This month, thousands of Americans will bet on the Kentucky Derby, the most heavily-wagered horse race in the U.S. Gambling is a part of America’s DNA–Native Americans played dice games prior to contact with Europeans and in 1612, English proprietors held a lottery to raise funds for the Virginia Company’s settlement of Jamestown.
On this episode of BackStory, the hosts explore the history of Gambling in America. We look at how speculators bet on land–America’s most plentiful commodity–and created the “first” stock market. The hosts also uncover how gambling, once outlawed throughout much of the U.S., has become a major source of revenue for cash-strapped communities. From Native American gaming to the rise of Las Vegas, this episode unpacks how some Americans found opportunity in gambling, while others lost big.
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BRIAN: This is BackStory. I’m Brian Balogh. The Kentucky Derby is the most heavily wagered horse race in the US with millions of dollars exchanging hands each year. But in the 19th century, Americans went to the track for more than a few bets. Political candidates got in on the action.
KEN COHEN: And so they used their horses to help rally support. They would also name their horses things like Democrat or Anti-Democrat.
BRIAN: Today on BackStory, we’re looking at a history of gambling, from the moral hazards of betting on your own life–
SHARON MURPHY: The life insurance industry’s always kind of haunted by this element of gambling and this taint of ickiness.
BRIAN: To an anti-gambling campaign that turned violent.
JOSHUA ROTHMAN: If people in the United States, when they have an association in their minds with the city of Vicksburg, their memory of Vicksburg is, oh, that’s the place where they murdered the gamblers.
BRIAN: A history of gambling coming up on BackStory.
ANNOUNCER: Major funding for BackStory is provided by the Shere Khan Foundation, the National Endowment for the Humanities, the Joseph and Robert Cornell Memorial Foundation, and the Arthur Vining Davis Foundations.
From the Virginia Foundation for the Humanities, this is BackStory with the American Backstory hosts.
PETER: Welcome to the show. I’m Peter Onuf, here with Ed Ayers.
ED: Hey, Peter.
PETER: And Brian Balogh.
BRIAN: Hey there, Peter. Today’s episode is on the history of gambling in America. And we’re going to start with one of the most ubiquitous types of gambling. BackStory listener Sarah Hobbes called in to ask about it.
SARAH HOBBES: Hey, guys. I’ve got a question. How long, historically, have we had lotteries and have lottery funds historically always gone toward a cause?
Ed: So Sarah wants to know if we’ve always had lotteries and if we have, have they all been put towards some socially constructive purpose? You know, I always thought lotteries were invented when we invented scratch-off cards but maybe there’s a different history to this than we realize.
BRIAN: Well, Ed, I think you can understand why I reached out to author Matthew Sweeney to answer the question. He’s written a book on the history of American lotteries.
MATTHEW SWEENEY: Oh, in America, lotteries go back to the very beginning. The nation was founded on lottery dollars.
BRIAN: Sweeney’s not kidding. He says as far back as the early 1600s, the Virginia Company in London looked to a series of lotteries to save its struggling venture across the pond, a little colony called Jamestown.
MATTHEW SWEENEY: The colony itself was in financial trouble. It hadn’t returned profits. A lot of the financial backers were, I think, getting wary. So the company applied and sought permission from the crown to hold a lottery.
BRIAN: Sweeney says that public lotteries like this were still relatively novel. So the Virginia Company spread the word with broadsides featuring tantalizing descriptions of lottery prizes.
They even commissioned a song. It was a little more high-minded than today’s radio jingles. A patriotic anthem painted the lottery not just as a game of chance but an opportunity to fund England’s glory. The actual tune didn’t survive. So we decided to commission our very own version.
FEMALE (SINGING): Take courage then with willingness. Let hands and hearts agree. A braver enterprise than this, I think, can never be. The merchants of Virginia now have nobly took in hand the bravest golden lottery that e’er was in this land.
ED: Well, that’s quite the jaunty air. I’d buy a lottery ticket with that.
PETER: Yeah, it sounds like you’d buy any lottery ticket, Ed.
BRIAN: Sweeney says the first drawing in June 1612 was a major public spectacle, almost like a carnival.
MATTHEW SWEENEY: They constructed a special house next to Saint Paul’s Cathedral in London and it was not too dissimilar from a bingo hall that you would see today. You’d put all the slips into a drum. It often had glass sides to allow the public to see the slips or the tickets that were rotating around inside.
Often there’d be a child, you know, a symbol of innocence brought out to pull a ticket And, you know, you can imagine that moment of tension as the child dipped their hand into the drum to pull out a ticket and everything would go silent as they waited for, you know, the ticket to be pulled to see who was going to win the top prizes.
BRIAN: Now, some people had decidedly mixed feelings about these lotteries. The Spanish ambassador wrote a scornful letter home claiming the English had been reduced to begging in the streets to fund their colony. Others commented that poor people were being cousined, that’s Elizabethan for fooled, by the lure of big prizes they stood little chance of winning. Despite these concerns, these lotteries eventually paid off.
MATTHEW SWEENEY: By 1620, the estimates are that 2/3 of the funding of Jamestown was provided by the lotteries and it was John Smith’s comment that lotteries had provided the real and substantial food of Jamestown during that time period.
