No one knows exactly how much money is involved in gambling in the United States. What we do know is that the American people are spending more on gambling than on medical care or education; that, in so doing, they are putting up the money for the corruption of public 'officials and the vicious activities of the dope peddlers, loan sharks, bootleggers, white-slave traders, and slick confidence men.
Investigation this past year by the FBI, Internal Revenue Service, the Narcotics Bureau, the Post Office Department, and all other federal investigative units has disclosed without any shadow of a doubt that corruption and racketeering, financed largely by gambling, are weakening the vitality and strength of this nation.
But, as I sit down today to write this article, a business executive with an industrial firm on the Eastern seaboard is telephoning a bookmaker to place a fifty-dollar bet on a horse race; a factory worker in a Midwestern town is standing at a lunch counter filling out a basketball parlay card on which he will wager two dollars; a housewife in a West Coast suburb is handing a dime to a policy writer who operates a newsstand as a front near the supermarket where she shops.
These people, and millions like them who follow similar routines every day, see nothing wrong in what they are doing. Many of them can afford the luxury of this type of gambling. They look upon it simply as taking a chance.
But they are taking a chance which the nation and its economy cannot afford. They are pouring dimes and dollars day by day into a vast stream of cash which finances most illegal underworld activities. The housewife, the factory worker, and the businessman will tell you that they are against such things as narcotics, bootlegging, prostitution, gang murders, the corruption of public officials and police, and, the bribery of college athletes. And yet this is where their money goes.
Last May, I appeared before a subcommittee of the House Committee on the judiciary and testified in support of anticrime legislation then pending before the Congress. Relying on rock-bottom estimates of the Department of Justice, I estimated—probably conservatively—that illegal gambling in the United States does a gross volume of $7 billion annually. That is more than the American people spend each year on bread.
Mortimer Caplin, the Commissioner of Internal Revenue, told Senator John L. McClellan's antiracketeering committee that a total of $25 billion a year is wagered in the United States, but he did not provide a breakdown on how much was legal and how much went into illegal channels. Twenty-five billion dollars is almost as much as we spent on education in this country last year.
Last August, John Scarne, who has made a study of gambling for many years, testified before the McClellan committee that the annual gross figure on illegal gambling involves about $50 billion. He testified that the bulk of this money was bet on horse racing through bookies. Fifty billion dollars is eight billion more than Congress appropriated last year for national defense. Our estimate of $7 billion may be low. Mr. Scarne's estimate of $50 billion may be too high, but it could be right. The truth is that nobody really knows. Senator McClellan pointed out that if the figure, of $50 billion is accurate, the government is being cheated out ofsome $5 billion a year in taxes owed by the gambling community.
Is this really the way American citizens want it to be?
The great discrepancy in the guesses as to how much is wagered each year is understandable, because once the housewife, the factory worker, or the business executive gives money to a local bookie or policy writer, it disappears into the pocket of the underworld figure, who is in business to cheat the government—and his customer, if he can: And while many persons may regard the bookie on the other end of the telephone and the neighborhood numbers writer as the gambling racketeers, actually they are usually the small-time front men who stand to make a profit with every person who bets with them.
The bookies make a profit from the bettors because they have an edge on every bet. They pay track odds, but usually not in excess of twenty to one. The odds at the track are calculated after deducting the 15 to 18 percent of the total betting pool which goes to pay taxes and other expenses. The bookmaker pockets that amount.