Abstract
Currently, VIP junkets are a major source of income for casinos in Macau and many other jurisdictions. There has been a great deal written about the Macau junket system, which is likely an outgrowth of the major role that it plays in Macau operations. There has been comparatively little, however, written about casino junkets in Nevada and, in particular, Las Vegas. This article seeks to remedy this gap in the scholarship by examining the development, growth, and eventual decline of air junkets to Las Vegas casinos. This is an important story to explore, because although air junkets did not remain a major part of Las Vegas casino marketing and were thus not factors in the growth of the 1990s, they played a crucial role in the evolution of the gaming industry by providing a significant amount of revenue for the industry as it was expanding and seeking legitimacy.
This study traces the evolution of air junkets as a business practice starting in the late 1950s and diminishing in the late 1960s and early 1970s, and the shifting attitude of Nevada regulators towards the junket business and the degree of control the state should assert over it.
Statutory and Regulatory References
Currently, Nevada casino junkets must be conducted in accordance with Commission Regulation 25, which was last revised in 2019. 1
Nevada Revised Statues (NRS) Chapter 463, which describes the “Licensing and Control of Gaming,” do not define what a junket or junket representative is, and do not specifically include junket representatives with the description of “gaming employees,” which is inclusive of a variety of positions, from dealers to keno runners to shills to call center employees who “receive and transmit wagering instructions.” 2 It is possible, however, that junket representatives fall under the category of “hosts or other persons empowered to extend credit or complimentary services.” 3 NRS 463A.020, however, which deals with casino employee labor organizations, includes “junket representatives” under the list of “gaming casino employees” who are directly or indirectly employed in licensed gaming establishments as involved in the operation of a casino gaming pit. 4
Junket operators are considered in section 463.0164, which defines an “independent agent,” who can be anyone who approves or extends credit on behalf of a state-licensed casino, collects a debt on behalf of a licensee, or contracts with a casino to arrange complimentary travel, food, lodging, or other services, whose combined retail price per person exceeds $1,000 over a single week. 5
In addition, NRS 463.0164 excludes non-junket employees from its categorization as an independent agent, even when their duties overlap—at least on paper—with that of junket representatives. State gaming licensees and their employees, bonded collection agencies, licensed attorneys, travel agencies, and those making less than $1,000 for their services are specifically defined as not being independent agents. 6
The Nevada Revised Statutes establish the definition of an independent agent and the requirement that such agents may be subject to a finding of suitability, but they do not detail how such agents operate. This information is found in Commission Regulation 25, which was originally promulgated in October of 1972 (see below for a more complete discussion of the circumstances surrounding the adoption of Regulation 25). 7 Substantially overhauled in 2018, Regulation 25 defines independent agents, delineates the registration and suitability determination processes, and specifies what records must be kept and what information must be reported. Amendments in 1991 and 1992 made changes to the above sections and added outlining the mandatory requirements of agreements between licensees and registered independent agents and the reporting requirements that registered independent agents were subject to.
Casino Junkets 101
Although an exhaustive history of Las Vegas junkets has yet to be written, as important elements of casino operations, they appear in industry and regulatory literature about gaming relatively early on, providing the earliest documentary evidence about how junkets operated. Bill Friedman's Casino Management (1974), which accurately billed itself as “the most comprehensive book yet published about gambling and the gambling industry,” devoted a chapter to junkets. 8
Friedman starts with a brief historical account of the rise of junkets, which were, at the time of publication, a very recent phenomenon, making this section quite brief. He writes about the junkets currently (1973/4) taking place as being substantively similar to the earliest ones, to wit: a casino paid up front for a chartered flight and complete RFB (room, food, and beverage) comp for a select group of players, with the explicit expectation that those players gamble substantially. Friedman writes that “the sole purpose of a junket is to generate casino business; a junket cannot produce any hotel revenue since everything is comped….. A hotel must calculate precisely the per capita customer cost of a proposed junket and then invite only those customers who can be expected to gamble enough money to cover the hotel's costs and allow for a reasonable profit.” 9
When Friedman wrote Casino Management, the average per capita cost of an East Coast air junket was about $400: $150 per seat for the plane, $100 for four nights' accommodation, an additional $100 for food and beverage, and a $50 fee for the junket master. To earn at least a guaranteed $100 net win, the casino would have to win an average of $500 per customer, which Friedman estimates, using a theoretical hold of 20 percent for craps, would necessitate a minimum $2,500 drop per customer, which was an expectation for comps at the time (though that number was in flux due to the changes described below). 10
Friedman further describes the restrictions that casinos attempted to place on comps: only allowing “paying customers” seats on the chartered flights, and only paying for their food and beverage. While a hosted player was free to have their wife fly commercial and meet them in Las Vegas, any meals she ate without her husband would not be comped. Other cost controls included limiting the size of the gambler's party at meals, restricting the restaurants at which junket players could eat (no gourmet room, for example), and only allowing junket players to see a show on nights when the showroom was under-booked. 11
According to Friedman, casinos had to walk a fine line in arranging junkets. There were seldom enough known high-level players to fill a plane, so casinos sought to add “new” gamblers to trips. Sometimes, these were players who already had established credit lines at other casinos, while other times they were genuinely new potential gamblers, who had no discernable history at any property. Both unknown and known players had the potential to accept the flight and accommodations without actually gambling, making them, in the industry parlance, “riders.”
While even a player with a long history of playing respectably could decide to take a junket “off,” there was a particular danger in prospective new players turning out, after the plane touched down in Las Vegas, to be mere riders. Casinos had varying tolerances for the risk new players entailed: some restricted new players to five percent of each flight, while others filled planes with as many as 30 percent new customers. 12 By the early 1970s, many Strip casinos had chosen to mitigate the risk associated with new players by requiring them to submit an advance deposit by cash or check equivalent to the costs of their trip. 13
To recruit new players and generally supervise the junket, casinos contracted with junket masters, who beat the bushes for new customers, send invitations to returning ones, collect advance deposits, pursue collections after the trip, and, in most cases, travel with the junket, remaining on call and available to both players and casino managers to assuage any difficulties that may arise during the trip. 14 Not all casinos gave junket masters broad latitude to select players: while the Dunes had local representatives in major cities who identified and wooed new customers, the Hilton (today the Westgate) had a centralized approach, putting together its junket lists in Las Vegas and using junket representatives for collections. 15 Junket representatives were, however, allowed to fill the final 20 seats of a 200-seat plane, if all of the others were occupied by Hilton-selected players. 16
A typical junket in their heyday would start with the invitations, mailed by the casino to a list generated by the junket master. Reservations would block off the requisite number of rooms, with the junket master tagging players who merited suites. The junket representative would be on hand when the group arrived at their home airport, distributing boarding passes. He also determined the plane's seating, with higher-value players in first class. 17 Although a junket master could squeeze 250 bodies into a DC-8, provided they were packed like sardines, the L-1011, configured to seat 240, was the preferred airplane. 18
Dunes junket coordinator, Harley Kaufman, described how that casino relied on a partnership with TWA to bring the junket flying experience to its apogee. The casino was able to use the same inbound captain (known to the players as Captain Bud) on their inbound flight. Captain Bud became an integral part of the junket machine, greeting frequent flyers by name. The airline selected stewardesses who had experience with premium customers; some would even dine with junketeers after arriving in Las Vegas.
