There aren’t any commemorative parties, but this year marks the 30th anniversary of a major Atlantic City news story-the Abscam investigation.

The investigation—in which FBI agents posed as the henchman of a fictitious Arab sheik, Kambir Abdul Rahman, to uncover a corrupt congressman—took its name from Abdul Enterprises, the sheik’s alleged company. Though Atlantic City wasn’t a primary target of the sting, repercussions here led to big changes in the way New Jersey regulates casinos.

News of the investigation broke like a thunderbolt on February 2, 1980. The FBI announced it had snared numerous public officials, including New Jersey Senator Harrison Williams and seven members of Congress, in a two-year undercover investigation. The probe also included a member of the Casino Control Commission.

It was a critical time for Atlantic City’s gaming industry. Over the objections of the Division of Gaming Enforcement, the first casino, Resorts International, had just received its permanent license. Though Caesars Boardwalk Regency and Bally’s Park Place operated under temporary licenses, key figures at both casinos (Caesars Chairman Clifford Perlman and Bally’s CEO William O’Donnell) had been forced to step aside due to concerns about organized crime and corruption.

Allegations that a Casino Control Commissioner was tainted by malfeasance called the entire regulatory structure into question.

“It’s scary because it creates such an aura of wrongdoing,” said an anonymous casino executive at the time. “One has to ask, who else is involved?” Commission Chairman Joseph P. Lordi admitted that the regulatory body’s reputation was at stake.

Ironically, the casino industry wasn’t even a target of the FBI. Abscam had begun as a simple investigation into the theft of two pieces of artwork from a New York apartment building. It broadened into a more general investigation of organized crime and political corruption.

FBI agents posing as Sheik Rahman’s assistants approached public officials seeking political asylum and help with purported investments in port facilities and a titanium mine. It wasn’t hard work. Once they offered money in exchange for favors, the agents heard from officials who weren’t even on their radar. Congressmen lined up to sell their offices, and unwittingly incriminated themselves.

The investigation wound its way to Atlantic City when Camden Mayor and New Jersey state Senator Angelo Errichetti reportedly told undercover agents that, in exchange for $400,000, he could help the sheik secure land, build a casino, and get a gaming license. Errichetti reportedly boasted that he could deliver three of five Casino Control Commission votes. He suggested a $100,000 bribe for Vice Chairman Kenneth MacDonald, and claimed that MacDonald “controlled” Lordi.

MacDonald resigned immediately. Lordi denied any wrongdoing. As many as 60 public officials had been implicated. Licensing hearings for Caesars and Bally’s ground to a halt, and some wondered whether the entire regulatory structure needed an overhaul.

Abscam had another Absecon Island connection. To impress sting targets, the FBI had rented fancy digs including a townhouse in Washington’s upscale Georgetown area and a lavish Florida yacht. Locally, the digs were a little less lavish—a rented eighth-floor condo in Ventnor’s Regency Towers.

Despite the Abscam furor, not all legislators sold out. New Jersey Congressmen William Hughes, James Florio and James Howard not only spurned the undercover agents, they reported them to the FBI.

In the end, Abscam led to bribery and conspiracy convictions for Senators Williams and Errichetti as well as New Jersey Congressman Frank Thompson. Others caught in the snare were Congressmen Raymond Lederer and Michael “Ozzie” Myers (both of Pennsylvania), John Jenrette (South Carolina), and Richard Kelly (Florida).

The investigation forced changes in New Jersey gaming. The Casino Control Commission went from a part-time to a full-time body, and the Casino Control Act was amended to prohibit temporary permits. With the commission’s regulatory mandate more clearly defined, state officials hoped to avoid another ugly episode. One Abscam, they decided, was enough.

Though it ended careers and threatened reputations, the Abscam scandal did not slow down the growth of the gaming industry, though it did provide regulators with a cautionary tale.

By David Schwartz

David G. Schwartz (www.dieiscast.com), an Atlantic City native, is the Director of the Center for Gaming Research at UNLV and the author of several books, including Roll the Bones: The History of Gambling.