Legal Gambling in New York :A Discussion of Numbers and Sports Betting
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University of Calgary PRISM: University of Calgary's Digital Repository Alberta Gambling Research Institute Alberta Gambling Research Institute 1972-11 Legal gambling in New York :a discussion of numbers and sports betting Ransohoff, Joan; Goldman, Clifford; Oliver Quayle and Company; Schmidt, Benno C. Fund for the City of New York http://hdl.handle.net/1880/41338 technical report Downloaded from PRISM: https://prism.ucalgary.ca A DISCUSSION OF NUMBERS & SPORTS BETTING 3Q92 LI LAW LIBRARY UN.VERS.TY Of MANITOBA WINNIPEG MANITOBA. CANADA n Lk f Copyright 1972 by Fund for the City of New York 1133 Sixth Avenue New York, New York 10036 LEGAL GAMBLING IN NEW YORK: A Discussion of Numbers and Sports Betting Fund for the City of New York Benno C. Schmidt Chairman of the Board Edward R. Dudley • Victor H. Gotbaum .;...... Seymour Graubard '•'•'- Alton G. Marshall ^"u ' ;' I*1" Joseph P. McMurray ' - Richard Ravitch f"; L":, Benno C. Schmidt ^ "'"^ Mrs. R. Peter Straus '""'•" Herbert Sturz T^^J":''." '"''' Gregory R. Farrell Executive Director KJS ' Project Directors Joan Ransohoff, Numbers Clifford Goldman, Sports Betting Staff '."-. '.: • . ' . / Raphael J. Sonenshein Frank Feeley Edwin Barker Mary T. Chidley I November, 1972 / * ii mi SWIjgwAO JADRJ to noiaai/oaia A wsW xo viiD <9tl3 "soi bru''"i 1000IVS2 This report was prepared by the professional staff and consultants to the Fund for the City of New York. While the Board of Directors of the Fund have warmly encouraged that the report be done in the interest of stimulating broad public discussion of the important .O. .£lM policy issues involved, they have not as a group or individually been asked to endorse the report's conclusions or recommendations. __ „ • d-M-.fl • niw&S FOREWORD 4 Over the past year, the Fund for the City of New York has carried out studies of the feasibility, and the implications, of legalizing the numbers game and sports betting, two of the largest illegal gambling enterprises in the City and in the State of New York. The legal gambling issue is current and highly political. It " involves questions of organized crime, official corruption, public i morality and respect for the law, and public revenue. Some pro- ponents of legalized gambling argue that legal betting will take away customers of the present illegal activity and deny large •**" amounts of steady revenue to organized crime. If criminals are driven out of gambling,-it is argued, they will have fewer opportuni- ties to corrupt law enforcement officials through bribes for protec- tion. And the profits from gambling that now enrich criminal organi- sations will pour into the public treasury. Other advocates of legal gambling argue that government has no business prohibiting an activity that harms only its participants: the law enforcement resources used to combat "victimless crimes", they say, would be better di- " ^ rected at more serious criminal activities. Those opposing legal gambling, on the other hand, assert that official encouragement ; ' of gambling will result in serious loss to those least able to '•'- '"'' afford it, and may further undermine public morality without any positive effect on crime and corruption. .'•-';•.•• The Fund decided to involve itself in this field because ' it appeared that important public decisions might be inade without benefit of sufficient analysis and airing of the issues, and be- cause the Fund has a special mission in the City — sponsoring pro- jects that promise to ease the burden of the City's agencies, !: supplement their efforts, and make them more effective; and at the same time doing things or helping others to do things that will improve the quality of life for all New Yorkers. The Fund's purpose here was to determine whether and how certain forms of legal gamb- ling might provide -the City and its people with real benefits — in increased public safety, reduced corruption, and perhaps higher public revenues. Initially, the studies sought answers to a purely technical problem: how best to design competitive betting games in a legal setting. To this end, the Fund retained the consulting firm of Mathematica, Inc., of Princeton, New Jersey; it sponsored two sur- veys by the opinion measurement firm of Oliver Quayle and Company on the betting habits and attitudes of adult New Yorkers; and it engaged the law firm of Cravath, Swaine, and Moore to study the legal questions. We found no insurmountable technical obstacles to the de- sign of legal numbers and pool betting games. More difficult, however, was the task of constructing an attractive and efficient legal sports bookmaking scheme that would satisfy the present cus- tomers of the illegal operation. But we soon concluded that the essential problems for public policy makers are not merely technical; they are questions of arrang- ing priorities and making choices. The three objectives most often cited for legal gambling — to inhibit organized crime, reduce police corruption, and provide substantial public revenue -- are in impor- tant respects competitive. In short, the more a legal gambling enter- prise is designed to provide increases in public revenues, the less will be its impact on crime and corruption, and vice versa. The fact that these objectives are in conflict and that policy makers will have to choose among them is not generally perceived, and making this clear may be the single most important contribution of this undertaking. Our primary conclusion is that the first objective of any -. i s :i ".