Once on the ground, the hotel had buses ready, with bellmen hustling their luggage directly to their rooms. With the junket representative alongside, the junketeers checked into their rooms, and were given clear instructions about what was and was not permitted. They could dine in any of the casino's three gourmet restaurants, provided a floor person or shift boss made the reservation—ditto for any entertainment at the hotel. 19 If they wanted to see a show at another hotel, run-of-the-mill players would be on their own, but if it was a particularly prized guest, and the casino executive on point had a relationship with someone at the other hotel, a phone call might be made. This was a tricky dance; the customer was expected to play enough at the target casino to justify their comp, but not so much that the target casino would be perceived as poaching the customer. 20
“It was an unspoken quid pro quo,” Kaufman later recalled. “The code was never to lie about a player's credit. From my perspective, if a player was set on going to the Hilton, I'd rather be in control, arranging the comp as a courtesy.” 21
To the extent that Las Vegas air junkets are thought of today, they are considered as a relatively static feature of classic casinos, something that went out with the advent of megaresorts in the 1990s, but didn't much change over the previous decades. That is at odds with the historical evidence. Even the general outline of junket operations described above would not have been accurate in the earliest or latest years of this study. The failure to better understand the changes in the junket market over the period 1960 to 1980 is a byproduct of an outlook that is not overly curious about historical change in the casino industry.
While there are some attempts to remember the past (curiously, two of the most prominent center around Benjamin “Bugsy” Siegel, who had far less impact on casinos than dozens of his contemporaries), in general, there is little understanding of how today's gestalt worldview and operational orientation has emerged as the result of a long process of change and development; there is similarly little effort expended to imagine how the industry will continue to evolve, outside of mulling the incorporation of new technologies into existing processes. The way that junkets emerged, thrived, and ultimately failed, if examined critically, may point towards a greater understanding of how a variety of factors influenced the evolution and demise of a significant source of gaming revenue, and may shed some light on the generational changes now sweeping the industry.
The Development of Casino Air Junkets in Las Vegas
To better understand the development of junkets, one must first locate their beginnings. The general idea of a paid-for trip to a destination is not new to Las Vegas or even the casino industry. The word “junket” has its origins in the 15th century, meaning an assortment of sweet or savory treats; in the following century it came to mean a banquet more generally, and eventually arrived at its current meaning, “a trip made by an official at public expense,” or “a promotional trip made at another's expense.” 22
The concept of providing free service to an influential patron is hardly unique to casinos. It may be as old as restaurants, nightclubs, and bars, or any retail operation, whether done for friends and family or as a calculated step to curry favor with an influential person. The first Las Vegas resorts, of course, were happy to provide free trips, and even money with which to gamble, to visiting dignitaries or media members.
For example, Al Freeman, publicity manager for the Sands, regularly extended full courtesy to visiting journalists. One salient example: in September 1955, Freeman heard that French journalist, Pierre Galante, of Paris Match was planning a trip to Las Vegas. Unsolicited, he contacted Galante, offering to host the writer and his photographer at the hotel and to facilitate their coverage of Las Vegas; Freeman even included a list of performers at other hotels during Galante's trip. 23 This was entirely typical; in that same year, the Strip resorts jointly organized a junket of Chicago and Milwaukee media people, each hotel housing and feeding a few of the 15 journalists. This particular junket was coordinated with TWA to mark the inauguration of a new direct flight schedule. 24
So, if you were important enough, or at least placed to do the casino a good turn, it went without saying that you weren't going to be paying your bill, and you might even be flown out to Las Vegas on the house's dime.
Likewise, providing free drinks was, from the start, baked into the Las Vegas casino paradigm. Anyone playing drank for free. Certainly alcohol's effects on decision-making weren't lost on casino managers, and there is a financial logic to the exchange: if providing a drink whose value to the casino was a few dollars, if that, persuaded a player to continue wagering, it would be foolish not to dole them out.
Naturally, the system was subject to abuse—not all those who appeared to be playing actually were—but in general comped drinks were overall a net positive transaction for casinos, particularly on the Strip. Typically far enough from each other to make driving to another a hassle (it was rare to walk the Strip in its early days), anything that kept players gambling was, in the long run, guaranteed to enhance a casino's bottom line. And if one casino was pouring free rum and cokes, the others were hardly going to stop. As long as it did not become a race to the bottom, free drinks could lubricate the flow of money from patrons' wallets to casino drop boxes.
If all players got a free drink just for showing up, it made sense to offer premium players their own perks. Why charge a man (in those days, premium players were almost always men) for his room and board if he was losing hundreds of dollars, particularly if somewhere else would be happy to put him up for the night? Again, the competitive nature of the Strip, in which a relatively small number of properties offering substantially the same product existed in a small area, dictated that once one casino began comping rooms and meals, its rivals would follow. Thus, was born the RFB comp, which became industry standard early on.
Given that few big players—or little players—lived in Las Vegas, it was only logical to devise a cheap way to get gamblers from their home cities to the Strip and back again. This was the “casino shuttle.” These charter flights carried players from several cities—mostly but not exclusively in the Western United States—for inexpensive fares. The Dunes, for example, ran “up and backs” out of Long Beach Airport near Los Angeles, charging $20 for a seat on a DC-3. Particularly good players had their $20 refunded upon arrival at the casino. 25 In theory, the gamblers' losses would more than cover the cost of their seat on the airplane, making this a win-win proposition: players got a “free” trip to Las Vegas, while casinos got a boost in their drop.
The benefit of these “up and backs” was that they could be scheduled during a casino's slack times, making the most of the casino's fixed assets, which would otherwise be underutilized. By 1957, both the Dunes and Thunderbird were successful enough that Warren “Doc’ Bayley, operator of the new Hacienda casino at the Strip's far southern end, chose to emulate them. Putting into practice an idea of his employee Harry Price, Bayley's Hacienda Airlines offered “Champagne Tours” to the general public. For $27.50, fliers could embark from Los Angeles at 6 p.m., enjoy a bottle of champagne on the flight, with a limo ride to the Hacienda, two rounds of golf on a night-lit course, a show, and $5 in chips waiting for them at the Hacienda. For an additional $8, they could spend the night, flying back the following evening. 26
Bayley's bet on Price's concept more than kept the value-oriented Hacienda open—it was so successful that Bayley bought more than thirty airplanes to accommodate the demand. 27 In November 1961, however, the Civil Aeronautics Board (CAB) charged that the Hacienda was, in fact, running an unlicensed airline. In an argument upheld by the United States Court of Appeals, the CAB alleged that, since fliers paid before boarding, the casino was charging a fare. Though the Hacienda argued that the fee defrayed the costs of their guests' stay at the resort rather than paying for their flight, the Court of Appeals upheld the CAB's original ruling. 28 The era of the casino shuttle was ended.
