So Illinois’ finances are in such a state of chaos right now that they aren’t paying lottery wins over a certain sum. Which got me thinking about the old Mob-run numbers racket, which I suppose has largely been supplanted by the state-run games.
How did those old numbers games work? I’m thinking they were similar to what Illinois calls the Pick 3 game. (If I understand how Pick 3 works, you pay $.50 to play, and if your 3-digit number wins you receive $250). But maybe the numbers racket was a 4-digit number? Or both, just like what Illinois has?
How much did the numbers racket pay winners? What assurance did players have that they’d actually receive their winnings? How did players know what the winning numbers were? Assuming that the illegality of the numbers racket wasn’t an issue, if a player could choose whether to play the state-run game or the mob-run game, which would be the better choice?
It’s been a while since I’ve been in Las Vegas, but it seems to me that the keno game played in casino restaurants and lounges is fairly similar to Megamillions and/or Powerball. Or at least it can be – I know there are a lot of options in keno not available in the state lotteries. If you can make a keno bet that mirrors a Megamillions/Powerball bet and you decided to blow some money on one or the other, which should you play?
(A reminiscence that explains why I think the numbers racket was similar to Pick 3: Many years ago I worked as a nursing assistant at a hospital. One of the nurses often called feces “3-6-9.” When she was a girl, there was a book popular in her neighborhood that translated elements that appeared in a dream into numbers for playing, and feces was 369.)
Originally the numbers would be drawn randomly and posted somewhere. Because this was easy to fix, later they used some figure that was published daily. At one time it was the published daily balance in the US treasury. Later it the numbers were derived by some formula from the handle, or total amounts bet at some major race track. Sometimes it was based on daily bond sales on the US stock market.
These had the advantage in that they would be published in newspapers over a wide area, and were hard to manipulate. Therefore anyone could just buy a newspaper and find out what the number was.
Story I always heard that in NYC at least the winning numbers were the total amount of money bet at the horse race tracks (that is, the last three digits of such). These numbers were reliably published in the newspapers each week and were always in the millions to assure that the last three digits were essentially random. The legal NY Daily Numbers lottery that was introduced in the late 70s was done so to at least divert the money to the state coffers (i.e. it was seemed a better idea than trying to stop illegal mob betting).
It occurs to me that the only reason a person would be likely to be interested in the total amount bet at a racetrack would be to play the numbers, and that the newspapers were thus deliberately cooperating with the racket. It further occurs to me that it would only take a little bit of pressure from the Mob to ensure that the published last three digits were what they wanted them to be. This is especially true, given that the racetrack owners were likely to be connected to the Mob.
Actually, it was more complicated than just the total. From Wiki
And the totals are significant because they are used to calculate the payout in parimutuel betting. Therefore bettors might be interested in the totals to see if their payout on bets was reasonable.
As far as the newspapers only publishing the handle in order to cooperate with the racket, the operators of the numbers game wouldn’t have picked the handle as the number unless those figures were already being published in the newspapers.
Now, it’s possible that the published numbers sometimes might be manipulated. However, people would be less likely to play if they figured the game was fixed. This may be the reason for sometimes using financial figures, which would be less easy to rig.
In Detroit, it was 500:1 When the lottery came out, the started using the last 3 digits from the lottery. I really don’t think the lottery did much to illegal gambling, merely expanded the pool of players. I know that there were some very lucrative 50/50 raffles run by Catholic churches. They flouted the rules for years, always paying in cash, not registering with the state. The state eventually clamped down on them.
A numbers game is still played where I live. You pick a 3-digit number, e.g. 368, get paid 600-1 (wholesale) or 500-1 (retail) if that is the winning number. A popular choice would be to place 20 baht: 10 baht on 368 and 2 baht each on 386, 638, 683, 836, 863. 2-digit numbers can also be played, paying 60-1 (retail) or 70-1 (wholesale). The difference between retail and wholesale prices is often a commission paid to runners. The numbers chosen in this underground lottery are numbers derived from the semimonthly government lottery; the winning 3-digit number for the underground is the last 3 digits of the grand prize winner in the government lottery.
When calculating best odds, it may be best to set a specific goal. For example, the numbers game gives you a 0.1% chance to convert $10 to $6010; that’s 39.9% net vigorish.
If instead you take an even-money bet, hoping to win (slightly more than) nine times and the single-bet vigorish is 5.26% (vig on any bet at American roulette) your net vigorish, trying to multiply your stake by 601 leads to net vigorish of 40.4%, slightly worse than the numbers racket. Keno would be better still, but best of all by far is to return to the roulette wheel and bet on a single number: Three wins in a row pays 46665-to-1 with a net vigorish of just 15.0%
Comparing efficacy between the underground and government lotteries is fraught with peril. The latter features payoffs of $1 million or more; while winning just $25,000 in an underground game here I’d certainly be worried about getting paid! And do you really need the whole $100 million? Maybe our lifestye is overly tame and frugal but anything more than 5 or 10 million would just be wasted on us.
The story I heard was this:
Pick a 3 digit number.
If the last 3 decimals on the DJIA (printed every day in every newspaper) matched, you got a 400:1 payoff. It paid 400 on a 1000 chance.
This is why the papers dropped the third decimal place on the DJIA.
Bookies who didn’t pay didn’t live long. You were not dealing with nice people.
We never had the numbers thing in the UK, but betting on horses and dogs was everywhere. Until the Early 60s, off course betting was illegal, but hardly enforced. A factory I worked in at the time, had a guy who went round every day there was racing (most days) and took bets. He phoned them in to a bookie and paid out any winners. As an aside - there was also a thriving (and illegal) gamble by people who raffled their pay packet.
