The Gambling Town: Kentucky’s Attorney General and the Mob’s Newport Empire

Across the River From Cincinnati

There was a time when you could cross the Ohio River from Cincinnati into northern Kentucky and enter another world.

Newport looked like an ordinary Kentucky city. But in the 1930s and 1940s, the streets around Campbell County concealed an extraordinary concentration of gambling clubs, bookmakers and illegal casinos. By the time federal investigators arrived after World War II, gambling was so open that a visitor could have been forgiven for thinking it was legal.

It wasn’t.

Kentucky law treated operating a gambling device as a felony. Yet in Campbell and neighboring Kenton Counties, casinos operated openly for years. The 1951 Senate Special Committee to Investigate Organized Crime in Interstate Commerce—the Kefauver Committee—would later describe the gambling situation as one in which the law existed on paper while organized gambling flourished in practice.

Behind the glittering signs and crowded gaming rooms was something far more serious than a collection of neighborhood gamblers.

The Cleveland syndicate had moved into northern Kentucky.  And one Kentucky Attorney General decided to fight back.  His name was Hubert Meredith.

Newport’s Sin City

Newport’s location was almost perfect for illegal gambling.

Across the river stood Cincinnati, a major Midwestern city filled with customers. Newport and neighboring Covington were close enough to attract gamblers from Ohio while remaining separated from Cincinnati by the state line and the river.

During the 1930s and early 1940s, gambling establishments multiplied.

The names became part of local lore: the Beverly Hills Country Club, the Yorkshire Club, the Latin Quarter, the Alexandria Club and other establishments where dice, roulette, blackjack, slot machines and bookmakers operated.

The clubs weren’t necessarily hidden in obscure basements.  Some operated openly.

The Kefauver Committee later sent investigators into several of these establishments. At the Beverly Hills Country Club, investigators observed approximately 150 people in the casino, with dice tables, roulette wheels, blackjack and chuck-a-luck. At the Latin Quarter, investigators saw more gambling tables and another substantial crowd.

This was not a secret criminal economy.  It was an industry. And someone was making a fortune.

The Cleveland Syndicate Comes South

The money attracted organized crime. The Kefauver Committee had already received testimony indicating that the Cleveland gambling syndicate had moved into Campbell and Kenton Counties after being pushed out of Cleveland. The committee specifically investigated northern Kentucky because of those connections.

The names found in the financial records were revealing.

When investigators examined the partnership records of the Lookout House in Covington, they found interests connected to figures associated with the Cleveland underworld. Among the names listed were Moe Dalitz, Charles Polizzi and Louis Rothkopf, along with other individuals whom the committee identified as part of the Cleveland gambling syndicate.

This was organized crime in a form that didn’t always look like organized crime.  There were no Tommy guns on every corner. There didn’t need to be.

The syndicate could put money into casinos, establish relationships with local businessmen and cultivate political and law-enforcement connections. The gambling houses generated the cash, while the political machinery helped ensure that the doors stayed open.

That arrangement was more durable than violence. Violence was what happened when the arrangement failed.

Then Hubert Meredith Came Looking

Hubert Meredith was Kentucky’s Attorney General during this period.  In September 1943, he made a move that struck directly at Newport’s gambling establishment.

Meredith personally verified a sweeping legal petition seeking to shut down gambling establishments in Newport and Campbell County. The petition named numerous alleged gambling operators and, significantly, practically all of the city’s and county’s officials as defendants.

The allegations were extraordinary. The Attorney General’s office characterized the gambling establishments as public nuisances and accused officials of failing to enforce Kentucky’s laws against gambling.

Meredith wasn’t simply asking the courts to close one casino.  He was attacking an entire system.  The petition sought an injunction against the gambling operators and demanded that local law-enforcement officers enforce Kentucky’s anti-gambling laws and seize gambling equipment.

And then Meredith encountered something that would become central to the story.

The local judge.

When the Judge Became a Defendant

Campbell County Circuit Judge Ray L. Murphy was named in Meredith’s action. According to the Attorney General’s allegations, Murphy was among the officials implicated in the system surrounding the gambling operations. Meredith sought to prevent Murphy from presiding over the litigation because of his alleged involvement and personal interest in the case.

That produced a remarkable legal situation.  The state’s Attorney General was attempting to shut down gambling.  The local officials who were supposed to enforce the gambling laws were defendants.