BRIAN: Jamestown was just the start. Over the next century, all kinds of lotteries sprang up in Colonial America. At a time when cash and banks were scarce, Sweeney says lotteries where often the quickest way to raise funds for public works.
MATTHEW SWEENEY: It is Colonial Era crowdfunding. You vote your support for the project by buying a lottery ticket.
BRIAN: The Continental Congress even got in on the action, attempting and failing to use a lottery to raise money for American troops during the revolution.
MATTHEW SWEENEY: After the Revolutionary War, lotteries really spread like wildfire. You had a new country that had just ended a war over taxation. They weren’t about to start levying, you know, major new taxes and they already had debts to consider and they needed to build.
BRIAN: Now, throughout these periods, religious groups like the Quakers saw lotteries as a form of state sanctioned gambling. But Sweeney says, going back to Jamestown, lotteries offered betters something different than cards or billiards. It was the chance to win big but also to feel like they were contributing to a greater, sometimes even glorious, cause.
MATTHEW SWEENEY: There’s a certain ironic symmetry, I think, to asking folks to gamble some money on what was essentially a gamble for the Jamestown colony to take root. You see a similar metaphor made by Adam Smith, at the time of the Revolution where he compared the revolutionaries to lottery players who were willing to take a risk to win a big prize from the English state lottery wheel.
ED: Today on this show, we’re going to look at many other gambles Americans have taken over the years and the backlash that those bets sometimes brought. We’ll find out why Americans worried about gambling in the life insurance industry in the 19th century. And we’ll explore how a series of congressional hearings in the 1950s helped turn Las Vegas into the nation’s dice rolling capital.
PETER: But first, Sunday’s Kentucky Derby is the first leg of the prestigious Triple Crown horse races. It’s known as the fastest two minutes in sports but if you’ve been watching the news lately, you’ve been hearing a lot about a much longer, some of us would say, interminable horse race.
FEMALE SPEAKER: And the good news, the horse race to the 2016 Presidential election is heating up.
MALE SPEAKER: A 16-horse race, so who won the week?
FEMALE SPEAKER: But three factors in the 2016 Republican field are turning the Presidential primary into a horse race.
PETER: Now, this metaphor in American elections isn’t exactly a recent invention. In the 18th and 19th centuries, horse racing was much more than a political turn of phrase. According to historian, Ken Cohen, the track was the place for those in the know to lay a bet, broker a deal, or cultivate political allies.
KEN COHEN: In the 18th and 19th century, race courses were, by far, the largest sporting arenas in the country. It was the most popular sporting event in terms of live spectatorship, in terms of sheer numbers, that existed in the country.
PETER: But they’re doing stuff there, too, right? They’re not just pandering to their own impulses. There’s business going on. Maybe you could describe what really happens at a horse race.
KEN COHEN: Well, the business is right and the gambling or the tawdriness of what goes on at the horse race isn’t divisible from the business, but in the 18th and 19th century, those are the same thing. We have this phrase in English now that everybody uses at the end of an agreement, right, done and done. The phrase done and done comes from the betting sequence, the face-to-face betting sequence.
When you’re done with a deal, each party should shout done. The first one should shout done and the second one should shout and done. And the reason why you were supposed to shout it, and in the manuals it had exclamation points at the end of the phrase, was so that everybody around you could hear because wagers, for all their importance, we’re not legally prosecutable in the period.
And so the only way to make somebody pay who might be reluctant to pay was to get a bunch of witnesses who heard the negotiation and heard the done and done at the end that sealed the deal. That’s why these wagers come to carry so many different values other than just whether or not I can win money on a bet.
PETER: Ken, it sounds like we got friendship, business, and maybe some of these addictions.
KEN COHEN: It’s life.
PETER: A public spectacle, everything is happening at the same time, which suggests that this is a very important place, the racetrack, because a lot of things that we maybe haven’t paid attention to are taking place there.
KEN COHEN: In terms of building networks, building friendships, and building connections, I think that’s right. And if you start to go through diaries and letters between people who are betting at the racetrack, you very quickly uncover the deep business and political affiliations that they share with each other and the way that they went about building those affiliations through their gambling at the racetrack.
PETER: It’s like credit. There’s an ongoing relation of confidence.
KEN COHEN: That’s absolutely right, yes. And wagers are one way that those networks of confidence are expanded. People were constantly short on money then. They needed credit. And so in order to make a decision about who was worthy of that kind of credit when you’re not sure when you’re going to get paid back, developing trust is very, very important. And wagers didn’t have to be paid back.
You could filch on a wager and walk away. It was only your reputation that would get injured, but, of course, that reputation is very important in a credit economy where everybody everyday is making decisions as to whether or not they should loan you money. Whether or not you pay your wagers is a business decision, in fact.
PETER: Ken, you’ve told us some interesting things about races. A lot of stuff happened at the racetrack, including politics. Maybe you could explain that a little bit.
KEN COHEN: Right, well, politics happened at the same track in much the same way business did. In fact, it was often the same people because the people that owned the horses that were racing in the major races in Colonial America were extraordinarily wealthy men. Lots of racehorse owners who had business interests were also running for office. And so they used their horses to help rally support. They would also name their horses things like Democrat or Anti-Democrat.
