The Gambling Rackets

Aside from liquor bootlegging, which, of course, was the illicit manufacturing of alcoholic beverages, or the smuggling of branded liquor from Canada and Europe where it was still legal to buy that the American underworld trafficked in for nearly 13 years during what’s commonly referred to as the “Prohibition Era” from 1920 until the failed Volstead Act was finally repealed in 1933, no other underworld racket has ever been so pervasive, lucrative, and widespread as the gambling rackets.

In fact, no other illegal racket has ever even come close.

Sure, the narcotics business as well as loansharking, truck hijacking, labor racketeering, and many other rackets were also extremely lucrative. But each of those particular racket activities was only engaged in by smaller segments of hoodlums.

The majority of underworld members never collectively engaged in any one of those other rackets the way they did with organized gambling.

In fact, of all other rackets ever engaged in, shylocking or loansharking was and still is without a doubt the closest runner-up to gambling itself. The two rackets actually complement one another.

For the sheer staggering profits involved, hands down, the narcotics racket has always been the most lucrative of all rackets.

But the tremendous law enforcement scrutiny brought on by this activity as well as the draconian penalties meted out upon conviction for trafficking in drugs has always been a major deterrent for the majority of organized crime hoodlums. Especially the Italian Mafia.

Certainly, many hoodlums did get their toes wet. There are enough instances of top mafiosi knee-deep in heroin and cocaine traffic documented through the years to prove that out.

But as a whole, these men were still in the minority as far as operating rackets go.

But gambling in all its various forms has been, and to a great degree still is, an illegal activity that the vast majority of mafiosi and their mob associates as well as many independents alike have engaged in at one time or another. Most have made it their life work and their underworld “specialty” to engage in gambling.

There are several very good reasons for this.

The first is that it has always been an activity that many of the general public enjoy engaging in. So, there is a huge audience from which to draw customers.

The second reason is that because of this attraction, gambling is and has always been widely accepted by society at large.

If the reader requires a third and fourth reason, consider the fact that gambling in all its forms is a highly profitable business.

Another tremendous benefit is that if and when you get caught by the police the criminal penalties have always been on the low end of the “penal book” totem pole, so to speak. That's because gambling is largely considered to be a “victimless” offense.

For many decades when gambling offenses were commonly prosecuted by local police precincts and fell under the local city and state jurisdiction, the top penalty for being convicted of a Class E Felony “promoting of gambling” offense was a potential maximum sentence of up to 4 years in prison, a term of probation of up to 5 years, and a fine.

This held true for any type of gambling offense, whether it be bookmaking, policy, operating a dice game, etc. Misdemeanor gambling offenses for those same activities exposed the defendant to up to one year of imprisonment and a fine.

But in reality, it was extremely rare for any defendant convicted of gambling to receive the full 4-year penalty.

Most often they would either receive a varied term on probation or a short jail “bid” of anywhere from 30 days up to one year depending upon the seriousness of their previous criminal record and the alleged gross dollar volume of the gambling business involved.

The few times that the maximum 4 years was handed down by a judge were in cases where the defendant was viewed as a major organized-crime operative. But even that was a rarity.

After the FBI and the federal government took over jurisdiction in certain gambling cases, the maximum federal penalties for any gambling-related offenses maxed out at 5 years in prison. But if charged under federal law, it did increase the defendants' chances of actual imprisonment.

But even in those cases, more often than not, those convicted still received less than the full 5 years maximum.

Since the enactment of the draconian RICO conspiracy laws, the feds most often try and charge those engaged in gambling activities under RICO.

The top gambling count still carries only 5 years maximum, but if prosecutors can wrangle a “RICO conspiracy” conviction, in theory at least, the defendant could face up to 20 years in jail. That's rare.

But it’s very common today for those convicted of gambling under RICO to get banged with the full “pound” of 5 years in federal prison.

But even when hit with the full 5 years, or pound, so to speak, that's still a far cry from the heavy penalties a defendant might face if convicted of engaging in many other type rackets. So all in all, gambling also became attractive for that very reason.

Another very attractive factor is that gambling comes in many varied forms. So, depending upon where the professional gambler lives and operates, he can choose the particular gambling business that works best for him and his environment.

The “game” that will generate the biggest weekly “gross” and greatest net profit.

