as a Mafioso and wearing a wire. Within a few short weeks he worked his way into Matthews’ confidence and taped hours of incriminating testimony. The transcript reads like something out of a pulp fiction crime story. Never one for understatement, the mayor ran off at the mouth over dinner at a local Chinese restaurant, The Peking Duck, and gave the Feds all they needed. He buried himself when he accepted a $10,000 bribe in marked bills from the undercover agent. At the time of his indictment a full-length photo of the mayor with handcuffs and shackled ankles appeared in newspapers across the country. Mike Matthews had finally received the celebrity status he craved.

The record presented to the Court revealed an unscrupulous politician who all but put a “For Sale” sign on his office door. As Judge Harold Ackerman stated at the time of sentencing Matthews in December 1984, “You were on the take. Anyone with an eighth grade education could reach that conclusion.” Rather than gracefully resign as mayor, he was removed from office by a recall election. In little more than two years after taking office, Michael Matthews was on his way to federal prison. By Atlantic City’s standards, Michael Matthews’ biggest sin wasn’t that he stole, but that he was so clumsy at doing it. Matthews was worse than corrupt—he was inept.

Not everyone was as inept as Mike Matthews. After the adoption of gambling, the real Mafioso came to town, not just cops posing as them. Given the town’s history with gambling and the way things were in the past, there’s little wonder Atlantic City’s new casino industry attracted the mob and its friends. This time around the reception wasn’t so friendly. Brendan Byrne and leaders of the state legislature had meant what they said during the 1976 campaign. The mob wasn’t welcomed. Resorts International got a break, but would-be casino operators who followed them were scrutinized much closer. An example is the Perlmans.

Clifford and Stuart Perlman were no strangers to Atlantic City. Natives of Philadelphia, they knew the resort wasn’t the “World’s Playground,” but rather the place where Philadelphians went to let it all hang out. The Perlmans got their first taste of business on the Boardwalk selling junk to visitors. A couple of decades later, they returned, lured by casino gambling. During the intervening years they had made a fortune in Las Vegas. Upon their return to Atlantic City they were hailed as marketing geniuses. They set the standard for a first-class casino resort, with Caesar’s Palace the best-known casino in the world. They were leaders in the casino industry and viewed as natural players in the new Atlantic City.

Shortly after the adoption of the ’76 referendum the Perlmans began looking seriously at Atlantic City. Before Resorts International opened its doors, Caesar’s signed a deal to lease the Howard Johnson’s Regency, a leading local hotel. That a glitzed-up chain motor lodge was one of the city’s better hotels was proof of how badly the resort needed casino gambling. The Perlmans let the world know the Boardwalk Regency was just the beginning—a project that would allow them to open as quickly as possible. After the Boardwalk Regency started raking in cash, the Perlmans planned to reproduce their Las Vegas magic and build a Caesar’s Palace in Atlantic City. Caesar’s and the Perlmans were the type of casino operators Atlantic City wanted. But they had another side, one that had snuggled up to the mob for years. It began with hot dogs.

In 1966, Clifford convinced Stuart to invest nearly every penny they had in a Las Vegas restaurant called Lum’s. Stuart hoped it would be a fancy place but found it was a small storefront. Unlike the nearby Forge Restaurant, which was one of Meyer Lansky’s favorite spots, Lum’s was a tiny place that specialized in hot dogs. These weren’t your average wieners though. They were boiled in beer and served with sherry-flavored sauerkraut. But Stuart didn’t share his brother’s taste. “We went and bought a couple of hot dogs and then we went outside because I didn’t want to eat in there.” The Perlmans would later claim they knew nothing of the Forge Restaurant’s infamous reputation and its notorious patron who held court there, but events convinced people otherwise.

In 1969, Clifford led his brother into another deal, more grand than hot dogs. It was a major turning point in their careers together. The Perlmans, through Lum’s, made an offer to buy Caesar’s Palace, one of the swankiest casinos in Las Vegas, but widely known to have been built and owned by the mob. When the Perlmans took over, all they changed was the locks, leaving most of the management team in place. Caesar’s managers had a strong reputation around town, and the Perlmans saw no need to check into their backgrounds. The Caesar’s team included Jerome Zarowitz as director of casino operations. The Perlmans knew Zarowitz had a criminal record and at some point learned he had participated in the so-called Little Appalachia meeting of mob figures in Palm Springs in 1965. While the Nevada gaming regulators were concerned about Zarowitz’s suitability to run a casino, they never required him to be licensed. The Perlmans kept Zarowitz on the payroll from September 1969 through the following April. Zarowitz’s name didn’t appear as an owner, but when the Perlmans bought Caesar’s Palace, $3.5 million of the $60 million purchase price went to him.

Shortly after the purchase of Caesar’s Palace, Alvin Malnik, who had ties to the mob, approached Melvin Chasens—then president of the new Caesar’s World, Inc., nee Lum’s—with an offer to sell Sky Lake North, a country club and condominium development in Dade County, Florida. The offer was rejected, but Malnik returned less than a year later. This time he made the deal too good to pass up: no money down, pay for the purchase from the sale of the condominiums, no payments on a second mortgage for three years, and interest only on a first mortgage for two years. During negotiations, Clifford Perlman and other Caesar’s officials learned more about Malnik and his partner, Samuel Cohen. A book about mob financier Meyer Lansky identified Malnik as a close associate. As for Cohen, he had a criminal record for violation of the Commodity Exchange Act. But that didn’t prevent Caesar’s from dealing with Malnik. The Perlmans wanted Sky Lake and were willing to go ahead despite Malnik’s and Cohen’s reputations.

At the Perlmans’ prompting, Caesar’s directors approved the Sky Lake deal in July 1971 without being told that Cohen had been indicted four months earlier in a massive skimming operation at the Flamingo Casino. The Flamingo was directly across the street from Caesar’s Palace and the case drew intense publicity. The Perlmans knew Cohen was under indictment but never told Caesar’s directors, nor did they tell them that a co-defendant with Cohen was none other than Meyer Lansky. “Had this fact been disclosed at the meeting, it might well have brought the Lansky connection into sharper focus. The media allegations about Mr. Malnik and Mr. Cohen, then thought to be baseless, might not have been so readily dismissed.” Suggestions by Caesar’s legal counsel to seek advice from the U.S. Justice Department before dealing with Malnik and Cohen were also rejected. With the purchase of Sky Lake, Clifford and Stuart became increasingly involved with the mob. They already were in debt to the Teamsters Pension Fund—notoriously corrupt and controlled by the mob—from Lum’s purchase of Caesar’s. When they bought Sky Lake, they went further into debt with the same pension fund that had held the underlying mortgage for Malnik and Cohen.

The Perlmans were warned by Nevada regulators about dealing with Malnik and Cohen following a 1972 deal with Malnik and two of Cohen’s sons for a Florida condominium project. A second warning came in 1975, prior to a deal with sons of the two men. This time, in order to raise cash, the Perlmans sold their honeymoon resorts in Pennsylvania’s Pocono Mountains to Malnik and Samuel Cohen’s sons and then leased the property back from the pair. In addition to warnings from Nevada gaming regulators, the company’s security chief told the Perlmans that Malnik was tied to the mob. He also expressed concern that a number of Teamsters Union officials with ties to the mob had received free memberships at the Sky Lake Country Club.

