Gambling Could Sail Back Into California Waters : Wagering: Bills would allow casinos on U.S.-flagged ships. Law enforcement is cool to the idea.

More than 50 years ago, the Rex, Showboat and Tango lined up with other hulking ships on Santa Monica Bay and enticed thousands of gamblers to board the floating casinos each night.

Then, in one of the more colorful chapters of California history, state Atty. Gen. Earl Warren and his men stepped in. Condemning the ships as “the single greatest nuisance” in the state, Warren ordered ax-wielding authorities to destroy slot machines, roulette wheels, crap tables and every other gaming device in sight. When the raids ceased in the 1940s, so did shipboard gambling off the Southern California shoreline.

But under legislation before Congress, gambling could return to the state’s coastal waters.

A little-noticed amendment inserted into the national crime bill and approved by the House last month would permit U.S.-flagged ships to provide gambling entertainment between domestic ports.

The amendment to the crime bill, which is now before a House-Senate conference committee, is supported by a San Francisco Bay Area company, which has disclosed plans to operate a pair of $300-million cruise ships on daily runs between Los Angeles and San Francisco. The ships would transport 2,500 passengers, 500 automobiles and 11 tour buses each way while featuring elaborate casinos.

The proposal, 15 years in the making, attracts the same cool reception from law enforcement that gambling ships got five decades ago from Warren, who went on to become governor of California and chief justice of the United States.

“There are lots of problems with this sort of thing,” said Barbara Johnson, special assistant district attorney in Los Angeles. “Once you have staterooms available for high rollers, the hookers come along. Then it’s not a family outing anymore. It is a floating casino with all its pertaining glories.”

California Deputy Atty. Gen. Gary Schons said: “In general, anytime we have gambling, we have all of the attendant criminal problems such as loan-sharking, extortion, prostitution and money-laundering.”

Foreign-registered cruise lines that carry tourists from Southern California to ports abroad may provide gambling entertainment once the ships reach international waters, usually three miles off the coast. American-flagged ships, however, are prohibited from offering any gaming activities under the federal Gambling Devices Act. The legislation, enacted in 1951, was intended to stop organized crime from taking over the popular gambling ships.

Since then, the U.S. cruise industry has all but vanished--going from 46 ocean liners to two--in part because of the strict anti-gambling laws and competition with foreign-subsidized shipyards, Rep. Gene Taylor (R-Miss.) said. Moreover, the international cruise market is booming; American tourists generate annual revenues approaching $4 billion for foreign ships, Taylor said.

In an attempt to resuscitate U.S. shipyards and revive the domestic economy, Taylor introduced legislation that would eliminate the gambling restrictions placed on American-flagged ships. Taylor’s bill was approved last week by a House Merchant Marine subcommittee; other provisions were tacked onto the crime bill last month.

“I introduced (the bill) for one purpose: to put Americans in the maritime industry back to work,” Taylor said. “In my lifetime, America has gone from this world’s foremost maritime power to a virtual nonentity in the field.”

The bill is supported by 91 co-sponsors in the House and the entire maritime industry, including shipbuilders, domestic cruise line operators and unions.

Only the U.S. Justice Department has raised objections. Justice officials say that they are concerned about provisions allowing so-called “cruises to nowhere,” which are designed exclusively for gamblers without traveling to a destination.

The Taylor bill is expected to be approved by the House Merchant Marine Committee this week and could be sent to the House for action before the Thanksgiving break. The crime bill amendment must be approved by the Senate before it is forwarded to the White House. With no heavy opposition at this point, the measures appear likely to be approved.

Taylor’s legislation would eliminate a pair of restrictions now placed on U.S.-flagged vessels: It would open up the international cruise market to domestic firms and give American ships an advantage over foreign vessels by allowing them to offer gambling on ships serving domestic ports.

The measure amounts to a godsend for the owners of Continental Coastline Inc., a Fremont, Calif.-based firm that has been studying a Los Angeles-to-San Francisco line since the 1970s.

“This is something we’ve put a lot of sweat, blood and tears into,” said Charles Cooley, a Continental director. “We are comfortable with the fact that we started very early on and have the jump on everyone.”