The Policy Racket or Numbers Game

For instance, if a wiseguy operated in Manhattan up in the Harlem section, in Brooklyn’s Bedford-Stuyvesant or in another poor and depressed section of the city, the policy racket or “numbers” game was his best bet to attract potential customers.

A typical New York numbers game slip

This is because the poor, local residents could bet pennies, nickels, a dime or a quarter in the old days. A bet of a few dollars was considered substantial back in the 1940s-1950s era.

In fact, if a policy “banker” got hit heavy on one particular daily number, say $20.00 bet collectively from all his bettors, a 600 to 1 payoff could cripple a numbers bank. That's a whopping $12,000 paid off on only one day's handle. Back then, and even today, that's a big hit.

The daily “number” was a 3-digit number that was derived from the last three digits of the total mutual daily monetary handle of a given local race track such as Yonkers Raceway up past the Bronx or Aqueduct Racetrack out in South Queens.

These three numbers were printed daily in the sports section of all the New York daily newspapers, which was usually found toward the back of the newspaper.

And depending upon the neighborhood you lived in, either the so-called “Manhattan number” or the “Brooklyn number” would be offered for play. Some policy operations offered both numbers to their bettors.

It was a 1000 to 1 long shot. But if you did hit the number, the payoff used to be 600 to 1. This means that for every $1 bet, the player would receive $600 back from his numbers “runner” in winnings.

As the years went on, for a variety of reasons, the payoff was reduced to 550 to 1, and in some numbers operations, it was later even further reduced to 500 to 1.

But hell, that was still a big payday depending upon how much a player wagered.

Some numbers banks also offered “single-digit” play. Or “double-digit” action. This means that a player could bet on the outcome of one single number. Or two numbers. In the exact order as the number “fell” or came out or in different combinations.

Another variation offered was for the bettor to "box" his bet so that if any combination of the numbers he bet came out, regardless of which order the numbers fell in, he would still win his bet.

Of course, the payout if you won on a boxed, single, or double-digit action was greatly reduced, but your chances of making a “hit” were also vastly improved.

Bets were typically collected from a numbers “runner” who would walk around the neighborhood to various houses, stores, and factories, collecting his daily policy bets. Runners generally received 25% right off the top of whatever their daily collections were.

1966 - policy bank raid in Philadelphia

They would deliver their bag of numbers bets to a location, or “drop” where a collector would come around by midday to collect all the “work” before any races went off. These collectors would deliver all the work to a “controller” who oversaw a group of runners.

Controllers generally received 10%, hot or cold, on the total days handle for managing things. Ultimately, all the “work” was delivered to the “bank” which was, by necessity, a very secretive location. This of course is where all the records and evidence are held.

The “bank” was usually staffed by at least several guys who charted and tabulated the day's business, Banks are usually hidden away in an apartment or another low-key location with several lookouts stationed outside, laying “chicky” for the vice detectives.

A table and chairs, calculators and ribbons, note pads and pencils, bags and bags of policy number slips, and other bags filled with cold cash are usually what’s at the “bank.”

Essentially, the men working the bank are glorified accountants. Mob accountants handling illegal business but accountants nonetheless.

The bank is responsible for making any payouts to winning bettors. They are also responsible to pay the monthly “juice” or police payoffs so as to avoid a vice raid as well as any other overhead normally incurred.

It’s a business. Just like any other business. And the 65% gross that the bank receives after deducting the runners 25% and the controller's other 10% isn’t necessarily all that it’s always cracked up to be.

“Banks” have been known to get banged out, or even bankrupted, if they get an unlucky streak of winning numbers that hit them hard, back to back, over a short succession of days or even weeks.

Because of this, there were several “layoff” offices in New York City that handled the policy-numbers business exclusively.

Similar to horse and sports bookmaking “layoffs,” they were most often large operations that were run by top organized crime figures and were underwritten by million-dollar bankrolls.

These “numbers layoff” banks accepted overflow wagers from other policy operators who feared ruin because of heavy betting on a particular number or a series of numbers.

So, they’d call in and lay off any “numbers action” that they didn’t wanna hold for themselves. It was a built-in protective measure for many smaller numbers businesses.

Still, if done correctly, the policy racket was a tremendous business to be in at one time. And I know many guys who became very rich men operating numbers businesses through the years.

