ganizational and jurisdictional disputes. It is composed of the bosses of the Nation's most powerful families but has authority over all 24. The composition of the commission varies from 9 to 12 men. According to current information, there are presently 9 families represented, 5 from New York City and 1 each from Philadelphia, Buffalo, Detroit, and Chicago.

The commission is not a representative legislative assembly or an elected judicial body. Members of this council do not regard each other as equals. Those with long tenure on the commission and those who head large families, or possess unusual wealth, exercise greater authority and receive utmost respect. The balance of power on this nationwide council rests with the leaders of New York's 5 families. They have always served on the commission and consider New York as at least the unofficial headquarters of the entire organization.

In recent years organized crime has become increasingly diversified and sophisticated. One consequence appears to be significant organizational restructuring. As in any organization, authority in organized crime may derive either from rank based on incumbency in a high position or from expertise based on possession of technical knowledge and skill. Traditionally, organized crime groups, like totalitarian governments, have maintained discipline through the unthinking acceptance of orders by underlings who have respected the rank of their superiors. However, since 1931, organized crime has gained power and respectability by moving out of bootlegging and prostitution and into gambling, usury, and control of legitimate business. Its need for expertise, based on technical knowledge and skill, has increased. Currently both the structure and operation of illicit enterprises reveal some indecision brought about by attempting to follow both patterns at the same time. Organized crime's "experts" are not fungible, or interchangeable, like the "soldiers" and street workers, and as experts are included within an organization, discipline and structure inevitably assume new forms. It may be awareness of these facts that is leading many family members to send their sons to universities to learn business administration skills.

As the bosses realize that they cannot handle the complicated problems of business and finance alone, their authority will be delegated. Decisionmaking will be decentralized, and individual freedom of action will tend to increase. New problems of discipline and authority may occur if greater emphasis on expertise within the ranks denies unskilled members of the families an opportunity to rise to positions of leadership. The unthinking acceptance of rank authority may be difficult to maintain when experts are placed above long-term, loyal soldiers. Primarily because of fear of infiltration by law enforcement, many of the families have not admitted new members for several years. That fact plus the increasing employment of personnel with specialized and expert functions may blur the lines between membership and nonmembership. In organized crime, internal rebellion would not take the form of strikes and picketing. It would bring a new wave of internal violence.

CODE OF CONDUCT

The leaders of the various organized crime families acquire their positions of power and maintain them with the assistance of a code of conduct that, like the hierarchical structure of the families, is very similar to the Sicilian Mafia's code and just as effective. The code stipulates that underlings should not interfere with the leaders' interests and should not seek protection from the police. They should be "standup guys" who go to prison in order that the bosses may amass fortunes. The code gives the leaders exploitative authoritarian power over everyone in the organization. Loyalty, honor, respect, absolute obedience these are inculcated in family members through ritualistic initiation and customs within the organization, through material rewards, and through violence.. Though underlings are forbidden to "inform" to the outside world, the family boss learns of deviance within the organization through an elaborate system of internal informants. Despite prescribed mechanisms for peaceful settlement of disputes between family members, the boss

"Family" discipline

by a generally law-abiding populace. Powerful machine politicians skillfully exploited the sentiments of different sections of the public. Generally, rural areas were intolerant of gambling. Urban areas, characterized by a new mix of peoples and religions, were tolerant. A movement to legalize gambling in Chicago, San Francisco, New Orleans, New York, or any other city in the late 19th century would have been roundly defeated, not only because of the underlying social and moral taboos still attached to the activity, but because it would have meant a possible end to the lucrative pipeline of payoffs to police and lawmakers.