Continental’s plans call for ships to depart from San Francisco and Los Angeles daily for an overnight trip lasting about 18 hours. Each ship would travel at up to 30 knots and offer private cabins, a dinner theater, disco and casino. A one-way trip would cost about $200.

The San Francisco-to-Los Angeles route is one of the most heavily traveled in the world, said Continental Chairman Ronald M. Svendsgaard. “If we can pick up 10% of that traffic, we will fill our ships.”

Continental officials are tight-lipped when pressed for financial details, including how they will raise $600 million to build the ships. Svendsgaard will only say that the company is making progress on its financing package, food and service contracts and negotiations with unions.

The company has entered into talks with National Steel and Shipbuilding Co. of San Diego about building a pair of ships, NAASCO chief financial officer Fred Hallett said.

If the legislation is approved, ships could be operating in two to three years.

The ships would appeal to business travelers, out-of-state tourists and California residents who could take their cars along on an entertaining one-way journey, Svendsgaard said. He acknowledged, however, that rough seas and foggy weather, particularly near San Francisco, could prove challenging to year-round travel. In any case, the company’s studies concluded that the lure and profits from gambling are necessary to make the venture profitable.

Indeed, operators of California gambling boats learned in the 1920s how lucrative a casino parlor could be. Back then, an estimated 850,000 patrons a year lined up on piers in Long Beach, Redondo Beach and Santa Monica to take water taxis to the floating casinos.

Among the most lavish of the gambling ships was the Rex, which took in an estimated $20,000 a day from 300 slot machines, six roulette wheels, eight crap tables and a 500-seat bingo parlor. The ship’s owner, Tony Cornero, became the main target of Warren.

When Warren’s officers smashed gambling equipment and confiscated money aboard the row of glittering ships on July 28, 1939, Cornero’s crew erected a steel door over the gangway and fought off authorities with fire hoses. During what became known as “The Battle of Santa Monica Bay,” Cornero held out for nine days as authorities surrounded the Rex. During the battle, Cornero was heard to shout: “I will not give up the ship!”

Cornero eventually surrendered, although he was cleared in court of violating state gambling laws. He returned with a new ship called the Lux in 1946, but was only able to keep it open a short time before Congress outlawed gambling in U.S. coastal waters.

Gambling ships off California remained dormant until 1984, when Crown Cruise Lines, a Delaware firm, announced that its lavish 440-foot Viking Princess would make daily 11-hour “cruises to nowhere” out of San Diego. Those plans were sidetracked when then-California Atty. Gen. John K. Van de Kamp ruled that gaming activities aboard the Panamanian-registered Princess violated state laws because it would not call on a foreign port.

“We did have concerns about Crown Cruise and who was really behind it,” Van de Kamp said last week. “Every time you deal with gambling in this country . . . you have to be concerned about the arrival of organized crime on the scene.”

To get around Van de Kamp’s opinion, Crown officials decided to make a port call in Ensenada. During inspections, state agents found no evidence of profit skimming or money-laundering, said Johnson, the prosecutor who was in charge of the attorney general’s Organized Crime Division at the time.

A year and a half later, the operation went out of business and moved to Florida, where U.S. Justice officials have permitted gambling on one-day “cruises to nowhere” by foreign-flagged ships. In other areas of the country, the Justice Department has not allowed such gambling cruises.

The proposed Los Angeles-to-San Francisco cruise line is a “fascinating proposition” that could help boost the tourism industry in California, said Michael Collins, vice president for marketing at the Los Angeles Convention & Visitors Bureau.

“If gambling is an appealing attraction as it seems to be . . . I think both cities stand to benefit from it. There is an increasing interest on the part of Asian travelers to, once in Los Angeles, go directly to Las Vegas. . . . This would keep money flowing in the state that they otherwise would have spent in Nevada or New Jersey.”

Continental officials insist that their cruises will be different from the gambling barges that parked off the coast of Southern California in the 1930s.

“We are going to simply be a ship that runs between Los Angeles and San Francisco,” Svendsgaard said. “It is being used principally to transport passengers and not for gambling. Gambling is only a side issue. . . . Without that we don’t think it would work.”

Law enforcement officials think otherwise.

“My view is the gambling is the profit,” said Johnson, of the district attorney’s office. “The rest is the gimmick. The cruise is the tail that is wagging the gambling dog.”