Even had they not been halted, champagne tours and up and backs weren't precisely junkets. They were usually open to the general public, not pre-qualified casino players and their guests were not extended casino credit. Although Bayley promoted the flights as “free,” they were not reserved for “special players,” and seem to have mostly served to drive foot traffic to the Hacienda, rather than being used to lure specific high-value gamblers. So, while they were successful, they were at best antecedents to bona fide junkets. It's also interesting to note that the CAB complaint against Hacienda specifically excluded hotels and casinos that chartered airplanes with the express purpose of ferrying customers to them, which left the door open for junkets to continue. 29
Bill Friedman's Casino Management offers what has become the oft-repeated origin story for casino junkets:
In 1961, a Flamingo stockholder flew a planeload of his wealthy Miami, Florida friends to Las Vegas to show off his hotel, which absorbed the cost of the round-trip, chartered flight and RFB comps for all of the passengers. While his friends stayed at the hotel, the casino recorded its biggest drop. Afterwards, the Flamingo began an experiment and invited established premium customers from a few major cities to take a complimentary four-day chartered plane trip that included free transportation and an RFB comp.
30
Friedman goes on to share that the program was successful enough to be emulated at the Dunes the following year. In 1969, the International started its own massive program (no doubt needed to fill its 1,500 rooms), by which time most Strip casinos were adepts of the junket game. 31 In less than a decade, junkets had become industry-standard.
Friedman did not name the stockholder (for reasons that will be explained below), and few subsequent authors have identified this individual. Meanwhile, it is apparent that up and backs were organically transitioning into air junkets. The Dunes had expanded its program by experimenting in Miami. Dunes vice president Howard Engle (who, in 1972, would be acquitted, along with fellow Dunes officials George Duckworth and Sidney Wyman of charges that the trio had skimmed $1.5 million from the casino in 1965) 32 flew a group of his followers in that city out to Las Vegas, finding enough success that by 1960, the Dunes was spending $3.5 million annually on airplanes. 33 Yet, for whatever reason, the Dunes' foray into junketeering did not etch itself into institutional memory the way the Flamingo's did.
With a scarcity of extant records and fading memories, it may be difficult to pin down just who ran the “first junket.” We are as likely to end in frustration were we to look for the first manager to comp a player's drink or room. The true story of Friedman's “first junket,” however, does help to contextualize the tensions around the institution, tensions that at the time of Casino Management's publication were still very apparent, which is itself valuable in understanding how junkets emerged.
The stockholder alluded to in Casino Management was Morris Lansburgh, who, despite a lack of current name recognition, was an important figure in the history of Las Vegas casinos; despite only being active for seven years, he oversaw operational changes that became accepted as the established norm. Lansburgh, when he bought the Flamingo with partner Sam Cohen in 1961, was hailed as an experienced “Miami hotel man.” He had bought Miami's Strathaven hotel after having sold his father's Baltimore liquor store, and pioneered in Florida hospitality. Previously, Miami-area hotels had offered the “European plan,” which rented rooms without meals. Lansburgh's American plan provided guests with two meals as part of their modest room rate. This brought many middle- and lower-income tourists to Miami Beach, helping the resort gain pre-eminence in the 1950s. 34
Lansburgh was a figure of sufficient interest that he was regularly featured in gossip columnist Earl Wilson's syndicated dispatches, as when, in 1960, he reported that, “Morris Lansburgh of the Miami Deauville hotel chain flew to the Riviera to take over the Martinez Hotel in Cannes and the Rhul in Nice. Miami's Sam Cohen went with him, carrying money.” 35 He was twice named one of the best-dressed men in America. 36
At the time that he made a bid for the Flamingo, Lansburgh was the owner of a small chain of Miami Beach resorts which included the Deauville, Sherry Frontenac, Casablanca, Sans Souci, Versailles, Saxony, and Crown hotels. 37 A figure with Lansburgh's national (or international) recognition and a reputation as a public-facing hospitality operator had a great deal to offer Las Vegas.
In March of 1960, Lansburgh, Cohen, and Daniel Lifter applied to the Nevada Gaming Commission to purchase an 85 percent stake in the Flamingo. The following month, the Gaming Control Board deferred the application as incomplete. 38 That was apparently just a temporary setback, as in May, the trio officially bought that majority share of the resort, with five locals affiliated with the casino (including future Downtown patriarch Jackie Gaughan), applying to have their interests transferred to the new corporation. 39
Lansburgh was careful to appease locals, naming local radio and television personality, Chuck Hill, publicity director. 40 His efforts to placate Las Vegans were immediately successful; hopping onstage to join Pearl Bailey's dancers in her finale in the Flamingo's showroom, he was acclaimed as a “good sport,” delighting the audience despite his lack of terpsichorean talent. 41 The Las Vegas Review-Journal began referring to the resort itself as “Morris Lansburgh's Fabulous Flamingo Hotel.” 42 By 1962, his hotel empire included the Flamingo as well as 17 nightclubs and cocktail lounges in Miami Beach, making him one of the country's largest purchasers of entertainment. 43
So it was in entertainment that Lansburgh sought to distinguish his new casino. This was not a novel approach, but the scale of Lansburgh's Miami Beach operations gave him something of an advantage in this competitive area, as he could offer performers a package deal, with shows in both Miami and Las Vegas. And Lansburgh wasn't afraid of shaking things up. Already in August 1960, he began inking headline performers to two-week engagements, a break from Las Vegas tradition. 44 But he was to make an even larger change, one that would permanently shift the presentation of shows in Las Vegas. Since the origins of the Strip in the 1940s, casino showrooms had featured lines of showgirls whose lavish production numbers would punctuate the evening's entertainment. In 1962, Lansburgh eliminated showgirls.
After monitoring both entertainment and gaming revenues for several months, he determined that the change hadn't had any appreciable impact on the bottom line, so the showgirls permanently departed. 45 By the end of the year, the Dunes joined the Flamingo in cutting its production numbers. 46 Ultimately, the Sahara, Frontier, Riviera, Sands, Desert Inn, and Thunderbird all dropped their showgirls. 47 For someone in town for less than two years at that point, Lansburgh had an outsized influence.
