Laxalt then decided to challenge two-term Gov. Grant Sawyer.
Although the election would not take place until November of 1966, Laxalt launched his campaign in the middle of 1965.
One of the most hotly debated issues during the campaign was the federal government's involvement in Nevada gaming operations.
The Federal Bureau of Investigation (FBI) and Justice Department had deep suspicions about organized crime's involvement in the gambling industry.
Sawyer took the position that the federal government should stay out of Nevada's affairs.
Laxalt took the position that Nevada had to cooperate with "the Feds" in order to be in a position to regulate gambling credibly. (
In fact, one of Laxalt's first moves after his election was to meet with FBI Director J. Edgar Hoover to express Nevada's desire to establish a cooperative relationship.)
During the gubernatorial campaign, Laxalt also led a movement to purge members of the John Birch Society from the state Republican Party.
Sawyer was defeated by an unexpectedly wide margin (nearly 6,000 votes).
Laxalt served one term as governor, from January 1967 to January 1971.

Laxalt's tenure as governor was noteworthy for coinciding with the purchase of several hotel-casinos by reclusive billionaire Howard Hughes.
Laxalt allowed Hughes to secure his gaming license without appearing before the state's gaming regulatory authorities because he thought having an internationally acclaimed businessman involved in Nevada gaming would send a positive signal about the legitimacy of the industry.
Laxalt also supported corporate ownership of gaming operations in Nevada, which helped pave the way for modern-day gambling.
With the financial support of Hughes, Laxalt helped establish the state's first community colleges and Nevada's first medical school.

Along with Gov. Ronald Reagan of neighboring California, Laxalt helped create the Tahoe Regional Planning Agency, to protect scenic Lake Tahoe.
He also expanded the park system and promoted prison reform in Nevada.
On one occasion, Laxalt, against the advice of his staff, went to the Nevada State Penitentiary during a prisoner uprising.
He met personally with several prisoners who described to the governor the deplorable conditions under which they were living.
Laxalt sympathized with their concerns and ordered the prison staff to address the problems.
When he was later asked by the media if he had qualms about entering the prison yard, Laxalt, a former trial lawyer, said, "No, not really.
Many of them were my former clients!"

In 1970, Laxalt lobbied President Richard Nixon to reduce the prison sentence of notorious Teamster leader Jimmy Hoffa after Hoffa was convicted of attempting to bribe Sen. Howard Cannon, whom Laxalt had unsuccessfully challenged in 1964.
While governor, Laxalt worked with Teamster officials on gambling investments in Nevada.

Laxalt governed Nevada as a fiscal conservative, but felt compelled to raise taxes at the outset of his administration because of the budget situation.
Laxalt did not seek a second term.
He bequeathed a budget surplus to his successor, Gov. Mike O'Callaghan.
He left office saying that he had "a gut-full" of politics.
Laxalt then decided to challenge two-term Gov. Grant Sawyer. Although the election would not take place until November of 1966, Laxalt launched his campaign in the middle of 1965. One of the most hotly debated issues during the campaign was the federal government's involvement in Nevada gaming operations. The Federal Bureau of Investigation (FBI) and Justice Department had deep suspicions about organized crime's involvement in the gambling industry. Sawyer took the position that the federal government should stay out of Nevada's affairs. Laxalt took the position that Nevada had to cooperate with "the Feds" in order to be in a position to regulate gambling credibly. (In fact, one of Laxalt's first moves after his election was to meet with FBI Director J. Edgar Hoover to express Nevada's desire to establish a cooperative relationship.) During the gubernatorial campaign, Laxalt also led a movement to purge members of the John Birch Society from the state Republican Party. Sawyer was defeated by an unexpectedly wide margin (nearly 6,000 votes). Laxalt served one term as governor, from January 1967 to January 1971.
Laxalt's tenure as governor was noteworthy for coinciding with the purchase of several hotel-casinos by reclusive billionaire Howard Hughes. Laxalt allowed Hughes to secure his gaming license without appearing before the state's gaming regulatory authorities because he thought having an internationally acclaimed businessman involved in Nevada gaming would send a positive signal about the legitimacy of the industry. Laxalt also supported corporate ownership of gaming operations in Nevada, which helped pave the way for modern-day gambling. With the financial support of Hughes, Laxalt helped establish the state's first community colleges and Nevada's first medical school.
Along with Gov. Ronald Reagan of neighboring California, Laxalt helped create the Tahoe Regional Planning Agency, to protect scenic Lake Tahoe. He also expanded the park system and promoted prison reform in Nevada. On one occasion, Laxalt, against the advice of his staff, went to the Nevada State Penitentiary during a prisoner uprising. He met personally with several prisoners who described to the governor the deplorable conditions under which they were living. Laxalt sympathized with their concerns and ordered the prison staff to address the problems. When he was later asked by the media if he had qualms about entering the prison yard, Laxalt, a former trial lawyer, said, "No, not really. Many of them were my former clients!"
In 1970, Laxalt lobbied President Richard Nixon to reduce the prison sentence of notorious Teamster leader Jimmy Hoffa after Hoffa was convicted of attempting to bribe Sen. Howard Cannon, whom Laxalt had unsuccessfully challenged in 1964. While governor, Laxalt worked with Teamster officials on gambling investments in Nevada.
Laxalt governed Nevada as a fiscal conservative, but felt compelled to raise taxes at the outset of his administration because of the budget situation. Laxalt did not seek a second term. He bequeathed a budget surplus to his successor, Gov. Mike O'Callaghan. He left office saying that he had "a gut-full" of politics.
Paul Laxalt