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A Gambling Tale: The History of Galveston’s Underground Casinos

A Gambling Tale: The History of Galveston’s Underground Casinos 0001
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  • The story of how the Maceo brothers created an illegal gambling empire in Texas.

Sheriff’s deputies were not invited. They weren’t there for the gambling – they were there to close down the Lucky 7 and R&N game rooms – and seize thousands of dollars in cash on that warm day in mid-July. After an undercover investigation uncovered illegal gambling that included more than 150 eight-liner style slot machines from the two locations, deputies seized items that included an ATM machine used by bettors to keep the cash flowing in the slots. Two suspects faced felony money laundering and organized crime charges.

This 2011 raid was just another example in a long war between law enforcement and those hoping to keep gambling alive in Galveston County, Texas. As another summer vacation season comes to a close, thousands will head home from a city that attracts vacationers from across the country looking for a bit of fun in the sun at the beach, some great seafood, and a visit through one of Texas’s oldest cities. What many may not also realize is that this city on the Gulf of Mexico was once one of the hottest gambling destinations in the country – though not quite on the up and up.

Booze Brothers

As far back as the early-1900s, a few underground gambling establishments in dance halls and saloons were offering a chance to wager some cash. The city had been home to various types of criminality from prostitution to bootlegging, and Sam and Rosario Maceo first moved to the island in 1910 from Louisiana. Only a decade earlier, the city was destroyed in the Great Galveston Hurricane, which killed as many as 12,000 people and is still listed by the National Oceanic and Atmospheric Administration as the deadliest natural disaster in American history.

Born in Sicily, the Maceo brothers began work as barbers, but the lure of easy money soon led them to a life of crime serving the vices of Texans looking for a stiff drink during Prohibition. In Galveston, ships from Jamaica, Cuba, and other Central American and Caribbean countries would offload liquor a few miles out to sea, and then run into port by bootleggers who could make thousands of dollars supplying the Southwest (including the rest of Texas) and other destinations with illegal booze.

A local gang leader approached Rosario (nicknamed Rose) about hiding 1,500 cases of rum in his beach cottage. The payment of $1 a case proved much more than his haircutting wages, and Rose and Sam were soon hooked on the “business.”

After World War I, the brothers opened up their own barbershop and began rewarding customers with bottles of Dago Red (a cheap Italian-style wine made outside of Italy) during the holidays. The booze proved popular with customers looking to quench their thirst with some underground libations. Sam then opened a store selling “cold drinks,” a front to peddle liquor. The ban on alcohol proved to be an opening the men needed and they were soon knee-deep in liquor until the repeal of Prohibition in 1933.

The Gamble Gets Going

As their bootlegging business continued to flourish, the Maceos were in the driver’s seat of a burgeoning enterprise. Galveston was a large port and the beach-lined island was a popular tourist destination. The historic Hotel Galvez, which is still in operation and where Sam lived for a time in the penthouse suite, was a symbol of luxury on the coast of the Lone Star State. Gambling was popular with many underground casinos catering to those with a thirst to wager and money to gamble.

At one point, the Maceo brothers knew they had to get in on the action. In 1923, the two men made their first entrance into this world with the opening of the Chop Suey at the Corner of 21st Street and Seawall Boulevard. Renamed Maceo’s Grotto three years later, the place was shut down for illegal gambling in 1928 and then damaged by a storm in 1932. After the storm, the brothers rebuilt and added an “Oriental” theme and rechristened the club the Sui Jen. A decade later, a more "South Seas" theme was added and the Balinese Room was unveiled.

A Gambling Tale: The History of Galveston’s Underground Casinos 101
Image c/o Galveston Rosenberg Library

The Balinese Room would become the best known of Galveston’s many gambling destinations. With brilliant views of the beach and Gulf of Mexico, the Balinese Room sat on a pier, which extended 600 feet out into the water – and would soon become a Galveston hot spot. As vacationers pitched their beach umbrellas in the mocha-colored sand along the beach and soaked up the sun, blackjack hands were being dealt and roulette wheels spinning only feet away in the Balinese.

“It always had a guard posted at the front entrance to screen the patrons and issue membership cards to those who they wanted to enter and to warn of unwanted visitors,” writes Frank Chalifant in his book Galveston: Island of Chance, which focuses on the island’s gambling past and casino chips and collectibles from the era. “The long pier that isolated the Balinese Room from Seawall Boulevard became known as ‘The Ranger Run.’ By the time law enforcement officers reached the restaurant and the windowless back gambling room, the illegal paraphernalia had been hidden.”

