Dice, Vice, and Political Spice: The History of Organized Crime in Arkansas

When most Americans reflect on the history of organized crime, their thoughts naturally turn to Chicago, New York, or Las Vegas. However, for much of the 20th century, Arkansas, specifically the resort town of Hot Springs, was one of the most important centers of illegal gambling, prostitution, and syndicate crimes in the country. This seems like a strange footnote in the history of organized crime, as it portrays a state that is traditionally thought of as southern and small as an important conduit in a much larger national criminal network.

The history of crime syndicates in Arkansas does not follow the pattern of the ethnic succession theme in the Northern states. Still, it is a story of political scandal, Southern hospitality for retired gangsters, and a "sin" resort town known as "the first Las Vegas" with open illegal casinos thanks to the complicity of local and state politicians. This paper explores the growth and influence of crime syndicates in Arkansas for almost five decades in shaping the political identity of the state and the national image of the United States.

The Foundation Years (1880s-1920s)

Hot Springs: America's Original Sin City

The history of organized crime in the state of Arkansas begins with the city of Hot Springs, a city that attracted tourists to its hot springs well before the state of Arkansas was a reality. In the 1880s, the city of Hot Springs had become a resort town operating in a kind of legal twilight world, where a tidy accommodation had been reached to condone vice in order to satisfy the tourist trade.

The Flynn-Doran group dominated the gambling scene in Hot Springs from the 1880s into the 1920s. Frank Flynn, the political boss, and Mike Doran, the gambling kingpin, established a pattern that would be followed for many years in Hot Springs: operating illegal gambling enterprises openly with political shielding, payoffs to local and state officials, and maintaining order with guns when necessary through monopoly control.

By the early 1900s, casinos were operating in Hot Springs with horse race auction pools, bookmaking, and houses of prostitution. Each was operating in the open, just like any other enterprise. The Southern Club, which was started in 1894, had evolved to be one of the most famous places to gamble in America.

The Prohibition Catalyst

Prohibition, with Arkansas implementing state-led prohibition in 1915, four years before national prohibition, ironically solidified organized crime’s influence in Arkansas. Hot Springs was a resort destination where patrons could engage in gambling as well as enjoy fine drinking in a regulated manner. The corrupt politico-machine in Hot Springs maintained a status quo in which federal law was not enforced. During this period, Leo P. McLaughlin became known as the most important figure in the politics of Hot Springs. He became the mayor of the city in 1927 and would remain there for the next two decades, an era which has been characterized as forming “America's most corrupt city government.” With the patronage of Leo P. McLaughlin, crime took control of the city of Hot Springs.

The Golden Age of Hot Springs (1930s-1960s)

Owney Madden and the New York Connection

The transformation of Hot Springs from a regional vice center into a nationally significant organized crime center was initiated by the arrival of Owen "Owney" Madden in 1935. Madden, former boss of New York's Hell's Kitchen gang and a major Prohibition-era figure, came to Hot Springs ostensibly to "retire" after his release from Sing Sing prison.

Madden's arrival marked a new era. He injected New York sophistication into the Hot Springs operations and created the necessary links between Arkansas gambling operations and national organized crime syndicates. Madden did not simply go to Hot Springs to hide; instead, he turned into a respectable businessman—the owner of the Hotel Arkansas—while secretly retaining interests in several casinos and acting as a liaison between local operations and national crime figures.

The Gambling Empire

Under Madden's influence and McLaughlin's political protection, Hot Springs' gambling operations became more sophisticated than ever:

Major Casinos:

• The Southern Club (expanded and modernised)
• The Belvedere Club
• The Tower Club
• The Ohio Club
• The Vapors Club – opened in 1960, the most luxurious

These were not backroom operations, but rather elaborate casinos that rivaled anything in pre-Castro Havana or early Las Vegas: name entertainment—the performers who played Hot Springs ranged from Tony Bennett to Liberace to Mickey Rooney—gourmet restaurants, and sophisticated gaming operations.

The economic impact was substantial: by the 1940s, gambling employed thousands directly and indirectly supported much of Garland County's economy. Annual gambling revenues were estimated at $30–100 million—hundreds of millions in today's dollars—with protection money flowing to police, politicians, and state officials.

Political Corruption: The McLaughlin Machine

The political machine of Leo McLaughlin represented organized crime's deepest penetration into Arkansas government. The system operated through:

Municipal Corruption: Police were on gambling payrolls, some reportedly making more than their salaries in protection money. A chief of detectives served as a liaison between the casinos and the police.

Electoral Fraud: McLaughlin's machine perfected election manipulation. It paid the poll taxes for compliant voters, stuffed ballot boxes, and intimidated opposition voters. The 1946 GI Revolt in Hot Springs—where returning World War II veterans challenged the machine—revealed widespread fraud but did not immediately break McLaughlin's power.

State-Level Protection: In return, governors, attorneys general, and state legislators received campaign contributions and bribes to guarantee state authorities would leave Hot Springs alone. Only one governor, Carl Bailey (1937–1941), made an effort to suppress gambling in Hot Springs, but was thwarted by opposition in the legislature and from local leaders.

