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“born In Iniquity”
Running the long-lived Louisiana Lottery was as certain a moneymaker as owning the mint
February/March 1994 | Volume 45, Issue 1
At its peak the Louisiana Lottery paid out about three million dollars a year in prizes to ticket holders. How much was paid to its owners is not known, but estimates range from three to five million dollars a year all the way up to thirteen million dollars a year, perhaps ten times that sum in today’s money and all, of course, taxfree. The lottery routinely reported dividends in excess of 100 percent of invested capital, and it is highly likely that vast unreported dividends were paid out as well.
Because by this time it was the only legal lottery in the country, it was soon operating in most other states. In New Orleans the lottery hired a theater to hold the drawings and provided a free concert. It hired the Confederate generals P. G. T. Beauregard and Jubal Early to supervise the picking of the winners, playing them each the then princely salary of ten thousand dollars a year just to sit on the stage and watch the tickets be drawn.
Naturally there were persistent attempts to close down the lottery. The same social forces that had ended lotteries in all the other states were also at work in Louisiana. But Morris and Howard, needless to say, were not about to let that happen if they could avoid it. They had a powerful weapon right at hand: money, and lots of it.
A profit margin of 50 percent of gross revenue is nice work if you can get it. John Morris and Charles Howard got it.
They used it to buy good public relations. Besides the forty thousand dollars they gave to the Charity Hospital every year, they contributed generously to many other worthy causes. Whenever there was a disaster, such as a flood or an epidemic, the lottery was always right there with a big check.
The other effective use that the lottery made of its vast income was bribing public officials. In its first nine years the lottery is reputed to have spent three hundred thousand dollars to make sure that it had friends in high places. In 1879 it needed them, and it used them in an awesome display of raw political clout.
The antilottery governor had caught the company napping and got a bill revoking its charter through the legislature that year. To redeem the situation, lobbyists descended in droves. When the smoke cleared, the legislature had called a constitutional convention, an action that did not require the governor’s signature. At the convention the lottery managed to have a guarantee of its twenty-five-year charter placed in the new state constitution.
When the charter came up for renewal, the lottery spared no expense to see that it won the fight. One state senator, J. Fisher Smith, had made a career out of opposing the lottery but voted to extend its charter. Shortly after, he collapsed and died. He was found to be carrying eighteen thousand dollars in cash in his money belt.
Another legislator, J. M. McCann, couldn’t be bought, but one certainly can’t accuse the lottery of failing to try. McCann said that he found money in his hat every time he picked it up and that money was dropped from upper-story windows as he walked the streets of Baton Rouge. One day at lunch he found twenty thousand dollars under his plate, but was unmoved. The charter extension passed.
Finally, in 1890, it was the federal government, responding to a rising tide of public revulsion, that brought the Louisiana Lottery down. President Harrison asked Congress to forbid the use of the mails for lotteries, a statute still on the books. It was a crushing blow. The Postmaster General estimated that the Washington, D.C., office of the lottery alone sent out fifty thousand letters a month and that 45 percent of the mail volume in New Orleans was lottery mail.
Even its days of operating in Louisiana were then numbered. The charter extension was actually an amendment to the state constitution. It passed a well-bribed legislature, but the people rejected it resoundingly, 157,422 to 4,225. The company, already a shadow of its former self, moved to Honduras in 1894 and in 1907 expired unlamented, except, one supposes, by the Morris and Howard families.
There wouldn’t be another state lottery until New Hampshire established the first modern one in 1964.