There was a series of races in Richmond in 1832 with one horse being named Andrew Jackson and another being named Nullification, which, of course, was the challenge by South Carolina in 1832, at that very moment, to laws being passed by Andrew Jackson. So political purposes were served at the racetrack, in much the same way business ones were, through the networking hub that was the racehorse.
PETER: Ken, you’ve brilliantly illuminated this space, this place, the horse race and how it is a site for doing business and doing political business, as well as financial business. But how do we make the shift toward what we recognize as modern political horse races and there are no horses any more. And we don’t even bet any more, at least not in public the way they did in your day. So how does that transition take place? How do we get a politics that seems very much like competition, a sporting competition, but it’s no longer so closely associated with actual horse races?
KEN COHEN: So this is a process that sort of plays out over the course of the Antebellum period and then again in another wave in the late 19th century. So the first step is in the wake of the panic of 1837, which really destroys this broad thoroughbred market that had upheld racing for the previous 50 or 60 years. And so the panic drives thousands of men to divest themselves of their horses, particularly the ones that might bring some money because they have some thoroughbred blood in them.
Second of all, you have the rise of new political parties. And the Whigs and the Democrats of the 1840s have far greater party infrastructure and wherewithal. They start to stage their own events. They don’t need races to be political hubs because they’re staging their own massive rallies that borrow elements of racing, including the metaphor of talking about politics as races, as a way to lure people to these political events. Hey folks, this is going to be just like a race. It’s going to be just as much fun as the races used to be only now we’re celebrating Harrison or Van Buren or a local gubernatorial candidate.
PETER: But Ken, it sounds like the spectacle of the horse race now is being reenacted in a different way in conventions, which have some of the same entertainment and engagement values that you might associate with sporting events in the past.
KEN COHEN: And it’s been created by a sort of mass media and news media coverage that draws attention and draws interest by creating conflict in competition and by covering politics as if it’s sports. And there’s been several articles in the last few years written about this so-called sportification of politics.
And, I think, the sort of epitome of this process is when you listen to Donald Trump speaking today, right, and his emphasis on winning. We’re going to win against China. I’m going to win against Ted Cruz. We’re going to win everything back. It’s the sort of summation of taking this process of personal stakes and reusing it but transforming it at the same time into something that’s impersonal and just vaguely about winning and competing rather than about building personal networks with long lasting relationships.
PETER: Well, Ken, this has been a marvelous discussion and you’ve helped peel back the layers and we can see where it all came from. I don’t know where it’s going, but that’s always the problem with democracy. Thanks very much for joining us.
KEN COHEN: Thanks for having me, Peter.
PETER: Ken Cohen is a historian at Saint Mary’s College of Maryland and author of the forthcoming book, “They Will Have Their Game, Sporting Culture and the Making of the Early American Republic. He spoke with us from Abidjan, Ivory Coast.
BRIAN: Earlier, we heard from author Matthew Sweeney. His book is The Lottery Wars, Long Odds, Fast Money, and the Battle Over an American Institution.
Singer/songwriter Juliana Dougherty interpreted the Jamestown lottery jingle. We’ll post the full song and a link to Juliana’s other work at backstoryradio.org.
ED: Our next story takes us to the Wild West of the 1930S. It was a time of boom and bust and that was especially true in the Mississippi and Louisiana region, then known as the American Southwest.
JOSHUA ROTHMAN: Pretty much anybody can get a loan. People are speculating on real estate. They’re speculating on cotton. They’re speculating on enslaved people. And it was the kind of time and the kind of place in the Southwest where people would come and they would say, you know what, anyone can win here.
ED: This is historian Joshua Rothman. He says that this rough and tumble atmosphere sparked an infamous 4th of July party.
In 1835, residents of Vicksburg, Mississippi gathered to celebrate the holiday with a barbecue, many toasts, and a reading of the Declaration of Independence. At some point, one of the attendees started to get a little rowdy, a professional gambler named Frank Cabler.
JOSHUA ROTHMAN: He starts picking fights with people. He starts throwing dishes around.
ED: He’s just drunk I take it, right?
JOSHUA ROTHMAN: He’s pretty drunk. Probably most of the people there are drunk. It’s the 4th of July.
ED: Rothman says this members of the local militia, doctors, lawyers and other volunteers who protected the town, then forced Cabler to leave. But the gambler was itching for a fight. So that night, Cabler came back to Vicksburg looking for revenge.
JOSHUA ROTHMAN: People in the militia, they hear he’s coming back to town. They say, you know what, it’s really time to show this guy we mean business. And they tar him and feather him. They basically kick him out of town.
And then they decide, you know what, we’re going to get all of these professional gamblers out of town. And they announce to professional gamblers, you have 24 hours to get out of town or we’re going to make you leave town.
ED: Wait a minute, all these professional gamblers? What’s Vicksburg like that it could have an entire class of men who are professional gamblers and what does that mean? What do they do?
JOSHUA ROTHMAN: So Vicksburg was a brand new town. It has emerged as, essentially, a shipping center for cotton from the surrounding countryside. And Vicksburg, like all river towns, any time a boat would come through, you’d have sailors, you’d have boatmen, you’d have travelers, and they often were looking to have a good time. And a good time in the 1830s meant you would find a place to drink, you’d find a lady of the evening, perhaps, If that was where your tastes ran, and you would find a gambling hall.
