Unlicensed After-Hours Club Racket

Since at least the 1920s, one of the most pervasive and lucrative rackets has always been unlicensed drinking establishments. During the 1920s Prohibition era where federal laws were enacted to outlaw liquor sales and consumption of any type, underground drinking clubs called speakeasies quickly proliferated throughout the United States to satiate and quench the public’s thirst. 

After the repeal of the Volstead Act in 1933 which lifted the thirteen-year ban on alcohol, licensed bars and grills, taverns, restaurants, and nightclubs, of every size and stripe, began springing up across America. 

And simultaneous to the repeal of Prohibition, federal laws were immediately enacted to govern, monitor, and control the newly emerging liquor industry. Additionally, each varied state in the union formed its own state commission to control the sales and distribution in the local alcoholic beverage industry.

The federal government immediately set up a system to heavily tax the liquor industry. In large part, the tight controls over the newly formed legalized liquor industry were to insure collection of those federal taxes into the coffers of the United States Treasury. 

Good Moral Fiber

Named the SLA, which was an abbreviation for the State Liquor Authority, each individual state jurisdiction set up its own policies and by-laws to control the burgeoning liquor trade.

Potential businessmen could now apply for and receive a liquor license by which they could operate a retail business selling wines, hard liquors of every type, and beer. Additionally, a wholesalers license was also attainable to those wishing to engage in the manufacture and bulk sales of alcoholic spirits and beverages.

Licensed liquor businesses had to also follow strict controls regarding their operating hours and what days they would sell alcohol, liquor storage procedures, the age of customers, tax receipts, etc.