The day the numbers racket didn’t add up
In the opening act of George C. Hill’s needlessly complex but extraordinarily fun 1973 caper, The Sting, the two heroes are comparing notes on the Irishly evil and evilly Irish, Lonnegan.
JOHNNY: He runs a numbers racket on the South Side, owns a packinghouse, a few banks… HENRY: Yeah, and half the politicians in New York and Chicago. Not a fix in this world will cool him out if he blows on you. JOHNNY: I’ll get him anyway. HENRY: Why? JOHNNY: ‘Cause I don’t know enough about killing to kill him.
Just the words “runs a numbers racket” are enough to let us know that he’s no good. He runs numbers. He is a numbers runner. Numbers are run by him.
But exactly does it mean to “run numbers?”
A numbers racket is a small scale, illegal lottery run on a neighbourhood level and designed to entice the poor into a simple game of chance.
Gamblers would place bet on a three digit at bars, bookies and other makeshift betting shops called ‘agents’. Players could wager as little as a penny on the game. A ‘runner’ collects the bets and money before taking them to a ‘policy bank’, the headquarters of the racket. If your three digit number is drawn, you stand to win 600:1.
Since the odds of winning are 1000:1, the racketeers always stand to make a tidy profit.
The game, historically, was typically run by gangsters and organised crime figures. This created a problem. Who would play a game run by drug dealers, enforcers and stand over men? How could players we sure that the game was fair?
It was gangster Casper Holstein who came up with a solution. The winning number would be decided not by him but by a random, freely available number over which he had no control. The last three digits of the US Customs House receipts or the Cincinnati Clearinghouse weekly total profit.
So long as the three digits were pure and the gangs always paid the winners, the system was perfect.
Until 11 December, 1930.
On that day, a gang of con artists sent confederates to every agent in New York all betting money on the same three digits. Because the runners and the agents and the policy banks all operated independently, no one noticed that over $10,000 had been wagered.
The next day those three digits were the final three digits of Cincinnati Clearinghouse weekly total profit as reported in the New York Times.
The massive loses almost crippled the New York numbers games. Some of the smaller operators shut up shop, unable to pay out. Others threatened the confederates. While the con artists were due $6 million, they probably only collected a fraction of that.
So how did they pull it off? What were the winning numbers?
The gang bribed a Cincinnati Clearinghouse clerk to change how to number was reported to the newspaper. From 12 December, 1930, the weekly total was rounded to the nearest thousand dollars making the winning numbers always the same.
The clerk disappeared and several of the con artists were murdered and, within a few short years, the numbers racket was operating as strong as ever with a brand new, unimpeachable source for it’s three digit number. The daily share volume of the New York Stock Exchange.
And you can trust the stock exchange? Can’t you?
Nicholas J. Johnson is a Melbourne magician, author, entertainer and collector of scams.