The state of the state lottery, 1816
Lotteries were over a century old by 1816. Their aim was to raise money for the Chancellor of the Exchequer. They were traded as a government stock with a quoted and variable price depending on demand. Those such as Wilberforce and Cobbett who opposed the lottery were invited by the government to suggest other ways of raising the money.They could suggest nothing.
1816 was a poor year for the lottery; it raised only £164,000, despite the fact that this was the first year that prizes were paid in cash rather than 3 percent consols (government bonds)
Despite being called the state lottery, it was privatised. Contractors, often companies involved in stock-broking and banking, would bid for the right to run the lottery at a profit to themselves. Companies with names such as Bish, Richardson and Goodluck and Hazard and Burne would offer lottery tickets in advertisements in the paper. They would dominate the front pages of the papers with similar advertisements; the boasted about the number of winning tickets they had sold and that their offices were “fortunate”. The Richardson Company had paid £50 to a Mrs Goodluck for the right to use her name. Hazard would regularly advertise in the press advising customers to apply early if they wanted their lucky number. It sounds rather familar; human gullibillity seems to be a constant.
These companies were based in London but to achieve nationwide distribution they would appoint agents all over the country. Booksellers were preferred, as it was thought that this added to their brand, but high class grocers, goldsmiths, and watchmakers were also acceptable. These were selected as places where the poor would not go.
T Bish were the biggest contractors for the first lottery of 1816, which was drawn on Valentine’s Day. There were 20,000 tickets and £200,000 in prize money. The two main prizes were of £25.000 each and 4,600 prizes of £10, with others in between. Basic mathematics showed that they were poor value for money. Each ticket had an intrinsic value of £10 (200k prizes divided by 20k tickets). However, a whole ticket, which Thomas Bish had purchased from the state for £14, was sold for £24. This was well beyond the means of all but the richest individuals. A sixteenth of a ticket could be purchased for just over a pound.
This was still a significant amount for the poor to pay for a gamble on the lottery. Lottery clubs were organised illegally by the poor, but the most common form of abuse was the “insurance” system, when people would take side bets on whether a certain number would come out of the giant wheel-“the wheel within the wheel”.
This lottery on the lottery was made easier by the fact that the draw would take place over three or four non consecutive days and sometimes take a fortnight to complete. For example, the second lottery of the year opened on 14 May and continued on May 22nd and May 30th. By 1816, there were attempts to reduce the number of insurance scams; the 31 October lottery was completed in one day. The major contractors also promised action against insurance scams; although their success in reducing convictions was probably due to then ceasing to organise the abuse themselves!
There were six lotteries in 1816; the large lottery of February 14, and smaller lotteries (6000) tickets on 16 March 14 May, 25 June, 17 September and the 31 October. Each was drawn in the Guildhall, with pupils from the Blue Coat Schools selecting the winning tickets
The state made money by outsourcing the whole administration. They forced the contractors to bid for tickets and the the contractors sold them to the highest bidder.They also took the risk of any unsold tickets, which partly explains their exhuberant advertising.
Each lottery of the year had to be bid for separately. The bidding for the October lottery was halted when no contractor offered enough. Vansittart, the Chancellor claimed that he would run the lottery himself if no contractor offered more than £14 per ticket. The contractors blinked first; T Bish offered £15 4shillings (£15.20p) and won the majority of the contract. Then they passed on the extra cost to those who purchased the tickets.
The Lottery was dead by 1826. The State Lottery had seemed to be relatively uncontroversial, although by the beginning of the century there were the start of some opposition from evangelical Tories and radicals alike. The was an attempt to abolish it in 1816 which failed quite badly; the ongoing debate about the lottery is another blog!