More than any other individual, Howard Robard Hughes stamped the seal of legitimacy upon a Las Vegas casino industry that had been labeled as corrupt and Mob-invested in the general public mind. Hughes paved the way for corporate America to invest in gambling properties that had previously been controlled to a large degree by pension funds of the International Brotherhood of Teamsters and assorted underworld characters. Hughes did not necessarily transform Las Vegas from a profit center for organized crime in the favorite resort in the United States on purpose. Moreover, there were many unanticipated consequences of his drive to dominate Las Vegas gambling, not the least of which was the scandal that will go down in the history books as Watergate.
Howard Hughes poses with his plane, 1930s
Hughes was born in Houston, Texas, in 1905. Four years later his father, Howard Hughes Sr., helped develop a drilling bit that could penetrate hard rocks with ease. The tool revolutionized oil drilling and made the Hughes family wealthy. At age eighteen, the younger Hughes became the majority stockholder of Hughes Tool Company when his father died in 1924. Having been warned by his father never to have partners, he immediately set plans into motion for acquiring all the stock in the company from his relatives. He also began to diversify his interests. He maintained a stake in mineral extraction in addition to developing experimental aircraft, producing movies, and designing military hardware. Very soon he became a multimillionaire and also a playboy working the Hollywood scene. For excitement he flew many of his experimental aircraft. In 1938 he flew around the world, setting various speed records. The downside of his flying came with several crashes. Perhaps the most serious one was in 1946, after which doctors expected him to die. They gave him excessive dosages of morphine to kill his pain, not thinking of consequences if he lived. He lived and developed a lifetime addiction to drugs. It is also suggested that his plane crashes caused many head injuries that left a mark on later behavior that would have to be called “bizarre”, to say the least.
During the 1940s Hughes was a frequent visitor to Las Vegas, and several times prior to 1966 he had attempted to move his corporate interests to the desert. He purchased 28,000 acres of land on the west side of the city with the notion that the land would be used for aircraft development and testing. It remained undeveloped until the 1980s, when it became the essence of Summerlin, a residential expanse that filled as Las Vegas became the fastest-growing city in the United States. During the 1950s Hughes’s fortune approached $2 billion, and he became the principal owner of Trans-World-Airlines (TWA). Hughes hired Robert Maheu, a former Federal Bureau of Investigation agent, to be his chief business agent, and from 1957 on, Hughes became a recluse unwilling to meet any business associate on a face-to-face basis. All his contacts with Maheu from 1957 to 1970 were by telephone or on note pads. In the early 1960s, Hughes relocated his operations to the Bahamas, but he still yearned to be in Las Vegas. On Thanksgiving Day 1966, he moved to Las Vegas. Soon he was buying casinos.
The 1960s had been hard on Las Vegas. Bobby Kennedy had pushed the McClellan Committee of the U.S. Senate in its investigation of Teamsters’ union money in Las Vegas. As attorney general, Kennedy carried on ongoing probes into Mob activity in Las Vegas. No new casinos were being built because the Mob was fearful that the federal government might shut down gambling. Public corporations were precluded from owning casinos (unless every single stockholder was licensed), and legitimate lenders – banks and other institutional financial houses – would not touch the industry. Las Vegas was looking for a miracle, and here came Howard Robard Hughes – with money to spend. In May 1966 Hughes refused to appear before a congressional committee investigating aspects of the operations of TWA. To avoid having to appear in public, he willingly agreed to divest himself of all his holdings in the company – 78 percent of the stock. He received $546.5 million for an investment that had originally cost him $80. For purposes of avoiding excessive taxation, he had to quickly reinvest the money. Las Vegas was waiting.
Fiction and fact became mingled and confused as the story of Howard Hughes unwrapped in Las Vegas. Some say events just occurred; others see a masterful plan behind Hughes’s entrance into the gambling community. In November 1966, Maheu rented the top two floors of the Desert Inn for Hughes’s living quarters. He was supposed to stay for ten days, but after he entered his hotel suite, he stayed there for almost four years – until 5 November 1970. He may have been secretly taken out of the room on a few occasions, but no one outside a very small group of personal attendants saw him over these four years. A whole litany of strange behaviors, manias, phobias, delusions, and obsessions afflicted Hughes during his Las Vegas stay, but crazy or not, he made an impact on the town.