This was the résumé the Perlmans brought with them when they came to Atlantic City. It proved to be fatal. At the time Caesar’s received its temporary license, the Division of Gaming forced the Perlmans to take a leave of absence pending a hearing before the Casino Control Commission. In a report to the commission, the Division concluded, “As long as it maintains a relationship with Alvin Malnik and Samuel Cohen, we do not consider Caesar’s World suitable for licensure.” When the Boardwalk Regency opened its doors in June 1979, Caesar’s agreed to “make its best efforts to terminate all of its existing relationships with Alvin I. Malnik, Samuel E. Cohen, or members of their existing families.” But it wasn’t until 16 months later, October 1980, after the commission had completed its hearing on the firm’s application, that Caesar’s finally distanced itself from Malnik and Cohen.

Unable to buy out Malnik and Cohen, Caesar’s agreed to establish trusts to take over the firm’s leases in the Pocono Mountains honeymoon resorts and its Florida country club. The trusts purchased bonds to generate cash to make the lease payments. Then there would be no direct dealings between Caesar’s and Malnik and the Cohens. The company also agreed to prepay the balance of a $4.8 million mortgage it owed to Malnik and Cohen. But it was too little, too late. Less than a week later, the commission ruled the Perlman brothers were unfit to be licensed. The commissioners said their repeated dealings with Malnik and Cohen made them fear “these dealings may not have been isolated transactions.” The commission found that “while it may be true that Mr. Malnik and Mr. Cohen were not literally in control of the casino, their financial arrangements provided them with an obvious opportunity to exercise economic leverage against Caesar’s World … Thus, Mr. (Clifford) Perlman in a very real sense delivered his company into the hands of Mr. Malnik, Samuel Cohen, and Mr. Cohen’s sons.”

Both Perlmans were denied licenses and forced to leave the company. Their appeal to the State Supreme Court was unsuccessful despite representation by Irving Younger, one of America’s finest legal minds. While they were relicensed in Nevada and obtained a federal license to run an airline, Clifford and Stuart regretted their return to Atlantic City. After all the publicity surrounding their license denial, they could never escape the stigma attached from their dealings with the mob. And they weren’t alone. The same fate befell William T. O’Donnell, president and chairman of Bally Manufacturing Corporation.

The Division of Gaming believed O’Donnell, like the Perlmans, had too many ties to the mob. But this time, the ties led to New Jersey. Bally Manufacturing Corporation was a giant in the slot machine, pinball, and jukebox business. It dominated the slot market, having a stranglehold on a number of Nevada casinos. While the slot machine business was profitable, O’Donnell tired of making machines for others. He wanted slot machines of his own and decided Atlantic City was the place to be. He entered the market by acquiring a long-term lease for an aging hotel on the Boardwalk.

The Marlborough-Blenheim was one of the few remaining palatial Boardwalk hotels. The marriage of two grand old buildings—the quaint Marlborough, a wood frame hotel with deep red shingles and a slate roof, built in the Queen Anne style, and the Moorish-style Blenheim, a poured-concrete sand castle—the Marlborough-Blenheim was an architectural gem. Unfortunately, the aging hotel wasn’t adaptable for use as a casino and had to be demolished. O’Donnell and Bally’s then bought the neighboring Dennis Hotel and combined the two sites. The Dennis was gutted and renovated to provide the required 500 hotel rooms, while new construction on the site of the Marlborough-Blenheim housed the casino, restaurants, and convention space. Upon completion it became Bally’s Park Place Casino Hotel.

While Bally’s main base of operations was Chicago, O’Donnell was no stranger to New Jersey. The company’s biggest distributor of pinball machines and amusement games was based in New Jersey. And that distributor was owned, in part, by one of the state’s most notorious mobsters, Gerardo Catena. A well-known racketeer and underboss in the Genovese crime family, it was Catena who ran the family business when Genovese went to prison on federal drug charges. The Division of Gaming received evidence suggesting that during the 1960s some of the funds skimmed from Las Vegas casinos “were ultimately funneled from Las Vegas to New Jersey, where they were shared by, among others, Gerardo Catena.”

Runyon Sales, a vending machine company in Springfield, New Jersey, was Catena’s front. Runyon was Bally’s largest distributor, with the exclusive for New York, New Jersey, and Connecticut. Through Runyon, Bill O’Donnell had regular contact with Catena’s people, especially Abe Green. O’Donnell had met Catena during a visit to Runyon Sales and had heard rumors about his mob ties. When he asked Green about the roles of both Catena and Joseph “Doc” Stacher in Runyon, he was told they were still partners. At the time of the O’Donnell-Green conversation, Catena was in prison for contempt of court. He had been called to testify before a New Jersey grand jury hearing testimony on organized crime. Despite a grant of immunity, Catena refused to answer the grand jury’s questions and spent five years in prison.

While Catena’s interest in Runyon linked Bally’s to the mob, there were even stronger ties. Bally’s corporate predecessor was Lion Manufacturing Corporation. When Lion’s founder died, the bank managing the estate decided to liquidate the company, creating an opportunity for O’Donnell to buy the company. His efforts to raise money failed, and he turned to Green for help. Together with five other investors, they put together a corporation known as K.O.S. Enterprises, which bought Lion for $1.2 million. Gerardo Catena acquired an interest in the company through Abe Green and Barnet Sugarman. When Sugarman died in 1964, Green and Catena acquired his interest. While Catena’s name was never listed officially as a stockholder, he owned 12.5 percent of the company. In July 1965, O’Donnell bought out Catena for $175,000, in a transaction filtered through Green. In April 1968 K.O.S. became Bally Manufacturing Corporation. O’Donnell and Green each owned 22.2 percent of the company. Sam Klein and Irving Kaye controlled the balance of the stock. Both Klein and Kaye had links with Catena through a Brooklyn-based billiard table company. These acquaintances were heavy baggage for Bill O’Donnell.

Before Bally’s could be licensed to sell slot machines in Las Vegas, Nevada’s regulators demanded O’Donnell and Bally sever ties from Catena, Green, and Kaye. Nevada later forced Sam Klein to leave the company after he had been seen playing golf with Catena in Florida. Even though Bally’s wasn’t supposed to use Klein in any capacity, he was the one who approached Caesar’s Palace President William Weinberger to see if he’d be interested in running Bally’s new casino in Atlantic City. Klein also tried to put together a deal for Bally’s to buy the Howard Johnson’s Regency Hotel. While the deal never went through—the property was bought by the Perlmans—O’Donnell had promised Klein a “finder’s fee” if it had. Abe Green also kept doing business with Bally’s despite the Nevada Gaming Commission’s ruling.

