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Sixty years ago, the Tropicana opened under Mob’s hidden control

Frank Costello, Dandy Phil Kastel among underworld luminaries involved at time of 1957 debut

By David G. Schwartz

Las Vegas was in the middle of a slump. It was April 1957, and the town was still coming to terms with the opening of five major resorts two years earlier. The Dunes, Riviera, New Frontier, Royal Nevada and Moulin Rouge had all struggled through ownership changes, some slipping into bankruptcy; the latter two never recovered. The previous year’s opening of the Hacienda had been a low-key affair with little glamor. So to open the doors of the town’s most expensive hotel yet built was going against the grain.

Tropicana Hotel 1957. (Las Vegas News Bureau)

The Tropicana had been planned since 1955, and on the surface did not seem to have been hurt much by the failures of that year. It had a curious ownership structure: Miami hotelier Ben Jaffe (part owner of the Fontainebleau in Miami Beach) owned the land on which the casino would sit, but Conquistador Inc. would build and operate the resort.

It just so happened that Conquistador’s owner, “Dandy” Phil Kastel, had a long and fruitful partnership with Frank Costello, perhaps the nation’s most infamous gangster in the spring of 1957. For years, Kastel had run New Orleans’ Beverly Club (an ostensibly illegal but still operating casino) for Costello; the two also shared in a Louisiana slot machine route operation that, similarly, might have been illegal on paper but which police managed to avoid until the Kefauver Committee’s spotlight forced them into action. And it almost goes without saying that most “Miami hotel men” who came to Las Vegas in this era were more than familiar with Meyer Lansky, another famous gangland name.

Kastel was the driving force behind the Tropicana’s construction, and was happy to talk about his vision for Las Vegas. In an interview with New York Times reporter Gilbert Millstein, he admitted that while he had been “good friends” with Frank Costello for years, the reputed Mob boss had “no interest” in the Tropicana whatsoever because he was too busy and troubled to take on Las Vegas. “You couldn’t give him all of Las Vegas,” Kastel explained.

It was Kastel’s experiences with the Beverly Club — and elsewhere — that convinced him to build the Tropicana. “I’ve seen a lot,” he said. “I know all types — underworld, upper world, middle world — and a lot of pretty nice people. I saw where there was a need for a first-class establishment without, you understand, knocking any other hotel. I’m a particular operator. I like to give value.”

That value took the form of a hotel-casino that cost $15 million, making it by far the most expensive Las Vegas resort yet built — closer to the $19 million it would cost for Caesars Palace nine years later than the $8.5 million high-rise Riviera. The Trop earned its nickname “the Tiffany of the Strip.”

That $15 million delivered 300 rooms in two three-story wings that swept back from the main building in a Y shape. Described as having a “quiet dignity” in the Las Vegas Review-Journal (not precisely the words that first come to mind when discussing Las Vegas casinos today), the hotel was noted for its spacious lobby area and mosaic tile-lined entrance.

And so the doors opened on April 4. “Lush luxury, extremely good taste, warmth, intimacy, and functional efficiency,” enthused the Las Vegas Sun.

The Theater Restaurant, whose tiered floorplan gave every table an unobstructed view of the semi-circular stage, saw its first action that night with a gala revue that featured nearly three dozen dancers and the Las Vegas big stage debut of singing star Eddie Fisher. Produced by show business veteran Monte Proser, the revue featured original songs in an overarching storyline.

Kastel reached out to Los Angeles for culinary expertise, bringing in restaurateur Alexander Perino, whose Perino’s restaurant in L.A. was world renowned — an early example of a Las Vegas casino importing a celebrity chef, although in Perino’s case it was decades of superior dining, not television show, that had brought him fame. Perino oversaw the Theater Restaurant, the Brazilian Room and Perino’s Gourmet Room.

From Fremont Street, the Tropicana lured Ronzone’s, a downtown Las Vegas fashionwear staple, which established its first branch store in the new resort.

Frank Costello, wearing a bandage around his head after attempted murder, New York, 1957. A note police found in his pocket after the shooting revealed the skim at the Tropicana. (Getty Images)

Unlike many of the resorts that had faltered two years earlier, the Tropicana boasted veteran leadership from day one, with many of its executives hailing from the Sands. Former Sands part-owner Louis Lederer served as secretary-treasurer and as half of the Executive Committee, which called all the shots at the Tropicana. The other half was T.M. Schimberg, the soft drink king of Chicago, who also presided over a Windy City real estate empire. Together, Lederer and Schimberg were responsible for the resort’s day-to-day operations, with Lederer presumably taking a more active role than Schimberg, who retained both of his Chicago businesses.

The casino itself was presided over by J.K. Houssels, who was one of the first owners of full-on Las Vegas gambling halls following their 1931 legalization. The former miner and Army Air Force pilot had managed at various times the Las Vegas Club, Showboat and El Cortez in addition to starting a bus line and taxi company. In his free time, he bred thoroughbreds.

A substantial investment in the resort buildings and executive talent promised to give the Tropicana the kind of pop the busts of 1955 had lacked. It wasn’t known at the time, but behind the scenes the Tropicana had even more veteran leadership in the form of Costello, who had a more active interest in the casino than his friend Dandy Phil wanted to admit. At the time of the opening, the general public was blissfully (or willfully) ignorant of Costello’s involvement, although in a few weeks Costello’s private business would become public in the most explosive way imaginable.

On May 2, 1957, while entering a New York apartment building, Costello was shot and wounded by Vincent “the Chin” Gigante on orders from rival Mafia boss Vito Genovese. Written on a piece of paper found by police inside Costello’s coat pocket was the exact gross win from the Tropicana as of April 27, 1957 — $651,284, less $153,745 in markers (loans to players), with the proceeds from slot machines at $62,844. The note mentioned $30,000 for “L” and $9,000 for “H,” likely money to be skimmed on behalf of Costello’s underworld partner Meyer Lansky and perhaps for Mob-connected Teamsters union boss James Hoffa. It was a big national news story.

Costello survived the shooting with a minor head wound, but six months later, during the famous Apalachin meeting of American crime family leaders on November 14, he agreed to step aside and allow Genovese to become boss of the Luciano family. Months earlier, Nevada’s state gaming agency had refused to license the Mob-tainted Kastel, and Tropicana landlord Jaffe convinced veteran local casino executive Houssels to take full control of the casino.

David G. Schwartz, author of several books on Las Vegas gaming history, is director of the Center for Gaming Research and teaches history at the University of Nevada, Las Vegas.