Las Vegas history: 1905 founding, legal gambling, the mob and the Strip

Southern Paiute people lived in and around the valley for centuries before Europeans arrived. The attraction was water: artesian springs fed a green patch in the Mojave Desert. In 1829 Rafael Rivera, a scout with Antonio Armijo’s trading party on the Old Spanish Trail, is credited with naming the site Las Vegas, "the meadows". John C. Frémont camped there in 1844, and Mormon missionaries built an adobe fort in 1855. They abandoned it within a few years; its remains are now a state historic park.

The railroad founding

The modern town exists because of the San Pedro, Los Angeles and Salt Lake Railroad, backed by Montana senator William A. Clark, who gave his name to Clark County. On 15 May 1905 the railroad auctioned lots around its new water stop. That auction is the official founding date. Fremont Street became the main street, and saloons and gambling halls appeared almost immediately.

Nevada then banned most gambling, effective 1910, and Las Vegas was incorporated as a city in 1911. Gambling carried on in back rooms. For two decades Las Vegas was a small railroad and ranching town with a few thousand people.

Why Nevada legalised gambling

The Great Depression hit Nevada’s mining and ranching economy hard. In March 1931 the legislature passed Assembly Bill 98, which legalised wide-open casino gambling, and the same year it cut the residency requirement for divorce to six weeks. Both laws were meant to bring money in from out of state. Construction also began on Hoover Dam (then called Boulder Dam) in 1931. The federal government built Boulder City for dam workers and banned gambling there, so workers drove to Las Vegas to spend their pay. Downtown clubs such as the Northern Club received some of the first licences.

The Strip began outside city limits on the Los Angeles highway, US Route 91, where land was cheap and city taxes did not apply. Thomas Hull opened El Rancho Vegas there in 1941, and the Hotel Last Frontier followed in 1942. They were motor-court resorts with pools, aimed at drivers coming from Southern California.

The Flamingo

The Flamingo opened on 26 December 1946. The project was started by Hollywood Reporter publisher Billy Wilkerson and taken over by Benjamin "Bugsy" Siegel with money from East Coast crime figures. Costs ran far over budget and the opening went badly. Siegel was shot dead at a house in Beverly Hills in June 1947; the killing has never been officially solved. The popular idea that Siegel "invented" Las Vegas is a myth, since El Rancho and the Last Frontier came first. But the Flamingo set the pattern of glamorous resorts financed with money from outside the normal banking system.

The 1950s building boom

Banks were reluctant to lend to casinos, so money came from crime families and, later, the Teamsters Central States Pension Fund. The Desert Inn (1950), Sahara and Sands (1952), Riviera (1955), Dunes (1955), Tropicana (1957) and Stardust (1958) all opened in this decade. Many had hidden owners and ran skimming schemes, taking cash out of the count room before it was taxed.

The US Senate’s Kefauver Committee held hearings on organised crime in 1950–51, including in Las Vegas. Nevada responded by creating the Gaming Control Board in 1955 and the Gaming Commission in 1959, and in 1960 it began a List of Excluded Persons, the so-called Black Book, which banned named individuals from casinos. Meanwhile, above-ground atomic tests at the Nevada Test Site from 1951 were visible from the city, and some hotels marketed them as a spectacle. Entertainers such as Frank Sinatra and the Rat Pack made the Sands famous.

In November 1966 Howard Hughes moved into the top floors of the Desert Inn. The commonly told story is that when the hotel wanted his rooms back for high rollers, he simply bought it, which he did in 1967. Over the next few years he bought the Sands, Frontier, Castaways, Silver Slipper and Landmark, becoming the largest casino owner in Nevada. Hughes had no known mob ties, and his purchases gave the state a clean buyer for resorts with shady histories.

The bigger change was legal. Nevada’s Corporate Gaming Acts of 1967 and 1969 let publicly traded companies own casinos without licensing every shareholder. Hotel chains and investors could now raise money on Wall Street. Kirk Kerkorian opened the International (later the Las Vegas Hilton) in 1969, where Elvis Presley began a long residency, and Jay Sarno opened Caesars Palace (1966) and Circus Circus (1968).