Green’s son, Irving, formed a company called Coin-Op, which was separate from Runyon and in which his father owned no interest. New Jersey regulators claimed that the younger Green told O’Donnell that the new company was just another name for Runyon. That was true. Bally’s kept receiving purchase orders from Runyon and listed it on service orders, even though the bills went to Coin-Op, whose offices were next to Runyon’s. In late 1977 to ’78, at the time Bally’s was beginning construction of its new casino, Coin-Op physically separated itself from Runyon, but Runyon remained its only customer. And if Coin-Op/Runyon weren’t enough, there was Dino Cellini. O’Donnell had hired him as a slot salesman despite the fact that Cellini had run a casino in Cuba for Meyer Lansky—even more baggage. O’Donnell had to know he’d have big problems being licensed.

Despite his many ties with unsavory people, Bill O’Donnell refused to go quietly. At the hearing on his application, he offered an impressive parade of character witnesses to convince the commission he should be licensed. The witnesses included the former head of the Chicago Strike Force; a retired agent in charge of the FBI’s Chicago office; and a former U.S. Attorney with a record of prosecuting organized crime. Touching every base he called a federal judge, two Jesuit priests, and a half dozen bankers who tried to convince the regulators O’Donnell should be licensed. The commission members were impressed. They found, “He is obviously a man with many fine attributes, including those of kindness, generosity, loyalty, intelligence, and leadership ability.” But it wasn’t enough. The taint of dealing with the mob was too much. Like the Perlmans, O’Donnell was forced to leave Bally’s before the casino could be permanently licensed.

Setbacks with the Perlmans and O’Donnell didn’t discourage the mob. They tried to infiltrate casinos that had already been licensed. Golden Nugget, Inc. was an example.

Golden Nugget Chairman Stephen Wynn represented the new, mob-free Las Vegas, and when he decided to branch out to Atlantic City he was licensed without a hitch. Wynn had visited the resort shortly after the 1976 referendum. He was one of a large number of out-of-town investors who came to town to size things up, but most of them couldn’t see past the burned out buildings and squalor. They went away—Wynn included—believing it was a big joke, satisfied that Atlantic City could never compete with Las Vegas.

Shortly after Crosby and friends opened Resorts International, Wynn made a return visit. He was dumbfounded by the thousands of people waiting in line for hours to get onto the casino floor. The line went through the hotel lobby and out the door, spilling onto the Boardwalk where police were needed to control the crowd. Once inside, there was pushing and shoving for seats at the blackjack tables. Wynn was in awe of Resorts’ success. “I had never seen anything like it. It made Caesar’s Palace on New Year’s Eve look like it was closed for lunch.”

The unexpected success of Atlantic City’s first casino was like an explosion. It sent out shock waves that stirred interest across the nation. Not since the coming of the railroad had Absecon Island been such hot property. Within no time, there were dozens of firms beating a path to the resort, investing fortunes and gobbling up real estate.

Steve Wynn is typical of the “moneymen” lured to Atlantic City by the news of Resorts International’s profits. Handsome, charming, articulate, and polished, Wynn is a gambling prodigy. His entire life has been involved with gambling. “Since the day I took my first breath I have been a kid who has never had a meal, a dollar for tuition, or a piece of clothing on my back that didn’t come from gambling.” The son of a bingo parlor manager who grew up in suburban Maryland watching his father gamble away his earnings, Wynn learned an important lesson while still a child. “One thing my father’s gambling did was that it showed me at a very early age that if you wanted to make money in a casino the answer was to own one.”

After graduating from the University of Pennsylvania in 1963 where he was an English major, Wynn went home to Maryland to run his family’s bingo games. Things went well but Wynn was frustrated; bingo was small time and merely whetted his appetite for the real thing—he headed for Las Vegas. Wynn wasn’t there long before he came into contact with a banker named Parry Thomas, who at the time was a major figure in Las Vegas. Thanks to Thomas, when Howard Hughes bought the Frontier Hotel in 1967, Wynn got his first break. At the age of 25 he was named vice-president and put in charge of the slot machine operation. The following year he bought a liquor distributorship, which he owned until 1972 when he parlayed everything for his first big gamble. The $1 million he had raised was used to purchase a casino site from the Hughes organization next to Caesar’s Palace. Wynn knew that Caesar’s didn’t want a competitor right next-door and waited for Caesars to make him an offer; eventually they did—the sale price was $2.5 million.

With the profits from Caesar’s, Wynn bought more than 100,000 shares of stock in the Golden Nugget. Parry Thomas felt the stock was undervalued and told Wynn that if he wanted control of a casino, this was his chance. While the Nugget had a prime location and a popular name, it was poorly managed and had no hotel rooms. Wynn’s stock purchase was enough to gain a seat on the Board of Directors and appointment as executive vice-president. But he wasn’t satisfied; he wanted to be boss, and at the age of 31, made a bold power play. He confronted Golden Nugget President Buck Blaine with proof of mismanagement and stealing by casino employees. Wynn threatened Blaine with a stockholder’s suit, exposing his incompetence, unless he stepped down immediately. Blaine couldn’t take the heat and agreed to exit with a contract as a consultant.

By August 1973, less than a year after his initial stock purchase, Steve Wynn was in charge of the casino. Within a year casino profits skyrocketed from $1.1 million to $4.2 million. By 1977 he completed construction of a 579-room hotel tower, with the casino’s profits soaring to $12 million. Steve Wynn had come a long way from running bingo games.

When Wynn learned of the money being raked in by Resorts International, he decided to fly east again. One look at the lines of people was enough to convince him. He wasted no time looking for a casino site. By the time he left Atlantic City to return to Las Vegas, Wynn had an agreement for a choice piece of real estate. The property chosen was the Strand Motel on the Boardwalk. The Strand was one of the motels built during the ’50s when Atlantic City was trying to capture part of the tourist market traveling in cars. There were a few good seasons but as its novelty wore off, most of the Strand’s rooms were empty. Had Wynn wanted to purchase the site prior to the ’76 referendum, he probably could have acquired it by simply assuming the mortgages against the property; however, by summer 1978, the Atlantic City real estate market was on fire and the sale price was now $8.5 million.

Within months Wynn demolished the Strand and began construction of a tinsel palace that soon became a magnet. Golden Nugget invested nearly $200 million in creating a glittering Victorian hotel casino. With huge murals depicting early 1900s beach scenes, mirrored ceilings and walls, crystal chandeliers, stained glass, marble columns, and gold-colored slot machines, the Golden Nugget was a dazzling, and purposely overstated, piece of architecture (later sold to Bally’s and now the Atlantic City Hilton). It was designed to appeal to the middle-class’s craving for nostalgia and established Wynn’s name in Atlantic City.

Steve Wynn thought he had found a new marketing executive in Mel Harris. He was the person Wynn needed in Atlantic City. They had met during college and Wynn’s wife Elaine had known Harris since high school. The three rekindled their relationship in the early 1980s, and Wynn was so impressed he hired Harris in the summer of 1984 to be vice-president of marketing at a salary of $400,000. Wynn admitted that he thought so highly of Mel Harris he believed Harris might move quickly into the position of chief operating officer, a step below Wynn.

