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At mid-century, Las Vegas seemed far removed from the Cold War gripping the rest of America. With the mob in full control, the city was raking in enormous profits from gambling, an activity outlawed everywhere else in the nation. But Las Vegas was also searching for new paths to respectability. Oddly, it was the Cold War that gave Vegas a lift.

Just before dawn on January 27, 1951, a white flash lit up the Las Vegas sky. Minutes later, a thundering blast left a trail of broken glass more than a dozen blocks long.

Walter Cronkite reported the event. "This is Newsman's Knob, some 75 miles north of Las Vegas, Navada. The bomb will be exploded from a tower 300-feet high. This will be the first time that newsmen have been permitted to watch."

Over the next 12 years, 120 nuclear devices, an average of one every five weeks, were detonated above ground at the federal government's Nevada Proving Facility. It was just a one-hour drive from downtown Las Vegas. Nevada State Senator Dina Titus says the atomic testing program made Las Vegas seem more legitimate.

"Up until that point, we were just a spot in the desert, we were prostitution, we were gambling," says Titus. "Suddenly, we were helping to win the Cold War and I think people could grab a hold of that because it was a good thing to do for democracy."

As the atomic arms race gathered speed, Las Vegas was the only city in the country with a front row seat to ground zero. Casinos hosted "bomb parties" that peaked with an early morning blast.

"The bombs went off at dawn, and people would go up to the roofs of the casinos ... and they'd watch with glee," says film critic David Thomson, who has written about Las Vegas. "It was part of the entertainment, it was definitely part of a show and people who came to Vegas wanted there to be a test while they were there. It was something else they could see."

"My father was the first newsman accredited to the testing site," says newspaper editor Brian Greenspun who grew up in Las Vegas. "He used to take us as kids. We used to go up to Mt. Charleston, and I remember watching these bombs, you know, these mushroom clouds and these particles, these pink particles were, it looked pink to me, would just settle over us, this dust. And that was all radioactive fallout. We all took the government's word that it was safe. They lied."

Studies show that some people who were near the Nevada test site when bombs blew up may well have developed cancer from the radioactive fallout. In the mid-1950s though, any misgivings Las Vegas residents may have harbored about the bombs were easily brushed aside. Every time a radioactive cloud bloomed over the desert, Las Vegas again made the news. And like the rest of America back then, the town was growing. Tourism was surging.

"Las Vegas was perfectly positioned to cash in on the post-war consumerist prosperity boom," says journalist Marc Cooper. "I mean, think about it. 1950s, the rise of the national highway system, the emergence of motoring as a leisure activity and money. It's OK to have fun, it's OK to seek leisure, it's OK to go on frivolous vacations and it's OK to push the edge."

By the mid-50s, it seemed Las Vegas was everywhere Americans looked. Magazines and movies beckoned tourists to the licentious desert getaway.

When Americans thought of Las Vegas, what leapt to mind was the neon-lit stretch of Highway 91 at the southern fringe of town. That was the Vegas "Strip." Bankrolled almost entirely by organized crime figures, new Strip resorts rose up out of the scrub with stunning speed - first the Sahara and the Sands, then the New Frontier and the Riviera and the Dunes.

"Well, what happens is the mob quickly realized that it's an enormously lucrative thing," says David Thomson, "that there could be many casinos, and they also realized that in the prosperity of the post war period, you can bring tourists. They're going to hear about Las Vegas and it's going to be exotic and romantic and glamorous."

"You came here, and just by coming here, you were making a statement," says Cooper. "You were a little bit gamey. You were a little bit on the edge. And that was a real novel concept in American popular culture. It was the first permission, the first national permission granted to you to be an adult and to do things that you might not ordinarily do, but you wanted to do, and I think that was really the intoxicant that really drove Las Vegas."

Beyond the Strip, residential Las Vegas was also exploding. By 1960, the Las Vegas population had soared 400 percent, to more than 125,000. Most tourists never glimpsed the neighborhoods where all these new residents lived.

And certainly almost no tourists had ever been to the Westside - a sprawling, squalid neighborhood across the railroad tracks from Fremont Street, home to some 15,000 African-Americans.

"West Las Vegas, the Westside was like nothing I had ever seen before," says Las Vegas radio-host Patricia Cunningham. "It was the most segregated neighborhood that I had ever witnessed in my life. It was a given if you were African-American, you had to live west of the railroad tracks."

