Howard Hughes and Las Vegas

Howard Hughes and Las Vegas

Howard Robard Hughes, Jr. (December 24, 1905 April 5, 1976) was an American businessman, inventor, aviator, and left a major influence on the casinos of Las Vegas and the gaming industry in the state. Hughes first visited Las Vegas in the 1940’s and preferred to stay at the Last Frontier, although he did occasionally visit the casinos downtown.

Hughes spent much of his time working on feature films in Hollywood like Hell’s Angels (1930) and Scarface (1932), setting aviation records, and watching his profits from hughes Tool company soar. He began stockpiling shares of TWA in 1939 and gained control of RKO Pictures in 1948. Although RKO was not a very profitable venture, Hughes Tool Company manager Noah Dietrich keep money flowing to Hughes for his pet projects. However, it was his ownership of TWA (Trans World Airways) that left Hughes one of the riches men in the world. In 1966, Hughes was forced by a U.S. federal court to sell his shares in TWA because of concerns over conflict of interest between his ownership of both TWA and Hughes Aircraft. The sale of his TWA shares netted him a profit of $547 million

Unlike Texas and California, where Hughes had the bulk of his business, Nevada offered a tax haven he couldn’t pass up: no corporate or personal taxes. So, on Thanksgiving Day, November 24, 1966, a train with a specially-equipped Pullman car stopped in downtown Las Vegas at Union Plaza and the 51-year-old millionaire was transported via stretcher to a waiting ambulance that whisked him away to the Desert Inn casino and hotel. Reservations for the top two floors were made by Bob Maheu, a former CIA operative now fronting for Howard Hughes. He contacted mobster Johnny Roselli, who contacted majority owner and former Cleveland Mob Boss Moe Dalitz, who arranged the reservation as a personal favor. He may have considered it an honor to allow the reclusive millionaire the use of his hotel, but his attitude soon changed when Hughes refused to leave.

Howard Hughes’ First Casino Purchase

Weeks before the casino’s huge New Year’s Eve party, Dalitz asked Maheu to help get Hughes out of the penthouse of his hotel to make room for his incoming high-roller casino guests, but Maheu already knew Hughes wouldn’t go. Instead, he asked Dalitz to sell the property. Although Dalitz at first refused, the idea of selling the casino but still having a hand in running it (and a hand in the till) was appealing. A deal was eventually struck for $13.1 million.

While reputed mobsters like Sam Giancana, Moe Dalitz, Meyer Lansky, and Frank Costello were long rumored to control many of the Las Vegas casinos, players didn’t care too much about ownership so long as the games were on the square. However, the State of Nevada was overjoyed to have a wealthy industrialist like Howard Hughes associated with the gaming industry and approved his purchase and control of the property without so much as a single personal encounter.

Maheu brought a number of new security measures to the Desert Inn, but the Hughes ownership didn’t stop Dalitz from continuing to exercise control over the casino, and while it turned a nice profit each year, cash that never made it to the rightful owner was skimmed from the count room and slot machines.

Hughes enjoyed great political power in the sparsely populated state, and after purchasing the Silver Slipper casino across the street from the Desert Inn, his associates made direct, cash disbursements to many politicians, which were considered campaign contributions and thus perfectly legal. Hughes got most of the concessions he asked his political friends for over the years, but was never able to get the underground testing of nuclear devices stopped.

New Hughes casino purchases included the Castaways, New Frontier (which started life as the Last Frontier), and the Sands. Over the years the Sands casino was one of the most popular and talked about casinos in the world, especially with players like Dean Martin and Frank Sinatra appearing in the show room and gambling in the casino. Sinatra, who owned 9 percent of the Sands, was forced to sell his ownership due to allegations of criminal ties several years prior to the Hughes purchase.

Corporate Casino Ownership

Howard Hughes brought corporate ownership to Las Vegas, upgrading the city’s image and respectability. He modernized his properties, forcing the owners of sagging properties around town to spend more to keep up at a time when Las Vegas needed a face-lift. The added benefits included more tourism, more jobs, and overall prosperity. Unfortunately, behind the scenes the picture wasn’t so rosy.

By the 1960’s Hughes was in chronic pain from two near-fatal plane crashes and used codeine on a regular basis. When he purchased the unfinished Landmark casino, Hughes was in the middle of another round of obsessive-compulsive behavior that nearly doomed the project. He wrote notes about the construction and had them sent to Bob Mahue each morning, but often changed his plans later in the day. Room size, the overall height of the tower, color scheme, restaurant decor, and even the number of casino games were all on the plate, but Hughes was too sick to even manage himself, much-less the construction of a hotel casino at the time.

Shortly after the Landmark casino opened to a tiny reception, Hughes decided that the radiation from the continuing underground bomb testing was too dangerous. He instructed Mahue to offer President Nixon a $1 million bribe to stop the testing. The tests continued.

Hughes refused to leave his Desert Inn penthouse suite for over two years, and during that time had his hair and beard cut but once. His toe and fingernails were only clipped three times according to his aids, who were his only personal contact while he sat in a darkened bedroom filled with boxes of tissues he used as slippers and empty bottles of milk he periodically refilled instead of getting out of bed to use the restroom.

When Hughes wasn’t busy with his casinos, he was purchasing mining claims in old Nevada ghost towns, most of which turned out to be worthless, and buying businesses. His purchase of Air West, which become Hughes Air West (jingle: “West, Hughes Air West, a banana in the west), didn’t fare much better than the mines, especially after having the planes painted a bright yellow. In addition, without his direct involvement or a suitable gaming director, the Hughes casinos were skimmed to the tune of over $300 million in just a few years according to the FBI.

Unable to get the Federal Government to stop the underground bomb testing, Hughes left Las Vegas for the Bahamas in the cloak of darkness, never to return. Later, Hughes turned over his Hughes Aircraft Company to the Howard Hughes Medical Institute.

Howard Hughes Death

Howard Hughes passed away in 1976 at the age of 70 on an airplane en-route to Houston. His emaciated 6-foot 1-inch frame was just 90 pounds and fingerprints had to be taken to positively identify the body. He left no will, so a seven-year onslaught of lawsuits was finally settled in 1983 when 22 cousins split his $2.5 billion estate. Whether that would have been his last wishes or not, Hughes certainly got the last laugh over taxes, which he abhorred. The US Supreme Court ruled that Hughes Aircraft was legally owned by the Howard Hughes Medical Institute (sold in 1985 to General Motors for $5.2 billion) so there were no taxes that had to be paid. In addition, suits brought by the states of Texas and California for inheritance tax were also rejected by the court.

Shortly after Hughes began his casino buying spree (seven casinos), new corporate owners took note of the possibility of owning casinos, with hotels. Although Wall Street was cool to the idea, Bill Harrah talked Greyhound Corp. into loaning him enough money to finish his expansion in Reno in the early 1970’s and Harrah’s Corp. went on to become the first publicly-owned corporation. Today Harrah’s is Caesar’s Entertainment, the second largest gaming company in the world.

The largest gaming corporation, MGM Properties, was started by Kirk Kerkorian, a former Las Vegas airline owner who opened the International Hotel in Las Vegas on the same day the Howard Hughes Landmark opened. During construction of the properties Hughes fought continually with his contractor to try and keep his tower higher than the coming International. Kerkorian won. On July 4, 1969 when the casinos opened, the International was the largest hotel in the world.