The Outfit

by Russo, Gus

  1. Card Games

  Throughout much of the history of card gambling, the games of choice fell into two categories: percentage games, such as poker, where the players challenge one another equally, with the house keeping a fixed percentage of every winning pot; or banking games, such as blackjack, faro, and baccarat, where the player is pitted against the house directly. Both percentage and banking games can be further subdivided into contests largely determined by chance, or those by skill.

  By far the most popular card game for both the professional gambler and the house is the game of chance known as blackjack, the object of which is to draw cards whose face value is as close to twenty-one as possible without exceeding it. The gambler likes it because the action is fast, with a lucky streak bringing in a few minutes what it might take a poker player all night to amass. The house prefers blackjack because it allows a multitude of ways to gain a cheater’s advantage: Cards can be marked in numerous ways; shills can drive up the stakes against the “mark” (victim); the dealer would be hired by the gang for his skills of prestidigitation, which permitted him to to palm or insert cards into the deal at will; a well-positioned mirror kept the dealer informed of what the mark was holding. The mathematics of the game, even without cheating, affords the house an average 10 percent advantage over the player. In other words, the house will always win in the end.

  An example of a skill game is poker, wherein the players make continuous mathematical calculations attempting to improve their hands and discern the hands held by their adversaries. Unlike many card games that can be played purely for social enjoyment, poker is virtually nonexistent outside the realm of gambling. Poker is the most intense card game, with gamesmanship (”poker faces” and “bluffs”) a key component of success. Due to its antisocial, adversarial nature, poker attracts rugged individualists, willing to do anything to defeat their opponents, including waiting them out: The poker champion must possess great patience, given that a marathon game can last for days. All the above factors add up to make poker the passionate interest of a relatively small minority. (Studies conducted in Las Vegas casinos showed that poker accounted for only 1.7 percent of total gambling revenues.)

  2. Dice Games and Roulette

  Dominating the many variations of dice games is craps, in which two dice are thrown in hopes of rolling a 7 or 11. The house wins on rolls of 2, 3, or 12, with the remaining numbers being rollovers, or “points.”1 When played honestly, the lightning-fast craps game can be among the fairest, with the house holding only a 5 percent advantage. The trouble was that the Outfit, and other hoods, rarely played it straight. Craps is among the easiest games to manipulate, or “gimmick”: Dice can be “loaded” (weighted), with the fixed die inserted into the game by a shill adept at palming; tables and dice can be manufactured with magnets installed to force the winning house numbers 2, 3, or 12.

  Roulette is another game of chance favored by some weekend gamblers. With thirty-eight slots on a spinning wheel ready to catch one ball, the game has two slots (0 and 00) reserved for the house, thus giving the player 36-1 odds of winning on a single-number bet. But the house pays out only 34-1, giving it a guaranteed profit. In addition, like craps, roulette is easily gimmicked with magnetic circuits or mechanical pins that pop up to block a slot while the wheel is spinning. Although estimates vary, it is safe to say that illegal profits from dice and roulette games netted crime gangs in the hundreds of millions per year nationally.

  3. Coin-Operated Devices

  Conveniently for the Outfit, slot machines (also known as one-armed bandits) and pinball machines were mass-produced in the Chicago environs, arguably the capital of those games. The slot machine was invented in California by Charles Fey at the turn of the century with the introduction of the Liberty Bell device. It was improved in 1906 by Stephen Mills of Chicago. From that time on, all ten slot-machine manufacturers set up shop in the Windy City, where by 1931 they fell under the control of the Outfit. Not merely content to control the devices’ distribution, the Outfit created more revenue by manufacturing the machines. For this enterprise, they employed the services of former boxer and Outfit wheelman Joey Aiuppa. Aiuppa set up shop in Cicero, where he ran Taylor and Company, ostensibly a furniture manufacturing shop. In reality, the only furniture they produced were slot machines. When Taylor’s bookwork was later confiscated, it was determined that the Outfit was pulling down an extra $300,000 per year from selling their one-armed “furniture.”

