The Bonanza Machine

"A lottery," wrote Political Economist Sir William Petty in the 17th century, "is properly a tax upon unfortunate, self-conceited fools. The Sovereign should have guard of these fools, even as in the case of lunatics and idiots." Sir William's prim strictures have been echoed through the centuries by those who are certain of what's good for their fellow man. Labor unions have attacked lotteries as a pernicious tax on the poor, businessmen have deplored their tendency to tie up huge sums of money, and moralists have frowned on trying to get something for nothing. But for good or ill, in one form or another, the lottery has been pressed into service for many a worthy cause--from financing the American Revolution to (in the form of bingo) the endowment of U.S. churches.

In New Hampshire last week came the big payoff on the first major U.S. lottery since the crime-ruled Louisiana lottery brought the Federal Government down on it in the 1890s. As a result, New Hampshire's public school system was about $2,500,000 richer, the U.S. Treasury was looking forward to $570,000 in taxes, 1,992 tickets were paying off a total of $1,800,000.

One in a Thousand. New Hampshire's Lottery Commission had to egg-walk its way through a maze of federal rules and regulations designed to make a state lottery all but impossible. As chief egg walker they sagaciously chose a pillar of probity--ex-FBI Agent Edward J. Powers, 51, who helped break Boston's famed Brinks robbery. So far, Sweepstakes Chief Powers has well earned his $20,000 salary.

It is illegal to transport lottery tickets across a state line. Powers' solution was not to issue tickets at all. Purchasers had to go to one of the state's two race tracks or 49 liquor stores, where, on payment of $3, a clerk activated a machine which exposed a ticket on which the bettor wrote his name and address. The machine thereupon swallowed the ticket and issued him an "acknowledgement," which presumably may be transported anywhere, sent through the mail, or even thrown away. The rolls of tickets were collected from the machines, microfilmed and stored in a bank vault.

Every time $1,000,000 worth of tickets was sold, a drawing was staged--and every one naturally produced a gratifying set of stories, pictures and lists in the newspapers. The 333,334 tickets were packed into a great transparent drum. A smaller drum contained the names of the 332 horses nominated for the sweepstakes. One by one, in full view of an audience, beautiful girls drew one ticket from each drum, thereby matching each horse with a lucky ticket holder--the odds in favor of being lucky, obviously, were slightly less than one in a thousand.

But the promised rewards were glittering: one hundred thousand dollars went to each person with a ticket on the winning horse; $50,000 to the ticket holders whose horse ran second; $25,000 to those whose horse ran third.

Also-rans would divide a pot of $360,000, depending on how many horses actually ran in the race, which were a lot fewer than the 332 nominated, owing largely to the $1,500 entrance fee for each competing horse. Last week only eleven horses ran. Those with tickets on the eight also-rans won $7,500 each. Those with tickets on one of the 321 nonrunners won $202.49 apiece. And there were altogether six drawings, making six prizes in every category.

When the favorite, Roman Brother, sprinted in ahead of the pack by a half-length, whoops of joy resounded from Flushing, Mich., to Hyattsville, Md.* Two winners were actually on hand to witness their triumph. Mrs. Frank Malkus, wife of a Carteret, N.J., barber, burst into tears, displayed her rosary, sobbing, "I held this the whole time." Paul Cordone, a beverage distributor from Gloversville, N.Y., stood up under his $100,000 winnings more philosophically. "I'm even with horses for life," he exclaimed.

Happiness came by telegram to the other winners, since Post Office regulations prohibit sending any lottery information by mail. Prize money was deposited in the winners' names in the Merchants National Bank of Manchester, and it was up to them to get it out by normal banking procedure.

Gelling into the Game. This week tickets go on sale for the first of New Hampshire's two sweepstakes scheduled for 1965. Kentucky is considering a similar sweepstakes, and California is planning to hold a referendum in November on a proposal for a straight lottery at $2 a ticket, with drawings every month for prizes totaling $9,000,000.

There are still a few bugs in the bonanza machine. Internal Revenue has ruled that the gross wagers in the sweepstakes are subject to the 10% federal gaming tax, collectable from the state Lottery Commission. New Hampshire contends that this tax, passed in early May as a device to prosecute bookies on a tax rap, should not apply to funds being used for educational purposes. Another difficulty is the proliferation of operators who arrange to purchase tickets for out-of-staters for a fee. New Hampshire, a small state, proved easy to police. But Department of Justice officials blanch at the thought of the big-time Cosa Nostras that might move into the situation if states like California or New York get into the lottery game.

The Justice, Treasury and Post Office Departments have been working closely with the Lottery Commission's general counsel, Joseph Millimet, to try to keep everything as legal as possible. One Justice Department spokesman admits that much of the navigating has to be done by the seat of the pants. "Until we get court interpretations of a lot of these things, we won't really know," he said last week. "This is a headache for us, and it's probably going to be a headache for a long time."

* Just two days earlier, Robert and Mary Froner of Brooklyn--married four months--hit a twin double at New York's Roosevelt Raceway for a U.S. record win of $172,726 on a $2 ticket.

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