GAMBLING FOR THE YANKEE DOLLAR
On a cold, clear night immediately after the New Hampshire primary election Governor John King stood in the enclosure of the Rockingham Park racetrack at Salem and became the first legal purchaser of a state lottery ticket in the U.S. since 1892. The second ticket was sold to another New Hampshire dignitary, Laurence Pickett, a seasoned lawmaker from Keene, whose long years of trying to persuade the legislature to pass the lottery bill had at last culminated in this moment of triumph. Then the ticket-dispensing machines were thrown open to the public. In the first seven days of operation, before the machines had been installed in liquor stores in New Hampshire—the only places, except for the three tracks in the state, where tickets can be sold—20,000 tickets were bought by citizens seeking a share in several million dollars in prizes to be distributed next September.
The actual operation of buying a ticket was a little anticlimactic. Governor King paid $3. The transaction was recorded on a device slightly larger than an electric typewriter, equipped with a telephonelike dial. The Governor's name and address were written on a small slip of paper, called "an acknowledgment of purchase." Then a lever was pulled, and the acknowledgment emerged from the machine, while the actual ticket—No 000001—bearing the Governor's name and address, remained inside.
A portly, dignified individual, Representative Pickett announced that he was making out his ticket to the Grand Exalted Ruler of the Benevolent and Protective Order of Elks, for the benefit of the Elks Foundation. Governor King said that his winnings, if any, would also be given to charity. But the thousands who followed them were motivated by no such lofty impulses. They wanted the money.
While most of the U.S. was following Ambassador Lodge's stunning write-in victory in the New Hampshire presidential preference primary, in that state there was no less interest in the outcome of a special referendum approving or disapproving the sweepstakes. The circumstances were a little unusual, for the sweepstakes were actually already a part of the state government. A commission, headed by a good-natured ex-FBI man, Edward Powers, was busily operating in a cheerful, well-lighted, four-room office on the third floor of the new State House Annex in Concord and making careful plans for the future. The voters were called upon only to decide if they wanted the lottery in their respective towns. The commission intended to determine the winners of the lottery by means of a new Thoroughbred race, the New Hampshire Sweepstakes (3-year-olds, a mile and three-sixteenths), to be run for the first time at Rockingham Park on the afternoon of September 12, for a purse of about $150,000, of which the Sweepstakes Commission would put up $100,000.
But while thus established in plans—and partly on paper—the commission was frustrated because no tickets could be sold until after the primary. Among many other clauses, the bill that Pickett had drafted provided for a special ballot to be included in the primary: "Shall sweepstakes tickets be sold in this city or town?" There was no question but that enough towns would authorize their sale to permit operations to start. The question was one of popular support. The commission would need enthusiasm to succeed, and a close vote might be ruinous. Nothing was ruined.
The commission's plan of operation is to sell tickets, all at $3, until August 29, when the sale will be ended, in order to allow time for drawings before the race. The names of the horses will be placed in a small, rotating drum. The sweepstakes tickets will be placed in big, electrically driven drums, 333,333 tickets in each drum, or $1 million worth of tickets in each. A ticket bearing the name of a horse will be drawn from the small drum. A sweepstakes ticket bearing the name and address of a purchaser of a ticket will be drawn from a big drum, and this ticket will be assigned to the name of the horse that has been drawn. Then another ticket bearing the name and address of a purchaser will be drawn from the second drum and assigned to the same horse. The process will be repeated, with each horse being assigned a purchaser's name for every million dollars' worth of tickets. If two million tickets have been sold, or $6 million worth, there will be six big drums and six tickets on each horse. If three million tickets are sold, or $9 million, there will be nine tickets for each horse. The commission expects 250 to 300 horses to be nominated in the first days, but since fees rise steeply as the race approaches, probably there will be no more than 15 entries.
The prizes are big. Each person holding a ticket on the winning horse will get $100,000. Second place will be worth $50,000, third $25,000. Thus, if the lottery takes in $9 million, nine persons can win $100,000, nine more $50,000 and nine $25,000. There will be another 100 winners (approximately), representing the holders of tickets on other horses in the race, and these will collect a little over $9,000 apiece. Another 2,565 ticket holders, those who drew horses that were nominated for the race but did not run in it, will each collect a little over $500.
The commission bought 200 ticket-dispensing machines (for $200 each) and contracted with the Merchants National Bank of Manchester to prepare and stow away two million tickets, pending the outcome of the primary. It might not appear difficult for 200 strategically placed dispensing machines to sell three million $3 lottery tickets in five months, which is the figure the commission most often mentioned. The sale of Irish Sweepstakes tickets in New York is estimated to reach $12 million a year without the aid of mechanical devices. And on a single day the bettors at Santa Anita or Aqueduct may put $5 million into the mutuel machines. But there is a remarkable clause in the law. Section 284:21-h specifies that tickets can be sold only within the enclosure of a racetrack "where there is held a race or race meet...or in state liquor stores."
There are only two small harness tracks, in addition to the big track at Rockingham Park, which in itself is not large by the standards of Aqueduct or Laurel. And there are only 49 liquor stores, most of them located in remote country along the borders of Quebec, Vermont, Massachusetts and Maine, where potential liquor buyers come into the state to take advantage of the fact that New Hampshire has no sales tax and liquor prices are low.