"The Balinese Room was home to world-class entertainers, bootleggers, and organized crime."

The Maceos utilized extensive security measures. Hidden panels in walls could hide equipment quickly and craps tables converted to billiards tables. In all, the entire casino could “disappear” in less than a minute. The casino also reportedly had some help with a general “hands-off” approach by local law enforcement, who only responded to complaints, which were few.

“The Balinese Room was home to world-class entertainers, bootleggers, and organized crime. It was also one of Galveston’s more notable gambling rooms, although there were numerous ones all over the island,” says Will Wright, director of marketing and public relations with the Galveston Historical Foundation. “The Balinese was built in such a way that when raided, it took officers so long to get to the end of the building, that all signs of illegal behavior would be hidden or abandoned in the Gulf of Mexico. Legend also has it that when notified of a raid, the band would queue up ‘The Eyes of Texas Are Upon You,’ the Texas Rangers' theme song, when the Rangers would enter.”

As Galveston became more and more of a travel and entertainment destination, even stars like Frank Sinatra, Duke Ellington, Groucho Marx, Bob Hope, Jack Benny, George Burns and Gracie Allen, Mel Torme, Jayne Mansfield, and Gene Autry performed at the club.

“I can imagine what it must have looked like, with all the lights,” Casey Greene, a historian and scholar with Galveston’s Rosenberg Library, told the Austin American-Statesman in 2011. “The Maceos knew how to do it correctly. They ran a clean operation. Men wore coats and ties, and women wore dresses. It was classy. I wish I had been able to visit Galveston in those days. Imagine the excitement of having a national figure come to town. We don't have many anymore.”

Growing the Operation

As the popularity of the Balinese Room increased, the Maceos began to expand their entertainment and gambling empire. The brothers opened the Hollywood Dinner Club on Avenue S and 61st Street. The ritzy Hollywood was known for a nice meal and drink in a glamorous setting, and of course, gambling. The club attracted some of the biggest names in entertainment and became one of the most popular destinations in the country. It met its demise in the late-1930s after a raid by the storied Texas Rangers lawmen. The Balinese Room would continue to flourish, however.

“Rose was the tough businessman and Sam possessed all the finesse,” Chalfant writes in Galveston: Island of Chance. “Sam became good friends with and booked all the big names in the entertainment business. It is my heartfelt opinion that Sam Maceo was to Galveston what Steve Wynn is to Las Vegas today.”

The Maceos continued with their successful clubs, which also included places like the Turf Athletic Club (casino), the Studio Lounge (card room and horse betting lounge), and the Western Room. The brothers also had a hand in numerous other business ventures from athletic clubs and billiards rooms to business loans, check cashing, real estate, and oil. The business loans often came with the requirement that the Maceos would supply all vending and slot machines to the business, according to Chalfant, with the merchant’s portion of the take applied to the loan. The Maceo clubs and betting properties also took bets on sports and horse races, all illegal in Texas.

"It is my heartfelt opinion that Sam Maceo was to Galveston what Steve Wynn is to Las Vegas today."

While their work may not have been legal, the Maceos were well-respected by many in the Galveston community and they supported many charitable causes and philanthropic ventures. The brothers financed free concerts on the beach, gave money to churches, and even supported the Miss Universe pageant held on the island. They may have been running businesses outside of the law, but gave the front of legitimate businessmen.

Along with the Maceo empire, there were many other clubs in town offering a gamble or wager for those with disposable income. Slot machines were numerous throughout town – from the large clubs and underground casinos to smaller bars and gas stations. From the 1920s to 1950s, Galveston was a gambling oasis. Most law enforcement chose to look the other way as places like the Alamo Club, Artillery Club, Beach Amusement Club, Brownie’s Casino, Embassy Club, Horseshoe Club, and many more openly flouted gambling, liquor, and prostitution laws. And even though horse race wagering had been made illegal in 1909, the Galveston Downs was still open for business as late as the 1920s.

As Gary Cartwright notes in Galveston: A History of the Island: “None of the gambling places downtown or along the Seawall Boulevard went out of their way to hide what they were doing, although they didn’t advertise either.”

Galveston might as well have been called the first Sin City – taking advantage of Americans’ penchant for gambling decades before gamblers would be lured to the bright lights and big games of Las Vegas.