And professional gamblers were people who were, essentially, established businessmen. These were men who would run, usually a bar and they would have gambling tables in the bar. They were all called coffee houses.
ED: That’s weird.
JOSHUA ROTHMAN: None of them really were coffee houses, they’re bars, but that was the term of art for gambling houses at the time. But the men who stayed in a town for any period of time, they considered themselves to be businessmen and this is their particular type of business.
ED: So Josh, what would motivate this militia to decide that all gamblers have to be driven out of Vicksburg? What were they hoping to gain by that?
JOSHUA ROTHMAN: So part of it is a kind of broader cultural sense that gambling as an activity ran entirely counter to the kinds of morals and the kinds of economic discipline that particularly middle class white people were attempting to cultivate. And gamblers were thought to be people who didn’t really work for a living. They were people who came in and, essentially, cheated and fleeced people in order to make their money.
And so the larger goal here is to try to make Vicksburg a place that people who live there could tell other people, this is a safe, respectable, moral place.
ED: All right, so all this kind of kindling burst into flames with the persecution of the professional gamblers. I’m guessing the professional gamblers didn’t just say, OK, hey, thanks a lot. We’re out of here.
JOSHUA ROTHMAN: It seems pretty clear that some people leave town.
ED: The smart ones.
JOSHUA ROTHMAN: I mean, there were people who saw what happened to Francis Cabler and they say, you know what, there are a lot of other places to gamble that I might not get tarred and feathered and they skipped town.
But after the 24 hour warning is over, the mob, and it’s a militia unit but, essentially, at this point, has become a mob, starts going through the streets of Vicksburg, going into people’s houses, and into gambling halls and essentially taking out whatever equipment they could find, pool tables, faro equipment.
Faro was a very popular card game at the time and had sort of boxes and roll outs that went along with it. Decks of cards, any kind of equipment that could be associated with gambling. And they literally start piling it in the street and they’re going to light it on fire.
So that’s part of the drill until they get to a particular coffee house that is run by a man named Truman North. So, essentially, Truman North decides he’s going to hole up in his gambling house and he’s got probably about half a dozen other men in there with them. And mobs being mobs, they break down the door and Truman North and the men inside open fire on them. And standing in the doorway, one of the first man who leads the charge here, he is shot and he is killed.
And so the mob, there really is no stopping them at that point. They grab everybody inside that they can. They drag them all outside and they, essentially, tie ropes around their necks, drag them to a makeshift gallows, and they string them up.
ED: Wow, so that’s quite the 24 hours in Vicksburg, Mississippi.
JOSHUA ROTHMAN: It was not a good place to be.
ED: So what do people outside of Vicksburg think about all this?
JOSHUA ROTHMAN: Well, the short answer is people outside of Vicksburg are outraged by this. You see all kinds of outpourings in the newspaper saying, look, no matter who these guys were, it’s un-American to simply take people out and string them up in the street without any trial.
ED: So it seems to me that they wanted their town to be known as a respectable place that wouldn’t tolerate such people in their midst, but what they ended up doing is becoming famous as a place where you could get lynched on the street.
JOSHUA ROTHMAN: That’s exactly right. That’s exactly what happens. Instead, what you saw is, essentially, from about 1835, really up until the siege of Vicksburg during the Civil War, if people in the United States when they have an association in their minds with the city of Vicksburg, their memory of Vicksburg is, oh, that’s the place where they murdered the gamblers.
ED: So what does this episode tell us about America in the 1930s and ’40s and the role of gambling in the American mind?
JOSHUA ROTHMAN: So gambling is a thing in the 1830s and ’40s that is really rife with all kinds of contradictions because on the one hand, you have a widespread discourse, really throughout the country, of gambling as an activity that undermined discipline and frugality and all of those values that people in the middle class said were imperative for the United States to be a moral and economically successful country.
But on the other hand, you have an economy that is so grounded in the idea of that you can become something from nothing in the United States and it can happen really, really quickly. And the truth is, if you do it in the right kind of way and in the right kind of place, you don’t have to work that hard for it.
And so you have gambling sort of sits at this junction between the moralistic middle class values on the one hand and the realities of the way the economy works on the other and gamblers really are the personification of exactly that kind of tension.
ED: Joshua Rothman is a historian at the University of Alabama. He’s the author of Flush Times and Fever Dreams, A Story of Capitalism and Slavery in the Age of Jackson.
So that was a very flamboyant story with tarring and feathering and all other kinds of outrageous behavior. But do you guys think it was sort of anomalous, that it’s just a product of this very raw frontier in the 1830s? Peter? Brian?
PETER: No, Ed, I think it’s really revealing of a major strain in American history. These people who are dumping on the gamblers are gamblers themselves in many ways. And I think it’s really important because of the moral opprobrium in which gambling is held and that you would hear from every pulpit in the land in the years before the American Civil War. It’s not surprising that you’d want to claim you weren’t one. How do you prove it? By bashing them.
ED: You say people are gamblers. How are people gambling, Peter?
PETER: Well, it’s any speculation in land, speculation in any market transaction is a gamble. It’s a risk. But when you take a plunge, when you take a risk, of course, that’s forward thinking if it pans out for you, as they say in the gold mining districts. And so you take chances and if you win, you’re a hero, you’re a pillar of the community. If you’re not, your pilloried.
