By OSWALD T. BROWN
WASHINGTON, D.C., August 24, 2022 – For starters, casino gambling was not legally introduced in The Bahamas on March 20, 1963 with the granting of a license to Bahamas Amusements Ltd., as many Bahamians erroneously believe. A small casino called the Bahamian Club began operating In New Providence seasonally three months a year in 1920, catering to a very restricted clientele. It was located on West Bay Street, east of Fort Charlotte. What’s more, around the same time a small casino also operated legally on Cat Cay, south of Bimini.
Without doubt, organized gambling was not factored into the original plans of Wallace Groves when his lawyer Sir Stafford Sands, head of the Bahamas Development Board, arranged for him to sign the Hawksbill Creek Agreement on August 5, 1955, a landmark transaction that granted him 50,000 acres of crown land in Grand Bahama at $2.80 per acre. What we now know today as Freeport was a pine forest that over the years — with the acquisition of additional acreages of land acquired by the Grand Bahama Port Authority – was developed into the second most populous city in The Bahamas.
“Groves’ initial concept was for a standard free port completely free of import and export duties, but Sands observed that as the Bahamian government depended heavily on import duties for income, this would not be acceptable. They developed a modified plan for a largely tax and regulation (and, initially, trade union-free) exempt commercial enclave where trade and manufacturing could compete with nearby Caribbean and U. S. ports, but which would still collect duties on anything not directly connected with building and conducting businesses,” according to an article on the Grand Bahama Museum website.
The article added: “To make the Port Authority enclave economically viable and attractive to overseas investors, the Bahamian government agreed to exempt the Port Authority, its residents and employees from all taxes on real or personal property, capital gains, income in or outside the colony, excise or customs duties for specified imports and all exports out of the colony for a period of 30 years. After the 30-year period, the freedom from excise duties and the other provisions of the Agreement would continue for another 69 years (a standard British leasehold period being 99 years), and any new taxes would be no more than they were elsewhere in the Bahamas.
“In return, the Port Authority agreed to, within three years, create a new harbor and channel capable of handling large vessels 200 feet in length with a minimum depth of 30 feet at mean low water from the sea to the mouth of Hawksbill Creek, and within Hawksbill Creek, dredge a channel not less than 200 feet in width with a minimum depth of 27 feet, and also create a turning basin for the ships with a turning radius of not less than 600 feet wide. In addition, they were to construct a wharf at least 600 feet long with a ten-foot wide ‘apron’ to allow vehicles to access the ships.
“Further, the Port Authority was to promote and encourage the establishment of factories and industries (the rationale for the extensive acreage) to benefit the Bahamian economy and provide employment for the colony’s citizens. It was suggested that industries which could best exploit the natural resources of the island be particularly sought out (although the limestone and pine were fairly limited in their usefulness). No mention was made or implied concerning the salubrious climate and aesthetic beauty of the landscape—the Bahamas had those resources elsewhere, and it was industry (and agriculture) that was seriously lacking.
“It is clear that the primary intent of the special deal was industrial development, made possible by the impressive new harbor. Grand Bahama had not attracted earlier settlement or development precisely because there had been no viable harbor on the southern side of the island. However, the harbor alone was not enough to insure development. The services, infrastructure and amenities necessary for modern life — such as roads, electricity, water, supermarkets, restaurants, schools, churches, hospitals, banks, places of recreation and housing — had to be made available for the employees, officials and their families who would work in the new community before many could be convinced to move there.”
“When development of Port Authority land on Grand Bahama was not progressing quickly enough for investment return, a significant shift of emphasis was initiated to tourism and private residential development,” according to another article on the GRAND BAHAMA MUSEUM website.
Stafford Sands, head of the very effective Bahamian Development Board for tourism beginning in 1949, suggested a tourism initiative early on but was vetoed by Wallace Groves. As Sands explained, “Mr. Groves was not interested in the tourist trade. He did not consider it stable. I was a tourism man, and he was an industry man,” the article quoted Sir Stafford as saying.
However, the article added: “The desperate need for growth convinced Groves that the development of leisure facilities and tourist attractions were in fact necessary and led to the first important amendment of the Hawksbill Creek Agreement. This realization very well may have been the impetus for the 1958 acquisition of additional acreage to provide land for the new initiatives that was distant from the original industrial development zone.”
One particular addition was the construction of a first-class, deluxe resort hotel of not less than 200 rooms. The acceptable enterprises now included the Port Authority “owning, constructing, operating, and maintaining hotels, boarding houses, clubs (resident or otherwise), apartment houses, restaurants, marinas, yacht basins, and places of entertainment (other than cinemas), sport, amusement or cultural activity,” according to the article.