Similarly, Lansburgh found other ways to experiment with getting those who would enjoy the best of what he offered—whether that was Miami Beach sun or Las Vegas green felt—in the most cost-effective way, for both travelers and himself. That included perks for high-value guests. In 1961, Lansburgh began offering “Japanese houseboy” service for the hotel's patrons, something that had not been attempted before in Las Vegas. After completing one 200-room expansion of the Flamingo, he launched another, this one with Las Vegas innovation: English butler service. 48 While, for a variety of reasons, the Flamingo did not in the end establish itself as a high-end resort in Las Vegas, the fact that Lansburgh was willing to be the first in market to try butler service speaks to his risk tolerance. Another innovation planned for the new wing, six lavish suites with private swimming pools, would eventually become de rigueur for luxury accommodations. 49
Lansburgh enthusiastically embraced the Las Vegas tradition of comping potentially influential guests. In early 1962, he hosted 600 travel agents for a weekend “Flamingo Funarama,” picking up the tab. He was similarly hospitable in his home turf, hosting 1,600 agents in Miami. 50 Lansburgh explained that it was “impossible to keep the travel agents up to date by mail on the spectacular advances being made by the Flamingo as well as Las Vegas,” which necessitated hosting them in person. 51 Certainly showing them the city's charms gratis made them more persuasive when selling to clients. By 1964, the Las Vegas meeting, which had become an annual tradition, had expanded to include over 1,000 travel agents from across the United States, Mexico, and Canada, and had grown to include a brunch hosted by the Governor. 52 With business sufficiently booming at the Flamingo to justify two expansions in as many years, it seems that Lansburgh's largess was having the desired effect.
So, it makes sense that, at some point, he asked who could be more influential than his friends, and flew them all out to the desert to see his new joint, as recounted in Casino Management. It seems like a logical step forward, particularly to someone with Lansburgh's track record of innovation.
But there is likely more to the story than that.
Because Lansburgh, in addition to his decade-plus of success in promoting Miami Beach to progressively larger crowds, was partnered with one of the most notorious names in organized crime: Meyer Lansky. Born Maier Suchowljanksy in 1911, the young immigrant became a rising power in New York's criminal underworld in the 1920s. 53 Although he publicly professed that, “there is no such thing as organized crime,” he reputedly made a fortune during Prohibition before diversifying into gambling, loan-sharking, and other criminal enterprises. 54
Lansky had been one of the Flamingo's original investors, and although officially had had no stake in any Nevada casino, he was rumored to retain clandestine interests in several, reputedly masterminding skimming operations at the Fremont, Sands, Flamingo, and Binion's Horseshoe. 55 Sometimes, Lansky's involvement was not strenuously hidden. When Lansburgh bought the Flamingo, the sellers paid Lansky a $200,000 finder's fee, divided into eight years of quarterly $6,250 payments, which he dutifully reported and paid taxes on. 56
Lanksy wasn't paying taxes, however, on an additional $4.5 million that was allegedly skimmed from the Flamingo each year from 1960 until Lansburgh sold the casino to Kirk Kerkorian in 1967—a total of $36 million, according to federal prosecutors. 57 Lansky's continuing hidden ownership became public knowledge on March 25, 1971, when a federal grand jury indicted Lansburgh, Lansky, Lansburgh's partner Samuel Cohen, and Flamingo employees Jerry Gordon and Samuel Belkin, charging them with concealing casino income from the state of Nevada and the federal government.
Further, it alleged that Cohen and Lansburgh had violated Nevada law when they failed to disclose Lansky's continuing interest in the hotel under their ownership. 58 Initially prosecutors estimated the total skimmed at approximately $15 million. 59 Over the following months, however, a Washington-based federal task force combed through Lansky's network of associates and interests, which presumably unearthed evidence that the Flamingo skim was bigger than initially assumed. 60 On October 22, a new indictment charged those originally indicted, along with two more figures, with illicitly funneling $36 million from the Flamingo, with charges of tax evasion added for good measure. 61
The new indictment contained details of how the skim was orchestrated that touches on the role of junkets. As reported in the Las Vegas Review-Journal, “substantial credit” was extended to junketeers, who signed markers (promises to pay). Some of those markers were not recorded in the casino's official accounting, and when those markers were paid, the payments were not logged with the casino's income, but were collected in New York, sent to the Flamingo, then redistributed to Lansky and others. 62 Six of those charged pleaded innocent. Meyer Lanksy, who had been vacationing in Israel when the indictments were delivered, remained a fugitive. 63
After unsuccessfully seeking asylum in South America, Lansky returned to the United States; arrested when deplaning in Miami, his next stop was a local medical facility. 64 This presaged his defense strategy, as his attorneys argued over the ensuing years that he was too ill to endure the rigors of a trial. 65 Ultimately, Lansburgh, Cohen, and fellow indictees, Harry Goldberg and Steve Delmont pled guilty to lesser charges, while Lansky never faced justice. 66 Both Lansburgh and Cohen, were sentenced to one year in prison and a $10,000 fine for a count of using interstate commerce for racketeering, and one year in prison and $10,000 on a count of conspiracy to defraud the government and tax evasion. 67 They both paid the $20,000 fine and were released from prison after less than six months. 68
At his sentencing, Lansburgh was contrite. After Cohen broke down in tears, Lansburgh offered that he was “completely wrong.” He said he was “terribly, terribly sorry,” and that “this was the greatest tragedy of my life.” 69
It was indeed a long fall for Lansburgh: from signing contracts with some of entertainment's biggest names, regularly appearing in syndicated columns, and being celebrated as one of the nation's best-dressed men, to prison. He had grafted his name onto the Flamingo itself, in press notices if not on the marquee. Yet his plummet from grace did not bring down Lansky. Though he and his associates had admitted to their roles in a sustained fraud against the governments of the United States and Nevada (that coincidentally enriched them), none of them offered any evidence against the alleged mastermind. 70
Prosecutors had banked on crafting cases so airtight against Lansburgh, et al, that the defendants had no choice but to offer Lansky, but none of those who pleaded guilty said anything that tied Lansky himself to the scheme. The only evidence was the finder's fee contract, which had been “executed openly and legally, in triplicate.” 71 Lansky's attorneys, bolstered with reports by government-hired physicians as well as Lansky's own doctors, continued to successfully argue that he was not yet medically fit to be tried, until September 30, 1976, when Nevada judge Roger Foley dismissed the case, citing Lansky's apparently deteriorating health. 72
Lansburgh was collateral damage in the federal effort to nab Lansky, which made him radioactive at the precise moment that junkets were beginning to be discussed as elements in the evolving legitimate business of casino gambling. By the mid-1970s, it was no secret that organized crime interests were skimming money from Las Vegas casinos.