BRIAN: ED: If we leave that bad pun aside, I completely agree with Peter. You’re surrounded, Ed. Because if you fast forward to the 20th century, you have the masses beginning to participating in the stock market, for instance. It really begins in the 1920s but today, a huge percentage of the American population has their entire retirement funds wrapped up in their 401(k)s and that kind of thing.
It doesn’t matter if they go to Atlantic City or Las Vegas. We live in a highly financialized economy where people are quite literally gambling on whether interest rates are going up or going down.
ED: So guys, I’m persuaded that gambling is pervasive throughout American history. What is it about American religion that makes people opposed to gambling?
PETER: If you believe on the sovereignty of God, you believe everything is disposed according to His will and the idea of invoking lady luck, betting, gambling as if you could effect your own fate, that’s a basic insult to a good Christian.
ED: It’s kind of pagan, right?
PETER: Yes, indeed.
ED: OK, that’s pretty heavy. Brian?
BRIAN: Mine is not as heavy, although I think there is a similar impulse there, Peter. In the 20th century, we no longer see the kind of religious outrage. Lotteries are legalized in virtually all states, overcoming religious opposition.
But what we have is a very medicalized response and we know that a scary proportion of Americans who gamble develop some kind of addiction. And we have centers for treating problems that, in the 19th and 18th century were seen as sin or moral depravity.
ED: But you know, I see another profound continuity. People today think that gambling is bad for the society as a whole. It takes money from poorer people and puts it in the pockets of people who already have money.
BRIAN: I think you just described the current economy generally, Ed.
ED: That could be but notice how that resonates with what happened in Vicksburg in the 1830s. There’s a sense that I can gamble because I know how to do it responsibly but these other people out there just can’t handle all this risk.
BRIAN: And I do think what runs through all of American history is that one man’s gambling is another man’s business. And I was very much taken by the fact that these gamblers thought of themselves as business people who were doing what Americans have always done, that’s to make money on the newcomers.
PETER: And, of course, gambling is big business now. So that distinction is completely collapsed.
We’re going to turn now to life insurance. Remarkably, it’s an industry that used to be associated with gambling.
The basic premise of a life insurance policy is you pay premiums to a company and the company ensures that your family receives payment upon your death.
SHARON MURPHY: In a way, it is betting on when is your death going to occur.
PETER: This is historian Sharon Murphy.
SHARON MURPHY: Are you smarter to save over the long term because you know you’re going to live 50 or 60 years, or is it smarter to invest in a life insurance policy in case you were to die sooner?
PETER: Murphy says life insurance dates back to 16th century Europe. Back then, it was viewed as a form of gambling because people took out life insurance policies on strangers and bet on when they’d die. Centuries of murder and scandal ensued.
That morbid history followed life insurance to the US. In the early 19th century, American companies were still struggling to make the industry respectable.
SHARON MURPHY: They want to keep their reputation. They’re really worried about being associated with gambling.
PETER: Now, earlier in the show, we talked about how Christians were among the most vocal critics of gambling but strangely, life insurance took off in the 1820s and ’30s just as a huge Christian revival swept the nation. So I asked Murphy whether people reacted to insurance agent as con men peddling bets.
SHARON MURPHY: Yeah, initially there actually isn’t that reaction. That comes much later and it’s only a temporary reaction. Early on, some of the earliest companies were actually for insuring the lives of clergy.
PETER: Hold it, hold it, hold it. It’s up to God, isn’t it? I mean, you’re supposed to trust in God.
SHARON MURPHY: They are supposed to trust God but, you know, the clergy will very quickly turned around and say, God helps those who help themselves,
SHARON MURPHY: But this was actually initially a lot of congregations were insuring their ministers because unlike a farmer, who if the farmer dies, the wife still has the farm and the produce and could still work the land. Clergy are very much exposed, that if they die young, their families have nothing to fall back on.
So clergymen are actually very interested in life insurance early on but again, insurance companies were worried about being associated with gambling on your life. And any time you have anyone throwing accusations at them, that they are gambling, that they’re akin to lotteries, that they are promoting murder, any of these types of accusations are going to be countered very quickly by the industry because they don’t want to have any of these associations.
PETER: So Sharon, where are these accusations coming from? And maybe you could give us some detail, the sort of things that would be said about insurance companies to discredit them.
SHARON MURPHY: So one of the odd places where some of the criticism comes from, and I’m not quite sure what to make of this, are from savings banks promoters. Savings banks are, at this time, largely philanthropic institutions for the working poor. So they’re targeting a different market than life insurance. Life insurance doesn’t get into targeting the working poor until much later in the 1870s.
But in the 1850s, you start having some savings banks promoters publishing articles accusing life insurance as being equivalent with lotteries, that at this is gambling, companies are being fraudulent in their marketing. All you hear about is the guy who was 30 years old and seemed perfectly healthy, paid one premium, and within six months he had died suddenly. And if it weren’t for the life insurance policy, his whole family would have been thrown out on the street.
And they’re saying, well, you don’t hear about the guy who starts paying his premiums at 30 and ends up living until he’s 90 and has paid out all this money. And that his family doesn’t get as much in the end and that it’s ultimately the life insurance companies who are making money hand over fist and that you’d be much better off depositing your money in a savings bank.