The level of public tolerance toward all forms of gambling peaked in the 19th century. Various antigambling reform groups were active around the country at the turn of the century. In the early 1900's the constant harassment of gamblers by police during a fairly sustained reform movement in Chicago forced many gambling houses and policy and bookmaking operations to close. Those that remained operated more discreetly. Elsewhere, reformers succeeded in closing down racetracks in many States. By 1915, only seven States continued to allow racing. The reform momentum was relatively short lived, however. Ultimately the demand for gambling services succeeded in outstripping the reformers' ability to reform. But for the reformers there was a consolation prize in another area of public morals: the 18th amendment to the Constitution, which prohibited the manufacture, sale, and distribution of alcoholic beverages.

The Prohibition Era and Afterwards

Although gambling syndicates existed before 1920, it was during the prohibition era that the criminal underworld acquired a tight organizational structure." Much of the credit for this accomplishment has been assigned to Arnold Rothstein, a New York gambler born in 1882.

Basically, he transformed the world of crime from an anarchic into an authoritarian state. He gathered the loose, single strands of crime and wove them into a tapestry. He took the various elements that were needed to change crime from petty larceny into big business and fused them. The end result was a machine that runs smoothly today.

Rothstein is also noted for having invented the intercity layoff system that insured bookmakers against heavy losses and thus provided the foundation for a nationwide gambling apparatus.

After Rothstein came a parade of underworld figures whose lives and exploits have been extensively documented in film and literature. From the profits of their bootlegging and gambling endeavors, figures such as Al Capone, Frank Costello, Bugsy Siegal, and Dutch Schultz built powerful criminal organizations that still exist today. Organized crime leaders today are less ostentatious than their predecessors. They have not abandoned the use of violence, and in fact rely heavily on the threat of violence to accomplish their goals. But they are generally

more discreet in their numerous business dealings, more eager to avoid publicity, and considerably less blatant in their relationship to city and State politics. Local politicians no longer turn out en masse for gangland funerals. Responsible for these changes are stronger State and Federal laws and enforcement efforts and a citizenry less tolerant of overt gangland transgressions than in the past. Revelations produced by the Kefauver investigation in 1950 and the McClellan hearings in 1963-64 2 focused national attention on the outrageous criminal activities of the underworld and stimulated more vigorous attempts at reform.

These efforts had some success. They resulted in the passage of a series of Federal laws (see chapter 2) which proved effective in eliminating illegal slot machines from stores and restaurants across the country and in closing illegal casinos, including those that were operating in resort areas such as Newport and Covington, Kentucky, and Hot Springs, Arkansas, and on Florida's Gold Coast, and in eliminating the walk-in bookie joints that existed in many cities. With the illegal casino and slot machine business virtually eliminated, many former gambling operators transferred their base of operations to Las Vegas (see chapter 5). Vestiges of the illegal casino business can be found in the form of floating card and dice games, generally played on the streets or in small dingy quarters with participants periodically moving from place to place to avoid apprehension. Finally, the new Federal statutes were successful in combating large interstate layoff operations, most of which were operated by organized crime.

Organized Crime

Central to virtually every discussion of illegal gambling is the phrase "organized crime." This term has historically been defined, redefined, and utilized either to defend or reject numerous positions espoused by legislators, prosecutors, and other members of the legal community. The Commission has solicited, through research as well as testimony from various witnesses, definitions of the term and its utilization relative to gambling violations. The Commission recognizes that there are as many different definitions of organized crime as there are reasons to define it. The most recent definition provided by the FBI is as follows:

Organized crime is the sum aggregate of the more lucrative continuing types of racketeering activity involving some sort of formalized structure and generally requiring graft or corruption to conduct its operations without interference.

The Commission finds this definition much too broad for the purposes of this Report. A numbers game operated in Harlem and providing payoffs to the police might well fall within the FBI's definition, and yet not be the type of illegal gambling business the Commission feels to be properly within the scope of the routine enforcement activities of Federal agencies. Another method of defining

"GAMBLING IN AMERICA"

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olganized crime hinges on the nature of the crime being committed. By that definition, a gambling business that requires several people working together to commit the crime is therefore an "organized" crime.