The decision to hire Harris was made with the knowledge that there were some skeletons in his closet. Harris admitted to a “social” relationship with some mob figures. After all, his father “Big Allie” Harris had been one of the biggest bookmakers in the Miami area. In addition, Harris’ first wife was the daughter of Louis Chessler, another Lansky associate who had worked to bring the mob to the casinos in the Bahamas. His security staff was aware of these links, but Wynn concluded that Harris’ social relationships weren’t enough to prevent hiring him. What Wynn didn’t know was that a few months before he was hired, Harris had met with Anthony “Fat Tony” Salerno. Fat Tony was head of the Genovese crime family in New York. In December 1984, a month after Mel Harris was elected to Golden Nugget’s Board of Directors, the Division of Gaming learned of the meetings with Salerno. Harris, who insisted he had nothing to do with the mob, was captured on videotape during an FBI stakeout of Salerno. On at least two occasions, he was seen entering the Palma Boys Social Club in Manhattan where Salerno held court. Harris claimed he only stopped to talk to Salerno about the death of his father. The FBI was skeptical of his explanation because there had been two meetings with Fat Tony, one of which lasted an hour. Learning of Harris’ meetings with Salerno, the Division of Gaming called him in for questioning. When it was over, he reported back to Golden Nugget officials and said the Division’s staff had asked a lot of questions about his contacts with Salerno. That was enough for Steve Wynn. Within days, Harris was gone.

The Harris episode caused Wynn some uncomfortable moments, but he survived it. At the time of its license renewal, Golden Nugget was criticized by the commission Chairman:I must note that the prospect of a person having uncontested access to Anthony Salerno sitting as an officer and director of a casino enterprise is, to say the least, frightening … It is simply unacceptable for a company functioning in this most highly regulated of all industries to place a person of Harris’s known background in its highest operational and policy making echelons based on hit-or-miss investigations and haphazard and conclusory oral reporting to the chairman.

Wynn publicly conceded his company had blundered and admitted that hiring Harris had been an embarrassment to Golden Nugget. Several years later, after Fat Tony’s trial was over, the government revealed how close the mob had come to infiltrating the Golden Nugget. The FBI had managed to bug the Palma Boys Social Club and recorded a number of conversations involving Salerno and his cronies. Those discussions made it clear the mob intended to use Harris to make inroads into the Atlantic City casino industry.

Harris, O’Donnell, and the Perlmans—their stories only begin to tell the tale of a long cast of unscrupulous characters who thought they could cash in on legalized gambling. There were many lesser lights of organized crime that tried to infiltrate the casino industry as vendors in everything from junkets for high rollers to sales of food and beverage supplies. Given Atlantic City’s past and New Jersey’s reputation for corruption, many criminal types assumed the only thing needed for admission was money. They never had a chance. What they hadn’t bargained for was a licensing process akin to a proctology exam. That process was established by the Casino Control Act and the scope it created amplified the tiniest warts.

There’s nothing quite like the Casino Control Act anywhere. As a threshold, every applicant has the burden of proving a negative, namely, that he or she isn’t corrupt and has no ties to corrupt individuals. As William O’Donnell and the Perlmans learned, a person can be guilty by association. An applicant can be so tainted by his ties and acquaintances that he will never be licensed, even if he’s never been charged with a crime and is an asset to his community. Every applicant, whether an individual or corporation, must consent to a background examination that an ordinary, thinking person would find very disturbing. For starters, an applicant waives his rights under the 4th Amendment to the U.S. Constitution, which prohibits unwarranted searches. When you apply for a license in the Atlantic City casino industry, you authorize investigators to inspect, demand production of, and, if necessary, seize any documents or records of any kind, pertaining to any aspect of your past. It’s heavy-handed stuff but has been upheld by the courts. The reason is because a license is a privilege, not a right. If you want the privilege to own or work in a casino, you must agree to subject yourself to scrutiny, which the courts have described as “extraordinary, pervasive, and intensive.”

The architect of the Casino Control Act was Steven Perskie. Perskie was elected to the state assembly on the ticket with Senator Joe McGahn, which unseated Hap Farley in 1971. The adoption of the ’76 Referendum had raised the political ante in Atlantic City. By 1977, Perskie was tired of following Joe McGahn’s lead. He particularly bristled at having to contend with Joe’s brother, Pat, who was the Senator’s alter ego. Farley’s long tenure in the position of state senator had made it the most coveted position in city and county politics. His career still cast a shadow over local politics and was the standard for leadership. In the perception of politicians and the public alike, state senator was where the power was. Perskie wanted it for himself.

Some observers believe Perskie’s clash with McGahn was unnecessary. With his ally Brendan Byrne in the governor’s office, Perskie had all the clout he needed in Trenton to make his mark on any casino legislation. But Steve Perskie wanted to do it as senator, not as an assemblyman, and the McGahns were in his way. With the help of Democrats who feared that Pat McGahn wanted to become another boss, Perskie denied Joe McGahn the party’s nomination. Perskie went on to win an intensely bitter three-way general election (McGahn ran as an Independent) in a campaign, which, at the time, was the most expensive ever waged for a New Jersey legislative seat. Fortunately for Atlantic City and its new casino industry, Perskie’s legislative talents equaled his political ambitions. Working with the governor’s office, Steve Perskie crafted a statute that ensured the mob could never control a casino.

While criminal types would make occasional inroads into related businesses and unions, they never had a prayer at dominating Atlantic City as they had under Kuehnle, Johnson, and Farley. The rigorous standards for admission to Atlantic City’s casino industry greatly reduced the number of eligible applicants and, in the process, spawned a new type of casino management. Additionally, the requirements that applicants for a casino license must post a $200,000 application fee and fund the investigative and licensing process (often resulting in total costs exceeding $1 million), plus guarantee construction of a 500-room hotel, created a situation in which only corporate America would operate casinos in Atlantic City. The demands of the Casino Control Act made it extremely difficult for anyone but a publicly traded corporation to own and operate a casino.

Steven Perskie had raised the bar for admission beyond the reach of the mob. The standards he created ensured that the leaders of Atlantic City’s new industry would be educated, experienced businesspersons. They would have degrees from distinguished universities and hotel management schools. Many would have a masters in Business Administration or degrees in the Law, Hotel Management, or Accounting. The training grounds to be an executive in Atlantic City were now places like the Cornell University Hotel Management School and the University of Pennsylvania Wharton Business School. One graduate of the prestigious Wharton School soon became a major player in the new Atlantic City.

12

The Donald Comes to Town

Donald Trump stood on the bridge of his $30 million yacht, the Trump Princess. Despite gray skies and showers, hundreds of people—politicians, reporters, the paparazzi, and devoted Trump watchers—huddled out of the rain in the waiting area of the Frank Farley Marina. They had come to see the New York City real estate tycoon, turned casino mogul, sail proudly into Absecon Island with his latest toy.

“The Donald” and trophy wife number one, Ivana, beamed their biggest smiles and waived triumphantly as the 282-foot yacht maneuvered slowly into its custom-made slip. Television and news photos later made it appear they were waiving to cheering throngs, but in truth, the rain, together with Trump’s security people, had kept most onlookers far from the vessel. Trump’s people had loaded another ship with reporters and camera crews to record the arrival. The animated gestures were merely photo opportunities. Heavy rains left the pier empty and the planned reception was hastily moved indoors to the Donald’s casino hotel, Trump Castle (now Trump Marina).