The article added: “The immensely increased level of development was made possible by the contribution of yet another new investor, the flamboyant Canadian financier, Louis A. Chesler. Up until this point, the Port Authority, while aggressively ambitious on paper, had been relatively conservative in its leadership. Wallace Groves, despite his past mail fraud conviction that would be brought up whenever things seemed questionable, worked hard to establish a permanent and stable community with a secure future.
“Charles Hayward and Charles Allen, while willing to assume high levels of speculative risk, were both reputable and sound businessmen. Chesler, on the other hand, was quite a different sort of personality. In 1961, his contribution brought a $12 million infusion of cash to the project.”
Born in Belleville, Ontario in 1913, Chesler made his first million through Canadian mining stocks (Loredo Uranium Mines 1942-1946) before shifting his base of operations to Miami, Florida, where he controlled several corporations.
One of those corporations, General Development Company, was involved in the infamous “Florida land deals” of the time and was perhaps a model for what was to follow in Grand Bahama. However, it was the theatrical corporation, Seven Arts, that would play the primary role in the history of Freeport, according to the article.
“Despite the best initial efforts of DEVCO, development of Lucaya was still not happening fast enough. Land sales remained sluggish and funding was running low. This resulted in the radical decision to secure capital through the introduction of casino gambling,” the article noted.
It added: “A new company, Bahamas Amusements Ltd., was incorporated on March 20, 1963. Shares in the Amusements Company were divided between Louis Chesler and Georgette Groves, who each received 498 shares of 500 Class 1 shares and 498 Class 2 shares. The remaining Class 1 shares went to two of Chesler’s Canadian partners, while the two Class 2 shares went to Keith Gonsalves (future director of DEVCO and of Bahamian Amusements, Ltd.), and Sir Charles Hayward, another DEVCO director.
“That same day, the new company made an application, drafted by Stafford Sands, for a Certificate of Exemption to the Governor in Council, in great secrecy. The certificate was quietly granted without difficulty 11 days later on April 1, 1963, allowing the Bahamas Amusements Company to operate an unlimited number of casinos on Grand Bahama for a period of 10 years.
“Groves stipulated that all profits from Bahamas Amusements were to go to DEVCO to support the island’s hotels, as well as subsidizing land sale advertising, Bahamas Airways flights to Grand Bahama and encouragement of cruise ships to visit Freeport.”
The Certificate of Exemption was granted with the following stipulations:
- If within three years the Port Authority had not added at least 300 hotel rooms in addition to those already existing or under construction, and another 400 rooms within five years, the exemption would be cancelled.
- Management and control of all casinos had to be maintained by Bahamas Amusements, and not transferred to any other corporation or individual.
- No U.S. citizens were to be allowed to work in the casino (through fear of mob involvement).
- Gambling was forbidden to Bahamian residents.
- Casino profits were allowed to be taxed.
“The idea of a casino had been under consideration for some time, presumably at the suggestion of Louis Chesler and Stafford Sands. Wallace Groves only came to grudgingly agree in 1961 when there seemed to be no other solution to the development crisis,” according to the article.
It added: “Chesler was not only a financial speculator but also an enthusiastic gambler. He had long been involved with casinos (and the inevitable organized crime figures), and was instrumental in financing the purchase of the 450-room Hotel Nacional Casino in Havana, Cuba, for Mike McLaney in 1958 before McLaney moved to the Bahamas to manage the Cat Cay Club.
“Sands had decided that it was wiser to wait until after the 1962 Bahamian election to make a bid for exemption from not being permitted to operate casinos. Plans for the Lucayan Beach Hotel included an area designated as a ‘handball court.’ Once the Certificate of Exemption had been issued, it became the Monte Carlo Room, an opulent 76 x 120-foot casino with an enormous crystal chandelier and a carpet with three-inch pile. It was separate from the rest of the hotel (both physically and legally), costing Chesler’s construction firm $25,000 per room.”
Continuing, the article added: “The Monte Carlo Casino opened on January 11, 1964. The costly luxurious appointments of the hotel and casino were not in themselves an extravagance – they were calculated as appropriate for attracting the wealthy, high-roller gamblers whose losses could make or break the operation.
“The gamblers were carefully recruited in the U.S. and elsewhere and flown to Freeport on all-expense-paid junkets that cost the casino a great deal, but also guaranteed its profitability.
“As Life Magazine reported in February 1967: ‘In 1965, its first full year of operation, the Lucayan Beach Hotel casino on Grand Bahama spent $494,552 on chartered flights, just to bring in freeloading planeloads of ‘high-rollers’— big-spending gamblers with blue-chip credit ratings — who had been invited from all over the U.S. Another $935,268 was allocated to provide hotel and ship accommodations for such pampered guests.’ ”
The article added: “The junkets were very successful, as DEVCO officer Keith Gonsalves noted, bringing in two-thirds of the casino’s profit. The Monte Carlo’s success proved to be the turning point in DEVCO’s financial situation. Funds from Bahamas Amusements were able to underwrite the Lucayan development for several years.