In 61 the government gave in and allowed off course betting. This created the chains of betting shops that can now be found on every high street.
Back when I worked in one of our plants, they just used the Michigan State Lottery numbers. I don’t know too many of the details, as it was mostly an hourly thing that we all seemed to ignore. I was new in the company and didn’t rock the boat. I’m not sure if it was a Mafia or just an enterprising individual, and I don’t know what the payout was. Presumably it was higher than the state lottery.
Mostly payments were guaranteed by the guy’s reputation.
The hourly guys (and these were relatively rich UAW auto workers) had all kinds of scams going on: the numbers racket, mix- and pirate-CD’s, running various paid coffee pots (company water, company electricity, company cups), and of course petty theft (some of the salaried probably did this, too). They were all basically good, hard working people, and it seemed (and still seems) silly to me that they extended so much effort for so little relative gain compared to what they were earning legitimately (except, maybe, the numbers guy).
If that’s your definition of “incredibly lucrative” then I wonder what you’d call a lottery where the payout is only 35% of the money taken in. That’s how state lotteries work in the US. If they sell 8 million tickets at $1 each, they advertise that the “pot” is $4,000,000 but what you really get is an annuity which pays $200,000 per year for the next 20 years. If you choose the lump sum option instead, you only get 70 cents on the dollar: $2,800,000. And that’s assuming you’re the only winner; if there’s more than one winner, they split the money.
Compare that to a roulette wheel in a casino. There are 38 spots on the wheel (including 1-36 and 0 and 00). The chances of winning on a specific number are 1 out of 38, and the house pays out 36:1 odds. On average, for every $8,000,0000 played on the roulette wheel, the house will end up paying out $7,578,947 in prize money. But there’s risk involved. On some days, they may end up paying out more money than they took in. Other days they pay out less, and in the long run it averages out to 94.7%.
But the state lottery sells $8,000,000 worth of tickets and only pays out $2,800,000 in prize money with virtually no risk. There’s no way they can end up paying out more than 35% of what they take in. Oh, and your competition is declared illegal. Now THAT’S what I call “incredibly lucrative”.
Getting back to the O.P., I thought the whole idea of a “numbers racket” was that you pick 3 numbers and place your bet and then at the end of the day they tell you which numbers won but it was RIGGED. They would keep track of how many people bet on which sets of numbers and make sure that the winning numbers would never be a combination which lots of people had chosen. The winning numbers were supposed to be random but in reality you’re trusting the people who run the operation to be honest. And if you found out they were cheating what could you do? The game itself was illegal to begin with. And accusing the mob of cheating could be hazardous to your health.
I’m thinking of a number between 1 and 10. Guess it right and I’ll pay you 40 to 1 odds. But you have to just trust me when I tell you whether you won or lost. Plus I’m bigger than you and heavily armed. Wanna play?
While it was undoubtedly rigged in some times and places, I think for the most part it wasn’t. Otherwise, why would they pick publicly published numbers that were difficult to manipulate to generate the number? As has been said, the number was often from the US Treasury or the stock market. It would be far easier just to pick the numbers at random (which they did in the early days).
The problem with rigging the numbers was that it was something people played day in and day out. If people felt it was too badly rigged, they wouldn’t play. As it was, it was always “rigged” in the sense that the people who ran it couldn’t lose in the long run. You would make more money if more people had confidence that the results were legit.
Likewise, illegal sports betting makes a lot of money, but at least these days relatively few games are manipulated. The bookies will make more money if people have confidence in the result so that more people bet.
There’s absolutely no reason to rig the game (and risk incurring the wrath of your customers, who probably include plenty of violent criminals) when the odds are stacked so heavily in your favour anyway. With a 40% take no amount of random swing is going to leave you under water. Trying to rip off Johnny the Horse might.
That’s true for the grand prize, but most of these lotteries pay lesser prizes, too. For example, in the Illinois Lotto game, if you get 3 of the 6 numbers (and not the “extra shot” that costs more to play), you receive $5. You used to get 2 sets of picks for $1 in the Lotto game, but I think it’s only one now.
The Illinois lottery quotes your chances of winning 1:7.36 without the “extra shot”; 1:5.68 with. I don’t know how this translates to the percentage of money taken in that is actually paid out.
I don’t know if they still have the illegal thing going on in New York but back in the 60s when you played a number with the bookie (usually a barber, bartender, candy store proprietor, etc. would collect for him) you would be asked “New York or Brooklyn”. The Brooklyn number was determined by the last 3 digits of the take at, ironically, Yonkers Race Track. The New York number was computed differently and I’m not really sure how. Probably as Colibri posted earlier.
If too many people played the same number it would be announced (well, you would be told) that it was a “cut number”, meaning the payout was reduced to half or less. This would happen sometimes if a particular number was spotlighted in the media. e.g. : A plane crashed and the flight number was 456 and people saw it on the front page of the newspaper.
fivethirtyeight.com had an article about how much money in the various lotteries that goes to the state, running the lottery and as money paid out.
Some states like Massachusetts look like they payout about 2/3 of the money that comes in. South Dakaota and West Virginia look like it only pay back about 10%.
Thanks for the link. I’m curious as to whether they are calculating “prize money” as the amount which is advertised (spread out over 20 years) or the amount that is actually given to someone who requests a lump sum. I was going from the Florida lottery, where they advertised (25 years ago when I used to live there) that 50% of ticket sales went into the “jackpot” but everyone knew that the lump sum payout was only 70% of the advertised jackpot. I didn’t know that the values varied from state to state.
