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Galveston Island’s unique history of underground casinos

By Sean Chaffin


As one of Texas’s oldest cities, Galveston has quite a history. That stretches back to 1528 when Spanish explorer Cabeza de Vaca and his crew were shipwrecked on the island. French and Spanish explorers traversed the area in the coming years and famed pirate Jean Lafitte built the island’s first settlement in 1817. The island has always been a bit different—home to buccaneers, smugglers and rugged wanderers.

From the early 1900s up to the ’50s, that history also included an extensive network of underground casinos. Those in the know could find gambling establishments in dance halls and saloons across the island. The city was home to various types of criminality from prostitution to bootlegging, and Sam and Rosario (nicknamed Rose) Maceo entered this world when they moved to the island in 1910 from Louisiana.

Born in Sicily, the brothers began work as barbers, but the lure of easy money soon led to a life of crime serving the vices of Texans looking for a stiff drink during Prohibition. In Galveston, ships from Jamaica, Cuba and other Central American and Caribbean countries would offload liquor a few miles out to sea, and then be run into port by bootleggers who could make thousands of dollars supplying the Southwest (including the rest of Texas) and other destinations with illegal booze.

When a leader of one of the two local gangs approached Rose about hiding 1,500 cases of rum in his beach cottage, the reward versus the risk just seemed too irresistible. The payment of $1 a case trumped his haircutting wages, and Rose and Sam were soon hooked on the “business.”

Sam soon opened a store selling “cold drinks,” but it was really a front to peddle liquor. The ban on alcohol proved to be an opening the men needed and they were soon knee-deep in liquor until the repeal of Prohibition in 1933.


Bootlegging to Betting

As their bootlegging business flourished, the Maceos were building a burgeoning criminal enterprise. Galveston was a large port and the beach-lined island was (and remains) a popular tourist destination. The famed Hotel Galvez, where Sam lived for a time in the penthouse suite, was a symbol of luxury on the Texas coast. Gambling was also popular, with many underground casinos catering to those with a thirst to wager and money to gamble.

The Maceos knew they had to get in on the action. In 1923, the two men made their first entrance into this world with the opening of the Chop Suey at the Corner of 21st Street and Seawall Boulevard. Eventually renamed Maceo’s Grotto three years later, the place was shut down for illegal gambling in 1928 and then damaged by a storm in 1932. The brothers rebuilt and added an Oriental theme, rechristening the club the Sui Jen. A decade later, a more South Seas theme was added and the Balinese Room was unveiled.

The Balinese Room would become the best known of Galveston’s many gambling destinations. With brilliant views of the beach and Gulf of Mexico, the Balinese sat on a pier extending 600 feet into the water—and would soon become a Galveston hotspot. As vacationers pitched their beach umbrellas in the mocha-colored sand along the beach and soaked up the sun, blackjack hands were dealt and roulette wheels spun only feet away in the Balinese Room.

“It always had a guard posted at the front entrance to screen the patrons and issue membership cards to those who they wanted to enter and to warn of unwanted visitors,” writes Frank Chalifant in his book Galveston: Island of Chance, which focuses on the island’s gambling past and gambling chips and collectibles from the era. “The long pier that isolated the Balinese Room from Seawall Boulevard became known as ‘The Ranger Run.’ By the time law enforcement officers reached the restaurant and the windowless back gambling room, the illegal paraphernalia had been hidden.”

The Maceos utilized extensive security measures. Hidden panels in walls could hide equipment quickly and craps tables converted to billiards tables. In all, the entire casino could “disappear” in less than a minute. The casino also reportedly had some help from a lackadaisical approach by local law enforcement, who only responded to complaints, which were few.

“The Balinese Room was home to world class entertainers, bootleggers, and organized crime. It was also one of Galveston’s more notable gambling rooms, although there were numerous ones all over the island,” says Will Wright, chief creative officer with the Galveston Historical Foundation. “The Balinese was built in such a way that when raided, it took officers so long to get to the end of the building, that all signs of illegal behavior would be hidden or abandoned in the Gulf of Mexico. Legend also has it that when notified of a raid, the band would queue up ‘The Eyes of Texas Are Upon You,’ the Texas Rangers theme song, when the Rangers would enter.”

As Galveston became more of a travel and entertainment destination, even stars like Frank Sinatra, Duke Ellington, Groucho Marx, Bob Hope, Jack Benny, George Burns and Gracie Allen, Mel Torme, Jayne Mansfield and Gene Autry performed at the Balinese Room.

“I can imagine what it must have looked like, with all the lights,” historian Casey Greene, head of special collections at Galveston’s Rosenberg Library, told the Austin American-Statesman in 2011. “The Maceos knew how to do it correctly. They ran a clean operation. Men wore coats and ties, and women wore dresses. It was classy. I wish I had been able to visit Galveston in those days. Imagine the excitement of having a national figure come to town. We don’t have many anymore.”


A Growing Gambling Enterprise

As the popularity of the Balinese Room increased, the Maceos expanded their entertainment empire. The brothers opened the Hollywood Dinner Club on Avenue S and 61st Street. The ritzy Hollywood was known for a good meal and drink in a glamorous setting, and of course, gambling. The club attracted some of the biggest names in entertainment, and it became one of the most popular destinations in the country. It met its demise in the late 1930s after a raid by Texas Rangers. The Balinese Room would continue to flourish, however.

