By Nate Hendley
Gangsters make much of their income by providing goods and services the public wants but can’t obtain legally. Alcohol, drugs, prostitution and gambling have all been the basis of many a mobster’s fortune, past and present.
Back in the early 1930s, New York bootlegger Dutch Schultz (real name, Arthur Flegenheimer) was casting about for new opportunities. Schultz had earned a fortune peddling awful beer during Prohibition, but that income stream dried up in 1933 when America relegalized alcohol.
With no market left for overpriced rotgut, Schultz found a new niche in the form of illegal lotteries.
At the time, lotteries were against the law. Human nature being what it is, however, underground lotteries flourished, thanks to enterprising criminals.
In poorer districts such as Harlem, the “numbers racket” dominated.
“The ‘numbers’ was nothing more than an illegal lottery. A penny or two bought you a ‘policy slip’ (i.e. an illicit lottery ticket) containing a three-digit number, from zero to 999. Each day – or week, depending on who was running the game – a winning number would be selected. Winning numbers were usually based on stock market prices or horseracing results. If your number was selected – or ‘hit’ in numbers lingo – you won a small amount of money.
The numbers racket was hugely popular among poor people, for obvious reasons. It was extremely cheap to play and the risks – to the players at least – were next to nonexistent. Practically everyone in Harlem played, from criminals and the desperately poor to respectable, working people with solid jobs.
Policy slips were stored and sorted at ‘policy banks’ (usually, a big office or warehouse). By the early 1920s, city newspapers estimated there were roughly 30 ‘policy banks’ in Harlem. Each bank employed about 20 – 30 ‘runners’ (minions who sold policy slips and paid off winners). The boss in charge of the operation was called a ‘policy banker’.”
In New York City, numbers was one of the few vices dominated by African-American gangsters. White mobsters turned their nose up at numbers, dismissing it as a small-time racket that wasn’t worthy of their time or consideration.
Schultz thought otherwise and muscled his way into the Harlem numbers scene. He approached prominent policy bankers and suggested they join forces or suffer brutal consequences. Bankers who took the first option could remain in business, as long as they gave up most of their profits and all of their authority to Schultz.
Schultz’s gutter-level tactics worked and he quickly came to rule the Harlem numbers racket. To the astonishment of his fellow gangsters, Schultz was soon making $12 – 14 million from penny lotteries. To earn even money, he rigged the games to ensure that popular numbers didn’t “hit”.
Schultz’s time at the top didn’t last long, however. Wildly unpopular with his peers, for a variety of reasons, Schultz and three of his cronies were ambushed and shot at a New Jersey restaurant in October, 1935. After Schultz died, his fellow mob bosses seized his criminal empire, including numbers.
Since the advent of legal lotteries, the numbers racket has largely disappeared. Today, any consumer can walk into a convenience store and select from an array of tickets that might bring them a fortune, large or small.
No doubt Schultz would be chagrined to discover his one-time racket is now facilitated by clerks at 7-11.
(The paragraphs in quotations are taken from my book, Dutch Schultz: The Brazen Beer Baron of New York, available through Amazon in paperback and on Kindle)
(Nate Hendley is a Toronto-based author and writer. Click on this link for information on his books)