In the old days, when the Italians first came to this country, the “Italian Lottery” was also huge. Similar to the policy racket in that you also had to pick your number.

But the big difference was that the “Italian” number was drawn once weekly back in Italy where it was a legal and widely popular form of entertainment for the masses.

The “winning number” would then be telegraphed from mafiosi back in the homeland to their compare’ and brethren who were operating in the United States.

In the Spanish neighborhoods, a very similar numbers-lottery called “Bolita” was also offered for play. This form of lottery was based on the drawing of a little ball hence the term Bolita or little “pellet” or ball in Spanish.

Spanish Bolita numbers

With some “banks” specializing only in Bolita for their Spanish-speaking residents, East and West Harlem was an especially lucrative section of the city for Bolita. So were certain sections of the Bronx, Northern New Jersey, and other cities, where there were large Cuban communities.

Another location was Tampa, Florida, which was an especially popular city where Bolita was played.

It was big, big business for the mob….and still is. Except that now New York State has legalized it and collects all the money being wagered. Billions of dollars annually.

Funny how when the wiseguys were in the business they were all called racketeers and “bloodsuckers” of the poor people living in the ghettos. But today, because the government is in the policy-numbers business with their Lotto, Pick-6, Mega-Millions, and all the other variations they offer, somehow it’s become wholesome family entertainment and no longer “sucks the lifeblood” out of the city’s residents….. Hypocrisy at its finest!

Horse and Sports Bookmaking

If, on the other hand, the underworld gambling figure operated in a little bit of a better section of the city. Say a neighborhood that was more of a working-class or blue-collar area, then the professional gambler might choose to become a bookmaker instead.

Horse race betting was big business

He’d accept wagers on horses and/or sporting events. In the old days', bets might range anywhere from a few dollars to a few hundred dollars per bet.

When “booking” in a more upscale neighborhood, or when accepting bets from wealthy, well-heeled businessmen who were steady gamblers, a bookmaker might accept a wager of a thousand dollars per game or even several thousand dollars per game from a dependable bettor on the outcome of a baseball, basketball, or football game.

Before OTB (Off Track Betting) was legalized in New York City and its outer environs, horse-race betting was the single, most lucrative form of bookmaking that an operator could “book.” That's because the player had to choose one out of seven to nine horses in a race. Even with the varied odds-making on each horse, it was a big profit business.

When a bookmaker handles “sports action,” he is wagering the other side of the coin so to speak. Because in sports such as baseball, basketball, football, hockey, etc., there are only two teams going head to head.

The bettor picks the team of his choice, of course, and the bookie ends up with the other team automatically. Of course, each given team has their odds, or point spread so to speak.

Baseball is the one game where there isn’t a “point spread” per se. In baseball, betting works on a money spread. It’s a bit different. But generally in all sports, there’s a favorite and an underdog. And the odds for each reflect their perceived strength or weakness accordingly.

Any good bookmaker will try and set his daily “line” accordingly. And as the betting day progresses, he sees which team the money is being placed on. Where his bettors are putting their money. The bookmaker then tries to adjust his “line” up or down accordingly to try and encourage his customers to bet the other way.

If he’s successful, in a perfect world (which very rarely happens by the way), he will end up with an even amount of money placed on each of those two teams. Why is this important you ask?

Because bookmakers charge a 10% premium on each bet placed with them, called “vigorish,” which each bettor must plunk down in order to place his wager.

For instance, for each $100 dollars bet, the player must lay $110. So, in a simple example of arithmetic what I’m talking about here is that if you have two bettors each wagering $110 in order to win $100, in theory, at least, the bookie will collect $110 from the loser and yet only pays out to the winner $100, then the bookmaker stands to win $10.

Of course, we are talking about a very small bet here. But if you multiply the day’s bookmaking volume by say $10,000 in overall gross bets on those same two games and betting customers, in theory, the bookie will collect $11,000 and only have to pay out $10,000. He’s made a clean $1,000 for himself on one game.

The idea (in a perfect betting scenario) is for the bookmaking office to perfectly “balance” their betting action so they work on that 10% net profit. The more varied bettors that a bookmaking operation has, the better.

