Life assurance, taking a financial risk on how long somebody will live, has been big business since the Romans inaugurated ‘burial clubs’. In the UK, betting on football pools has been around since 1923 (Littlewoods, with Vernons in 1925, Zetters in 1933 and Brittens in 1946). Catering for people to have a flutter or punt on horse or greyhound races, the Cambridge/Oxford Boat Race or other sporting events, on the weather, a bingo card or political fortunes creates a turnover in the UK alone of £95 billion a year at conservative estimates and employs 35,000 people directly and indirectly.
In the USA people gamble on baseball games or other sporting events in exactly the same way. The desire to win big money relatively easily, is a basic human longing. The spin of a roulette wheel, the fall of dice, the turn of a card, the coin in the slot machine: all are temptations that addict many. Psychologists tend to fall into two camps in considering gambling in the psychological make up of humans.
Some think it an extension of normal behaviour; others that it’s a form of deviance. Criminal gangs are known to use forms of gambling as laundering and money raising fronts, and the dangers of perhaps vulnerable, susceptible people risking money on uncertainties is well rehearsed. However, that argument is used to justify investment on the stock market. Buying and selling shares is a form of (approved) gambling.
Ernie: The ‘Safe’ Lottery
The Conservative government announced the birth of Premium Bonds in 1956, to ‘reduce inflation and encourage thrift among those who were attracted not by earning interest but by winning prizes’. When they went on sale in November, they sold £5 million the first day and by the time of the first draw in June 1957, £82 million had been invested. There was a total of 23,000 prizes in the first draw and the top prize was £1,000.
Premium Bonds were the legal, ‘safe’ lottery of the time: if people didn’t win, they could get back their original stake money. Since the 1990s, they have been revamped with annual investment running at over £40 billion in 2010. A one million pound jackpot prize and hundreds of smaller amounts are paid out monthly, tax free.
ERNIE, the nickname of the Bonds, arises from Electronic Random Number Indicator Equipment. Apparently nobody knows who coined the acronym, but the four generations of the machine, each incorporating new technology, have produced a hundred million prizes worth over £9 billion.
UK National Lottery/Lotto
Lotteries or sweepstakes have been in use raising money for centuries, from Rome to China to all parts of Europe to South Americas. The current UK lottery was launched in November 1993, albeit reluctantly by some Members of Parliament who accepted it because legally nothing could stop other national lotteries appearing in Britain. The appeal of this was the amount of money promised for good causes: arts, sports and national heritage. Health and education were added in 1997. Competitive tendering gave the contract to Camelot.
The first lotto draw was televised to an audience of 22 million, but no millionaire was created. The second draw produced four. Every Saturday and Wednesday evenings draws take place on TV, except in September 1997, out of respect for the death of Princess Diana.
A French rival, Euro Lotto, or Euro Millions, launched in 2004, with a weekly draw in Paris and cooperated with Camelot and the Spanish equivalent organization. Since then Austria, Ireland, Portugal, Belgium, Switzerland and Luxembourg have joined. Prizes are allocated according to the ticket sales in each member country. The first British winner cleared £16.7 million, the largest winner to date took £35 million and the most a single European has won so far is 115.6 million euros.
To sustain public interest and keep the cash flowing in, new games are devised regularly. Thunderball, Lotto Hotpicks, Dream Number and Daily Play add to straight chance numbers and scratchcards. For millions of people, weekly lottery spending (averaging £2.50 per person with a 1 in 14 million chance of winning the jackpot) is part of their lifestyles; and the benefits from the donations to good causes has equally become relied upon up and down Britain.
The Tontine
Michael Quinion of World Wide Words explained that a tontine, (named after an Italian banker, Lorenzo Tonti, who founded the idea in France in 1653, though some think it predated that), was a scheme whereby: ‘each subscriber paid a sum into the fund, and in return received dividends from the capital invested; as each person died his share was divided among all the others until only one was left, reaping all the benefits’.
This was the ultimate long term investment, or punt, even in those days, spanning many decades. Quinion pointed out that the original scheme saw the capital reverting to the state when the last survivor died, so: ‘it was really a kind of national lottery’. It was widespread in France, Britain and the USA, where it sometimes funded buildings and public works. Private versions gave the last survivor the capital in full.
As Quinion suggested, the reason for their eventual banning in Britain and the USA (though not in France), was the incentive to kill off other members. This was a wonderful fiction device, taken advantage of by Robert Louis Stevenson in his story The Wrong Box (1889; movie 1966).
The Great Tontine was an 1882 novel published by Hawley Smart. Thomas B Costain wrote The Tontine (1955), beginning in the early 1800s and spanning nearly a century of the lives of princes and paupers, actors, artists, sailors, villains. It was romantic and historically absorbing.
The idea of part-insurance/part-lottery is still appealing. The 20th century invention the ‘endowment policy’ used to fund mortgages, till they went out of fashion in the 1990s, is a modern incarnation of the idea. Few would bet more won’t come in the future.