  The slot machine was a brilliant distillation of all the requisite gambling elements into a cheap mechanical beast: it took the money in, set the game in motion, and made the payouts. The typical arrangement had the Outfit splitting the profits fifty-fifty with the bar hosting the device. Added to its allure was that an initial investment of $100 for the purchase of the machine was typically paid off in its first ten days of operation. A Senate investigation estimated that a gangster who placed two hundred slot machines realized at least $5,000 per week after splitting the take with the storefront owner. The slot was attractive not only to the hoods, but also to the gambling masses, since it allowed Depression-era players, who could ill afford the high stakes of horse racing, to take their chances one nickel at a time.

  The fundamentals of the slots are elegantly simple: When a coin is inserted and a lever pulled, three cylinders of twenty characters each (displaying pictures of bars, bells, cherries, lemons, oranges, and plums) begin spinning. When the reels stop, a player wins if all three cylinders show matching icons. Although the player has a reasonable chance to win, the payout odds change constantly, from a 1-1 prize to the exceedingly rare jackpot. Of course the machine’s criminal owners make certain the payout is dwarfed by the amount wagered. The machine is also preadjusted so that its profits are guaranteed: typically from 25 to 50 percent of all moneys inserted. Even so, the one-armed bandits, like craps, were a huge success with both the player and the Outfit, which grossed untold millions of tax-free dollars.

  Crime gangs like the Outfit subverted the antigambling laws by asserting that the machines were “for amusement purposes only.” However, the machines could easily be rigged to dispense tokens, chewing gum, or free plays to a winner, but then with a secret pull of a lever by the proprietor, pay out cash. Payouts could also be made on the sly, with patrons stealthily exchanging their worthless chips and trinkets for cash.

  Nationally, estimates put the gross take from slots at over $100 million annually, with 20 percent of that earmarked for official corruption. With so much at stake, only the most trusted Outfit associates were given the slot machine racket. Of course, Joe Accardo was the overall boss, but directly under him was Eddie “Big Head” Vogel, who had started running slots during the waning days of Al Capone’s regime. Under Accardo and Vogel, the Outfit spread one-armed bandits to many other states. Often these extra-Illinois ventures solidified the Outfit’s association with other crime gangs, especially those of New York, led by Lucky Luciano, Ben Siegel, and Meyer Lansky.2 By the 1940s, an estimated 140,000 slot machines were in operation nationwide, grossing an astonishing $540 million per year, with only half the machines legal, taxpaying “amusement” gadgets.

  4. Pinball

  With the slot games coming under scrutiny by officials, some bar owners installed another game - this one a descendant of the Victorian parlor game bagatelle - known as pinball. In this variation, a ball is released into a glass-covered table, while the player uses hand-operated flippers, and more than a little body English, in an attempt to force the ball to knock over as many “pins” as possible. Although initially conceived as an amusement game, the hoods appropriated the game for gambling purposes, with machines that paid off in cash instead of free games and sundries. The machines cost approximately twice as much as slots to manufacture, and the table’s large size (fifty by twenty inches) made them harder to ship and less easy to fit into bars. Thus, pinball was a distant runner-up in popularity to the slots. Games of lesser importance included 26, faro, keno, the punchbo
ard, and chuck-a-luck. No matter how trifling the profit, the Outfit missed no opportunity to run a game.

  5. Dog and Pony Shows

  Equal in importance to “parlor game” gambling rackets for Joe Accardo was the game known as the sport of kings. Horse racing itself did not provide direct income - the Outfit did not aspire to own horses - but the ancillary world of “making book” on the race results provided staggering amounts of easy-to-skim hard cash.

  Even before the Outfit assumed the reins, their father figure, Al Capone, had already made inroads into the race game, first with dogs, then later with horses. (For details, see the gambling appendix.) Once entrenched in the sport, the gang learned that racetracks provided them important benefits that eclipsed those derived from race fixing.