Sports bets - big business for the mob

Ideally, the bookmaker will have a variety of gamblers who bet both ways on a variety of games. This allows the “office’ to spread out their liability of losses while balancing their “books” better.

Ultimately, bookmaking offices never have 100% perfectly balanced betting action. But by evening off the “work” as best they can on the bets they do receive which is done to a greater or lesser degree by adjusting “betting lines” in order to attract betting action both ways, the “office” can limit their exposure to losses.

Another way for them to ease their exposure to losses is to “hedge off” any heavily lopsided amount of bets on any single team. To some degree, bookmakers are always essentially “gambling” themselves when they accept betting action because they’ll always have some percentage of exposure to loss.

But when there is way too much money wagered on any one team or even a series of teams for that matter, then it can become a big problem. If such teams lose it could cost the gambling “office” their entire bankroll, and essentially put them out of business.

To offset such an event from happening, many bookmakers utilize what is called a “hedge” office, also sometimes referred to as an “edge-off” service.

Just as the word implies, they are “hedging” their own bets. Or taking the “edge” off of dangerous amounts of wagers that could hurt them.

Hedge offices are really nothing more than other bookmaking operations that trade betting action back and forth in order to help one another out and help balance the books.

There have been hedge offices known to accept such a tremendous amount of wagers daily and weekly that they are essentially the equivalent of “super bookies” that specialize only in hedge bets. The larger of these type bookmaking networks will typically have multimillion-dollar bankrolls to back them up, and they’ll accept overflow wagers from smaller bookmaking operations all around the city.

Generally speaking, these types of betting offices are controlled by the hierarchies of the Five Families. They operate at such a high level that sometimes several family bosses and crews will pool their financial resources together in order to create the bankroll required to cushion them properly.

The mechanics, logistics, and profit structure of a typical sports-gambling operation generally break down in the following way:

Runners function by constantly cultivating new betting customers and maintaining the customers they already have. Depending upon who the runner is, his capabilities to generate income for the operation, and how many bettors he has coming into the office, a runner can work on a profit of either 50%, or 25% of the amount that is “won” from his bettors each week.

Regardless of how much the gross amount of bets they placed for the week may be, it’s the bottom line “win” that counts.

A runner who receives 50% of whatever amount is won by the office is referred to as having a “half-sheet” or a “50/50 sheet. By the same token, a runner who works on a 25% profit is referred to as having a “quarter-sheet” with the office retaining the other 75%.

If his bettors win money from the bookmaking operation, those monies will be laid out by the office. But then those losses are recorded, and the runner is then in “the red.” In such a scenario both he and the office will not split any money until whatever amount of money that was lost to the bettors has been won back and the sheet gets “even” so to speak.

The office is essential because it is in fact the “heart” of the business. It maintains the locations the bets are called into. They pay the rent and “nut” of salaries and other expenses, staff it with telephones, computers, and “sheet writers” who are the fellas answering the incoming calls.

The office is the “bank” that pays out and collects all monies due. They maintain the bookkeeping records” either by written record or nowadays by computer programs. That is their function. Offices will typically have their own “personal” betting customers who come in directly to them.

But to do big volume, it is necessary for them to employ, or “partner” with other sub-bookies who function as the runners. Not all bookmakers necessarily have the desire, nor the capability to actually operate a bookmaking office. Many prefer to just generate betting customers and then have those customers call an “office” they are affiliated with.

It’s less of a hassle and virtually no outlay of cash unless a player lays down on the runner, in which case the runner is then required to make good on the amount of money due the office. But all in all, it generally works well. And they still split 50/50 with the bookmaking office itself…. Not a bad deal.

Both the numbers lottery-policy racket and horse and sports bookmaking were tremendous earners for the underworld.

But not to be outdone by their “gaming cousins,” there were also many other types of gambling rackets that have provided the mob with many decades of dependable income. Huge multimillion-dollar annual profits that wiseguys have been running successfully since the turn of the century.

Illegal Casino Games - Cards, Dice, Roulette, etc.

Despite the legalization of many of these gaming operations like OTB, legalized sports betting, as well as gaming casinos that first started out in Las Vegas and today boast legalized casinos in South Jersey and many other states of the union, many illegal gambling operations still continue to flourish. Albeit, not at the same prolific pace and staggering, overall gross dollar volume and net profits that once was.