The point, as the commission saw it immediately, was that if its machines worked every day, they would have to sell 700 tickets a week to sell three million tickets, take in $9 million and clear around $4 million in revenue. But the machines would operate only when the liquor stores were open for business and during race meets, 145 days in all. It was an easy calculation that the machines would have to sell one ticket every five minutes or so in order to total three million. So, while the gloomy Goldwater supporters were stepping over television cables in their headquarters on Main Street in Concord and the Lodge supporters were demonstrating well-bred satisfaction in their headquarters at the Highway Motel, officials and common people concerned with the lottery were worrying about how many sales outlets the lottery would have.
There are 302 towns and wards that are voting units in New Hampshire. With but 49 liquor stores, it would appear that for most towns the question was academic. It was not, however—far from it. Even if a community refused to permit sweepstakes tickets to be sold in its liquor store, it would nevertheless share in the money derived from the lottery, since the money is to be used for education exclusively, and is to be paid out equally for all New Hampshire's 126,000 school-children.
The university town of Durham voted No to the sale of sweepstakes tickets there—511 to 440. So did Hollis (333 to 248) and Canterbury (104 to 85), but only half a dozen other towns came out against the sweepstakes, as opposed to nearly 300 in favor. When the votes were finally tabulated, the total was 114,987 in favor and only 31,327 opposed. Every town that had a liquor store voted Yes—to the commission's enormous relief.
The town of Salem, where Rockingham Park is located, endorsed the measure by a vote of 3,080 to 757, and the machines were hurried to the track for the opening of the harness race season. For the first time in 72 years a state lottery existed in the U.S.
The biggest and the most durable lottery in the past was the Louisiana Lottery, which started in 1869 and was put out of business by postal regulations during Grover Cleveland's administration. It was not state-run then, but owned by an obscure capitalist named John Morris of New York, who paid the State of Louisiana $40,000 a year for his 25-year franchise. The Louisiana Lottery did a business of about $30,000 a day; half of all the mail at the New Orleans post office was concerned with the lottery. Drawings were held on the second Tuesday of each month at the old St. Charles Theatre and were conducted with elaborate ceremony, General Jubal Early drawing the tickets from the little wheel and General Pierre Gustav Toutant Beauregard those from the big wheel. There were also daily drawings in 180 retail lottery shops which dabbled in insurance as a sideline. The stock of the company, which sold for $35 a share in 1879, went for $1,200 a decade later, earnings amounted to $13 million a year and the lottery virtually controlled the state. When it was put out of business by Congress, with laws that remain on the books, the Louisiana Lottery continued to operate for several years from Honduras, but it dwindled steadily and finally closed up shop.
Ever since the sweepstakes bill passed, the offices of Governor King and the Sweepstakes Commission have been flooded with thousands of letters from people trying to buy tickets. The money is returned; no tickets can be purchased through the mail. The prize money will be paid to the individuals whose names are on the winning tickets. These tickets, however, cannot be sent out of New Hampshire—that would be a violation of the postal laws—which is why the name and address remain in the ticket-dispensing machines. Nor can the winner's money be sent through the mails. He can come to Concord to collect, or his winnings can be telegraphed to him or sent by a bank credit.
The morning after his victory Director Powers sat in his office, surrounded by cartons of newly opened ticket machines, and recognized that he had suddenly been catapulted into a powerful position in U.S. racing. This year there will be only one race and one distribution of prizes. But next year there will be two—one a big race at the opening of the season in the spring, and the other the second running of the New Hampshire Sweepstakes in September. Because of the public attention that will be concentrated on the winner of the sweepstakes and the size of the purses, the commissioners believe that the fall race, coming after the Kentucky Derby, the Preakness and the Belmont, will attract the finest racehorses in the world.
When Director Powers was in charge of the Boston office of the FBI he was credited with having broken the Brinks robbery case, and Specs O'Keefe, the leader of the robbery, was asked what he thought of Powers. Gloomily, or perhaps enviously, Specs said, "Powers is the All-American boy." Since Powers appears to be 20 years younger than his 50 years, plays golf in the 70s, is married to a beautiful wife (a former Miss Cape Cod) and has three handsome children, a nice home, a friendly, casual manner, an acute intelligence and a background of professional experience that has not made him cynical or calculating, it appears that Specs is right.
Son of a Chicago detective, Powers was working as the 20-year-old manager of an A & P grocery when he won a scholarship to Lawrence College in Wisconsin. He graduated cum laude, a member of Phi Beta Kappa and the basketball team, and he was breezing along to a fine career with an insurance company in Detroit when a friend persuaded him to take the examination for the FBI. He passed and was a supervisor in the bureau headquarters in Washington while he took law courses, five nights a week, at Georgetown University. He was also married, his wife having come from Hyannis to work as a secretary in the bureau. Powers says that much of his work was administrative, and in succession he was in charge of the offices at Albany, Miami, Boston, New York, Indianapolis, Baltimore, Pittsburgh, Minneapolis and Boston again.