“Unfortunately, the Lucayan Beach Hotel, which had been sold to Allen S. Manus, a Canadian rival of Chesler’s, was not equally successful, going into receivership in 1966 and eventually leading to the bankruptcy of the Canadian holding company of the Atlantic Acceptance Corporation. Ltd. It also resulted in the embarrassing scandal of Bahamian government corruption and Mafia influence that would erupt in the media in 1966 and 1967.”
During my far-reaching research for this article, I ran across a very interesting article related to tis topic that was published on February 3, 1967 in LIFE Magazine. This lengthy excerpt from that article is a small portion of the very comprehensive and engrossing LIFE article written by Richard Oulahan and William Lambert that highlights the level of corruption that permeated the introduction of casino gambling in The Bahamas. Here is the excerpt from that article:
THE SCANDAL IN THE BAHAMAS: AN ISLAND PARADISE CORRUPTED BY GRAFT, GREED AND AN INFLUX OF U.S. GANGSTERS.
“When their hopes for a great industrial development in Grand Bahama began to fade, Groves and Sir Stafford turned to the one thing that would draw the tourists like nothing else and make the resort turn a profit—big gambling.
“Long before the gambling was authorized or even mentioned out loud, the blueprints for Freeport’s Lucayan Beach Hotel depicted a large room specifically ordered at a Miami meeting attended by Groves’s representatives, the architect and Meyer Lansky. On the plans, the 9,000-square-foot room was called a “handball court,” but it was ultimately to become the Monte Carlo casino.
“There is a reason for the camouflage: as it happens, gambling was and is specifically forbidden by law in the Bahamas, punishable by law by a maximum penalty of a £1,000 and two years in prison. Gambling has existed there nevertheless in a modest way for many years. The way to get around the official restriction is to persuade the governor’s council to issue a Certificate of Exemption, which is simply a permit to ignore the law.
Some of the Bay Street Boys were opposed to the notion of big gambling on Grand Bahama, and the ground had to be painstakingly prepared to get a Certificate of Exemption for Freeport. In this, Groves and Sir Stafford were immeasurably helped by the arrival on the scene of one Louis Chesler, who showed up in 1960 with $12 million to invest and more than a casual interest in gambling.
A bigtime promoter from Canada, Chesler was the guiding force in several giant companies, including Canada’s Lorado Uranium Mines Ltd.; General development Corporation, the huge Florida real estate operation; and Seven Arts Productions Ltd., the entertainment complex. He was a proved entrepreneur in housing promotion, the developer of Port St. Lucie and two other large, successful “retirement towns” in Florida. When Chesler, a cherubic, rollicking 300-pound man, moved in, he brought with him a retinue of jet-set friends and satraps, and a go-go attitude that was offensive to the prim conservatism that Wallace Groves affects. But Groves managed to tolerate it until 1964, when the $12 million was gone, the Lucayan Beach Hotel was open and Lou Chesler could be given the coup de grâce.
Meanwhile, Chesler had been put to use in another way. In September 1961, in a manner called “Operation Indoctrination,” he and Groves were lavish hosts to a carefully selected group of key/ officials of the Bahamian government, first at Chesler’s Port St. Lucie, and later in Miami Beach. The influential group included Premier Sir Roland Symonette, Attorney General Lionel Orr, Treasurer William Sweeting, their wives, and Colonial Secretary Kenneth Walmsley. The guests were brief on the realities of resort building in the Bahamas and the absolute necessity of admitting bigtime gambling in order to create the beautiful—and profitable—life it would bring.
Sir Stafford was also present, but unobtrusive. His big scene came later, in 1963, when the governor’s council met in great secrecy to discuss issuing the Certificate of Exemption for Freeport. The vote was 8-3 in favor of the gambling license. Sir Stafford got $1.1 million, including $515,900 in legal fees, plus a retainer of $10,000 a month, plus a “consultant’s fee” of $50,000 a year for 10 years.
Some early dissidents—like Publisher Sir Etienne Dupuch, who had editorially campaigned with some eloquence against gambling — changed their minds after the vote and accepted “consultant’s fees” from casino funds funneled through Groves’s development company. Sir Etienne was appointed a “consultant” at $15,000 a year, but begged off, as a matter of conscience, after several months. Earlier Sir Stafford and Groves had tried to win Sir Etienne’s favor by commanding every concessionaire in Grand Bahama to buy ads in the publisher’s annual Bahamas Handbook. When the ads still did not produce the $50,000 they felt Sir Etienne deserved, Groves’s Grand Bahama Development Company was required to buy enough copies to make up the difference. After a few months, all of the 10,000 undistributed copies were burned.