And the local judge was being challenged because, according to the Attorney General’s allegations, he himself had a connection to the system Meredith was trying to dismantle. The language of the litigation was unusually severe.

The court record described a situation involving widespread gambling houses and violations of law, while the Attorney General alleged that numerous officials were aiding and abetting the continued operation of the establishments.

The line between law enforcement and the criminal establishment was becoming difficult to see.

The Raid in the Middle of the Night

On September 20, 1943, a temporary restraining order was obtained.  It prohibited gambling operations and ordered local officers to enforce the law.  The order was delivered to Newport police shortly after midnight.

At approximately 1:30 a.m., the paperwork reached Kenneth Collins, a Newport police officer. Roughly half an hour later, officers went to the Beverly Hills Country Club and began seizing gambling equipment. 

They confiscated 41 slot machines.  The raid was not symbolic. The equipment was real. The money was real. The gambling operation was real.  And Meredith’s office had forced the issue into court.

In another proceeding, the Kentucky Court of Appeals described the case as involving a broad effort to abate alleged gambling nuisances and compel local officials to enforce the Commonwealth’s gambling laws.

For a brief moment, it appeared that the machine had finally met an opponent it couldn’t intimidate.

The Attorney General had come to Newport.  And he had brought the law with him.

Then the Gambling Came Back

This is where the story turns.  The Meredith action succeeded in obtaining a permanent injunction.  For a time, according to testimony later presented to the Kefauver Committee, gambling was effectively eradicated.  But the victory didn’t last.

Fred Warren, the city solicitor under Newport’s reform administration, testified that after the injunction was obtained, gambling gradually resumed. By 1950, the casinos were operating again on a scale that shocked federal investigators.

The question was obvious.

Why wasn’t the injunction enforced?

Warren testified that no explanation had ever been given for the failure to enforce the court’s mandate. He expressed the view that gambling establishments could not have operated so openly and for so long without some form of protection.

That testimony changes the story.  The issue was not necessarily that the Attorney General had failed to act.  He had acted.  He had filed the lawsuit.  He had obtained the injunction.  He had forced raids.  The problem was what happened afterward.

Somewhere between the courtroom and the casino floor, the law lost its teeth.

The $50,000 Question

By 1949, the corruption had become even more blatant.  Newport’s administration had enacted a tax system that effectively assessed gambling interests.

The Kefauver Committee reported that the Yorkshire Club paid more than $8,000 under the system, while other gambling-related businesses were assessed additional amounts. The city treasury reportedly received more than $50,000 in 1949 from these taxes.

It was an extraordinary arrangement.  Gambling was illegal.  Yet the city was collecting money from it.  The machine had found a way to turn vice into municipal revenue.

City Manager Malcolm Rhoads later described the arrangement in stark terms. He argued that a government taking money from gambling interests was not fundamentally different from an individual accepting graft.

The distinction between taxation and protection had become almost meaningless.

The gamblers paid.  The government benefited.  And the casinos remained open.

The Lookout House

One of the most revealing establishments was the Lookout House in Covington.  The Kefauver Committee subpoenaed its partnership records and discovered a network of investors that included people the committee associated with the Cleveland organized-crime syndicate.

The money trail was more revealing than the neon signs.  Organized crime did not need to put its name on the front door.  It could own an interest through partners.  It could place money into legitimate-looking businesses.

It could rely on intermediaries.  And it could benefit from a political environment in which enforcement was inconsistent.  That was the genius of the gambling machine.  The customer saw a casino.  The government saw tax revenue.  The syndicate saw an investment.

Everybody had a different name for the same operation.

Kefauver Comes to Kentucky

By 1950, reformers had gained control of Newport’s city government. That made northern Kentucky a natural target for the Kefauver Committee.  The Senate investigators arrived to examine what had happened to Kentucky’s gambling laws and why organized crime appeared to have established such a stronghold.

What they found was embarrassing.

Kentucky’s gambling statutes were severe. Yet the committee reported that in Campbell and Kenton Counties there had been no successful prosecutions under the relevant gambling law and no defendants sent to prison for those offenses.

The casinos were still there.  The law was still there.  The arrests were not.  And then came the question that hung over the entire investigation:

Where had the law gone?

The Attorney General’s Legacy

It would be easy to turn Hubert Meredith into the villain of the story.  The evidence doesn’t   support that. Quite the opposite.