The Princess was Trump’s new plaything. It reeked of wretched excess. A floating pleasure palace, it would have made Nucky Johnson green with envy. The six-deck ship had every convenience imaginable, whether sailing the ocean or at anchor in a Mediterranean port. It boasted eight staterooms, six suites, and two master suites. Bathroom vanities were hand-carved from single pieces of onyx and the basins for the sinks were plated in gold. During an $8.5 million renovation, every screw in the public areas was removed, gold plated, and replaced. There were dozens of telephones throughout the ship, supplemented by a satellite link to keep Trump in touch with his empire anywhere on the globe. A pair of high-speed cigarette boats was kept in davits at the stern of the ship to quickly ferry people to shore at ports where the harbor wasn’t deep enough for the Princess. And if the Donald needed to get to shore quickly, the Princess had her own helicopter on the upper deck.

The Princess was conspicuous proof its owner was world-class wealth. Christened Nabila in honor of its original owner’s daughter, the ship had been built for Saudi Arabian arms dealer Adnan Khashoggi, a middleman used by Oliver North in the Iran-Contra scandal. When asked about the rumored secret passageway that enabled Khashoggi to slip from his suite to his paramour’s, crew members would smile silently, feigning ignorance of such things. Girlfriends were expensive, and times got tough for the gunrunner. Over his head in debt, he used the Nabila as collateral for a loan from the Sultan of Brunei. Khashoggi defaulted, and the Sultan took the ship. The yacht was estimated to cost as much as $85 million to build and was heralded as one of the most luxurious vessels in the world. But the Sultan didn’t need another yacht. He had one of his own, which he hardly used. He wanted to unload the Nabila; Trump took it off his hands for $30 million.

Shortly after purchasing his new yacht, Trump was contacted by Khashoggi, who had been a guest at a number of Atlantic City casinos. The arms dealer wanted Trump to remove his daughter’s name from the yacht. Khashoggi didn’t understand the Donald’s ego, which may be the biggest since the Pharaohs of ancient Egypt. For a man who put his name on nearly everything he owned, there was never a doubt he would rename his new toy. Had Khashoggi waited awhile, it wouldn’t have cost him the $1 million Trump demanded to change the yacht’s name. By the time she sailed into Atlantic City, the yacht had become the Trump Princess.

The event was Trump’s coronation as the self-anointed prince of the local casino industry. Inside the ballroom of the Trump Castle, hundreds of locals joined the Donald and his people to mark the occasion. The guest list read like a “Who’s Who” of Atlantic City. Area business leaders, the mayor, members of city council, state legislators, and even a U.S. Congressman were on hand. The crowd was a tribute to Trump’s success at cultivating his image as the billionaire developer whose touch turned everything to gold. He was bringing Atlantic City more than a glitzy yacht, he was increasing the resort’s visibility to a national audience. At the time the Donald came to town, the name Trump was on its way to becoming a legend in the real estate world and an icon in popular American culture. But the Donald is only part of the Trump legend and in truth, the lesser part. His father, Fred Trump, was the stuff of genuine legends. He’s where Donald got his start—standing on Fred’s shoulders. To appreciate the Donald, it’s important to know his roots.

Frederick Christ Trump was born October 11, 1905, in New York City. At the time, the family home was a cold-water flat at 539 East 177th Street in Manhattan. The son of German-born parents, Fred’s father, Frederich, wandered from place to place in search of his fortune. He even went back to Germany to find a wife before returning to America and settling permanently in New York. Unsuccessful as a hotelier and restaurateur, he began a real estate business in the Queens section of New York City. Time proved it to be the beginning of an empire. Frederich died when Fred was 11 and his wife, Elizabeth, struggled to provide for Fred and his brother and sister.

Elizabeth Trump was a seamstress, and Fred went to work shortly after his father’s death. Early in his teens, Fred supplemented the family income working in the booming New York housing industry as a “horse’s helper.” In winter months it was often impossible for horse- and mule-drawn wagons to make it up hilly streets with construction materials to a job site. In an age when there were no child labor laws, contractors hired strong young boys to substitute for horses. Fred carted many heavy loads of building materials up icy slopes to busy carpenters. “I replaced a mule,” he said later. While still a teenager, Fred became a carpenter himself. Studying at Pratt Institute in Brooklyn, he immersed himself in the building trades, learning how to read blueprints and prepare mechanical drawings. He would later say, “I learned how to frame walls more efficiently than other people, how to read a blueprint more accurately and faster. They weren’t huge skills, but they gave me an edge.” He had the edge on his competition his entire career.

Fred was self-employed by age 18. Too young to enter into a contract or even sign checks, Fred’s first company was “Elizabeth Trump and Son.” His initial project was a single-family home in the Woodhaven neighborhood in Queens. From the profits on the sale of that home, he built two more in Queens Village, followed by 19 in Hollis. No need to wander from where his father had begun, the Borough of Queens was where he established himself, building everything from mansions in Jamaica Estates to homes for teachers, firefighters, and merchants in Woodhaven and Queens Village.

As he branched out into Brooklyn and Staten Island, Fred built thousands of units for sale and rental. In July 1938 the Brooklyn Eagle praised Fred Trump as “the Henry Ford of the home-building industry.” By exploiting government financing and tax incentives available after World War II with a skill unequaled by anyone in New York City’s history, Fred amassed a fortune. Throughout the ’50s and ’60s he was dogged by controversy and government inquiries from one development to the next. While there were allegations of bribes and kickbacks, Fred remained unscathed and became the city’s largest landlord. By the time his son, Donald, had completed prep school at the New York Military Academy in Cornwall-on-Hudson and graduated from the Wharton Business School at the University of Pennsylvania in Philadelphia, Fred’s empire comprised nearly 25,000 units, with rental income of more than $50 million annually. And it was his alone—he had no partners.

The enormous equity Fred had built up in his rental properties was irresistible to his son. Donald convinced his father to use that untapped cash to venture where Fred had never gone, across the East River to the island of Manhattan.

The Manhattan real estate market is no place for amateurs. Smart players with equity and good timing can make fortunes in Manhattan but it’s also a graveyard for many would-be real estate barons. Donald Trump had not only his father’s money but also his instincts. From the time he was a child, he had watched and worked with his father whenever he wasn’t in school. He learned much. While still in his 20s, Trump had developed maturity for the real estate game far beyond his years.

Trump’s first opportunity to test his talent in Manhattan came on property owned by the ailing Penn Central Railroad. In 1974, Trump Enterprises secured options to buy several large waterfront parcels along the Hudson River. The timing was critical. Not only was Penn Central in trouble, but New York City was having serious financial and image problems of its own, and there were no other buyers. The purchase price for Penn Central’s land was $62 million, but Trump paid nothing for the option. Better still, the railroad agreed to pay all of Trump’s soft costs for the approvals needed to build a housing project that would contain thousands of units. Tax abatements from the city and long-term, low-interest financing (Fred had close ties to Mayor Abe Beame) assured success of his plans. Another deal where Trump put up little of his own money was the Grand Hyatt. Again, Penn Central was the seller, and this time Trump had a partner in the Hyatt Hotel chain. He agreed to buy the aging Commodore Hotel for $10 million and convinced the city to give him an unprecedented 40-year tax abatement, valued at a minimum of $160 million. When terms of the deal became known to other developers, the city was widely criticized. But Trump was probably the only buyer for the Commodore and, at the time, the only developer willing to gamble on building a new hotel in New York City.