But as the industry was seeking legitimacy, it made no sense to call attention to Lansburgh's role in the development of what had become a major underpinning of the business. This explains Lansburgh's anonymity in the initial Friedman account. In the ensuing years, Lansburgh's (who passed away in 1977) 73 reputation continued its slide from celebrated to notorious to toxic to obscure to forgotten. Today, while Ben “Bugsy” Siegel has a monument to him in the Flamingo's pool area, and he and Lansky have a steakhouse named for them, Lansburgh is nowhere. Tying Lansburgh to the creation of junkets would have raised eyebrows in 1974, but it would draw a blank stare in 2022.
Yet it makes sense that casino air junkets came together under Lansburgh's aegis. Owned by an associate of Lansky, whose Havana gambling interests had recently been shuttered by Fidel Castro, 74 the Flamingo would have access to men who were familiar with Miami's gamblers, as well as those in New York and other major cities. It is likely that those on this junket were not just social acquaintances, but were serious players, which explains the increase in drop that Friedman's account claims. When considered in this perspective, the junket appears to have been far more than a mere whim of Lansburgh, as the Friedman account seems to suggest. The true question is, whose idea was the junket?
According to Edward Linn, the biographer of noted Dunes junketmaster “Big” Julie Weintraub, Bernard Cohen, who was affiliated with the casino but not named in subsequent indictments as a co-conspirator, ran thrice-yearly junkets from the Flamingo, which inspired Weintraub to initiate a similar program at the Dunes. 75 But while Cohen was executing the nuts and bolts of the junkets, securing airplanes and accommodations and signing up players, it is not clear whether the basic idea came from him, Lansburgh, Lansky, or someone else entirely. Some might argue that air junkets to Las Vegas casinos were inevitable.
The general concept of paying for premium players' travel and lodging being almost self-evident, coupled with the fact that the majority of high-value players were on the East Coast, if anything, raises the question of why it took until the early 1960s for junkets to become institutionalized. And, as with paid parking, once one resort proved it could be done, others quickly jumped in. But the extant evidence suggests that, if anyone is to be credited with “creating” the casino air junket, it is some combination of Lansburgh, Cohen, and Lansky.
The account of Lansburgh's first junket as related in Casino Management states that the inaugural trip was a financial success, with few other details—understandable, as more than a dozen years had passed and, for good reason, no one was eager to explore too deeply the details of Lansburgh's administration of the Flamingo. In his account of Weintraub (published in 1974), Linn also elides Lansburgh, crediting instead Bernard Cohen solely, and quoting Weintraub himself as saying that since he knew as many people as Cohen—and maybe more—he could probably do a better job of organizing junkets than their originator. 76
Weintraub came into the casino business as a customer—a New York jewelry salesman, he first visited Las Vegas in 1955 to attend the wedding of his friend Ash Resnick, who was then an executive at the El Rancho Vegas but who would make his greatest impact at Caesars Palace. 77 He discovered that he could simultaneously enjoy all that the city had to offer and make money selling his jewelry, but was caught short that December, when the town, as it usually was in the days before National Finals Rodeo, was empty. He persuaded El Rancho Vegas owner Beldon Katleman to reserve 13 rooms for a group of gamblers who, on Weintraub's recommendation, were willing to sample Las Vegas for the first time. He sold them each jewelry to ensure “domestic tranquility” upon their return home to their wives, and the group reportedly gambled $300,000 in total. 78
Weintraub continued to spend time in Las Vegas, but it wasn't until he heard of the Flamingo's nascent junket program that he was able to persuade the owners of the Dunes to allow him to assemble a group of high rollers. Three of the casino's owners had put him on salary for $1,000 a month to assist in the collection of debts from New York players. 79 In October 1962, he pitched the owners on spending $25,000 to charter a plane during the December lull, filling it with 125 known gamblers, and comping their room, food, and drink. Even if each player only dropped, on average, $1,000, the trip would be a success. Weintraub argued, and he knew in his bones that they would lose much, much more. 80
Despite the apparent success at the Flamingo, this was not an easy sale, even for a born salesman like Weintraub, though given the Dunes' long history of low- or no-cost (to customers) fliers, it is unclear whether the hesitation was about Weintraub's eye for picking gamblers or the concept itself. Linn's narrative suggests it was the latter, but by 1962, Dunes managers should have had a solid appreciation of air junkets. It is possible that Linn's account, published a dozen years after the fact, was colored to heighten Weintraub's role.
In any event, in Linn's telling, one owner refused to authorize the expense, but when he fell ill Weintraub was able to convince the others to proceed. When the flight was ready to depart, Weintraub learned that he had 140 gamblers ready to go and only 125 seats. The owners only reluctantly agreed to pony up commercial airfare for the additional 15 players. 81
The owners were rewarded for their faith, no matter how grudging it had been, in Weintraub. According to Linn, “an hour after the buses rolled up to the casino, the hotel had all its money back.” 82 Weintraub reported that shortly before the junketeers were due to depart, the casino was up between $600,000 and $700,000—a godsend for the struggling Dunes in the short term, but a disaster, Weintraub thought, for their long-term prospects. “Then this one fellow picked up the dice and he just never stopped shooting for one hour,” he later recalled. 83 The hotel ended up losing over $100,000 in that hour, but they couldn't have spent the money on a better advertisement. 84
The junket's success convinced the Dunes owners to allow him to host regular trips. Linn reports that Weintraub in effect saved the Dunes, which enjoyed an increase of $10 million to $12 million in gaming revenue thanks to Weintraub's junkets for the year, transforming the Dunes “from a tottering operation to a highly profitable one.” 85 Since then, Linn claimed, “the Dunes' casino receipts have been the highest in Las Vegas.” 86
Harley Kaufman, who formerly ran the Dunes' baccarat room, assumed administration of that casino's robust junket program in 1972. At this point, one and sometimes multiple airplanes were ferrying gamblers to the Dunes each week, with “back to back” trips optimizing the cost for the casino by using the same plane and deliver gamblers from New York to Las Vegas and fly back to Boston with a previous group. 87 The Dunes' reach extended the length of the East Coast, with Boston, New York, Baltimore, Norfolk, Atlanta, Jacksonville, Tampa, and Miami all regularly sending out groups. The Midwest and South were also represented, with Chicago, Detroit, St. Louis, Cleveland, Indianapolis, Dallas, Houston, Memphis, and Atlanta particularly notable. There were even regular flights out of Toronto. 88
Kaufman describes the excitement that surrounded early flights:
When the junkets first started, East Coast guys were spending cash that they had buried in their backyards for years. When they came out to play, there was so much cash on the table that they had to force it into the drop boxes with a paddle. When it came time to do the count, the money just exploded out of the boxes as soon as they were unlocked.