In New York City’s environment that I grew up in back in the Big Apple of yesteryear, illegal high-stakes card games and floating dice games were an everyday, daily neighborhood activity - a common occurrence that most neighborhoods in nearly every section of the city had and enjoyed.

Even though neighborhood guys might on occasion fly to Vegas and fool around for a given weekend, their day-to-day gambling was done locally right in their neighborhood.

Illegal card games such as poker, blackjack, rummy, and the Italian card game Ziganette were all common in most areas. These were operated by the local wiseguys and their associates.

They were run out of private social clubs, various basements of taverns and retail shops, or apartments hidden away from the prying eyes of both the public and the local precinct cops.

By and large, many of these illicit card games were actually a well-known secret among the neighborhood folks who lived there. If they didn’t frequent the games themselves then they were at least tolerated by local residents because the games were run by guys from the neighborhood.

Back then, most of these games were also ignored by local precinct cops as well. With many cops receiving a regular “envelope” to look the other way. This went on for decades.

Police confiscate illegal crap table

One of the biggest money-makers for Cosa Nostra was operating dice or crap games. By the very nature of the way the game was played, it was an extremely fast-moving type game. With thousands of dollars changing hands on a single roll of the dice.

So, the potential for major pots of cash and accompanying profits was enormous. It was not uncommon to have $20,000 or $30,000 floating on a roll. In some of the larger games, hundreds of thousands of dollars could be won or lost in a single night. And it was a big earn for the mob.

Because of it, the police also made busting up dice games a big priority of theirs. Many of the bigger dice games had to “float” in order to avoid law enforcement's detection and the resulting vice raids that would follow.

In order to properly operate a “floating dice game,” it had to be properly protected.

One of the ways this was accomplished was to always keep the location of the game secret. Even among the players. This was done by having a “drop” where potential dice players were told to meet in order to attend the game.

Periodically during the course of the evening, a driver known as a “lugger” for the game would gather up a bunch of players as they congregated and drive them to the hidden location of the game.

The players never actually knew where they were going until they arrived at the game. And every few weeks the location of the game would be moved to a different address. That's where the term “floating dice game” came from.

The so-called “Joe Rivers” game, controlled by Anastasia/Gambino soldier Joseph (Joe Rivers) Silesi was considered the number one crap game in New York City during the 1950s and 1960s era.

A close second, always in competition with the Joe Rivers game, was the so-called “Harlem Game” which was operated by Lucchese capo-regime Paul (Paulie Ham ) Correale.

There were of course hundreds of additional dice games operating all over the city in those days by members of all Five Families. But the two floating crap games named above were the “creme de la creme” of the dice game world in those days.

Another very popular dice game in those days was a Greek dice game called Barbut. It was similar to craps except that it was tossed from a little felt-lined cup. It too generated big bucks for its operators.

Slot Machines or One-Armed Bandits

In the 1930s and 1940s era, New York City and its suburbs were also inundated by the proliferation of newly invented coin-slot machines which were better known as “one-armed bandits,” as they were called back then.

An illegal Joker-Poker slot machine

In fact, the slot machine racket quickly became one of the easiest and most profitable gambling businesses around. It is well documented that mob boss Frank Costello was the single largest slot machine racketeer in the city. In the entire nation for that matter.

In NYC alone, he was said to have thousands of slots out “on the streets” throughout the five boroughs. Costello was also the primary source of supply for other mob guys in both New York and other cities throughout the nation.

He soon became a prime target of NYC’s then-Mayor Fiorello La Guardia who made it a point to direct New York’s Finest to confiscate and bust up Costello's machines whenever and wherever they found them.

Mayor La Guardia even made showy newsreels of him taking a sledgehammer to stockpiles of slot machines that had been placed on floating barges out on the East River before his men dumped them by the dozens, deep into the drink. These displays were constantly televised on nightly TV and made front-page headlines with La Guardia loudly proclaiming that the “tin horns and racketeers were to stay away from New York City.”

Conditions in New York got so bad for Frank that he eventually moved his machines by the thousands down to New Orleans, Louisiana, where Costello had made a deal and went partners with New Orleans boss Carlos Marcello for the placement and operation of these machines throughout the state.