Trump had seized the opportunity created by a city desperate for development. He continued his roll going on to acquire the Bonwit Teller building and the air rights above the adjacent Tiffany’s on Fifth Avenue. There, he built the centerpiece of his Manhattan empire, Trump Tower, a glittering palace housing hundreds of seven-figure condominiums—only in New York. Shortly after that transaction Trump expressed interest in becoming a player in Atlantic City.

Despite the initial success of casino gambling, a mind-set similar to New York’s prevailed in Atlantic City at the time Trump began looking for property—namely, development of any kind was welcomed. It had been so many years since anyone was willing to invest in Atlantic City that for the first 10 to 15 years after the legalization of gambling, any new developer, especially a high-profile real estate tycoon like Trump, was received with open arms. There was so much rebuilding to be done that Donald Trump was embraced immediately. While he was eager to cash in on the Atlantic City boom, Trump had waited too long to get in on the really easy, big money raked in by Resorts, Bally’s, and Caesar’s. During their early years, the first three casinos were virtual money factories. Trump didn’t begin looking seriously for a casino hotel project until early 1980. By that time, there were at least six other casinos under construction and a dozen more on the drawing boards. The lure of a quick return on investments had attracted all types, ranging from established firms like Hilton Hotels and Holiday Inns to stock swindlers and the mob.

Donald Trump’s first casino hotel, the Trump Plaza, was one of those projects that started as a con game. Plans for the casino were first developed by Robert Maheu, an associate of reclusive billionaire Howard Hughes. It had been eight years since he was forced out of Hughes’ Summa Corporation, where he was involved in the company’s extensive Las Vegas casino operations. In 1978 when Resorts International opened, he was president of Houston Complex, Inc., a Las Vegas company that claimed to be in the computer software business. His partner in the venture was Grady Sanders, president of Network One, Inc. Like Steve Wynn, Maheu and Sanders saw gamblers waiting in line to lose their money at Resorts International and they wanted a casino of their own. With a bravado bested only by the likes of Donald Trump, Maheu and Sanders announced they would build a 1,000-room hotel on an undersized Boardwalk lot next to Convention Hall. It would cost more than $100 million.

Maheu’s press release attracted the attention of the Securities and Exchange Commission (SEC). Comments by Maheu and Sanders about their plans had generated intense speculation on Wall Street, and the price of the stock of the two companies shot up. In late August 1978, just days after they signed a lease for the property, the SEC halted trading in the stock for 10 days while it took a closer look. About two weeks after the SEC first intervened, Maheu and Sanders unveiled plans for another project, a $60 million, 600-room casino hotel. “The marching orders have been given and everyone is gung-ho,” Maheu said at a press conference. The announcements continued. Partners were added, leases and financing packages were developed, and construction plans were revised. There were other projects, too. Network One told stockholders earlier in the year that it was developing a “tamper proof” videotaping system that would be sold through 90 distributors and generate $2 million in sales in the first year. A year later, there were no distributors and no sales. The firms also made announcements about a planned satellite cable television network and a two-mile-long roller coaster project in Las Vegas—neither of which ever got off the ground. Then the SEC returned. It charged the two companies had issued “false and misleading statements about the firms which were designed to create the illusion that they were well established, highly regarded Las Vegas firms engaged in diverse activities.” Instead, the two were nothing but “defunct publicly traded shell corporations.”

With financing next to impossible, Maheu and Sanders recruited partners Midland Resources and developers Robert Lifton and Howard Weingrow to help salvage the project. But Maheu and Sanders didn’t have the resources to continue and control of the venture was turned over to the new partners. Plans again were revised, but they were unable to secure funding for what they dubbed the “Atlantic Plaza Hotel Casino.” That’s when Trump arrived. The Donald reached a deal to lease the land from the partnership and took over the project, permitting him to enter Atlantic City cheaply.

At the time of Trump’s arrival, Atlantic City’s casino industry was having growing pains. The industry had expanded faster than the market could grow, and that led to some difficult moments. There were nine casinos in place—several losing money—and none under construction. With the resort far from rebuilt, state and local officials were desperate for someone to put construction workers back to work and bring additional tax ratables and employment to the city. Trump sensed the anxiety and seized the moment. He moved in with grand plans, which officials praised as the start of the “second wave.” Then he held his plans hostage until he received concessions from city and state government that would insure his investment.

Trump brashly insisted he wouldn’t go forward unless he was first licensed as a casino operator. “I didn’t want to be in a weak negotiating position with the Casino Control Commission. … My strongest card was the fact that construction of new casinos in Atlantic City had come to a complete standstill. State and city officials, I knew, were hungry for new evidence that Atlantic City was a good investment.” He told the state he wasn’t willing to “sit around twiddling my thumbs waiting for answers” if the license investigation took a year or more. The result was an informal agreement to complete the process within six months.

Technically such a request was impossible to fulfill. Regulators license a building and find that its owners are qualified to run and operate it. The distinction had not been a problem before Trump because every other operator opened its gaming hall under a temporary license—a convenience that allowed regulators to open a casino complex as soon as it was physically ready even though investigation of the owners wasn’t complete. By this time, temporary licenses had been abolished and Trump wouldn’t risk building a casino without first knowing he could run it. The move accomplished two goals simultaneously. It gave Trump the excuse he needed to go out and find others to risk their money on the project and also put pressure on regulators to move quickly with their investigation. The commission couldn’t issue a license to him, but it did the next best thing—it held a hearing and determined Trump met all the qualifications to hold a license, once his building was complete.

One of the first design problems faced by Trump was that the hotel was to be built on a narrow sliver of land. The location next to the Boardwalk Convention Hall was fine, but a hotel less than 200 feet wide would be difficult to build and operate. Trump needed more width for his project. To handle this problem, he reached out to local attorney Pat McGahn. Resorts International had used McGahn effectively for years to get matters through local government, and Trump recognized the value of a local player. Quietly, McGahn arranged several private meetings with his friends in city hall to discuss a radical new plan for the project. A proposal was developed to allow Trump to buy the air rights over Mississippi Avenue, the street separating the hotel site from Convention Hall. The street is the only access to the Hall’s underground parking garage and was used heavily by traffic visiting the Hall. Being able to build above it permitted Trump to develop a much wider casino, more attractive to gamblers. In a period of just one month—lightning speed by Atlantic City standards—the new plan was approved by the city, and the air rights over Mississippi Avenue were sold for $100. McGahn’s ability to secure the air rights for a token is in stark contrast to a similar situation at Caesar’s Boardwalk Regency. When Caesar’s requested the air rights over a narrow alley, rarely used by the public, city hall demanded $500,000.

