Gambling in America is thriving, and we have Bugsy Siegel and the Mafia to thank for it.

Yep, American gangsters popularized gambling and today many states have lotteries, race tracks, casinos and off-track betting.

It is a vibrant industry and one that has gained legitimacy over time. And while we know the odds are against us, there are still enough winnings to keep the tables open and the bets flowing.

The odds were never that good with our big bankers and the stock market created on false and inflated profits.

In fact, betting that terrible housing loans would somehow turn into great securities was a plan destined to fail. Trouble is, no one cared if it failed. There was just too much money to be made to care about the future.

In the end it was like going to the craps table and having to roll 7s all night long — never anything else — just 7s every roll. The odds of that happening approach zero, and sure enough the first snake eyes brought the whole economy crashing. Dumb bet? Of course. But greed is a short term thing, and that was a perfect fit with a short term view of our economy by our government.

While there is plenty of blame to pass around, the feds were needed for two contributions to this losing bet. First, the government had to de-regulate the banking industry.

No problem, Republicans and Democrats agreed that “chaining” free enterprise would hold back the creative energy that drove the economy. So they glibly reduced banking regulations.

Second, the industry needed what little regulatory oversight that remained to end. Again the feds were more than willing to nod and wink so the industry could soar.

Given these protections, only one further protection was needed: insurance. If a bank could make terrible loans and call them secure, it needed another entity to help it “sell” that claim.

Along comes AIG, more than willing to claim that a bundle of terrible loans were in fact great and safe investments.

So AIG insured the loans made securities and investors bought them knowing they were sound investments, protected and insured.

But AIG never placed reserves against the loans, the funds needed to pay off the loans if they went bad, as everyone knew they would.

Instead the company paid about half of the insurance premiums to its sales force as bonuses, awarding millions and millions to employees who sold guarantees for failed investments all over the world.

In 2007, the five major investment banks in the U.S. paid $38 billion dollars in bonuses, basically taking the premiums and paying them out to each other instead of building a loss reserve for when the loans would fail.

Now we know the “rest of the story” as the late Paul Harvey would say, and we are outraged that AIG executives and sales people would take $165 million in bonuses for themselves. Yet these people probably took that much over a few weeks in the past and doubtlessly feel they are worth so much more today.

Bugsy was a gangster who came to a bad end. His bullet-riddled body was found after he played fast and loose with the money of his investors.

But he never would have made this bet. He had a longer-term view.

As long as we justify bankers making millions and millions of dollars, producing nothing and simply moving money, we can expect these kinds of results.

We need regulations and enforcement to re-gain our lost trust. The free market failed us all.

Jim Crawford is a contributing columnist for The Tribune and a former educator at Ohio University Southern.