  Although the races themselves brought great profits to the Outfit according to his own paperwork, Paul Ricca’s cut was $80,000 per year from two tracks alone - the real allure of the racetracks for the Outfit has never been grasped by the public. According to Jim Ciatola, who worked for Unione Siciliana consigliere Joseph Bulger (Imburgio), “The tracks provided truckloads of cash, which made them an ideal setup for money laundering.” Previous to the track ploy, members of the Outfit made so much cash during the bootlegging days that, fearing tax problems, they often buried it in their backyards or in other parts of their homes. “Very often they put the money in five-gallon cans in which they drilled air holes,” says Ciatola. “What the Outfitters failed to realize was that after a few years the money got moldy and developed a stench. They were worried that if they took it to the bank or tried to spend it, the bank tellers or the IRS would get suspicious. In addition, the Treasury had just changed the size of U.S. currency, so old bills were conspicuous. So they used the tracks to exchange the bills. Sometimes they paid the winners with old bills, but most of them were sent to the Federal Reserve. It was hilarious. The G was laundering money for the Outfit and didn’t know it.”

  One Outfitter with a huge cash overflow was Paul Ricca. Knowledgeable sources assert that the Waiter hid half a million dollars in a hidden space under his roof. In fact, the gang stashed so much bootlegging money that it is a virtual certainty that there are still undiscovered stashes throughout Chicagoland.

  6. Bookmaking

  The racetracks became a money mill in every sense of the word. Not only were the fixed races generating profits and the tellers laundering money as fast as they could count it, but the racetracks provided the scaffolding for the real profit machine known as bookmaking. The bookmaker’s key function is to allow gamblers to place offtrack bets on sporting events (predominantly horse racing), then illegal in every state except Nevada. (Decades later, when state-run offtrack betting was legalized, bookmakers expanded their domain to cover other sporting events such as football, basketball, and boxing.) Although the upperworld barons saw to the enactment of legislation such as the 1894 Percy-Gray Law in New York, which outlawed offtrack bookmaking, the bookies continued to flourish. The Internal Revenue Service estimated that by 1940 there were fifteen thousand individual bookmakers nationwide. Joe Accardo and his associates even dabbled, albeit briefly, with the idea of “going legit” with their bookmaking enterprise. At the Outfit’s urging, Mayor Ed Kelly sponsored a state bill to legalize racing handbooks in Illinois. Not only would the Outfit benefit from legislation that legitimized one of the “games” they already controlled, but Kelly could multiply his income as a result of the graft that would accompany the licensing procedure. During the period of debate in the state legislature (1935-36), two representatives strongly opposing the bill were shot to death. Although the bill passed, Governor Henry Horner vetoed it. It didn’t matter. With the Kelly-Outfit arrangement, there were soon more than one thousand bookie joints in the Windy City.

  Once again the European immigrants were ahead of the curve: They knew that offtrack betting was widely accepted, and legal, in Europe, where it was the principal form of horse-race wagering. “Off-course” betting was legalized in France in 1930, largely as a method of discouraging bookmaking. The combined offtrack bets in England and France accounted for 85 percent of all bets placed. It was only a matter of time before the American upperworld prevailed and seized the action.3

  At least one key bookmaking takeover was assigned to Joe Accardo during this period. One can imagine Frank Nitti, Paul Ricca, Curly Humphreys (before going off to “college”), and Joe Accardo at one of their daily morning meetings deciding to acquire the bookmaking operation of the Russell brothers.4 In the thirties, Harry “the Muscle” Russell and his brother David ran the most profitable ’lay-off operation in the Loop from their headquarters at 186 North Clark Street. In bookie parlance, a lay-off joint is a place that takes bets based on odds and the results it receives over the telegraphic wire service provided by a larger organization. At these locations, bettors pick three numbers they hope will correspond to three winning horses assigned the same numbers. Author Joseph Albini described the lay-off in his book The American Mafia: “By knowing the results of the first two races [from the wire service], the operators can foretell how many potential winners they have . . . If they find that they have a large number [of bets] with the first two winning digits, they can then ’lay off a portion of these bets with other gamblers. The ’lay-off here refers to the process whereby the operator bets with a larger gambling concern a portion of the customers” bets having the first two digits. By doing this, should the last digit create a large number of winning tickets, the operator can collect from the lay-off source and hence balance his own losses.’