A Haven for National Figures

Hot Springs was known as a "neutral zone" where organized crime figures from different cities could take vacations and conduct business without being threatened by any violence or possible arrest. Some notable visitors included:

• Al Capone: Kept a suite at the Arlington Hotel
• Frank Costello: Regular visitor, investor in local operations
• Meyer Lansky: Casino operations consultant
• Lucky Luciano: Visited before his deportation
• Charles "Lucky" Luciano: Regular at the horse tracks

This created an influx of national crime figures that brought in money but also connected Arkansas more deeply to national criminal networks.

Beyond Hot Springs: Organized Crime Across Arkansas

Little Rock Operations

While Hot Springs drew most of the headlines, organized crime existed throughout Arkansas. In Little Rock, the Russ Graham organization monopolized gambling and prostitution from the 1940s into the 1960s. Graham's White Front Cigar Store was the center of a bookmaking enterprise that processed several million dollars' worth of bets every year.

Graham's operation showed that organized crime's political reach extended well beyond Hot Springs. He received protection from Little Rock police and had contacts with state politicians. His 1961 conviction for income tax evasion—the favorite federal tool against organized crime—revealed an operation pulling in more than $1 million a year in gross receipts.

The Dixie Mafia Presence

By the 1960s, the loosely affiliated criminal network that was the Dixie Mafia had established operations in Arkansas. Unlike traditional organized crime families, the Dixie Mafia was a confederation of criminals involved in various illicit activities.

• Business and warehouse theft rings
• Insurance fraud schemes
• Contract killings
• Drug trafficking — mainly marijuana, and later methamphetamine

The presence of the Dixie Mafia in Arkansas included figures such as Kirksey McCord Nix Jr. and associates who operated down the Arkansas-Mississippi-Louisiana corridor. Operations here were less centralized than Hot Springs operations, but contributed to a culture of corruption in various Arkansas communities.

Rural Crime Networks

Organized crime didn't stop at the city limits in Arkansas. Rural counties experienced:

• Moonshine Operations: Although Prohibition had been repealed, illegal whiskey production still occurred in both the Ozark and Ouachita Mountains, with organized distribution networks stretching across state lines.
• Chop Shop Rings: Organized automobile theft rings operated in rural areas, where stolen vehicles were either stripped for parts or shipped out of state.
• Cockfighting and Dogfighting: Both were blood sports with organized gambling operations moving between rural venues to avoid the law.

The Decline and Transformation (1960s-1980s)

The Beginning of the End: Winthrop Rockefeller

The election of Winthrop Rockefeller as governor in 1966 signaled the start of organized crime's decline in Arkansas. Rockefeller, Arkansas's first Republican governor since Reconstruction, campaigned openly on cleaning up Hot Springs.

• Undeterred by massive opposition from entrenched interests, Rockefeller:
• Ordered state police raids on Hot Springs casinos in 1967
• Removed corrupt officials from state positions
• Pressed for the prosecution of gambling operators
• Reformed the state police to reduce corruption

Although gambling interests tried to reopen after initial raids, sustained pressure, coupled with changing political dynamics, made large-scale operations impossible. The last major casinos closed permanently by 1970.

Federal Intervention

• The federal government's heightened organized crime initiative had effects on Arkansas as well:
• IRS Actions: As elsewhere, prosecutions for tax evasion reached those crime figures who had eluded conviction on other charges.
• FBI Investigations: In the aftermath of the Apalachin Meeting, the FBI's heightened interest in organized crime extended to include Arkansas operations.
• RICO Prosecutions: Although the 1970 RICO Act furnished tools to prosecute entire criminal organizations, its application remained sparing compared to major metropolitan areas.

The Shift to Drug Trafficking

As organized crime in the traditional sense faded, narcotics trafficking became the chief organized criminal activity. Arkansas's location on key interstate highways and its rural areas, which proved conducive to marijuana growing, made it attractive for drug operations.

The Mena Airport controversy of the 1980s, involving allegations of CIA-connected drug smuggling during the Iran-Contra era, seemed to indicate that Arkansas continued to play a role in organized criminal networks, though again the full extent remains disputed.

Political and Economic Impacts

The Corruption Legacy

• Organized crime's decades-long presence profoundly impacted the state's political culture:
• Normalized Corruption: Generations of Arkansans grew up seeing open corruption and became cynically accepting of government and "honest graft."
• Weak Institutions: Law enforcement agencies, especially at local levels, were compromised for so long that rebuilding public trust took decades.
• Political Financing: Money coming from organized crime influenced elections at all levels, creating a political system in which criminal interests enjoyed significant influence.
• Reform Movements: Organized crime's visibility paradoxically spawned reform movements, from the GI Revolt to Rockefeller's gubernatorial campaign, which modernized Arkansas politics.
• Economic Consequences

The economic impact of organized crime on Arkansas was multifaceted:

Positive Effects:

• Tourism dollars in Hot Springs supported thousands of jobs
• Casino operations benefited the construction and service industries
• Tax revenue from legitimate businesses owned by crime figures

Negative Effects:

• Reputation damage that deterred some legitimate investment
• Economic distortions where illegal enterprises crowded out legal ones
• Capital flight occurred because criminal proceeds were invested outside of Arkansas
• Lost tax revenue due to unreported illegal income
• Social and Cultural Impact

Organized crime left lasting marks on Arkansas society:

• Cultural Mythology: The gangster era of Hot Springs became part of Arkansas folklore, celebrated in museums, tours, and popular culture despite its dark reality.

