Scandal strikes the lottery system; a former politician who's a mathematician argues passionately that lotteries should be banned; the General Assembly holds hearings.
The scenario sounds like the state lottery of today: Lincoln Park's executive director and the CEO of Lincoln's parent company stand indicted for allegedly trying to bribe the law firm of the former speaker of the House. Rodney Driver, a former state representative and mathematics professor, argues to anyone who will listen that lotteries are bad public policy that impoverish people.
The details and characters differ, but the whole scene has played itself out before. In the 1840s, lottery scandals throughout New England gave momentum to a movement to abolish lotteries, with former Providence Mayor Thomas A. Doyle, who fancied himself a mathematician, leading the charge.
A small exhibit called "History of Lotteries and the Lottery System in Rhode Island" lays out the details of Rhode Island's on-again-off-again relationship with lotteries over the past 300 years. The exhibit is on display weekdays through the end of October in the secretary of state's archives division on Westminster Street.
The chief sponsor of the exhibit is the Rhode Island Lottery Commission, which teamed with collectors Russell DeSimone and Daniel Schofield to create it. The commission has printed posters and published, in pamphlet form, John Russell Bartlett's 1856 newspaper series on the history of Rhode Island lotteries.
"The lottery system in Rhode Island is of a curious nature in its history," wrote Bartlett, a historian and former secretary of state, "and few are aware of its prominence during a period embracing a full century."
The century to which Bartlett refers is the 100 years between 1744, when the General Assembly overturned a ban on lotteries, to 1844, when the last legal lottery in Rhode Island ran its course. The General Assembly banned new lotteries in 1842, a prohibition that lasted for 132 years.
Lotteries staged in the 18th and 19th centuries literally shaped the landscape around us today: Block Island's Old Harbor, a hall at Brown University, Newport's venerable Redwood Library, and an entire village in Westerly were all built by money wagered on lotteries.
Colonists of the 17th and 18th centuries wanted to carve a European-type society out of what they saw as wilderness; to do that, they needed roads for wagons, churches, meeting places.
The mid-1700s were a tough time to raise money for public works projects. The colonies had no banks to make loans, and the people famously loathed taxation. Yet there was one sure way for towns to raise money in colonial Rhode Island: hold lotteries.
There is evidence in the secretary of state's archives that early Rhode Islanders turned to the lottery too often for the public good. In 1732, the General Assembly found that "certain unlawful games, called Lotteries" had led people "into foolish Expence of Money . . . to the great Hurt of sundry families."
The Assembly of 1732 outlawed lotteries, but the ban did not last. Just 12 years later, the Assembly legalized lotteries as long as the holder of a lottery sought the assembly's permission and paid a fee to the state.
For the next 100 years, lottery wheels spun wildly around Rhode Island.
"The colony of Rhode Island, the smallest colony, generated almost as many lotteries as all other colonies combined," wrote Samuel Ezell in his book Fortune's Merry Wheel: The Lottery in America. There was good money in it."
In the year 1763 alone: The people of Block Island needed money to break open a shipping passage between the great pond and the sea; Woonsocket's residents had to raise 2,000 pounds, a currency at the time, to repair the bridge over thundering Woonsocket Falls; Providence needed 9,000 pounds to repair its streets, which were "very miry in many places, which renders it difficult for carriages to pass."
In his research, DeSimone found that a man with lots of land in Westerly needed to raise some capital, so he held a lottery that paid prizes of parcels of land along the Pawcatuck River. That part of Westerly was known as Lotteryville until the 1880s when the name was changed to Avondale, now an upscale village on the way to Watch Hill.
In the 1700s, lotteries performed as insurance companies do now. After Nathanael Greene's forge burned to the ground in Coventry, the General Assembly of 1772 gave his family permission to hold a lottery to raise money to rebuild the business.
In 1776, the U.S. Board of Treasury attempted to raise $1 million by holding a lottery to equip soldiers fighting in the Revolution. In Rhode Island, counterfeiting tickets to the U.S. Lottery was punishable by death without clergy.
After the Revolution, the number of lotteries grew, and so too did the stories of scandal and fraud. People who won permission to hold lotteries would often get their money by selling the right to run the game to a broker. The broker would print tickets and manage the drawings.
The brokerage houses had tricks that guaranteed huge profits for themselves: they'd print many more tickets than they actually sold; then they'd include the unsold tickets in the drawing, drastically cutting the chances that a person holding a ticket would be a winner.
Everyone, it seemed, was making money off lotteries except the people buying the tickets. Governments made money by taking a percentage of lotteries it granted to churches, civic groups, and others who applied to run them; the groups with permission to run lotteries sold the rights to the brokers; the brokerage houses and their agents made money by selling tickets; newspapers made big money through lottery advertisements. But people who actually bought the tickets won few grand prizes.
Today, about two-thirds of the $1.2 billion wagered annually with the Rhode Island Lottery Commission is returned to gamblers in the form of prizes.
After gamblers, the state takes the largest share, 18.3 percent. About 13 percent, $145 million, is paid as "commissions" to the owners of Lincoln Park, Newport Grand Jai Alai, GTECH, other providers of video-lottery machines, and greyhound dog owners ($13.4 million.) The towns of Lincoln and Newport split $3.1 million for hosting gambling venues.
New Hampshire was the first New England state to break a 20th-century taboo on state-run lotteries; Massachusetts followed suit in the early 1970s, and soon Rhode Island was again running its own lottery with the legalization of state-run gambling in 1973.
Over the past three decades, gambling has become the state's third-largest revenue source, $241.9 million, behind only income and sales taxes.
The History of Lotteries and the Lottery System in Rhode Island may be viewed at the secretary of state's archives division on weekdays from 8:30 a.m. to 4:30 p.m.; on Wednesdays, the office is open until 6:30 p.m.
Nobody has commented on this story yet.