PETER: OK, OK, I’m a 19th century middle class guy and you’ve come to sell me a policy. What are you selling me exactly and remember, I don’t want to die and I don’t want to talk about dying. I don’t want to gamble because I’m a good Christian, and I don’t believe in Lady Luck. So give me a pitch.
SHARON MURPHY: Well, my pitch would absolutely be the investment side then. The rich, they can buy stocks, they can invest in companies. The poor, they can put their money in savings banks. There’s very few opportunities for the middle class to grow their money in the 19th century.
I mean, life is changing radically in the 19th century, you know, as people are moving into these urban areas. You don’t have family surrounding you. You die and, you know, your family’s going to be thrown out on the street.
So yeah, life is a huge gamble. It’s becoming a different gamble than it was an agricultural society. That’s also a gamble but the risks are changing. And I’d say life insurance emerges as a response to new risks.
PETER: Well, Sharon, you’ve written persuasively about the early years of life insurance but then it goes into overdrive after the Civil War. What happens to change the industry, make it truly a democratic product that people want to buy?
SHARON MURPHY: Well, I think the war does play a huge role in this. The war is a big risk for the companies. If you die in war, your policy is historically voided. And the life insurers are faced with a conundrum. Do we void all these policies and face the public relations backlash that we’re being unpatriotic, that we’re not supporting the war effort? Or do we take on this risk of insuring all these soldiers not knowing what the outcome of the war is going to be?
But the companies are actually very shrewd. They decide to charge an extremely high premium for people to keep their policies in time of war but they allow them to keep it. After the war, the companies are really able to take advantage of this period of heightened awareness of death to their advantage and there really is a take off of life insurance that comes.
But I think it’s partially that they marketed it well.
PETER: So you’ve got a highly morbid population of young men who have survived and who are worried about death. But what a wonderful pool.
SHARON MURPHY: They’ve see it firsthand.
PETER: Well, that’s their reward for having patriotically supported the war, right, is to enjoy this harvest of morbid young man.
SHARON MURPHY: But the life insurance industry’s always kind of haunted by this element of gambling and this taint of just kind of ickiness at times, if I can put it that way.
You know, as you get into more industrial policies targeted at the working class, you start having policies targeted at whole families, children, spouses, and then this question of, oh, do you really have an insurable interest in your baby and is that bringing up areas of risk that we don’t want to get into?
PETER: Well, Sharon, what you’re selling me and I’m willing to buy is a little bit of peace of mind so I might make it through the night not worrying about what’s going to happen. Thanks for that policy.
SHARON MURPHY: Yeah, you’re welcome. Thanks for paying the premium. Keep it up.
PETER: All right. Sharon Murphy is professor of history at Providence College. She’s the author of Investing in Life, insurance in Antebellum America.
ED: Hi, podcast listeners. Hamilton, the Musical just nabbed a record 16 Tony nominations. This is great news for us since we’re working on an episode about the life and legacy of Broadway’s most popular historic figure.
And this is where you come in. We want to hear from teachers across the country about how Hamilton is changing the way you teach history, for better or for worse.
Do your students work Hamilton references into conversations or sing the lyrics in class discussion. Do you spend time in class defending Thomas Jefferson or even Aaron Burr?
Head to our website, backstoryradio.org, to share your stories. We’re looking forward to hearing from you.
Hey, you know, guys, we come across a lot of interesting trivia working on this show. We don’t have time to put it all in and so the producers had a great idea. What do you say we compress the trivia into a minute and have it presented in sort of bullet form by one of our producers, in this case, Nina Earnest.
BRIAN: How did you draw the short straw, Nina?
NINA EARNEST: I don’t know.
ED: Oh, but it’s going to be fun, Nina, really. And here are the rules. You have exactly one minute to tell us all the amazing trivia that you learned about the history of gambling for this episode. Are you ready?
NINA EARNEST: No, but I will be.
ED: Too bad. We’re going anyway. They’re off to the races. On your mark, get set, go.
NINA EARNEST: During the terrible Yellow Fever plagues in the late 18th century, it’s reported that Philadelphians bet that a third more New Yorkers would die from the disease and New Yorkers bet the opposite.
We talked about horse racing earlier on the show, but Americans have also bet on pigeons, greyhounds, even greyhounds with Capuchin monkey jockeys, and steam boats. Civil War soldiers, desperate for entertainment, bet on lice racing, as in lice from their heads. That one’s a real head-scratcher in my opinion.
In 1960, Dr. Seuss’s publisher bet him $50 that he couldn’t write a book with 50 or fewer distinct words. The result? Green Eggs and Ham.
Forget that stereotype of old west gamblers playing poker. The most popular card game in the Old West was Faro, spelled F-A-R-O.
Speaking of poker, Presidents have been known to play the game. Richard Nixon picked up poker in the Navy during World War II and won thousands of dollars, which he reportedly used to fund his first congressional campaign in 1946, which he won. So without gambling, Americans may never have lived through Watergate when the people called his bluff or multiple bluffs, actually.
PETER: You did it.
SHARON MURPHY: I did.
ED: Yeah. So, Nina, that was really good. Were there any nuggets that you wish you could have gotten in that you couldn’t?
SHARON MURPHY: Yes, I do have one. But it’s contemporary but I’m going to tell it anyway.
ED: That’s OK.
