Gambling Comes to Hot Springs:  City Coffers Explode.  Economy Never Better.

by Mike Brooks
photography courtesy of the Garland County Historical Society

At one point in its history, Hot Springs welcomed any and all gambling.  The attraction of it and the healing thermal waters of the hot springs is what earned the city of Hot Springs the moniker of “America’s First Resort” and that of the original “Sin City”.

Hot Springs came into prominence after the Civil War when several veterans, of both northern and southern loyalties, hearing of the healing waters of the thermal springs, visited the area seeking relief of woes due to amputations, disease, maladies, etc. suffered during the war and eventually settled the area. It wasn’t long before these shrewd businessmen, with foresight of what the Hot Springs could be, were able to convince tourists by the hundreds to visit the area for the healing and curative properties of the newly dubbed “Health Spa.” With the increased interest, investors began to take notice of the possibilities the springs and its attraction afforded.

Once, The Diamond Joe, a narrow gauge railroad from Malvern to Hot Springs was laid, travel exploded to the isolated city tucked neatly between the mountains.  The train meant the end of having a day long, bumpy, dusty ride, provided one did not get caught in a rainstorm which would swell the several creeks causing lengthy delays and extended travel time. The El Paso stage coach from Malvern to Hot Springs was a route once robbed by the famed James-Dalton gang.

Realizing the potential profits to be made from the little community, the early gambling czars of the city put most of the profits back into it in one form or another. Yes, they built extravagant and elegant homes, but also swanky gambling houses, with names like The Monarch Club, The Opera House Bar and The Office Saloon operated by the notorious Frank Flynn – Boss Gambler, one of the city’s earliest czars. This also encouraged other innovative businessmen to move to the secluded valley and provide necessities in the form of hotels and restaurants for the tourist, but also those businesses vital to sustain a vibrant and growing community.

Although traditionally controlled by one main “czar,” gambling flourished and became a vital part of the downtown area and Hot Springs experience. Visitors to the bathhouses naturally looked to be entertained at the poker tables and roulette wheels, as well as the many bordellos and other houses of ill repute.  As long as you adhered to the rules set down by the local “Gambling Czar,” and paid him his share of the profits, one could operate pretty much any kind of gambling operation or scheme one could concoct.  Part of the problem was that the control of the gambling would, or at least could, change every two years with the election of a new mayor, who early in the city’s existence, had the power to name both the Chief of Police and the High Sheriff.  One position would usually go to his brother and the other to his other brother, or brother-in-law, or a strong supporter.  Together they controlled the gambling, the town, and everything that it brought to the area.  All three positions were highly coveted because of the money to be earned. Not as city and county employees, but in the form of payoffs and kickbacks from the many gambling houses, booking joints, horse books, bordellos, etc.

Doctors – some certified and some quacks – also came to the area sensing an opportunity to apply their trade on the influx of crippled and diseased people expecting miracle cures from the “healing” waters. “Drummers” would work the outlying train stations and incoming trains seeking patients to direct to the office of their (Doctor) employers. They received a commission on every patient who visited the doctor. The Doctor would direct the patient to the proper spring, sometimes requiring a written prescription.

With the influx of tourists and visitors to the springs seeking relief from their ailments, a more seedy element filtered into the mix of the locals and, at times, created serious headlines and animosity from the locals.  This helped to create the necessity to incorporate the city and create a government to police and curtail the more undesirable element.  But, it also helped to attract other more desirable elements such as baseball teams for the first spring training sessions.  Along with the athletes came politicians, entertainers, horsemen when the race season was open, radio stars, and eventually television and movie stars.

In addition to the more desirable element, the underworld, including mobsters (Al Capone, “Bugs” Moran, John Toria and others from Chicago as well as New York figures such as Charles “Lucky” Luciano, Albert Anastasia, Meyer Lansky and Owney Madden), gangsters and bank robbers ( Frank “Jelly” Nash, Bonnie Parker and Clyde Barrow, Alvin “Old Creepy” Karpis and many others) also flocked to the area.  While present, they adhered to the tradition of the peaceful valley established by the Native Americans who, when they came to the area, considered it “sacred ground” and would enter under the strictest of peaceful rules.  The gangsters respected the city, never causing problems between the tribes even though they may be bitter enemies outside the valley.  There was no recorded mob activity or any bank robberies occurring within the city and immediate area of Garland County.

Although always illegal, the gambling was a major part of the economic system and success of the city. In 1927 Leo P. McLaughlin, at the encouragement of  his good friend and confidant, Municipal Judge Vern Ledgerwood, ran for and was elected mayor.  Together they built a political machine that would control the gambling, the town, and everything that it brought to the area.

For the next 20 years Hot Springs was the biggest illegal gambling operation in the country and it flourished under the strict leadership and tight control of Leo and Vern. There were over 120 establishments (at the time gambling was shut down in 1967) within the city that would pay their “entertainment tax” in the form of a monthly fine, to the municipal court in order to continue to operate their slot machines, poker tables and roulette wheels. The amount of the “tax” depended on the number of tables and machines located within the particular establishment.

Leo bragged that he never took a penny from the city coffers as Mayor, yet he never had a want for money, fine clothes, cars, a home for his entire family including his eccentric mother and sisters, pristine riding stables, and anything else he desired.

Even the mob saw the potential for millions in profits to be made from the illegal gambling in the sleepy valley. In the 1940’s the New York mob sent Benjamin “Bugsy” Siegel to Hot Springs to investigate the potential of gaining a major interest in the operation. When it became apparent that they would not be able to strong arm the local powers that be, “Bugsy” went directly to the desert and formed Las Vegas.

Today gambling on that scale no longer flourishes in Hot Springs. Nor does the money flow into the pockets of the investors – gambling houses, restaurants, hotels, spas, shops – and their employees, as well as the rest of the local economy that it brought with it.  The city has been forced to look elsewhere to attract the vital tourist dollar to the area, and they work diligently to assure that there are different activities, including festivals – music, film, arts – cook-offs, bathtub races down Central Avenue, and many others every weekend.  The old casinos may be gone, but the ghosts of the past are still as alive as ever in Hot Springs.