Shortly after work started, Trump reached a deal with Holiday Corporation, the Memphis-based firm that owned Harrah’s Casino Hotels in Nevada and the Harrah’s Marina Hotel Casino in Atlantic City. It was July 1982, and Holiday agreed to provide the financing and manage the casino hotel. All Trump had to do was build it and turn over the keys. In exchange, he would receive one-half the profits. Trump had found someone else to assume the risks while he shared in the rewards, but he wasn’t happy. Within months of the Plaza’s opening, Trump grew restless with Harrah’s control of his casino. He wasn’t content to sit on the sidelines and let someone else get all the glory. There was constant bickering between the partners over how the facility should be run. Trump was convinced that Harrah’s was doing a lousy job.

To the Donald, one of Harrah’s biggest mistakes was the failure to take advantage of his name. Trump felt his name had drawing power and he wanted it shouted to the world. The official name of “Harrah’s Boardwalk Hotel Casino at Trump Plaza” had to be changed. He demanded that his name be moved up. So it became “Harrah’s at Trump Plaza.” While the name change fed his ego, it didn’t solve the underlying differences between the partners, nor did it quench his thirst to run a place of his own. Trump got the opportunity in 1985 by a means no one could have predicted.

The Casino Control Commission, in what will likely be remembered as that agency’s biggest blunder ever, denied a license to the Hilton Hotels Corporation. Unlike Trump, Hilton had started construction of its $325 million casino hotel prior to being cleared by the regulators. After all, who could anticipate the denial of a license for an international hotel chain that hosted presidents and kings at its luxurious hotels? Under intense pressure, the commission agreed to reopen the Hilton hearing and reconsider additional evidence. But the initial denial left the Hilton organization so angry it refused to risk further damage to its reputation and gave up on being licensed. To make things worse, Hilton was facing several other problems at the time. Steve Wynn of Golden Nugget, Inc. was threatening a takeover of the company, and the estate of the company’s founder, Conrad Hilton, was contesting a claim by his son Barron to the estate’s controlling block of company stock. To add to the problems, an order of nuns who were the principal beneficiaries of the estate believed the estate would receive more for the stock in a sale to someone other than Barron Hilton—a sale that could help them in their mission to care for orphans and the poor. Unable or unwilling to fight major battles on both coasts, Hilton put the casino up for sale and the Donald was ready to buy.

Trump obtained a $325 million loan from Manufacturers Hanover Trust Corporation to purchase the Atlantic City Hilton—a large risk for a single bank, but revealing of how strong Trump’s standing was then at only age 39. Uncomfortable, perhaps because he was on the hook for the money, Trump quickly sold $350 million in mortgage bonds in the junk bond market to finance the property, removing his personal guarantee. He didn’t have to worry about finding someone to run “Trump’s Castle Hotel Casino,” since part of the deal with Hilton required its management team to stay in place, at least until the end of the year.

Upon opening his second casino in June 1985, Trump was a prince, and not just of his Castle. By owning more than one casino, Trump had positioned himself to become a major player in Atlantic City—more influential than politicians or casino regulators. There was only one annoyance. As he basked in the glory of the casino’s opening, Trump was hit with a lawsuit by his partner on the Boardwalk, who was also his competitor across the street at the Marina. After fighting with him over the name of Harrah’s at Trump Plaza, Holiday Corporation didn’t want Trump to use his name on his new property, which was across from Harrah’s Marina. Having a taste of what it was like to run his own casino, Trump went back to the junk bond market and raised the funds needed to buy out Holiday’s interest in the Plaza. A short time later, he successfully fought, and bought, his way out of costly road improvements, which Hilton had agreed to as part of the approvals for the casino hotel. Trump then made some quick money in the stock market, employing “green mail” to weaken several competitors, by threatening takeovers of Holiday Corporation, Caesars World, Inc., and Bally Manufacturing Corporation.

Trump’s next big move came shortly after the death of Resorts International’s Jim Crosby in 1986. He convinced Crosby’s heirs he was the one to complete Crosby’s dream hotel, the “Taj Mahal.” They sold their stock in a deal resulting in Trump having control of three casinos—the maximum allowed by law at that time. To comply with the three-casino limit, Trump proposed to close the casino at Resorts when the Taj Mahal was completed. While casino regulators are supposed to encourage competition and prevent “economic concentration,” they accepted his plan to shut down a gaming hall rather than force him to sell it. Resorts never did close because entertainer/game show producer/investor Merv Griffin acquired it.

There was a brief struggle between Trump and Griffin for control of the corporation, but in the end they both acquired what they wanted. Griffin had purchased large amounts of Resorts’ stock while Trump was dealing with the Crosby heirs. He was someone Trump had to reckon with. In an arrangement between the two, Griffin took control of all of Resorts assets except the partially constructed Taj Mahal, which was the only asset Trump wanted anyway. A few months later, after the Casino Control Commission refused to renew a license for Elsinore Atlantis Casino Hotel, formerly Playboy, Trump exploited Elsinore’s fears that the state might appoint a conservator to run its casino hotel. Shortly before the company’s license expired, Trump bought the property. Since he couldn’t have another casino, he bought the Atlantis as a non-casino hotel to provide rooms for his Trump Plaza on the opposite side of the Boardwalk Convention Hall. With a Plaza and a Castle in hand, Donald Trump turned his attention to the Taj Mahal.

Construction of the Taj Mahal was floundering badly when Trump stepped in. Crosby’s fantasy had become a money pit and spelled financial disaster for his company. The project was too costly for Resorts International and had drained the company’s cash. Most casino industry analysts believed it was simply too expensive to finish and was better off abandoned. Trump was unfazed. He promised that not only would the Taj Mahal be completed, it would be “an incredible place—the eighth wonder of the world.” He set a completion date of spring 1990 and met that deadline, opening in April.

The grand opening was befitting of both Trump and his new casino hotel. Standing on a large platform erected for the occasion in front of the hotel, Trump rubbed an over-sized magic lantern, which spewed smoke and shot a laser beam hundreds of feet into the air, cutting an enormous red ribbon and bow draped from the top of the 42-story hotel tower. The laser show and speeches were followed by a thunderous fireworks display along the Boardwalk. Thousands were on hand both indoors—the gambling had already begun—and out. Despite the usual dignitaries and celebrities on hand, it was the people inside at the slot machines and gaming tables who were most important to Trump. The Taj Mahal would need many thousands of gamblers to be successful.

“Success,” namely survival for the Taj Mahal, required truckloads of cash. Prior to its opening, it was widely speculated by serious observers that Trump had to generate revenues in excess of $1 million per day in order to meet his debt service and operating expenses. Trump had leveraged himself so completely that as the grand opening of the Taj approached he didn’t have enough cash on hand to operate his three casinos. In order to comply with Casino Control Commission regulations on the cash reserves required for a casino, Trump secured an interest-free loan from his father. That spring, Fred Trump came to town in one of the Donald’s limousines and brought a suitcase full of cash. Fred exchanged the cash for $3.5 million in Trump Castle Casino gambling chips and provided his son with badly needed cash. The incident led to the adoption of a new regulation by the Commission and enabled Trump to bridge a gap in his financing.