In 1967, the President's Commission on Law Enforcement and Administration of Justice suggested that the use of violence and corruption regularly by a group seeking to achieve criminal ends should mark the point at which crime is called "organized crime." Since that time, other definitions of "organized criminal ventures," "organized crime enterprises," and "organized crime syndicates" have been put forth by law enforcement officials, study groups, members of the judiciary, and legal scholars.

This Commission rejects the concept of categorization based on the offense committed, as well as the correlative concept which lumps together any members of the criminal subculture bearing a semblance of organization. The Commission believes that members of Congress, as well as the vast majority of the American public, view the meaning of organized crime in the traditional sense; i.e., the national syndicate of Sicilian origin, providing many types of illegal services and having international ties, known generally as the Mafia or La Cosa Nostra. Law enforcement agencies and other authorities have, over the years, greatly expanded this definition, perhaps necessarily, for their purposes. However, the Commission believes that it is not helpful to use this expanded concept when discussing illegal gambling and therefore adopts the traditional definition. Should policymakers employ the broadened concept, it would, of course, then be necessary to review this Report with an eye toward a different application.

The following discussion of organized crime and its involvement with illegal gambling should be read in light of the above definition.

The Commission held hearings in various cities throughout the United States which elicited testimony from law enforcement officials, defense attorneys, and,

Early Development"

when possible, persons convicted of or involved in illegal gambling. 10 This testimony made it apparent that there is no uniformity of traditional organized crime control over illegal gambling throughout the country; in some cities such control exists, but not in others. Even where organized crime is a factor, the extent of its involvement varies.

In areas where there is no control by traditional organized crime' families," gambling may nonetheless be "syndicated." In any particular city or region, a criminal cartel or syndicate may control a particular type of illegal gambling; to the extent that such an organization follows a pattern of continual activity assisted by systematic corruption of government, the Commission does not suggest it be precluded from the prohibitory aspects of Federal legislation aimed at traditional organized crime or from carefully selected enforcement activities.

The Commission believes that such gambling cartels pose as great a threat to society as their traditional organized crime counterparts but do not lend themselves to the same type of identification and investigation. Beyond these two types of organizations involved in illegal gambling, the Commission specifically rejects the notion that traditional organized crime controls all illegal gambling or that all illegal gambling provides revenues for other illegal activities.

The Commission also acknowledges the existence of independent, nonsyndicated gambling violators who would not be covered by the above discussion. It believes that these individuals present a much less serious threat to society because their criminal activity generally is limited to gambling and is not accompanied by corruption and the use of violence. Consistent with its recommendations in chapter 2 regarding selectivity of prosecution, the Commission urges that such independent gambling operators receive minimal attention from Federal law enforcement authorities. Adoption of this policy would free additional resources for use against organized crime and syndicated gambling.

The forerunner of modern numbers gambling was a game called "policy." Policy originated as a sideline for the 18th century London lottery houses and was introduced in America late in the 18th century as an adjunct to lotteries. While lotteries were used as fundraisers for governments and charities, policy was operated as a sideline for the profit of the lottery company alone.

By the time of the Civil War, most State lotteries had been outlawed, and policy, which had never been legal, began to develop independently. Like many of the earlier lotteries, policy was based on drawing numbers (from 1 to 78). Normally, 12 numbers were drawn, and players bet that from 1 to 4 numbers of their choosing would be

among the 12 drawn. Even before the Civil War there were hundreds of policy shops in New York City, and the game had developed its peculiar argot and mystique. Dream books were widely sold, designed to enable the customer to choose his number for the day based on the dreams he had the night before. Because policy fed on numerous small bets, it was especially popular among the poor. Blacks had a reputation as particularly avid fans.

Policy was the first form of gambling to become syndicated. Early policy operations were coordinated by backers who financed local policy shops. Because bettors chose their own numbers, it was always possible that a small-time policy operator might on any particular day have more bets on winning numbers than he was able to pay off. As early as the Civil War, a group of politicians, gamblers, and businessmen in New York City put together