April 24 (Bloomberg) -- Last week, Federal Bureau of Investigation agents descended on the Helly Nahmad Gallery at the Carlyle Hotel on the Upper East Side of Manhattan.
Hillel “Helly” Nahmad, the gallery’s owner, was charged with running a high-stakes gambling operation in New York and Los Angeles that attracted multimillionaires and billionaires. Though the gallery was only a tenant of the hotel, the allegations -- which include suggestions that Nahmad coordinated his efforts with powerful Russian mobsters -- evoke the long intertwined history of hospitality, gangsters and games of chance.
Before the early 1800s, games of cards often took place at the local tavern. In the 19th century, as many industries spun off from taverns (hotels, restaurants, clubs and saloons), gambling also developed its own specialized institutions: gambling houses and halls, riverboat saloons and the posh palaces of Gold Rush San Francisco.
But the tenuous legality of betting meant that these businesses would often fold, pushing gamblers toward clandestine operations in other service-sector businesses, such as saloons, bachelor apartment houses and hotels. In 1894, New York state helped consolidate gambling into hotel life by passing a constitution that banned “lottery or the sale of lottery tickets, pool-selling, book-making, or any other kind of gambling.”
Illegal gambling in and around hotels flourished. Floating poker games were often played in hotel rooms and became more popular when district attorneys cracked down on free-standing gambling houses. The same pattern applied to prostitution -- enforcement pushed it from brothels to the streets and anonymous hotel rooms -- as well as the sale of liquor after Prohibition. The unintended consequence of greater vigilance against such crimes was that criminals sought cover inside legitimate businesses.
It was always an open question whether hotel owners and managers countenanced the gambling that took place under their roofs. In 1905, the police raided a game in a Cleveland hotel owned by John D. Rockefeller. The chief of police, Fred Koehler, followed up with a letter to the magnate.
“Three times this department has been called upon to raid rooms in the Weddell House,” he wrote. “I cannot believe that this has been done with the knowledge and consent of yourself as the proprietor.”
It may be that Chief Koehler meant this facetiously; when District Attorney Edward Swann of New York County announced a crackdown on hotel gambling in 1918, he was more direct. “The managers of the hotels,” he wrote, “know what is going on in their establishments and cannot easily escape responsibility.”
Hotel managers’ ignorance seems especially unlikely when it comes to the highest-rolling gambling rings, such as New York’s Partridge Club, which attracted judges, retired police officers, attorneys and ex-Fire Commissioner John H. O’Brien to rooms at the Ritz-Carlton.
When a police captain confronted the management of the hotel, the game moved across town to the Imperial.
And hotel lobbies and bars were a good place to snare tourists looking for a game. It became common practice for professional gamblers to send “runners” to snag out-of-town “boobs” to be fleeced.
Hotel detectives kept track of professional gamblers and runners, and threw them out when they caught them, so new runners always had to be found. Sometimes the gambling rings enlisted the help of hotel employees, such as bellhops, elevator operators and telephone operators, who were tipped generously when they helped steer clients to runners, or kept the house detectives away.
The greatest of all the hotel gamblers was Arnold Rothstein. Best known for fixing the 1919 Black Sox World Series (which he may not have actually done), and for his portraits as Nathan Detroit in “Guys and Dolls” and Meyer Wolfsheim in “The Great Gatsby,” Rothstein got his start running a floating craps game in New York.
He later said: “I always gambled. I can’t remember when I didn’t. Maybe I gambled to show my father he couldn’t tell me what to do, but I don’t think so. I think I gambled because I loved the excitement.”
Rothstein eventually graduated to other crimes -- bootlegging, drugs, prostitution and labor racketeering -- and to some legitimate businesses, such as his ownership of the Fairfield Hotel on West 72nd Street.
But his love of gambling endured. In the summer of 1928, he dropped in on a game run by George “Hump” McManus and lost $322,000 over the course of two days and a night. He left the game without paying, promising that he would soon have cash on hand.
Many weeks later, sitting at his regular table at Lindy’s, he got a phone call summoning him to Room 349 at the Park Central Hotel. He placed a bet -- $60,000 on Herbert Hoover to win the presidential election -- got up from his chair, and walked out of Lindy’s.
Hours later, the hotel detective found him at the bottom of the service stairs, shot in the groin. He lingered for a couple more days in the hospital, refusing to say who shot him, and died. The Park Central was later renamed the Park Sheraton, and in 1957, Albert Anastasia, another gangster who also knew something about gambling, was shot dead in its barber shop.
(Daniel Levinson Wilk is an associate professor of American history at the Fashion Institute of Technology. The opinions expressed are his own.)
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