“Rose was the tough businessman and Sam possessed all the finesse,” Chalfant writes in Galveston: Island of Chance. “Sam became good friends with and booked all the big names in the entertainment business. It is my heartfelt opinion that Sam Maceo was to Galveston what Steve Wynn is to Las Vegas today.”

The Maceos continued with their successful clubs, which included places like the Turf Athletic Club (casino), the Studio Lounge (card room and horse betting lounge), and the Western Room. The brothers also had a hand in numerous other business ventures from athletic clubs and pool rooms to business loans, check cashing, real estate and oil. The business loans often came with the requirement that the Maceos would supply all vending and slot machines to the business, according to Chalfant, with the merchant’s portion of the take applied to the loan. The clubs also took bets on sports and horse races as well, all illegal in Texas at the time.

While their work may have not been on the up and up, the Maceos were well respected by many in the Galveston community and supported many charitable causes and philanthropic ventures. The brothers sponsored free concerts on the beach, gave money to churches, and even supported the Miss Universe pageant held on the island.

Along with the Maceo empire, there were many other gambling clubs. Slot machines were numerous—from the large clubs and underground casinos to smaller bars and gas stations. From the 1920s to 1950s, Galveston was a gambling oasis. Most law enforcement chose to look the other way as places like the Alamo Club, Artillery Club, Beach Amusement Club, Brownie’s Casino, Embassy Club, Horseshoe Club, and more openly flouted gambling, liquor and prostitution laws. And even though horse wagering was made illegal in 1909, the Galveston Downs was still open for business as late as the 1920s.

As Gary Cartwright notes in Galveston: A History of the Island: “None of the gambling places downtown or along the Seawall Boulevard went out of their way to hide what they were doing, although they didn’t advertise either.”


Law Enforcement Crackdown

By the 1940s, casinos flourished throughout the island in the years after World War II. The Maceo brothers’ gambling devices were prevalent in towns and cities throughout the Galveston area. Business was booming, but tragedy soon struck. Sam died of cancer in April 1951. His brother continued and controlled the business, but passed away himself in 1954 of heart failure.

After years of dodging government oversight and numerous law enforcement raids, the deaths of the two brothers seemed to be an omen for gambling in Galveston as federal and state crackdowns began in earnest throughout the 1950s. The IRS also filed a claim against Sam Maceo and eventually won $600,000 in 1964.

In 1957, new state attorney Will Wilson admonished local officials to “clean up Galveston” or he would be forced to take action. Wilson had previously worked as Dallas County district attorney and helped end the city’s “wide open gambling” and mob wars of Benny Binion and Herbert Noble. Newly elected Sheriff Paul Hopkins took note of Wilson’s demands, and set about to end the underground gambling. Wilson also appointed former FBI agent and World War II pilot and hero Jim Simpson as a special assistant tasked with the job of closing down the gambling rackets. He was given wide latitude in investigating casinos.

Simpson hired two oil workers for a special mission. They were trained and sent to various casinos in undercover investigations over a four month period in 1956-57. They gambled, drank cocktails, and compiled evidence meant to shut down the establishments. The two investigators eventually made several visits to Maceo clubs, including the Balinese Room. They visited the club three times in May 1957 on fact-finding missions, noting that the extravagant gambling room housed three craps tables, several slot machines, two roulette wheels, and a horse racing machine.

Eventually, the two men gathered evidence on 50 clubs. Unlike in the past, law enforcement was now taking the “casino problem” seriously. Raids and criminal charges followed. Then on May 30, 1957, the new sheriff raided the Balinese. Undercover detectives inside stopped employees from hiding equipment and evidence. All gaming devices were destroyed—and it was game over for the Balinese Room. Gambling and liquor violations forced it to shut down.


Reviving History, but Facing Hurricanes

While some gambling houses stayed open in the 1950s, most disappeared. The new efforts by law enforcement and the legal Las Vegas casinos complete with luxury hotels began attracting American gamblers. Hurricane Carla ripped through Galveston in 1961, and the former Balinese Room sustained considerable damage. The historic facility went through several owners afterward and functioned as a nightclub and later a meeting room and banquet hall before closing again in 1989.

In 2002, Houston attorney Scott Arnold purchased the club, renovated the building, and re-opened with several shops and businesses within the building. Visitors could check out some of the historical artifacts (including the chalkboard ledgers to post baseball betting odds) on display. The showroom was converted to a restaurant and much of the retro South Seas décor was kept. Diners could hit the original dance floor with perfect views of the Gulf from the rear of the property.

“I bought the Balinese because I could and because it was an iconic piece of Texas—and my— history. I had gone there many times in the early 1980s and believed the South Seas ballroom to be the most beautiful room I had ever been in,” Arnold says. “Owning the Balinese was very much a labor of love. I often felt it owned me. The sense of history was palpable— you could feel it breathing in the walls. To be very honest, being ‘Mr. Balinese’ was a great feeling.”

In September 2008, the landmark club and gambling hall faced yet another major storm as Hurricane Ike surged into Galveston. The powerful water and waves, which rose above the famed city seawall, was too much for the almost 80-year-old structure. The Balinese Room was completely destroyed.

From gambling and fine dining to world-class entertainment and elegance, the Balinese Room was a forerunner of today’s casino experience. But after Hurricane Ike, this piece of Galveston history was gone. Like a bad roll at the dice tables, the old gambling hall officially crapped out. But to many Texans, that legacy is not forgotten.

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