-,;: new form of legal gambling should be the removal of organized crime ,.,;ji-. .,. from the field, and thus the reduction of the official corruption ;'-.,'»• and other socially damaging vices that result. The aim of raising ••-.- new public revenue, while it need not be eliminated, should be subordinate. _ .. : ^.S-, •,..,-. ...:.- We believe that the place to begin is with the numbers game, .:,,-j where evidence indicates it would be possible and desirable to , supplant the existing illegal operation with a legal game that would give players a much better payoff and equal convenience, with a strong prospect for reducing significantly the role of organized ., crime in numbers operations and eliminating this source of police , ..... ,,j,.. .- corruption. If a legal numbers game demonstrates its value as an ,. .-; important part of a concerted campaign against organized crime, it is .-.••: possible that pool betting should be legalized as a logical and .,, mechanically simple second step. The precedent of using legal • , . ;r gambling as a law enforcement tool may make it possible in the future to remove some of the tax impediments to competitive legal sports betting. At present, however, legalized bookmaking--or a legalized numbers game that does not offer players a clearly more attractive alternative ,,.: to the present game—will be no more than revenue-raising measures that <•..^ further complicate law enforcement problems and preempt the opportunity to use legal gambling for more important social purposes. .;,...• We have included as part of this report our design for what we believe to be a workable legal numbers game. Gregory R. Farrell Executive Director ACKNOWLEDGEMENTS We wish to thank innumerable people in the criminal justice system for their assistance. We are grateful to Deputy Commissioner William P. McCarthy in charge of Organized Crime Control, New York City Police Department and his staff for sharing their experience with us. Deputy Chief Inspector Paul Delise, Deputy Chief Inspector George Huebsch, Assistant Chief Inspector Arthur Grubert, Deputy Inspector Edward Stoller, Captain Martin Ryan, Lieutenant Walter Casey, Lieutenant Francis Martin, Detective First Grade John Murray, and Patrolman Dan Sweeney were patient with our questions and generous with their knowledge. We want to thank Bronx District Attorney Burton Roberts, Chief Assistant District Attorney Seymour Rotker and Executive Assistant District Attorney David Worgan, Assistant District Attorney Samuel Yasgur, and Assistant District Attorney Kenneth Conboy of New York County for their time and assistance in pointing us to public records that helped illuminate the role of organized crime in the operation of illegal gambling. Justice David Ross, Administrative Judge of the New York City Criminal Court, helped us assess the potential impact of law enforce- ment in supressing illegal gambling operations. Members of the Strike Force Against Organized Crime of the Department of Justice and Mr. Edward Joyce, Director of the Department's Organized Crime Control Division gave us insight and perspective on the problems of legalized gambling, organized crime, and law enforcement on the national level. We wish to thank Mr. Ernest Bird, Executive Director of the New York State Lottery; Mr. Ralph Batch, Executive Director of the New Jersey Lottery Commission; and Mr. Edward Powers, Executive Director of the New Hampshire Sweepstakes Commis- sion for discussing the operation of their organizations with us. Thanks goes also to Mr. Howard Samuels, Executive Director of the New York City Off Track Betting Corporation and to members*of his staff for sharing information and insight into the operation of a legal gambling system. t We thank F. and "Sam" for their patience in explainina the inner workings of their operations. * Special thanks for allowing us to test and re-test our ideas with them goes to Mr. Henry S. Ruth, Director of the New York City Criminal Justice Coordin- ating Council; Deputy Commissioner William P. McCarthy of the New York City Police Department; and Mr. Jeremiah B. McKenna, staff member of the State Joint Legislative Committee on Crime and co-author with Mr. Harold D. Laswell, to whom thanks are also due, of the study "The Impact of Organized Crime on an Inner City Community." Thanks go also to Mr. James A. Cavanaugh, Deputy Director of the New York City Bureau of the Budget; Mr. Ralph Salerno, special consultant to the New York City Off-Track Betting Corporation and former member of the Central Intelligence Bureau, New York City Police Department; Sir Stanley Raymond, Chair- man of the Gaming Board for Great Britain; Dr.