In the book Fredo becomes more-or-less legitimate, focusing on the hotel side of Moe's operation. It seems reasonable to assume at the end of the novel that Fredo will run the five or so Corleone hotels, and that he'll end up a respectable part of the Las Vegas power structure. The first movie drifts away from that, but Fredo in the first film is still pretty dissonant with the sleazy gangster we see in GF2.