After Prohibition, gambling was embraced by the national crime syndicate as a principal source of revenue. But from 1940 to 1946, after the conviction and imprisonment of publisher Moe Annenberg, the mob lost control of the horse-racing wire business. Annenberg had been essentially a creation of the Chicago Al Capone/New York Luciano-Lansky-Costello axis, as organized crime switched from booze to gambling as the prime source of revenue.
The mobsters were in disarray, outmaneuvered by James Ragen, who skillfully converted himself into the most powerful figure in gambling in the country.
Ragen had come up the hard way in the Chicago underworld, having started out as a circulation slugger for the Chicago Tribune during the era of the great newspaper circulation wars, when Max Annenberg, Moe's older brother, was circulation manager.
Ragen learned the art of violence with a host of future big criminals, including Dion O'Banion, Walter Stevens, Frankie and Vince McErlane, Mossy Enright and Tommy Maloy, men who later turned Chicago into a bloody murderground. Ragen had the distinction of outliving most of his fellow students of mayhem while at the same time maintaining a certain independence from the Capone mobsters.
The federal government had mistakenly thought that the imprisonment of Annenberg in 1940 and the dismantling of his Nation-Wide News Service would be a crippling blow to illegal gambling around the nation. However, Ragen moved quickly to take advantage of the syndicate's plan to lay low for a time. His Continental Press Service met the urgent need of bookmakers and became the dominant racing wire in the nation, providing the latest results from dozens of tracks directly to thousands of bookie joints.
Finally the mob started pressuring Ragen to come in with them, even dangling a handsome buy-out price for his business. Ragen had been in the Chicago underworld too long not to know the score. He told friends he knew how the mob worked and that if he sold out, there was no way he would be allowed to live to collect his payoff.
Faced with Ragen's intransigence, the mob set up Trans-American Publishing under the murderous Bugsy Siegel and forcibly took over the lush California market, charging bookies $100 a day for the necessary racing information.
Ragen, however, maintained a tight grip on the rest of the country, and it soon was obvious things could never change as long as Ragen lived. Such details were no problem to the mob. In June 1946 Ragen was cut down by a fusillade of bullets from a passing car. Remarkably, he survived and was taken to a hospital where he was put under 24-hour police guard.
From his hospital bed, Ragen, no believer in omerta, charged the mob with trying to kill him off. It was not the smart thing to do in 1946 Chicago. In September Ragen died, supposedly of his wounds; however, an autopsy showed death resulted from mercury poisoning.
The mob had had no trouble penetrating Ragen's police protection, and his death was officially listed as a gang murder. Several mob big shots were quizzed in the case, including Greasy Thumb Guzik, but the final results were the usual ones for Chicago: no arrests, no convictions, one body. And the way was open for the mob to grow fat on ever-increasing gambling profits.