Premier Symonette’s own “consultant’s fee” was set at $16,800 a year for five years, and his son, Bobby, the Speaker of the House of Assembly, got $14,000, also for five years. Maritime Affairs Minister Trevor Kelly was awarded the charter to haul men and materials from Florida to Freeport on his freighter, Betty K, at $60,000 a year for three years. The Betty K proved to be unusable, so the charter was canceled after seven months. As consolation for the loss of the contract, Kelly got a compensatory payment—$100,000.
Not long after the gambling franchise for Freeport was secure, Groves and Chesler moved into open conflict, for it had become apparent that Grand Bahama was not big enough for the both of them. Chesler made the first move towards a showdown, offering to buy out Groves’s 48% interest in the Grand Bahama Development Company for $17 million. Groves countered with an offer to buy enough of Chesler’s stock to gain control of the company, and Chesler—bowing to the feudal lord of Freeport—meekly accepted.
By this time Groves’s development company, financially shaky, began to change rapidly. The Lucayan Beach Hotel, which had been built under Chesler’s aegis at the cost of $8.6 million—one of the costliest hotels in the world on a per-room basis—had been sold, at a loss of $1 million, to Allen Manus, a Canadian entrepreneur, (Sir Stafford got a fee of $125,000 for arranging the papers.) Manus had no better luck with the hotel: despite a subsidy of $500,00 a year from the Monte Carlo Room, the Lucayan Beach was in receivership after 18 months. It still is today.
Manus had secured his down payment on the hotel with loans of $2.5 million, mostly from Canada’s Atlantic Acceptance Corporation, which invested $11 million in various Grand Bahama enterprises. Much of that investment in the island’s development went sour, resulting in an upheaval of the giant holding company. Atlantic Acceptance collapsed in June 1965, defaulting on $104 million to creditors, most of the Americans, and causing an international financial scandal.
By the end of 1966, the last of Lou Chesler’s holdings on Grand Bahama had been sold off and his friends, relatives and hangers-on were gone. But Chesler had left his mark on the resort. He had introduced Meyer Lansky and the late Jim Norris, millionaire boxing promoter and friend of the mob to the Bahamas’ gambling picture. Courtney, Ritter and Brudner, the three Lansky henchmen, all known by Chesler from their days in Havana and around the New York racetracks, had been installed as managers of the Monte Carlo Room, and the big gamblers were flying in and the big money was flowing out to a Miami Beach bank as regularly as the tides. In Miami Beach, a platoon of Courtney’s bookmakers was keeping a constant check on the credit ratings of high-rollers who showed up at Freeport. Everything was operating with machine-tooled efficiency—unlike the early days when Freeport’s unreliable telephones failed, and Jim Norris obligingly allowed the radio aboard his yacht, Black Hawk, riding at anchor in Hawksbill Creek, to be used to relay credit information back and forth between Freeport and Florida.
From its opening night in January 1964, the Monte Carlo Room prospered, never had a losing night. At the end of five months it had made $1 million, and before the year was over it had repaid the $600,000 lent by the Lansky mob to quip the casino and provide the initial bankroll. By the end of 1966, the casino was grossing $8 million a year by available records. It is worth noting, however, that Peat, Marwick, Mitchell and Company, the international accounting firm which kept the casino’s books, did not trust those available records and resigned last year.
In New York, meanwhile, U.S. Attorney Robert Morgenthau has been keeping a dogged pursuit of the fugitive Gotham mobsters. One of Groves’s officials admits that all casino personnel have been warned not to go to the U.S. for fear of being caught by one of Morgenthau’s subpoenas. The prosecutor has already obtained indictments against the Messrs. Courtney, Ritter, and Brudner. Another, more notorious Lansky lieutenant, Dino Cellini, and several lesser hoodlums have been declared non gratia and deported from Grand Bahama as a result of strong representations by U.S. governmental agencies.
Cellini went to London, where he operates a school—financed in part by Bahamas Amusements Ltd.—for British croupiers to learn the intricacies of American craps and blackjack. But among the replacements for Cellini and the others, all still working gainfully in Bahamas casinos, are Eddie, Bob and Guff Cellini-all of them Dino’s kinfolk.
As long as the mob has a toe hold, it will keep sending replacements—”soldiers,” as the Mafia calls them—whenever there is a vacancy to be filled. Of course, the mob has reason to be nervous, what with the heat from the U.S. and the changing political scene along Bay Street. One thing is obvious: they won’t give up easily. Nor will the Bay Street Boys.’
NOTE: The February 3, 1967 issue of LIFE Magazine is available on Amazon for $49.95.