• Tolerance for Vice: Some communities developed a lasting tolerance for gambling and other vice activities because such practices were viewed as victimless crimes.
• Class Divisions: Organized crime would often exploit working-class communities while catering to wealthy tourists, thus emphasizing social divisions.
• Ethnic Tensions: While less pronounced than in Northern cities, organized crime sometimes inflamed tensions between established communities and newcomers.

Modern Legacy and Contemporary Challenges

The Debate About Gambling

Organized crime has been a part of Arkansas history and continues to shape current debates about betting. The state's complicated relationship with gambling includes:

• Oaklawn Racing: The Hot Springs racetrack, which operated legally even during the anti-gambling era, expanded into casino gaming.
• Casino Gaming: Voters in 2018 approved limited casino gaming—partly justified by references to Hot Springs' gambling history.
• Lottery: The Arkansas Scholarship Lottery, approved in 2008, represented acceptance of state-sanctioned gambling.

These developments reflect an ongoing tension between the economic benefits of gambling and concerns about its social costs—a debate shaped by historical experience with organized crime.

Drug Trafficking Networks

Contemporary organized crime in Arkansas is primarily drug trafficking:

• Methamphetamine: Arkansas became a major methamphetamine production center, with rural labs and Mexican cartel distribution networks.
• Prescription Drugs: As part of the opioid crisis, organized pill mills and distribution networks appeared.
• Mexican Cartels: The Sinaloa, CJNG, and others developed distribution networks within Arkansas, especially within the growing metropolitan areas of Northwest Arkansas.
• White-Collar Crime Evolution

Modern organized crime in Arkansas is increasingly white-collar in nature:

• Health-care fraud networks
• Organized retail theft rings
• Identity theft operations
• Cyber-crime organizations
• These crimes are less visible than traditional organized crime but may actually have a greater economic impact.
• Law Enforcement Response
• Contemporary Arkansas law enforcement has developed several sophisticated approaches to organized crime:
• Multi-jurisdictional task forces
• Federal-state cooperation agreements
• Asset forfeiture programs (though controversial)
• Intelligence-sharing networks

However, resource limitations and changing criminal tactics remain as challenges.

Comparative Analysis and Lessons Learned

Arkansas vs. Other States

Arkansas's organized crime history differs from classic patterns:

• Ethnic Dynamics: Unlike Northern cities with ethnic succession in organized crime, Arkansas's criminals were primarily white Southerners collaborating with national figures.
• Rural-Urban Balance: Arkansas showed that organized crime could thrive in smaller cities and rural areas, not just major metropolitan areas.
• Political Integration: The degree of open political cooperation with organized crime in Hot Springs exceeded even notably corrupt cities like Chicago or New York.
• Economic Dependence: Few cities were as economically dependent on organized crime as Hot Springs during its heyday.

Historical Lessons

Arkansas's experience with organized crime offers several lessons:

• Corruption Spreads: Tolerance for limited corruption inevitably leads to broader compromise of institutions.
• Economic Arguments: Claims that vice supports the economy obscure long-term costs to society and governance.
• Reform Requires Persistence: Decades of entrenched corruption required sustained reform efforts over multiple administrations.
• Geography Matters: Arkansas's position on trafficking routes continues to present challenges, showing how geography influences crime patterns.
• Cultural Impact Persists: The cultural legacy of organized crime continues to influence attitudes toward law, government, and economic development.

The Permanent Shadow

These days, Arkansas isn’t the wild playground for gangsters it once was. You won’t see mobsters strutting down Central Avenue or governors pocketing mob cash. But the ghosts of those days still hang around. You hear it in debates about gambling, in the fight against drug rings, and in the way outsiders sometimes talk about the state. Sure, the old Vapors Club now hosts dinner shows, and the Southern Club’s just a quirky wax museum. But the bigger problems—how you grow an economy without selling your soul, how you keep politicians clean, how you tackle vice—those haven’t gone anywhere.

In the end, Arkansas’s brush with organized crime throws out both a red flag and a glimmer of hope. The warning? Corruption takes root fast if you let your guard down. The hope? Even the deepest, ugliest corruption doesn’t have to last forever—if enough people care to dig it out. As Arkansas keeps changing, that old history isn’t just some dusty story. It’s a reminder: the fight against organized crime isn’t over, and never really will be. You have to keep showing up for justice, for transparency, and for law—not just once, but again and again.