The last skimming cases

The mob did not leave at once. In the 1970s and 1980s federal investigators uncovered skimming at several casinos, including the Stardust and Tropicana, run on behalf of Midwest crime families. Trials in Kansas City in the 1980s convicted leading figures and effectively ended mob control of Strip casinos. The story of that period, lightly fictionalised, became Martin Scorsese’s film Casino. See gambling movies for how accurate it is.

Tragedy and rules

On 21 November 1980 a fire at the MGM Grand (now Bally’s, later Horseshoe) killed 85 people. Nevada responded with much stricter fire codes, including sprinklers and alarms in high-rise buildings. Surveillance also became far more sophisticated in this period; the casino surveillance guide explains how.

Steve Wynn opened the Mirage in November 1989, with a man-made volcano out front and thousands of rooms. It was financed partly with high-yield bonds and showed that a resort could earn money from rooms, shows, shops and restaurants as well as gambling. A building boom followed:

Old casinos were imploded on live television to make room for new ones. The 1990s even tried a "family" image, with theme parks and pirate shows, before the city went back to marketing itself to adults.

A tourism city, not only a casino city

Since the 2000s Strip resorts have earned more from rooms, food, entertainment and conventions than from gaming. Las Vegas now draws around 40 million visitors in a typical recent year. Pro sports arrived with the NHL’s Golden Knights (2017) and the NFL’s Raiders (2020). The Sphere venue opened in 2023, the same year Formula 1 raced on the Strip, and the Super Bowl was played in the city in February 2024.

The city also lived through hard years. The 2008 financial crisis stopped several projects, and on 1 October 2017 a gunman firing from Mandalay Bay killed 60 people at a country music festival, the deadliest mass shooting by a single gunman in US history. In March 2020 Nevada closed all casinos for about eleven weeks during the pandemic. Macau has also overtaken the Strip in gambling revenue since the mid-2000s.

Every era of Las Vegas history rested on the same business model. A casino does not need to win every bet. It needs a small edge on each bet and a huge number of bets. That is the law of large numbers put to work.

A worked example

Take American roulette. Any single-number bet pays 35 to 1 on a 38-pocket wheel:

• Expected value per $1 = (1/38)(+35) + (37/38)(−1) = −2/38 ≈ −$0.0526.
• A table that takes $100,000 in bets over a shift expects to keep about $5,260.
• A single player can win big that night. Across millions of spins the percentage holds almost exactly.

The mob skim worked because the edge was so reliable: bosses knew roughly what the count room should hold, took cash off the top and still reported a normal-looking profit. Once state regulators, auditors and corporate accountants took over, the same maths produced public company earnings. See house edge for edges on other games.

Comps and the high roller

The city’s famous free drinks, rooms and shows are paid for by expected loss. Casinos estimate a player’s theoretical loss (average bet × hours × decisions per hour × edge) and hand back part of it as comps. The casino host guide explains how that calculation drives VIP treatment.

Las Vegas history is part of a much longer story told in history of gambling, and the oldest casino guide covers the European houses that came first. Browse more in the Casino knowledge topic.

PVPspinArena is a small online example of the same maths, with a different trust model. It runs three player-vs-player games in USDC or ETH on the Base network:

• Roulette is a 15-slot wheel with 7 Purple and 7 Silver slots paying 2x and 1 Green slot paying 14x. Every bet returns 14/15 ≈ 93.33%, a 6.67% house edge, and the law of large numbers enforces it the same way it does on a Strip table.
• Coinflip pits two players against each other on a 50/50, with the winner taking the pot minus any fee shown before entry.
• Jackpot gives each player a win chance equal to their share of the pot.

Where Vegas relied on regulators and auditors in the count room, each PVPspinArena round is settled from committed seeds that any player can check on fairness. Play is 18+ only, and limits and support are on responsible gambling.