SHARON MURPHY: So there was a professional poker player named John Hennagan and his friends bet him that he couldn’t last in Des Moines, Iowa, couldn’t live there for six weeks. And he couldn’t. He lost after two days.
PETER: Oh, no, Iowa.
NINA EARNEST: And as an Iowan, I just love it.
PETER: And how long did you stay at Iowa, Nina?
NINA EARNEST: 22 years,
ED: So folks, there’s always more trivia where that came from, fortunately or not. And we wager that you know some of it. So let us hear from you. Tweet us, write us on Facebook, email, whatever you got, backstoryradio.org.
BRIAN: We’re going to turn now to the mid-20th century. Gambling back then was, for the most part, illegal throughout the United States, even lotteries were outlawed. But naturally, Americans were still gambling wherever they where. Do you remember this scene in Casablanca where the police detective shuts down Rick’s illegal casino?
MALE SPEAKER: I’m shocked, shocked to find that gambling is going on in here.
MALE SPEAKER: Your winnings, sir.
MALE SPEAKER: Oh, thank you very much.
BRIAN: Well, that’s pretty much how gambling worked here in the 1940s. Local organized crime syndicates ran gaming operations and they bribed cops and politicians to look the other way.
DAVID SCHWARTZ: It’s something that people like to do and doesn’t seem to be causing a lot of problems, so it’s really not a priority for enforcement.
BRIAN: This is historian David Schwartz. He says that mobsters controlled all kinds of gambling from local lotteries to race track betting.
DAVID SCHWARTZ: Everybody from poor people to rich people liked to gamble. You know, the poorest people would play their daily numbers. The richest people would go to the illegal casinos. Everybody from kids to housewives to businessmen would play illegal slot machines, which were all over the cities in cigar stores, candy stores, places like that. Because, like alcohol in the ’20s, it was illegal but in very high public demand.
BRIAN: Enter Estes Kefauver. In 1950, the junior senator from Tennessee decided to take a stand against these operations.
DAVID SCHWARTZ: And he’s looking for a big national issue because he’s an ambitious guy and he decides that gambling is something that’s pretty threatening. You know, If you look around, anti-communism had already been taken by people like Joe McCarthy. So gambling’s as good as anything.
BRIAN: Kefauver didn’t mind gambling per se. What infuriated him was who raked in the profits. He believed that all these small time mobsters answered to one very powerful national crime syndicate. In order to uncover this conspiracy, Kefauver chaired the Special Committee to Investigate Organized Crime in Interstate Commerce. The Kefauver Committee then took its show on the road to get as much publicity as possible.
DAVID SCHWARTZ: This would give him a chance to go around the country and look at crime conditions and it, not coincidentally, raised his profile in those cities around the country.
BRIAN: Over the course of 15 months, the Kefauver Committee held hearings in 14 cities, including Miami, New Orleans, and Chicago. They also stopped in a little place called Las Vegas, then a growing attraction with just half a dozen casinos. Gambling had been legalized in Nevada two decades before but Kefauver thought even above board gambling was a public menace.
DAVID SCHWARTZ: Kefauver and the rest of the committee said that as an experiment in legalized gambling, Nevada speaks eloquently in the negative and legalizing it is just going to give the criminals legal cover for their action.
BRIAN: Kefauver’s hearing in Vegas didn’t attract much attention but the media swarmed the other showdowns. In Chicago and New York, Kefauver interrogated local mobsters and bookkeepers while warning Americans of the dangers of seemingly harmless $2.00 bets.
DAVID SCHWARTZ: Millions of Americans like to go out and put down a $2 bet. And he was able to tell them, look, this $2.00 bet is actually funding organized crime and organized crime isn’t just your local gangster, your local hoodlum, as they called them then, but is this national and maybe even international network. Really terrifying people that are taking money out of the American economy and bribing police and bribing judges. So it’s creating a problem in the minds of a lot of people.
BRIAN: Americans were mesmerized by these hearings. The committee made an even bigger splash thanks to the new medium of television. In New Orleans, a local television station decided to broadcast the hearings live.
DAVID SCHWARTZ: And people just can’t get enough of it. And as this continues, other cities where he’s meeting, like Detroit, St. Louis, LA, and especially, New York, also decide to broadcast this.
MALE SPEAKER: Climaxing 10 months of nationwide hearings, the Senate crime investigating committee headed by Senator Kefauver, left, opens hearings in New York.
DAVID SCHWARTZ: It’s broadcast to movie theaters around New York and about 4 1/2 million New Yorkers watched this. And this is just really the first time that American citizens get to see Congress doing stuff live and they love it because you have mobsters and corruption and all kinds of other really cool things.
BRIAN: By the end of their tour, Kefauver and his fellow senators had interviewed more than 600 witnesses. Their final report was 11,000 pages long. There was just one problem. Mob operations did cross state lines but Schwartz says Kefauver couldn’t find the evidence to link those operations.
His imagined network of a central massive mob operation didn’t exist the way he thought it did. So in the end, the committee’s recommendations mostly just asked for more money to keep looking for this conspiracy. None of their recommendations became law. As for the public?
DAVID SCHWARTZ: The American people said, oh, my god, this is terrible, mobsters. And then they went on and gambled like they were doing before. So Kefauver wasn’t successful in getting people to stop gambling.
BRIAN: But Schwartz says Kefauver’s efforts did alter public attitudes towards gambling.