The surviving court record shows Meredith taking direct legal action against Newport’s gambling interests in 1943. His office sought to close the casinos, force local officers to enforce the law and seize gambling equipment.

The later failure was a different matter.

The Kefauver Committee placed responsibility for enforcing the injunction largely on the Attorney General’s office, while local officials offered their own explanations for why gambling had returned.

That unresolved responsibility is what makes Newport’s history so compelling.  Meredith could take the syndicate to court. He could obtain an injunction.  He could order raids.

But a piece of paper could not permanently defeat a criminal economy supported by money, political connections and compromised enforcement.

The casinos simply waited.  And when the pressure eased, they reopened.

The Mob Didn’t Need to Own the Courthouse

Newport’s story offers a lesson about organized crime that is easy to miss when Mafia history is reduced to shootings and gang wars.

Power doesn’t always announce itself.  Sometimes it looks like a casino operating in broad daylight.  Sometimes it looks like a police officer who doesn’t see what everyone else sees.

Sometimes it looks like a judge whose impartiality is questioned.  Sometimes it looks like a city collecting money from an illegal industry.  And sometimes it looks like an injunction sitting in a courthouse while gambling quietly returns to the streets.

The Cleveland syndicate didn’t have to control every politician in Kentucky. It only needed enough protection to make enforcement unreliable.  That was enough.

By the time the Kefauver investigators arrived, the machine had survived an Attorney General’s lawsuit, a court injunction and multiple raids.

The gambling houses were back. The money was flowing.  And the law was once again standing outside the door, waiting to be invited in.

The Dark Side of Newport

Hubert Meredith’s 1943 campaign against Newport’s gambling interests deserves to be remembered because it demonstrates just how difficult it was to dismantle organized crime when the criminal enterprise had become embedded in local institutions.

Meredith went after the machine through the courts.  The courts issued orders.  Police seized equipment.  Officials were named as defendants.  And yet, within several years, the gambling industry had returned.

The Kefauver Committee exposed what had happened next: casinos operating openly, organized-crime interests appearing in ownership records, officials struggling—or refusing—to enforce the law, and reformers insisting that gambling could not have survived without protection.

There was no single Tommy-gun moment when the government surrendered.

There didn’t need to be.  The surrender happened slowly.  One ignored violation.  One unmade arrest.  One unanswered question.  One gambling house reopening after the heat disappeared.  That is the darker story of Newport.

The Attorney General did not necessarily lose because he was corrupt.  He lost because organized crime had learned something more powerful than how to break the law.

It had learned how to make the law look the other way.

And for years, across the river from Cincinnati, the roulette wheels kept turning.

References:

1. United States Senate, Special Committee to Investigate Organized Crime in Interstate Commerce. Third Interim Report of the Special Committee to Investigate Organized Crime in Interstate Commerce. 82nd Congress, 1st Session, Report No. 725, August 31, 1951. Washington, D.C.: U.S. Government Printing Office, 1951.
2. Tucker v. Commonwealth ex rel. Attorney General, 299 Ky. 820, 187 S.W.2d 291 (Ky. Ct. App. 1945).
3. Commonwealth ex rel. Meredith v. Murphy, 295 Ky. 466, 174 S.W.2d 681 (Ky. Ct. App. 1943).
4. Commonwealth v. Malco-Memphis Theatres, Inc., Kentucky Court of Appeals, March 9, 1943.
5. Hatcher, Secretary of State, et al. v. Meredith, Attorney General, 295 Ky. 194, 173 S.W.2d 665 (Ky. Ct. App. 1943).
6. Messick, Hank. The Syndicate: The Story of the Coming of the Syndicate to Newport, Kentucky. New York: Thomas Y. Crowell Company, 1968.
7. University of Louisville. Sin City Kentucky: The Rise and Fall of Gambling in Newport and Campbell County, Kentucky. Graduate thesis. University of Louisville.
8. Campbell County, Kentucky Genealogy and History. “Newport Gambling.” Historical compilation concerning organized gambling and political corruption in Newport and Campbell County.
9. Campbell County, Kentucky Genealogy and History. “Lee Keslar.” Compilation of contemporary Kentucky Post reports concerning enforcement actions against Campbell County officials and gambling operations, 1944–1945.
10. United States Senate. Special Committee to Investigate Organized Crime in Interstate Commerce (Kefauver Committee). Hearing and investigative records concerning gambling and organized crime in Newport and Covington, Kentucky, 1951.