In 1966, a time when the mob had totally corrupted Las Vegas, Howard Hughes moved in from Los Angeles. He and his entourage rented the top two floors of the Desert Inn. After 10 days, the amount of days allowed by the owner to stay in a room, Hughes would not leave. As the Christmas and New Year season approached, Las Vegas’ busiest time, the owner was furious because those rooms were promised to high rollers.
Receiving a lot of pressure from the owners, Hughes called upon Robert Maheu, his personal emissary, to deal with it. In the end, Maheu suggested Hughes buy the hotel. That began a series of other purchases in the city. This was due to the fact that after buying the Desert Inn, Hughes discovered that the revenue from the casino was “active” income which was taxed less by the IRS than “passive” income. Hughes was heavily taxed when he sold TransWorld Airlines, as it was considered “passive” income. Hughes wanted to buy more toys in Vegas.
Maheu was instrumental in picking which hotels Hughes bought. They were places on a list commissioned by Attorney General Robert Kennedy that needed to be purged of the mob. The best way to oust them was to buy them off. Being a billionaire, Hughes was in a perfect position to do that.
Hughes would have purchased all of Las Vegas if the U.S. Securities and Exchange Commission hadn’t put a stop to it, preventing Hughes from having a monopoly. An interesting thing to note is that many of the properties Hughes purchased included a lot of empty acres. This gave Hughes room to build. Meanwhile, Hughes did not step out of his hotel room for four years.
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