"The first significant numbers of African-Americans came to Las Vegas during World War II to help build and work in the Basic Magnesium factory, a defense plant," says historian Eugene Moehring. "There were many white people who hoped that once World War II ended, they would leave and go some place else. But the hotel industry, the growing Strip, and downtown created lots of low-paying jobs for custodial labor, room maids, waiters and whatever. And so ironically, it was the Las Vegas hotel industry that kept African-Americans here."

Segregation was commonplace in mid-century America, and Las Vegas was no different. African-Americans were not only relegated to the lowliest jobs, they were barred from patronizing almost every restaurant, casino and club in town.

Even headlining black performers like Nat King Cole were shunted out of the Las Vegas showrooms when the curtain came down. But by the spring of 1955, a quiet revolt had begun.

As the civil rights struggle gained momentum in the South, African-American celebrities began to challenge segregation on the Las Vegas Strip, demanding rooms in the hotels where they played and refusing to perform unless black people were allowed into the audience. Las Vegas casinos were over a barrel. They could either concede and possibly offend some white patrons, or risk losing some of their most popular black entertainers. In early 1960, the local NAACP ratcheted up the pressure.

"The NAACP called a march on the Strip," says Alice Key, one of the activists, "they notified the hotel, resort hotel association that this was going to happen, and if they didn't want to see it on national television, they would open their doors."

"The hotels don't want this fight," says Greenspun. "They don't want these headlines all over the country. This town was run by the hotels. When they said, 'Do,' it got done."

The day before the planned protest, members of the NAACP met with the mayor, the governor and a group of local businessmen. Within hours, they had agreed to lift the Jim Crow restrictions at every hotel, restaurant, bar, casino and showroom in Las Vegas. Though it would be more a decade before the city fully desegregated, the color line was fading.

"This is a city where the only currency is currency," says Marc Cooper. "It's a place where, as long as you have the chips, you are equal to everybody. Nobody cares what your race is, your color, your gender, your sexual orientation. In fact, they don't even care if you have a criminal record, everybody is the same until you're out of money. And then when you're out of money you're just out."

By 1960, Las Vegas was very in. The city was an icon of cool in American culture. Warner Brothers set a major motion picture in town: Ocean's Eleven. It starred three legends of the Vegas stage: Sammy Davis, Jr., Dean Martin and Frank Sinatra. When shooting for the film wrapped for the day, they performed nightly in the luxurious Copa Room at the Sands.

Sinatra and company called their act, "the Summit." Fans called them the "Rat Pack." The show was such a hit, that it would play on and off for years.

"We went to the Sands hotel, where every business guy with money on the planet was trying to get through the door," says casino developer Steve Wynn. "Every swinger and do-da-diddy guy, every sporting life character on the face of the earth was in Las Vegas, taking every room in this small town so they could get a seat at the Rat Pack. And the air in the Sands crackled. Something was happening. The music was playing on the P.A. system was Sinatra and Dean Martin. The charisma, the excitement, the electricity in the building in the afternoon was beyond belief. There is no parallel to it today."

"Everything that Vegas promised it would be and said it would be really was embodied in those handful of weeks when the Rat Pack were performing every night. So what it really was, was a pinnacle of 'Vegas Cool,'" says Cooper. "We flippantly refer to Las Vegas now and then as Sin City, but that's when Las Vegas really was Sin City."

In the fall of 1960, the rise of passenger jet service brought millions of new visitors to Sin City. Suddenly, the Las Vegas mob bosses needed more hotel rooms, and for that, they needed a lot of cash.

"Mobsters built hotels with what I call shoebox money," says Hal Rothman who teaches history at the University of Nevada, Las Vegas. "They went to each other and said, 'I'm building a hotel in Las Vegas. Do you want to buy a share? It's $50,000. The other guy pulls a shoebox from under the bed, opens it up and counts him out $50,000, in cash. It got to the point that hotels were too expensive to do that. You simply couldn't get enough guys with $50,000 to build a $12 million hotel. So they needed another source of capital."

One of the city's top mobsters, Moe Dalitz, knew just the guy to tap: his longtime associate, Jimmy Hoffa. As president of the Teamsters Union, Hoffa drew on the retirement savings of nearly 200,000 truckers and longshoreman to finance a spate of hotel expansions in Las Vegas.

