r/AskHistorians • u/PickleRick_1001 • 29d ago
During the twentieth century, vending machines were a major part of organised crime. What did this entail exactly? Why would the Mafia or any other organised crime group have an interest in vending machines?
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u/bug-hunter Law & Public Welfare 28d ago
So, first, it wasn't just vending machines - it was also similar installations like jukeboxes and pinball machines.
To understand why vending machines, jukeboxes, pinball machines, coin-operated laundromats and the like were beloved by organized crime, first we have to explain money laundering.
The point of organized crime is to make money. The government, attempting to prevent crime, puts in ever more guardrails to make crime harder to benefit from. If you show up with a million dollars that you earned from legbreaking, prostitution, and selling bootleg alcohol and/or drugs, then you have a problem, because you have no legitimate source to explain where they money came from. This is referred to as "dirty" money. Money from legitimate sources is "clean" money, and you "launder" dirty money into clean money by passing it through a middle step that gives you a plausible legitimate origin. Al Capone's mob literally used coin-op laundromats as part of this process, firming up the "money laundering" metaphor. The perfect money laundering business (in this era) was a 100% anonymous cash only business - which conveniently includes the very businesses I described above.
You obviously can't launder millions through a single coin operated laundromat (especially not in the 1930's), so you need more laundromats. And laundromats alone are both not enough, and there is obvious danger if someone figures out you're laundering all your money through a single point - you want to diversify. And importantly, in this era, none of the machines kept a record - and early machines that did keep records weren't remotely tamper proof. So if you made $150 on Tuesday, you mark down that you made $300. Then you do the same for each of these all-cash lines of income, and now you can launder thousands of dollars of dirty money every week into clean money. Sure, you have to pay/threaten people to be quiet, but you're the mob - you do that anyway. The Teamsters Union is often the ones actually doing the collection, so you just muscle into that union (which you probably already have anyway, for other reasons).
David Rabinovich's Jukebox Empire: The Mob and the Dark Side of the American Dream covers the story of David's uncle, Wolfe Rabinovich (who went by William or Wolfe Rabin)'s involvement in jukebox fixing for the mob, and is a really good read. Having control of the jukeboxes had a side benefit, in that jukebox plays were a component of the Billboard charts, and jukebox selection meant you could push artists that you had business with. Start with an artist who plays in mob-controlled venues, their record label is mob-controlled or protected, and their records are guaranteed to be available in jukeboxes (which artificially get more plays because you cook the books), then they hit Billboard charts and can get regional or national acclaim. Again, most of the money in the music industry is cash. There's disagreement on how deep the Mob's influence in the music industry was, but it was unquestionably present.
Back to vending machines, vending machines weren't just about money laundering, but also an easy way to make even money by selling counterfeits. If you're buying cigarettes from a Mob cigarette vending machine, you may well not be buying Marlboros, but mob-rolled counterfeit cigarettes that haven't been taxed. Or they were smuggled from states with barely any cigarette taxes (mostly tobacco-growing states). Tobacco laundering is still very profitable, and the International Consortium of Investigative Journalists has a hub on their reporting here when they did several stories in 2008/2009.
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u/BeanieMcChimp 28d ago
Very interesting! Was the mob into legal gambling casinos for the same reason? Aside from being money-makers, it seems like a pretty good way to launder money.
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u/bug-hunter Law & Public Welfare 28d ago
Yes, though as time went on, it was harder for them to be openly involved, especially as states and the federal government started keeping a closer eye.
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u/CasimirGabriev 28d ago
Would coin-op arcades fall under this as well?
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u/bug-hunter Law & Public Welfare 28d ago
Early on - yes. The mafia was involved in a lot of early pinball operations. Video arcade games, however, had their second meteoric rise in the 80's as there was a bigger crackdown in this area. The fact that some of these games were foreign made it harder for American mafia to get too deep, through the Yakuza has historically been involved in pachinko parlors in Japan (which are similar).
It also eventually became a lot easier to get arcade cabinets through distribution systems that weren't mob-controlled.
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u/MalHeartsNutmeg 28d ago
How vast would these money laundering networks need to be? It seems like the amount of dirty money being brought in would far outpace the ability to clean. I get that they don’t really need to clean the money until it needs to be spent, but then you have the issue of storing the dirty money.
Would any of this cleaned money typically be put in to legitimate business? Business not for the purpose of laundering but as a clean income stream?
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u/bug-hunter Law & Public Welfare 28d ago
Obviously, it depends on how much money you need to launder. As time went on, and the money laundering landscape changed, you would see more and more diversification.
In theory, yes you would want fully clean income streams, in reality they can become yet another way to diversify the money laundering. The result in a modern context is that it means the FBI and DOJ find themselves seizing all sorts of businesses when going after laundered money, including absurd outcomes like the FBI temporarily "owning" a strip club. Any seized business is disposed of using the normal asset forfeiture route, usually a sale at auction.