89
Cash play, however, was only transitory; players eventually dropped all of the currency they had been hoarding, which necessitated the shift to a credit program. 90
The issue of credit was a serious one. At casinos like the Dunes, junkets, at their peak, generated as much as 30 percent of total gaming revenue. 91 With much of that play on credit, often with customers who the casino had no prior knowledge of, the potential exposure was immense as Nevada, at the time, did not permit the collection of gambling debts. With casinos fronting the costs of the flight and associated other expenses, failure to collect debts incurred by customers was a serious concern. The problem of credit-worthiness could be solved through sufficient screening, but was compounded by the difficulty of precisely measuring just how much junketeers were betting. While tracking the credit issued to players was straightforward, it was impossible to measure just how much the player had actually gambled. Perhaps they placed a few bets for appearances' sake and cashed out the bulk of their chips, giving them in effect a free vacation at the casino's expense. 92
While at the Dunes, Kaufman came up with a system intended to curb the most obvious abuses and to provide a better insight into who played and how much. He had individual rating slips produced in the Dunes' print shop. Floor people could unobtrusively carry them, with customers none the wiser. They tracked time at the tables, levels of play, credit taken, along with other notes. Each morning, the slips were forwarded to Kaufman's office, where a team of secretaries transferred the information to folders. Before each plane left town, Kaufman or his designate would review each customer with the junket master. When issued a rooming list for an upcoming trip, Kaufman would check the customers' ratings, and if needed, ask the junket master to explain a poor performer's presence or flat-out refuse to host them. 93
“We backed into it as a defensive mechanism,” Kaufman explained, “but it later grew into what it is today.” 94 Player tracking and reward systems—which are a fundamental part of casino operations today—had their origins in junket operations. With a substantial portion of casino revenues generated from a potentially fragile source, it is not surprising that those working with junkets created these innovations.
Reputational Issues with Junkets
There was money in junkets, but it wasn't necessarily easy money. In addition to the internal pressures—such as the problem of free riders and difficulties with collection of credit—there were serious reputational issues with junkets as well. As seen with the Lansburgh/Lansky case, by 1971, the public—as well as the federal government—was aware that junkets were being used to facilitate the skimming of casino revenues. At a time when the casino business's legitimacy was still contested, this was a matter of deep concern for regulators, state officials, and members of the industry.
Junkets came into the spotlight in early 1969. On May 28, Clark County Sheriff Ralph Lamb pulled 18 of the 100 passengers of a Kansas City junket off of their plane as they were about to return home, charging them with vagrancy. Lamb alleged that the 18 men, who had spent the previous four days enjoying the best of Caesars Palace, were “believed to have Mafia ties.” 95 This prompted interest from Frank Johnson, the chairman of the Gaming Control Board (GBC), who requested Caesars Palace to forward all of its records pertaining to the junket. “We're not very happy to have people of this type,” in Nevada, Johnson asserted. 96 Eight of the 18 had already been subpoenaed to testify before a Miami grand jury about an alleged underworld meeting in that town. While none of those on the junket were on Nevada's List of Excluded Persons, which would have opened Caesars Palace to an enforcement action, one of them, Tony Civella, was the nephew of Nicholas Civella, who was on that list. 97
In Johnson's eyes, the fact that the men had come on a junket, rather than as independent leisure travelers, demanded a harsher response: “A person has the right to move around the country and eat and drink, but a junket implies a group of people coming at the invitation of the hotel,” he said. “There is an element of screening in junkets. They are not dealing with ordinary people.” 98
A week after Johnson made that statement, the Board filed a complaint alleging that the hotel and its 59 owners had brought discredit on Nevada gaming by catering to 12 of those arrested. The casino, the Board charged, had “wined and dined” the junketeers, with free rooms, drinks, food, and entertainment by Andy Williams and Frank Sinatra. The Review-Journal noted similarities with Frank Sinatra's 1963 hosting of alleged Chicago gangster Sam Giancana at the Cal-Neva Lodge, which ultimately cost the singer his gaming license. 99 Caesars' management knew full well who would be on the plane, the Board argued, because junket master Carl Caruso had submitted the credit cards of all junketeers to the casino two weeks before the trip. The violation was severe enough, the Board felt, to merit up to $3 million in fines against the casino and its owners. 100
The Kansas City/Caesars Palace debacle, which came just as Lum's, Inc. was in the process of purchasing the casino from its founding owners, led GCB chair Johnson to announce that the List of Excluded Persons, or Black Book, would soon be expanded. 101 Yet there were signs that Johnson's vigilance was perhaps misdirected. A June 16 Review-Journal editorial argued that the Board's complaint against Caesars was misguided for three reasons. First, each of the men arrested had previously stayed in casino hotels without incident. Second, one of the Board's members did not sign the complaint. Third, Johnson's statements that the Black Book needed flew in the face of the state's position that the recent influx of corporate ownership had “given the state a new image.” 102
In early July, Sheriff Lamb arrested three “undesirables” just after checking in at the Dunes. A Gaming Control Board investigation concluded that the hotel was not at fault, since the trio were not “guests” of the casino but had paid their own way. 103 And, after several delays, the Board dropped its complaint against Caesars Palace, stating that while the Board was confident that it could sustain the allegations, “the matter of junkets should be a policy decision” rather than an enforcement action. 104
That policy decision surfaced in December 1969, when the State Gaming Policy Board passed a motion brought by GCB chief Johnson to draft rules requiring the licensure of all junket operators outside of the state, as well as the licensure of all Nevada casinos operating out-of-state junket offices. 105 That was not the end of it, as new allegations—including that some junket passengers had been cheated at gambling while in the process of flying to Las Vegas, which defeated the purpose of the trip—kept junkets in the public eye. 106 A member of a New York junket was arrested at the Frontier on a vagrancy charge. 107 Two men at the Aladdin on a junket from Philadelphia were arrested for the possession of cheating devices after over 100 quarter slugs were found in their room. 108
By February 1970, the Gaming Control Board had expanded its investigation into junkets, sending board members to Boston and New York. 109 Gaming Control Board Chair Frank Johnson and member Jack Stratton returned to Carson City to announce that some junket operators were “pretty damn questionable,” and that allowing them to continue would sully the name of Nevada gaming—the one unforgivable sin in the Silver State. 110
One of the erstwhile junketeers interviewed by the Board complained that he was told to “pay up or else ‘the boys' will call on you.” 111 Although Johnson insisted that “legitimate” junket operators posed no threat, and that the casinos themselves were not to blame for the shenanigans played by “shady” operators, there were, nevertheless, disturbing facts emerging: the FBI arrested five men for their role in a “flying fleece,” in which junketeers were “picked clean” in airborne card games before they touched town in Las Vegas—a distressing proposition for the hotels, which now had to feed and house gamblers who had already been busted out. 112 Loan sharks aboard the planes reportedly offered loans with interest of up to 150 percent to those who had lost sums of up to $30,000 while flying to the world's premier gambling resort. 113