DAVID SCHWARTZ: After the committee came together, people are realizing, well, maybe these illegal casinos aren’t so great, maybe we should do something about this. And there’s pressure on local police and local politicians to enforce the anti-gambling laws more strictly.
BRIAN: Municipalities, rather than the federal government, started to chip away at organized crime’s local gambling operations. Mobsters, being savvy businessmen, simply took their talents elsewhere.
DAVID SCHWARTZ: And a lot of the guys in the mob who want to have their money do something for them decide to invest in legal casinos in Las Vegas.
BRIAN: To be clear, there were mobsters in Vegas before the Kefauver committee, but Schwartz says that the 1960s stereotype of Vegas as a gangster’s paradise only took off after the Senator’s work was done. So Kefauver’s fear of legalized gambling providing cover for criminals came true.
DAVID SCHWARTZ: Yeah, it’s funny, you know, if you’re looking at it, you could consider Kefauver one of the founding fathers of modern Las Vegas because without the 25 years or so that Las Vegas had with a pretty much monopoly on gambling in the United States, it probably wouldn’t have become as successful as it did.
BRIAN: But Schwartz says that Vegas also gave gambling a makeover. Gambling had been associated in the 1940s with big city back alleys, dusty race tracks, and dimly lit bars.
DAVID SCHWARTZ: That and it seems kind of seedy. You go out to Las Vegas and you have blackjack tables and craps tables in pools. And there’s palm trees and sun and it’s a vacation. And you’re in this isolated little suburban style resort with nothing around you and it really sanitizes it. And it makes it more acceptable, come as you are, and have a lot of fun.
BRIAN: Schwartz says all these factors remade Las Vegas from a town with just a handful of casinos into a neon explosion. By the 1970s, other states looked to this oasis in the desert as a model for legalizing gambling themselves. In other words, what happened in Vegas certainly didn’t stay in Vegas.
We had help on that story from David Schwartz, director of the Center for Gaming Research at the University of Las Vegas Nevada. He’s the author of several books, including Roll the Bones, the History of Gambling and most recently, Grandissimo, the First Emperor of Las Vegas.
ED: So guys, you know, thinking about the history of gambling across American history, I’m struck with where we are right now, that it seems that gambling is just too profitable to the state to let it go. I mean, it’s not unlike tobacco and alcohol and now pot, where if there’s money to be made from regulating it and putting a tax on it, the temptation to gamble by the state is just too strong.
BRIAN: Well, Ed, you know what I learned from the show is that states depended on revenues from lotteries from the very start. And Peter talked quite eloquently about that.
What we didn’t talk about during the show is a pretty significant period of time when every state outlawed gambling. And so that when Las Vegas comes along in the middle of the 20th century says, oh, we can have gambling here, it was a really, really big deal. So that shows the power of religious groups operating at the local level to really stop gambling, at least, in a legalized form.
PETER: And I think it also tells us something about the way we feel about the state and what it does because what’s at the bottom of all this is anti-tax feeling. That’s All-American and I think it’s something we need to pause and think about. What is the state supposed to do? It’s now associated with our vices.
ED: And a lot of people would point out, too, that it’s one of the most regressive ways of developing state revenue that you could possibly create. The income tax, Brian, in the 20th century comes along and taxes people by how much money they make. But this is almost a tax on how little money you have, that you’re desperate enough to buy lottery tickets in the hope that you’ll be able to get yourself out of the box you’re in.
BRIAN: Well, you know, Ed, once the state becomes addicted to revenue, they’ll reach for it anywhere they can get it.
ED: You know, it would be a lot easier to get rid of if we weren’t using the state revenue for undeniably good things like underwriting entire systems of financial aid for college students. I mean, there are entire states that are built on lottery income. And people are dreaming of a tuition free college education. The quickest way to find that is just like back in Jamestown with a lottery.
PETER: That’s going to do it for us today, but we’re betting on you to join us online. Tell us what you thought of the show and ask us questions for our upcoming episodes on the history of political correctness and the Alexander Hamilton phenomenon.
You’ll find us at backstoryradio.org or send an email to email@example.com. We’re also on Facebook, Tumblr, and Twitter. BackStory Radio, whatever you do, don’t be a stranger.
ED: BackStory is produced by Andrew Parsons, Bridget McCarthy, Nina Earnest, Kelly Jones, and Emma Gadek Jamal Millner is our technical director. Diana Williams is our digital editor with help from Briana Azar. Melissa Gismondi helps with research.
BRIAN: BackStory is produced at the Virginia Foundation for the Humanities. Major support is provided by the Shere Khan Foundation, the National Endowment for the Humanities, the Joseph and Robert Cornell Memorial Foundation, and the Arthur Vining Davis Foundations. Additional funding is provided by the Tomato Fund, cultivating fresh ideas in the arts, the humanities, and the environment, and by History Channel, history made every day.
FEMALE SPEAKER: Brian Balogh is professor of history at the University of Virginia. Peter Onuf is professor of history emeritus at UVA and senior research fellow at Monticello. Ed Ayers is professor of the Humanities and President Emeritus at the University of Richmond. BackStory was created by Andrew Wyndham for the Virginia Foundation for the Humanities.
BRIAN: BackStory is distributed by PRX the Public Radio Exchange.