More hotel rooms, more guests, more money dropped at the tables and slots, all of it would eventually add up to a dramatic spike in the "skim." That was the secret pile of cash the mob collected in casino counting rooms and then distributed to the network of owners with hidden interests in Las Vegas.

"It was a town that had the front-end guys, the smiling guys with the wild sport coats," says John L. Smith, a columnist for the Las Vegas Review Journal, "and then it had the other folks who came to town and, of course anyone in the lobby on a Friday night might notice that a crew of New York mob guys came in and got all the penthouse suites and that were ... they were treated very, very well. Now were they just gambling? Of course not. They were watching their store."

With Teamsters money at their disposal, it looked as though Moe Dalitz and his cronies had found a way to stay on top. And with hundreds of millions of dollars in gambling revenues at stake, Nevada authorities left them there. Then, in 1961, President John F. Kennedy appointed his brother Robert to the post of U. S. Attorney General. The mob had good reason to fear him. Just a few years earlier, Bobby Kennedy served as chief counsel to a highly-publicized Senate investigation into organized crime where he took on figures like Jimmy Hoffa.

"Every place you go, we've checked your telephone records, you're calling every gangster in the United States," Kennedy said to Hoffa.

"Mr. Kennedy, they may be nice people today. You know, you don't give them a chance to prove they're nice," Hoffa responded.

Kennedy watched in disgust as all but a handful of the nation's leading racketeers got away. The attorney general vowed to nab those who had eluded the government's grasp.

Writer Nick Pileggi says the feds set their sights on Las Vegas. "The FBI and the IRS could never accept the fact that a man like Moe Dalitz who was illegal in Cleveland, could get on a plane and come here and be legal here. You can't have one state where being illegal is legal. It just drove them nuts."

In 1962 and 63, Kennedy's Justice Department, along with the FBI and the IRS, waged an all-out war on Las Vegas, plotting raids, planting illegal wiretaps, and searching out mob connections to every casino in town. The Feds uncovered the skim, publicizing what one observer called "The Mob's Federal Reserve." In the face of relentless scrutiny, Las Vegas' alliance with mobsters had become a liability. Soon, an unlikely character would help dissolve that alliance.

Billionaire Howard Hughes checked into the Desert Inn in 1966, seeking tax shelter for his riches and refuge from the press. Cloistered round-the-clock, Hughes began collecting Strip hotels and casinos like postage stamps.

Nick Pileggi says that for Las Vegas mobsters, Hughes's buying spree couldn't have come at a better time. "The guys who created Vegas the original guys were powerful and rich, but they could never cash out. They could not walk away from that profit. They were now in their 60s and 70s, they want to leave some money to their grandkids and their families and Howard Hughes comes in with his accountants and they could finally get rid of it, they could cash out."

Hughes was precisely what Las Vegas needed, a national hero with a clean-cut image that could redeem the city from the stigma of organized crime.

"I think Howard Hughes played an enormous role in the evolution of Las Vegas," says John L. Smith. "His man, Bob Maheu, says that Howard Hughes didn't make the new Las Vegas, but he got it ready. By bringing a brand name that was not Murder Inc. into Las Vegas, Howard Hughes helped separate the community from its past."

Howard Hughes moved on from Las Vegas in 1970, and corporate America moved in. Hotel chains like Ramada and Hilton took Hughes's lead and started buying up casinos. Once Wall Street came to Sodom and Gomorrah, there was little reason for Las Vegas to put up with the mob.

Over the next several years, Nevada authorities forced half-a-dozen Las Vegas casinos to cut their ties to organized crime. By the mid-1980s, the last of the mobsters were gone from Las Vegas, but as corporate casinos took root, buzzing energy of the old Sin City waned and its nightclub cool grew tepid.

"You know, we're talking about a community that had become out of step with what people thought was hip," says John L. Smith. "When things .. got punk, Las Vegas, you know, pulled up its polyester leisure suit and went, 'Gee whiz fellas, you want to hit the blackjack table?'"

However dowdy or corny or tame Las Vegas seemed, it was still the only big city in America where a person could legally sit down at a blackjack table and throw his life savings away. But in May 1978 even that distinction disappeared.

With millions of people living less than a gas tank away, Atlantic City easily won out against the cross-country airplane ride to Vegas. That competition, along with a national recession, sapped Las Vegas' drawing power. By 1980, Las Vegas was in the throes of a full-fledged identity crisis.

Continue to part 3

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