When Hughes refused to leave the Desert Inn after his ten-day stay, Maheu began to negotiate a deal with Moe Dalitz and the other owners of the property. On 22 March 1967, the parties agreed that Hughes would purchase the Desert Inn for $13.2 million. The licensing process for casino ownership entailed many hurdles. These included financial statements, personal statements, fingerprints, photographs, fees, and a personal appearance in front of the Gaming Control Board and the Nevada Gaming Commission. There was no way that Howard Hughes was going to endure such procedures. On the other hand, there was no way Nevada was going to allow Hughes to slip away.
Governor Paul Laxalt and the gaming officials waived many requirements and allowed Maheu to appear on behalf of Hughes in the licensing hearing. The license was not opposed by anyone. Said board chairman Alan Arber, “After all, Mr. Hughes’ life and background are well known to this Board and he is considered highly qualified”. The truth was quite different. Neither Hughes nor anyone in his organization had any experience managing a gambling facility.
Safely brought into the business, Hughes and the state of Nevada wanted more. In July 1967, Hughes purchased the Sands Hotel and Casino and 183 acres of land beside it for $14.6 million, and in September he acquired the Frontier. He quickly followed this with purchases of the smaller Castaways and Silver Slipper casinos. He also bought Harold’s Club in Reno. Then he set his sights on the Stardust and the Landmark. But by then, the federal government had its sights set on Hughes as well.
U.S. Attorney General Ramsey Clark thought Hughes had bought enough. Clark contended that any further purchases would make Hughes a monopolistic owner on the Las Vegas Strip. Hughes did not like to be told no. Clark and the president, Lyndon Johnson, were due to leave office soon, and so Hughes maneuvered to control the next president’s capacity to refuse his desires. In 1968 Hughes hired Larry O’Brien, a family friend and political confidant of the Kennedy family, to be on his legal team. O’Brien had also been in the Kennedy cabinet. Then Hughes gave Richard Nixon, Republican candidate for the presidency, a $100,000 “campaign contribution”. Some thought that the contribution could be considered a “bribe.” Hughes also gave Democratic candidate Hubert Humphrey a $50,000 contribution (Drosnin 1985, 250). In 1960 Hughes had given Nixon’s brother a large loan that remained unpaid, and Nixon’s opponents had used the loan as a major campaign issue against Nixon. In 1968, Nixon was elected, and he promptly removed objections to Hughes’s purchases of more casinos. Hughes gave up his desire to purchase the Stardust, but he did finalize the purchase of the Landmark. In 1972 Nixon declared himself to be a candidate for reelection, except there was a little bug in his plans. Larry O’Brien was now the chairman of the Democratic National Committee. Nixon strongly suspected that O’Brien had information about the 1968 contribution (the alleged bribe) – as he was working for Hughes when it was made – and might use that information against Nixon. Nixon told his aides to find out what O’Brien knew and what his campaign plans were. The aides began to gather information from many sources. They decided to break into O’Brien’s office in the Watergate Hotel in Washington, D.C. The irony is that O’Brien could not raise the issue of the money, because Democratic candidate Humphrey had accepted a similar contribution. But Nixon did not know that—in time. Hughes had brought down a president.
It has been suggested that Hughes purchased the hotels he did because they surrounded the Desert Inn, and he wished to own every hotel he could see from his tenth-floor suite. Maheu suggests that the casinos purchased were on a list of casinos that Robert Kennedy suspected of being Mob establishments. The practical effect of the purchases was to give the United States the impression that Las Vegas was being cleaned up and that the organized crime elements were leaving town. That was not exactly true. A major change was in order, however. Even though Hughes had brought capital to the Las Vegas Strip, he had invested in existing properties; he did not build new ones, nor did he remodel and improve those he purchased. The Strip needed infusions of new capital for new casinos. The activity of Hughes had given the legitimate investment community a new perspective on Las Vegas. It could be a good place. Before Hughes left town for the Bahamas with his entourage on 5 November 1970 (firing Maheu in the process), the state of Nevada had passed (in 1969) the Corporate Gaming Act, which allowed publicly traded corporations to have Nevada subsidiaries that could be licensed for casino ownership in the name of the principal stockholders – not all of the stockholders. As Hughes exited the state, Hilton came in – what Hughes started, others would finish. As Hughes was an absentee owner while living in his secluded tenth-floor suite, he was the same while he was in the Bahamas and elsewhere. His sanity was severely questioned, as he remained in seclusion for the rest of his life. Only once did he agree to meet with Nevada officials. That was in 1972 when rumors of his death caused concern. He agreed to meet the governor – Mike O’Callaghan – in London for a very brief session just to verify that he was alive. That he was, but not really very alive. He was in miserable physical shape; nonetheless his life continued until he was defeated by kidney failure in April 1976.