Yes, Johnson declared, the regulations that had already been proposed would be “strengthened considerably” now that they had a better understanding of the issues raised by “freelance” junkets. 114 At a public hearing in Las Vegas on February 19, the Gaming Commission held an open discussion of what was to be done about junkets. Members of the Commission and Control Board spoke of the need for strict regulation, but industry representatives were less enthusiastic. Johnson continued to press against “freelance” junkets, further alleging that a top member of “The Cosa Nostra” ran biweekly junkets to several casinos and that skimming was present. 115 Commission chair Jack Diehl, “gravely concerned” about the implications of Johnson's investigation, put aside his general beliefs that the fewer regulations, the better to announce that, unless regulations were put into place, he would declare a moratorium on all junkets. 116
Industry representatives, while conceding that no one wanted to see abuses continue, argued that as a whole the junket industry was clean. Regulating junkets would lower revenues (and tax dollars for the state). Charles Rich of the Dunes said that the casino had not had any issues with junkets in the seven years it had been running them. Harrah's vice president Charles Munson, cautioning the regulators against “overkill,” pithily summed up the industry's approach: “Let's be sure we don't burn down the house to get rid of the rats.” 117
Scarcely a month later, however, Clark County Sherriff Ralph Lamb arrested three junketeers at the International Hotel, charging the purported “Mafia members” with failing to register as convicted persons and possession of “dangerous drugs.” 118 The arrests still put “mafia,” “junket,” and “Las Vegas” in the same sentence, which is exactly what the gaming industry's regulators did not want. This was just the latest bad headline for Las Vegas junkets; in February, Hawaiian orchid grower Harry Otake—who also organized junkets to Las Vegas and collected IOUs—was murdered. Honolulu police chief Francie Keala believed that a junketeer who resented Otake's aggressive debt recovery was responsible. 119 Though lucrative, junkets were becoming a major public relations liability for both regulators and casino operators.
Asserting Control Over Junkets
With the public becoming increasingly aware that junkets could tie Nevada casinos to organized crime, regulators considered taking action. At issue was what level of oversight the state would have over junket operators. One proposal would require all junket operators to be investigated and licensed. Further, junket operators would be paid a straight salary rather than on commission and could only work for one licensee. 120
Despite some pressure to contain the worst excesses of junkets, the Gaming Commission did not strengthen controls over them in 1970. When, in July 1971, the United Kingdom announced a total ban on casino junkets in order to keep the American mafia out of that nation's gaming business, Nevada regulators maintained that such a blanket prohibition was not contemplated for the Silver State.
While regulators were still “working on” new junket regulations at the behest of the legislature, Phil Hannifin, chair of the Gaming Control Board, declared that, in Nevada, the prevailing sentiment was “if you behave yourself while you're here, you're welcome and not too many questions will be asked,” while Europeans tended to be “more restrictive.” 121 Nevada was sure to balance regulatory oversight with economic considerations. “Without junkets half these places would close down,” said Frank Schreck, then a member of the Gaming Commission. “Junkets are all right, as long as they are properly controlled. Right now, the casinos are controlling them pretty well.” 122
The perception that casinos could “self-regulate” their junket business was not widely shared outside of Nevada. In October 1971, a St. Louis federal grand jury began investigating the potential organized crime penetration of Nevada casino junkets. The panel was spurred to act by the murder of Primo Frank Caudera, a St. Louis junket organizer who, shortly before his bullet-riddled body was discovered in his car's trunk, told local authorities that someone who he refused to identify was demanding a $5,000 cut of the trips he organized. It didn't help that Caudera was the fourth violent death connected to Las Vegas junkets in two years. 123
Nevada gaming officials acknowledged that they would have to do something to tighten control over junkets, but Hannifin remarked that it would be, “a dirty bear” to police junket representatives across the country, clarifying the issue to be one largely of image. “I personally feel we have to do something about it,” he said, “but the question is how to without causing the state embarrassment. 124
The Nevada Gaming Commission finally met on July 20, 1972 to discuss the adoption of Regulation 25, which would “provide for a new Regulation to gain some measure of control over junkets, determine the suitability of junket masters, and report credit problems to commercial credit agencies.” 125
And that was the crux of the problem. Reading between the lines, it seems apparent that there was no great desire to crack down on junket operations broadly. If regulators' (and the industry's) highest priority was to keep any taint of organized crime involvement far from gaming, it would have been a simple matter to take the United Kingdom's approach by adopting a blanket prohibition on junkets. That, however, would have led to a decline in revenues, which would hurt both gaming operators and the state. So, the question was how to exercise “some measure of control” over junkets that was sufficient to keep embarrassing stories out of the news, but not so stringent that it led to diminished business.
After two years of wrangling, by the summer of 1972, regulators and operators still differed in just how much control was needed, and who would be responsible for exercising it. Tensions came to a head at the August 17 meeting. Previously, Control Board member Shannon Bybee had declared that the new set of regulations was, outside “a few changes in wording,” ready to be adopted. 126 At the public hearing, however, industry representatives voiced “stiff opposition” to the proposed rules, which would make the licensee responsible for the conduct of junket masters and debt collectors working on their behalf. Any junket official engaging in any type of conduct that would reflect discredit on the gaming industry (i.e., being tied to organized crime or disreputable debt collection techniques) would expose the licensee to charges of operating in an unsuitable manner. 127
The Nevada Resort Association proposed that, before taking action against a casino for associating with a “disreputable junketeer,” the state should provide a warning. Hannifin did not embrace the suggestion, pointing out that a junket organizer labeled disreputable might sue the state. 128
With pressure to enact “some measure of control” building, regulators and the industry finally reached an agreement in October 1972. 129 Henceforth all junket operators would have to submit an “informational filing” to the Gaming Control Board. Once this information was filed, the junket representative could begin working on behalf of the casino, without any investigation or finding of suitability. If the Gaming Commission chose to investigate a junket operator (if, for example, they were featured in a news story as an alleged organized crime associate, or their name was mentioned in a grand jury investigation) and found them unsuitable, the casino would be forced to cut ties with them. 130 This would appear to satisfy the wishes of both the state and the industry to avoid bad publicity while not placing an undue burden on either regulators or operators. After two years of back-and-forth, the state had asserted control over junkets.
Junkets Decline
And yet, even as Nevada provided a framework for the control of junkets, allowing them to remain a part of casino operations, their importance to Nevada casinos was diminishing. There were several factors responsible for the decline of junkets. First, while the junkets offered a good deal for serious casino players, inevitably, some players worked to game the system. This included blatant frauds, such as players applying for credit under false identities or writing bad checks (and sometimes both). 131 But the occasional fraud or cheating was, for better or worse, part of the casino business. The more insidious threat came from the casinos themselves.