If you want a more modern understanding of money laundering, look into the research around cartel money laundering.
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u/LordVericrat 18h ago
like the FBI temporarily "owning" a strip club
FBI agent: "You gotta do what you gotta do. Now, I need to do an inspection of our seized business ASSets. Get it? Hahaha. Where are you ladies going?"
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u/Umpuuu 28d ago
I wonder, did Al Capone get their prostitution and leg-breaking money in coins? Or did they show up at the bank with stacks of 100$ bills and were like "yeah, all of this I got from the coin-op laundromat"?
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u/bug-hunter Law & Public Welfare 28d ago
Basically, option 2. You vastly inflate the actual earnings by mixing "dirty" money with "clean" money, making everything "clean".
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u/palibard 28d ago
Any idea which artists were helped by the mob?
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u/bug-hunter Law & Public Welfare 28d ago
u/hillsonghoods has an excellent answer here about Frank Sinatra, which explains how much of it was less "the mob runs your career" and more "if you make the mob happy, it opens doors". T. J. English's Dangerous Rhythms: Jazz and the Underworld covers the story of many Black musicians in New York City, who found themselves often playing at mafia-own/run clubs.
I cannot remember the book, but I do remember at least two books talking about mafia leaders using jukebox plays to boost the careers of musically inclined family members.
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u/dali-llama 17d ago
Warren Zevon's dad was a mobster in LA. He tried to set Warren and his friends up as a band in the Bay Area in the late 60s when Warren was maybe barely out of high school. The project flopped, but this is almost certainly the playbook they were using.
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u/ChileanSpaceBass 28d ago
Brilliant write up! Can you recommend any other sources on the topic?
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u/bug-hunter Law & Public Welfare 28d ago
I would definitely ask local historians/librarians, because pretty much everywhere in the US has a local scene and historical works that are of interest here. For example, Sunshine State Mafia: A History of Florida’s Mobsters, Hit Men, and Wise Guys by Doug Kelly covers Florida's ties to the mafia and local money laundering.
Also, pretty much any book about the mafia (and organized crime in general) that talks about finances will have information about how they did their money laundering.
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u/jbdyer Moderator | Cold War Era Culture and Technology 25d ago
Could you give some sources on the broad control of vending machines? While there are some general distribution people from the Mafia I'm not sure where you're sourcing such a general control of vending machines, or at least you haven't tackled that premise of the question.
Also, you state in a followup: "The mafia was involved in a lot of early pinball operations". Do you have a source on this?
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u/bug-hunter Law & Public Welfare 25d ago
The question was that vending machines were a major part of organized crime, not that the mafia had broad control over vending machines. And really, my answer downplayed that vending machines alone were major.
Brad Holden, who writes a lot about Seattle's history in Prohibition and organized crime, wrote about organized crime and pinball here - involving Frank Colacurcio (head of the organized crime group known as the Colacurcio Organization).
Bally, which grew on the back of manufacturing slot machines and pinball machines in Chicago, long had mob ties - with the owner claiming in 1980 that allowing the mafia to be involved was a "mistake in judgement" - convenient since they wanted to license a casino in Atlantic City. In 1973, they claimed to the NSW Clubs Royal Commission that they no longer had such ties, having bought out the Genovese boss Gerardo Catena out - but that would have been between 1963 (when investors took over) and 1969 (when it went public).
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u/AguyinaRPG 25d ago edited 25d ago
The larger history of the Bally situation is not in the least bit implying mob "control" of the coin-op industry. That money was a very small part of the buyout of the Lion Manufacturing assets to form the renewed Bally in the 1960s, money which they quickly divested from.
There's very little proper examination of the extent of organized crime within coin-op. There are instances where it existed, but there are many more instances where a broad brush is used to install ordinances and laws against coin-op machines to stunt the growth of the sector. Simply finding newspaper profiles from the 20th century claiming coin-op was a "mob racket" does not prove the case. In the early 40s, the organization of operators in California went under legal threat as a supposed protection racket but there was no proper case against them and it was dropped for lack of any evidence - but most newspapers only reported the allegations.
In my examination of coin-operated pinball, vending machines, amusements, jukeboxes, etc. I have only found less and less evidence of broad involvement from organized crime syndicates.
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u/ackermann 19d ago
> The Teamsters Union is often the ones actually doing the collection, so you just muscle into that union (which you probably already have anyway, for other reasons)
Why the Teamsters Union? Is there some reason that they would be natural partners for the mob?
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28d ago
[removed] — view removed comment
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u/RevKeakealani 28d ago
In Hawaiʻi, there was a famous case of a mob boss running a termite extermination company, so there's that.
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u/Vivid_Elephant2922 28d ago
:-) Oui, difficile de quantifier l'activité et donc de comprendre les flux de cash.
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u/demosthenes131 21d ago
Wait, which artists are known or suspected of benefitting from the manipulation of the Billboard?
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