The size of Trump’s financial obligations were exceeded only by the Taj Mahal itself. At the time of its construction, it was the biggest and most expensive building ever erected in New Jersey. Trump’s Taj bears no resemblance to the elegant mausoleum of an Indian Princess for whom the original one is named. Its eclectic architecture incorporates bits and pieces of several extravagant buildings, including the Regency Pavilion in England’s Brighton Beach, the Alhambra Palace in Spain, and Moscow’s candy-cane striped St. Basil’s Cathedral. There’s also some early Miami Beach thrown in together with touches of Las Vegas. Captain John Young would have loved it.

From a distance, Trump’s Taj looks like a gigantic, thickly frosted, multilayered wedding cake, custom-baked for someone with more money than taste. What Trump calls “quality,” others might consider gaudy. Regardless, the numbers on this behemoth of a building are staggering. While only a visit to the property can give one a sense of the place, a recitation of some of the parts that make up the building is helpful in appreciating the commitment Donald Trump has made to Atlantic City. It’s a marriage that won’t end anytime soon.

Trump’s Taj Mahal stands nearly 500 feet tall, making it one of the highest buildings in New Jersey. It covers 17 Boardwalk acres and includes 1,250 guest rooms (400 luxury suites), 175,000 square feet of meeting and exhibit space, an 80,000-square-foot arena, a 1,500-seat theatre, a 30,000-square-foot ballroom, and a 6,000-space parking garage. There are a dozen places to eat and when all the restaurant and banquet facilities operate at capacity, 13,000 people can be served at a time. Construction of the Taj consumed enough steel girders to make nearly five full-scale replicas of the Eiffel Tower. There are acres and acres of marble used lavishly throughout the hotel’s lobby, guest rooms, casino hallways, and public areas—the quantity consumed nearly two years’ output for Italy’s famed Carrara quarries. Austrian-made chandeliers hang over the gaming tables, escalators, and throughout public spaces of the building—the total chandelier bill came to $15 million. Another $4 million was spent on uniforms for the staff of more than 6,500 employees. At the time of the grand opening, mercifully scaled back since, everyone was outfitted in outlandish costumes, a mixture of Arabian Nights fantasy and traditional Indian garments.

The core of Trump’s Taj—and from which all blessings flow—is a 120,000-plus-square-foot gambling casino, the world’s largest at the time of its opening. On the day this mirror-lined cavern opened, it increased Atlantic City’s gaming floor space by more than 20 percent. The casino contains more than 3,000 slot machines and nearly 200 gaming tables. To accelerate the pace at which money is fed to the house, there are 1,300 compact change machines scattered over the casino floor along with dozens of ATM machines. The roaring and ringing of the slot machines, and shouting and groaning from the blackjack and craps tables, are endless.

Visually, the casino is dazzling. The lighting is the type you get when you decorate a room in crimson, violet, purple, orchid, fuchsia, salmon, and scarlet—the type of light that makes everyone’s hair look as if it’s been dyed. Toss in big-breasted cocktail waitresses, statues of elephants decked out in jewels, and men on stilts with turbins, and the effect is dizzying. As the New Baedeker said of Atlantic City nearly a century ago, so may be said of Trump’s Taj, “It is overwhelming in its crudeness—barbaric, hideous, and magnificent. There is something colossal about its vulgarity.”

The only vulgar thing to Donald Trump about his Taj Mahal was the debt incurred in constructing it. Despite early receipts averaging in excess of $1 million per day, Trump still couldn’t handle both the construction debt (nearly $1 billion) and daily operating expenses. Within less than a year after opening the Taj, Trump made a prepackaged bankruptcy filing, which reorganized the debt with his banks and bondholders. However, the reorganization plan approved by the Bankruptcy Court clobbered many contractors who had worked on the job. To this day there are local contractors and suppliers who cringe at the mention of Donald Trump’s name. It wasn’t a proud day for the Donald, but he survived it and his Taj Mahal is a winner, earning slim but consistent profits. In the Taj and his other holdings, Donald Trump’s presence will be felt in Atlantic City for many years to come.

Another person who helped transform Atlantic City was Arthur Goldberg of Park Place Entertainment, who died at age 58 in October 2000. Smart and tough, yet ethical and courteous, almost courtly, Goldberg was a leader in the true sense of the word. In the brief period he was active in the gaming industry he earned an enviable reputation with casino moguls and Wall Street investors alike. In August 1999, Barron’s, the Dow Jones business and financial weekly, declared him “King of Craps” in a feature article.

Arthur Goldberg’s empire began with his family’s Newark-based trucking company, Transco Group, a hauler of goods for such national accounts as Tropicana, Safeway, and Pepsi-Cola. A graduate of Villanova Law School, he gave up the law after only two years to run the family business for his father, who had suffered a serious heart attack. In 1979, with earnings from Transco, Goldberg acquired a major position in Triangle Industries, a wire and cable maker. He quickly became CEO of Triangle and realized a $7 million profit on his investment when Triangle was bought by other investors a year later. In 1983, Goldberg made another large investment into International Controls, a conglomerate producing everything from bomb casings and electric utility towers to tractor-trailers. Again, Goldberg became CEO and several years later, after improving the value of the company, sold his stock for another large profit. His reputation as an investor willing to get his hands dirty by involving himself in the management of the companies he bought added to Goldberg’s aura.

As the decade of the ’80s came to a close, Goldberg had been so successful that he found himself with little to do. In 1989, he acquired controlling position of a food distributor, DiGiorgio Corporation, which sold Italian food items. It was profitable, but not enough of a challenge. A year later he paid $14 million, or $8 a share, for a 5.6 percent interest in Bally Entertainment, Inc., the owner of Bally’s Park Place Casino Hotel. At the time, Bally’s was in serious trouble and was in danger of being forced into a Chapter 11 bankruptcy filing.

Goldberg had bought into a headache. Consistent with past ventures, he dove into the casino business feet first, never contemplating failure. He went to Bally’s Board of Directors with a turnaround plan, conditioned on his being named Chairman and CEO. The Board accepted his proposal and Goldberg never looked back. His performance in turning Bally’s around was extraordinary by anyone’s yardstick. Investors who stayed with Goldberg from the day he joined the company in November 1990, to the Hilton Hotel’s purchase of Bally’s nearly six years later, saw their shares increase in value from $3.50 to $28. At Goldberg’s encouragement, despite the earlier debacle, Hilton reapplied for licensing and this time was successful.

The Hilton merger moved Arthur Goldberg and the Hilton organization—and with them, Atlantic City as well—to the first tier of the gaming industry, worldwide. Goldberg became President of Hilton Gaming and brought 11 Hilton properties, including the Flamingo and Las Vegas Hilton, under his control with the four he had. That total increased to 18 gaming properties with the purchase of three major Mississippi casinos when newly formed Park Place Entertainment was spun off from Hilton. The final addition to his empire before his early demise was Paris-Las Vegas, a lavish $800 million casino hotel that opened in September 1999. Arthur Goldberg set the standard for the new gaming entrepreneur in Atlantic City and the nation. He is sorely missed.