Riders, for example, became an increasing problem for junkets, even when customers had been carefully screened for their credit-worthiness and level of play. “Big” Julie Weinberg laid out the problem. It started out with one premium player asking whether his wife could join him—a reasonable request, and one that junket masters entertained. Weinberg rationalized it in three ways: wives were willing to let their husbands visit Las Vegas more often if they were present to chaperone; husbands gambled more because, instead of “wearing themselves out in bed” with new company, they were at the tables; and the wives might develop a taste for gambling as well. 132
Weinberg's justifications, however, didn't change the fact that a plane that once had 240 qualified gamblers now had as few 120. Initially, only players with credit of $10,000 and above were afforded the privilege of asking along their better halves; as competition intensified, that dropped to $5,000 players. 133 As the bar lowered, players took advantage. In addition to his wife, one player also wanted to bring his doctor (who didn't play). Casinos might have been able to profit from a big enough player with a small entourage, but the groups inevitably expanded: why not your accountant as well? 134
Once the cost of chartered planes became prohibitive and executives began comping individual airfares, competition drove a further race to the bottom. First, one coach airfare was comped. Then, one first class was granted. Then, two coach, and finally, two first class tickets. 135
In addition to outright fraud and riders, even otherwise decent paying customers tried to take advantage of casinos' largess. One Dunes junket customer thought he'd worked out a way to get a guaranteed return from his trips. He continuously ordered full bottles of whiskey—allowable under the terms of his comp—but was never seen drinking them. Pit personnel informed the junket master, who, with the wisdom of Solomon, requested that the junketeer's luggage be brought out shortly before departure to the airport. Laying the suitcases on the floor of the lobby, he called the customer over and proceeded to jump up and down on them, shattering the bottles inside.
“You're not coming back,” he said to the customer. “But you can take your glass home.” 136 As well as suitcases full of liquor-drenched clothes, this was a stark warning to those watching that even full comps had their limits.
Casinos also had to combat generally poor economic conditions throughout the 1970s. A combination of high inflation, higher gas prices, and economic stagnation put a damper on growth, and dried up the pool of premium customers needed to keep the junket system rolling. The crisis was effectively solved in the mid-1980s with the “Burger King Revolution,” a general shift away from high-end, credit players to retail, mass-market ones. 137 Why grant $10,000 in credit to 200 players who might or might not pay up, when you could cater to 2,000 players, who played $500 each, cash, and didn't require comped flights, rooms, or meals? While the reward was potentially less, the risk was virtually nil.
As Las Vegas casino hotels got larger in the 1970s and especially the 1980s, requiring more intense capital to build and maintain, junkets were increasingly outdated. When the casino department was the resort's primary breadwinner, management was content to run other departments, particularly rooms and food and beverage, as loss leaders. But, with the larger scale of investment, every department was expected to generate profits. 138
Finally, the old system of domestic air junkets was undone by an institution originally designed to optimize it: player tracking. Kaufman and his colleagues tracked play at the Dunes to determine whether players brought in by junket operators should be eligible to return. 139 It wasn't a stretch to eliminate the middleman.
In a 1999 study, John T. Bowen and James Makens credited the air junket, created by the anonymous Flamingo stockholder in 1961, as “one of the first” tools casinos marketers used to develop premium players, but that “liberal comping to players and rebates to junket operators” had pushed “a number of casinos” to failure. 140 By the time of the study, most Las Vegas casinos had, the authors claimed, “internalized the role of the junket operators for domestic players” by employing hosts to work directly with premium players. 141 The emergence of database marketing and of premium slot players further undercut the need of external junket operators. As the authors correctly predicted, “the development of sophisticated databases will lead to more niche marketing and micro marketing in the future, particularly with the premium slot player. Casinos will use their marketing programs to develop relationships with their players…the distribution systems will become internalized.” 142
By the 21st century, it was clear that the age of the domestic air junket for Las Vegas gamblers was past. A 2012 study of the battle for competitive loyalty among Las Vegas resorts by Oliver Lovat highlighted the importance of the development of players clubs (Bowen and Makens' “sophisticated databases”) to several casinos' strategic marketing, but noted that, on the Strip, gaming only represented 38.2% of total income. 143 In an environment where casinos have a robust set of tools to track play and incent premium players to visit, and in which gambling represents a diminishing portion of the overall revenue picture, air junkets would make little sense. Barring drastic changes to not only how casinos market themselves but also the larger social, regulatory, and economic milieu in which they operate, it is unlikely that junkets will see another golden age in Las Vegas.
Conclusion
The development of air junkets to Las Vegas casinos came during a decade of growth and change for Nevada's gaming industry, as it transitioned from syndicate ownership to publicly traded corporations, and as Las Vegas Strip resorts grew in size. Initially, air junkets were a boon to casinos, as they allowed them to effectively outsource marketing. Though junkets were expensive in terms of airfare and promotional outlays, they had, by the early 1960s, a proven track record of bolstering the casino department's bottom.
And yet, as the industry was changing, junkets became more of a liability. Starting in the late 1960s, a series of scandals connected to Las Vegas junkets, starting with rumors of mob involvement and escalating to extortion, loansharking, and murder, gave the junket business an unsavory odor. Fear of embarrassment prompted Nevada gaming regulators to assert a measure of control over junkets, but even as they did, junkets were on the decline. Opportunistic customers and fraudsters squeezed junket margins, while over-exuberant competitiveness forced casinos into a race to the bottom. An industry-wide shift to the mass market further eroded junkets' importance. Finally, as the capital structures funding casinos demanded greater fiscal discipline and more accountability among all departments, the very idea of a junket, which sacrificed revenues in non-gaming departments in the hopes of a higher casino win, was unsustainable.
Still, the decade or so of air junket supremacy in Las Vegas has lessons for gaming operators and regulators today. First, junkets grew quickly and fostered a host of innovations, not the least of which was a rudimentary player tracking system. That shows that, when there is money to be made, even seemingly intractable problems will have solutions. Second, the regulatory apparatus, perhaps by design, was slow to respond to revelations of corruption and organized crime associations around junkets. Certainly, there were logistical problems with monitoring junket operators outside of Nevada, but casinos seemed to solve those problems. And, while ugly headlines made the junket business something of a liability for Nevada gaming, in the end, it wasn't the federal government that undid junkets, but the industry itself, which evolved beyond the need for them.
In the end, junkets are a reminder that the problems facing gaming today, while they may seem overwhelmingly crucial to the future, may have made themselves irrelevant by the time regulators take action.