With all this professional background, however, Powers is slightly self-conscious about his inexperience at racetracks. He likes to mention former agents of the FBI who are now active in racing, raising images in your mind of bank presidents who are embarrassed about their slowness in making change. He also admits, "I'm a $2 bettor." These days his work takes him often into the company of veterans like Lou Smith, the picturesque general manager of Rockingham Park, and the members of racing commissions who can remember the details of long-forgotten races in the way he remembers the trial of 11 Communist leaders for conspiracy, in which he was supervisor of the Government's case for the FBI. Powers makes a point of knowing nothing about horse racing. Oh, he acquired a little knowledge when he was in charge of the office at Miami, but that was in the course of his work. There was, for example, the melodramatic case of Jockeys Ted Atkinson and Conn McCreary, whose lives were threatened to force them to throw races. They cooperated with the FBI to trap the culprits.
Powers says that the New Hampshire endorsement was a vote against the hypocrisy and the double-standard confusion in public attitudes toward gambling. In the lounge of the Elks Club, three blocks away from the Sweepstakes Commission office, Representative Pickett was a good deal more eloquent. "I am certain," he said, "that we are on the threshold of a new economy which will make our state even more inviting than it has been to retired people, to people who like our variety of climate"—and here he gestured beyond the empty chairs to the 14-inch snowfall which, coming down on Primary Day, somewhat reduced the total vote—"to industry, to agriculture and to other phases of our economic life."
Glowing with enthusiasm, his voice vibrating with old-fashioned elocutionary eloquence, he made you think of W. C. Fields. He was, in fact, a song-and-dance man in vaudeville and toured the country in a road company of No, No, Nanette before he became mayor of Keene. Now he reminisced about his original involvement in the sweepstakes bill. "There once came into the mayor's office at Keene, many years ago, an elderly lady," he said, "a dear friend of my late mother's—and whose funeral I have, alas, also attended—to ascertain what I could do to assist her in a crisis brought about by the action of the assessors in raising the taxes on her property by $100 a year." It appeared that the lady lived on a meager income from insurance, and, while undergoing many hours of wonder and worry, could, nevertheless, just make ends meet, but not with the added taxes. In pondering her problem and many others like it, Pickett concluded that, while most increased governmental costs reflected normal increases in the price of material and labor, the costs of education were increasing far more rapidly, and in New Hampshire these are borne entirely by property owners. At first he conceived of the sweepstakes merely as an adjunct to pari-mutuel betting. There would be a $5 sweepstakes window at the tracks. But after he introduced the bill a decade ago he was precipitated into so many conflicts and encountered so many disappointments that he became an expert on lotteries as well as on public opinion, and drafted the broad, ingenious and far-reaching measure that the legislature passed a year ago. After the successful vote, passers-by stopped to congratulate him. They did not talk about Lodge, Goldwater, Rockefeller, Nixon, Johnson or Kennedy. They talked about the future of the lottery.
Apart from the spell cast by Pickett's oratory, the question was asked often: What will the sweepstakes actually bring in? One of the most experienced racing figures in the state has startled the natives by guessing the total will be about $10 million in revenue. Howell Shepard, the chairman of the New Hampshire Racing Commission, says with characteristic caution that he will be satisfied if the first year's revenue actually amounts to $2 million. Commissioner Powers does not want to be quoted, but uses the figure of $4 million when giving examples of the distribution of the money. He may be far too conservative. When lotteries and sweepstakes are successful they have a way of expanding astronomically. The Calcutta Sweeps Derby, for example, had a first prize of $580,000 in 1927. In 1928 the first prize was won by a Bombay timber merchant named Ebrahim Dawood Kazi. He won $3,115,000.
The New Hampshire enthusiasts do not expect prizes on that scale. But talk of a future sweepstakes of $40 million or so does not disturb them—not since the election. The heart of the problem is the clause in Representative Pickett's bill that calls for a referendum every two years. It was thought of as a defensive measure, to satisfy opponents, in case the sweepstakes became unpopular. But now it looks like a means of expansion if the sweepstakes take hold.
So long as the sale of tickets is limited to New Hampshire's tracks and liquor stores, the referendum probably will prove inconsequential. New Hampshire can add liquor stores indefinitely. In fact, two new liquor stores have been authorized since the primary. One is at Salem, directly opposite the entrance to the track. More will be added in tourist centers this summer, to make sweepstakes-ticket buying easy for New Hampshire's million summer visitors. But the vision that lies before the original supporters of the enterprise reaches far beyond New Hampshire. Instead of voting on the question as it is now—"Shall sweepstakes tickets be sold in this town?"—how would it be if voters decided whether they should be sold in other New Hampshire property, such as an exhibit at a World's Fair? All in all, for a business that has been dormant for 72 years, the sweepstakes came to life in New Hampshire with swift vitality.
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AN EX-FBI MAN, DIRECTOR POWERS VIEWS ILLEGAL MAIL ORDERS FOR TICKETS
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A SAMPLE OF TICKET KEPT IN MACHINE
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LEGISLATOR PICKETT AFTER VOTE