numbers racket

Numbers game

The numbers game, or policy racket, is an illegal lottery played mostly in poor neighborhoods in U.S. cities, wherein the bettor attempts to pick three or four digits to match those that will be randomly drawn the following day. The gambler places his or her bet with a bookie at a tavern, or other semi-private place that acts as a betting parlor. A runner carries the money and betting slips between the betting parlors and the headquarters, called a "numbers bank" or "policy bank". The name "policy" is from a similarity to cheap insurance, both seen as a gamble on the future.

History

The game dates back at least to the beginning of the Italian lottery, in 1530. Policy shops, where bettors choose numbers, were in the U.S. prior to 1860. The penny and dime games opened up numbers to even the poorest. One of the game's attractions to low income and working class bettors was the ability to bet small amounts of money. Also, unlike state lotteries, bookies could extend credit to the bettor. In addition, policy winners could avoid paying income tax. Different policy banks would offer different rates, though a payoff of 600 to 1 was typical. Since the odds of winning were more like 1:1,000, the expected profit for racketeers was enormous. In the northeastern United States this game was known as the "Nigger Pool", because of its presence in poor African-American communities. The game was also popular in Italian neighborhoods, and it was known in Latino communities as "bolita" ("little ball"). In 1875, a report of a select committee of the New York State Assembly stated that "the lowest, meanest, worst form ... [that] gambling takes in the city of New York, is what is known as policy playing.

Winning number

One of the problems of the early game was to find a way to draw a random number. Winning numbers were set by the daily outcome of a random drawing of numbered balls at the headquarters of whatever local numbers ring. The daily outcomes were publicised by being posted after the draw at the headquarters and were often fixed. The existence of rigged games used to cheat players, and drive competitors out of business, led to the use of the last three numbers in the published daily balance of the United States Treasury. The use of a central independently chosen number allowed for gamblers from a larger area to engage in the same game and it made possible larger wins. When the Treasury began rounding off the balance many bookies began to use the "mutual" number. This consisted of the last dollar digit of the daily total handle of the Win, Place and Show bets at a local race track, read from top to bottom.

For example, if the daily handle was:

  • Win $1001.23
  • Place $582.56
  • Show $27.61

then the daily number was 127.

By 1936, "The Bug" had spread to cities such as Atlanta where the winning number was determined by the last digit of that day's New York bond sales.

Harlem

Francis A. J. Ianni, in his book Black Mafia: Ethnic Succession in Organized Crime writes: "By 1925 there were thirty black policy banks in Harlem, several of them large enough to collect bets in an area of twenty city blocks and across three or four avenues." By 1931, there were several big time numbers operators, James Warner, Stephanie St. Clair, Casper Holstein, Ellsworth Johnson, Wilfred Brandon, Jose Miro, Joseph Ison, Masjoe Ison and Simeon Francis. The racket continued into the 1930s and beyond in Harlem.

Manipulation

Dutch Schultz is said to have rigged this system, thanks to an idea from Otto Berman, by betting heavily on certain races to change the Win, Place and Show numbers that determine the winning lottery number. This allegedly added ten percent to the Mob take.

Odds and payout

A player's chance of winning on one number is one in 1,000. In illegal numbers games, depending on time and place, winning on most numbers may pay off as high as 800 to 1 or as low as 600 to 1 (in Norristown, PA in the 1950s the payoff was 500 to 1). Typically, certain more popular numbers, known as cut numbers, have reduced payoffs, typically as much as 20% less than other numbers. Numbers such as 777 were cut numbers to prevent the possibility of the bank being overwhelmed by a hit on those numbers. The difference between the dollar amount of the tickets bought and the amount paid out is the vigorish, which the bookie keeps to cover overhead and make a profit for himself. In the Norristown, PA area part-time sub-runners collected bets on both numbers and horses in their neighborhoods and workplaces (factories, retail stores, movie theaters, the local police station, the county courthouse, etc.). The sub-runners earned 5% for this service. The runner then earned 15% of the numbers bets he "picked up" on his route, which left 30% for the bookie. The bookie "laid off" excess bets to a better financed local banker so as to keep his daily risk manageable. The local banker in turn laid off to a higher level banker when his daily book became too unbalanced. The bookie also paid upward through the banker a daily tax on his volume. This tax went up the line to the organization (based in New Jersey in the case of Norristown, PA in the 1950s) which defined and guaranteed his territory, and which also organized payments to politicians to reduce "heat" on the business. A measure of the effectiveness of this "protection" is that in the 1950s a runner in Norristown made daily stops at both the local police station and at the Montgomery County courthouse to pick up numbers and horse bets. In one case when the PA State Police were planning to do a raid on the business the first act they did after alerting the local police was to station a trooper at the police department switchboard to discourage warning from going out.

Legal version

Today, many state lotteries offer similar "daily numbers" games, relying typically on mechanical devices to draw the number. The state's rake is typically 50% rather than the 20%-40% of the numbers game. (Pennsylvania even calls its daily lottery "Daily Number".) Despite the existence of legal alternatives, some gamblers still prefer to play with a bookie for a number of reasons. Among them are the ability to bet on credit, better payoffs, the convenience of calling in one's bet on the telephone, and the avoidance of income tax.

Policy dealers

Policy reformers

Timeline

In Popular Culture

The 1948 film noir Force of Evil revolves around the numbers racket, with the plot hinging upon the workings of policy banks. The film tells of a gangster who is trying to take over all the banks in New York City by rigging the mutual numbers to come up 776 on Independence Day. Since everybody plays those numbers for the Fourth of July, the banks will go bankrupt filling the policies.

See also

Further reading

  • New York Times; May 19, 1883, Wednesday; "Policy-dealers Punished."
  • Nathan Thompson; Kings: The True Story of Chicago's Policy Kings and Numbers Racketeers An Informal History; The Bronzeville Press ISBN 0972487506 (2003)
  • Lawrence J. Kaplan and James M. Maher; "The Economics of the Numbers Game" in American Journal of Economics and Sociology;

References

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