A Gambling Tale: The History of Galveston’s Underground Casinos 102
Image c/o Galveston Island Historical Foundation

Losing Out

By the 1940s, casinos flourished throughout the island in the years after World War II. The Maceo brothers’ gambling devices were prevalent in towns and cities in the Galveston area. Business was booming, but tragedy soon struck. Sam died of cancer in April of 1951. His brother continued and controlled the business, but passed away himself in 1954 of heart failure.

After years of dodging government oversight and numerous law enforcement raids, the deaths of the two brothers seemed an omen for gambling in Galveston as federal and state crackdowns began in earnest throughout the 1950s. The IRS filed a claim against Sam Maceo and eventually won $600,000 in 1964.

In 1957, new state attorney Will Wilson admonished local officials to “clean up Galveston” or he would be forced to take action. Wilson had previously worked as Dallas County District Attorney and helped end the city’s “wide open gambling” and the mob wars between Benny Binion and Herbert Noble. Newly-elected Sheriff Paul Hopkins took note of Wilson’s demands, and set about cracking down. Wilson also appointed former FBI agent and World War II pilot and hero Jim Simpson as a special assistant tasked with the job of closing down the gambling rackets. He was given wide latitude in investigating the casinos.

Simpson hired two oil workers for a special mission. They were trained and sent to various casinos in undercover investigations over a four-month period in 1956-57. They gambled, drank cocktails, and compiled evidence meant to shut down the establishments. The two investigators eventually made several visits to Maceo clubs, including the Balinese Room. They visited the club three times in May 1957 on fact-finding missions. They noted that the extravagant gambling room housed three craps tables, several slot machines, two roulette wheels, and a horse racing machine. Eventually, the two men gathered evidence on 50 clubs in the Galveston area. Unlike in the past, law enforcement was taking the Galveston “casino problem” seriously. Raids and criminal charges followed.

Then on May 30, 1957, the new sheriff raided the Balinese. Hopkins demanded to be let inside, and two undercover detectives inside stopped employees from hiding equipment and evidence. The equipment was destroyed – and it was game over for the Balinese Room. Gambling and liquor violations forced it to shut down.

While some gambling houses stayed open in the 1950s, most began to disappear. The new efforts by law enforcement in Galveston coupled with the legal Las Vegas casinos complete with luxury hotels began attracting American gamblers to head west. Hurricane Carla ripped through Galveston in 1961, and the former Balinese Room sustained considerable damage. The historic facility went through several owners afterward and functioned as a nightclub and later a meeting room and banquet hall before closing again in 1989.

"I bought the Balinese because I could and because it was an iconic piece of Texas – and my – history."

In 2002, Houston attorney Scott Arnold purchased the club, renovated the building, and re-opened with several shops and businesses within the building. In the gift shop, new Balinese Room merchandise and historical artifacts (including the chalkboard ledgers to post baseball betting odds) were on display. The showroom was converted to a restaurant with a brunch buffet. Much of the retro South Seas décor was kept, and diners could dance on the old floor with brilliant views of the Gulf from the rear of the property.

“I bought the Balinese because I could and because it was an iconic piece of Texas – and my – history. I had gone there many times in the early-1980s and believed the South Seas ballroom to be the most beautiful room I had ever been in,” Arnold says. “Owning the Balinese was very much a labor of love. I often felt it owned me. The sense of history was palpable – you could feel it breathing in the walls. To be very honest, being ‘Mr. Balinese’ was a great feeling.”

In September 2008, the landmark club and gambling hall faced yet another major storm as Hurricane Ike surged into Galveston. The powerful water and waves, which rose above the seawall, was too much for the almost 80-year-old structure.

“I still have a 60-year lease on the property and rebuilding the Balinese there and other options for the space are under consideration,” says Arnold.

From gambling and fine dining to world-class entertainment and elegance’s little space of Galveston history was gone. The Balinese Room was completely destroyed. Like a bad roll at the dice tables that were so popular on a busy weekend, the old gambling hall had officially crapped out. But some still remain who have certainly not forgotten the city’s unique past as a gambling mecca.

Sean Chaffin is a freelance writer in Crandall, Texas. If you liked this story, check out his book, RAISING THE STAKES: True Tales of Gambling, Wagering and Poker Faces. If you have a gambling or poker story idea, email him at seanchaffin@sbcglobal.net. Follow him on Twitter at @PokerTraditions.

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