Marcello had a near iron-clad “lock” over his city and its police department. This “hook” allowed Frank and Carlos to hardly skip a beat.

For whatever reason, the lucrative slot-machine racket eventually faded from gangdom’s repertoire for several decades during the 1960s and 1970s era in New York City and elsewhere. But with the advent of computer technology during the early 1980s, the old one-armed bandits, which had been slot machines activated by pulling a lever, were now making a huge comeback in the form of “video screens” and computerized gambling machines.

These “video slot machines,” more commonly referred to nowadays as “Joker-Poker” machines, became the rage.

Wiseguys were soon being supplied with them from several major nationally known vending machine manufacturing companies they had “hooks” with.

Simulated games with such names as Lucky-7, Joker-Poker, Blackjack, Roulette, Horse-Racing, Craps, and many other variations, all of which were nothing more than glorified gambling machines quickly proliferated New York, New Jersey, Philadelphia, and other major American cities. All compliments of Cosa Nostra.

These machines became a major, major, source of revenue for mafia crews across the nation.

Depending on the location of course, one single video-slot machine could generate anywhere from $500 to $3,000 weekly average. If a racket guy had say a dozen machines out on the street working for him, it was not uncommon for him to pull in $10,000 to $20,000 per week for himself.

Some routes pulled in even more. Even when split 50/50 with the location owner, and often times it was a 75/25 percent split, with the wiseguy getting the better of the deal, you’re talking big bucks. A solid route could earn a net profit of $300,000 to $500,000 per year like nothing.

Other Gambling Rackets - Punchboards, Football Sheets, Bingo Parlors, etc.

Other gambling operations ran the gamut from “punchboards” which were very common during the 1930s-1940s era and located in retail locations such as candy stores, drug stores, and luncheonettes.

College and Pro Football sheets

It was another inexpensive form of gambling where if you punched out a little circle on a board and hit your number, or a hit a “win,” the player would receive anything from a Kewpie Doll to a monetary payout.

Or seasonal “football sheets” which were printed out once weekly during the gridiron season and offered a variety of “picks” to the player on both college and pro-football games for the upcoming weekend.

Football sheets were almost like another form of a “lottery” because in order to win, if I remember correctly, the player had to pick a combination of at least 3 games, or up to 12 games as he wished. The more games you picked, the higher the multiple of money you’d win.

Another unlikely but very lucrative gambling game run in certain neighborhoods of NYC, as well as other cities over the years that made a lot of money for the mob, was Bingo.

I was personally amazed when told that several friends of mine were operating Bingo parlors up in the Bronx and out in Queens. I had to see it for myself. So, one day I took a ride with one of the fellas who ran these weekly games and had a look.

They were operating out of large venue halls, much the same as you’d expect as a Church would. They opened several days a week and typically attracted younger and older women and older men from the neighborhood who played religiously.

The nice part about operating these Bingo parlors was that they typically fell under law enforcement's radar. They were not viewed as a high priority by the police department for whatever reason.

Sometimes they were operated under the auspices of a charity such as a local Roman Catholic Church or Synagogue. Other times they were possibly “licensed” or attained permits and didn’t advertise that actual cash prizes changed hands.

I don’t exactly know how they got away with this. What I do know is that they ran these Bingo games as an open secret for many years without raid or arrest. So, there was definitely a “gimmick” to it.

Depending upon the era and the city they operated in, there were many other variations of illicit games of chance that organized crime capitalized on through the years.

But remember that all of these gambling operations and gaming venues quenched the thirst of a willing public, who desired and sought out these forms of illicit entertainment. The same way that nowadays potential bettors flock to Atlantic City, New Jersey; Las Vegas and Reno, Nevada; Foxwoods in Connecticut; and a host of other states where gambling has now finally been legalized.

Slowly but surely, the United States government is basically putting the mob out of the gambling business.

Until the next time.…”The Other Guy!”

The Gambling Rackets

You May Also Enjoy

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The Day Charlie (the Bug) Workman Saved a Horse

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The Gambling Rackets

Unlock This Door to the Underworld

Take the Journey!

You May Also Enjoy

Racketeer Snapshot: Connecticut’s Frank (The Cigar) Piccolo

The Anthony Strollo Regime of NY/NJ

The Day Charlie (the Bug) Workman Saved a Horse

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