  Of course the lay-off was only employed on the rare occasion when large numbers of bettors held the same two winning numbers. Nonetheless, the wire information was crucial to keeping bookies from having what could have been a catastrophic day. Key among other reasons for the bookies’ dependence on the wire reports were that bettors might have race results relayed by telephone without the bookie knowing the contest had been concluded (such “postbetting” could destroy a bookie); or conversely, a crooked bookmaker with information right off the wire could accept losing bets for a race he knew was already decided. For these and many other reasons that will be seen, the wire service was indispensable to the race betting business. The wire operation, controlled by an upperworld collusion with Western Union, was able to extort huge sums from all bookies for their precious information. The profits far surpassed even what the Outfit took in from the bookies. It would therefore become targeted for takeover by the Outfit, but the process would not go into high gear for a few years to come. In the meantime, Joe and the Outfit were happy to run their stable of bookies and muscle in on Harry the Muscle.

  Joe Accardo was fast mellowing in his role, having learned the art of the velvet glove from Curly. Just a few short years earlier, a bat-wielding Joe Batters would have dispensed with the Russell brothers in a markedly sanguine manner. Now, the nattily attired boss Accardo simply arranged a business merger. It was a partnership that flourished, expanding into other states, for over a decade.

  7. The Sharks

  Backstopping the gang’s gambling revenue was the affiliated scam known as loan “sharking,” a bastardization of Shakespeare’s “Shylock,” the Jewish moneylending antagonist of The Merchant of Venice. With so many of their customers losing at their almost-impossible-to-win games, the Outfit became a full-service provider, offering high-interest loans to those who could not meet obligations made to bookies. The scam consisted of the Outfit’s channeling a portion of their huge profits to loan sharks at, say, 2 percent interest. The sharks, known in the Chicago vernacular as juice men, then loaned the money out to the “juiced-up” loser at double or triple that interest per week. This compound interest is known as the sharks’ vigorish, or vig. It is easy to see how a debt can rise exponentially in short time: A $100 loan becomes $120 at the end of week one, $144 a week later, $172.80 the third week, and $207.36 the fourth week, etc. Often, a minimal-paying client ends up paying back the original loan numerous t
imes over - much like the now legal version of loan-sharking known as credit cards.

  Given that their victims were believed to be other lowlifes, the sharks were virtually unmolested by police. And since no one was being arrested, loan-sharking benefited from low overhead, as graft was unnecessary. With millions loaned out at any one time, loan-sharking was second only to gambling in profits for the Outfit.

  With the combined revenues from sharking, bookmaking, and the innumerable versions of gambling, the Outfit’s coffers were bursting. And the booming business was supervised for the Outfit by Joe Accardo, who personally tapped Outfit chieftain Louis Campagna to run two gambling joints, the Austin Club and the El Patio, in Cicero. Years later, Campagna testified that he “bought into” the operation for $1,500, but netted over $75,000 per year. Accardo’s other key crewmen helping to hold it all together were Frankie Pope (bookies), Pete Penovich (games of chance), and Hymie “Loud Mouth” Levine (collection).

  By 1934, Joe Accardo was overseeing an empire that numbered more than seventy-five hundred gambling establishments in Chicago alone. In 1941, the Chicago Tribune unearthed some of the Outfit’s books and reported that by then “the boys” were grossing $320,000 per month; estimates of the portion of the take that was funneled to Ed Kelly and his bribe-infested City Hall have run as high as 50 percent. The headquarters for the graft exchange was the Lawndale Scrap Iron & Metal Company on South Kedzie Avenue. In what must have appeared a surreal scene, politicians and gangsters met at prearranged times inside the Lawndale office. In one line were the gangsters with cash in hand; in the other, the pols waited with open palms outstretched. From behind his desk, a former investigator for the state’s attorney’s office coordinated the corrupt circus, periodically announcing, “You’re next.”