Did you ever wonder why there were no lotteries when you were young? Or perhaps there was a lottery in your state when you were young. Were you aware that they were once illegal? We can blame the scammers and gamblers of the Old West for that fact. There was a time when anyone could run a lottery in the Old West. Sometimes they were required to pay a fee, sometimes they simply advertised their game, and where there is gambling without supervision, there will always be cheaters, too.
Gambling in the Old West was a common form of entertainment in saloons. Although lotteries were a type of entertainment, the proceeds were often used for necessary community projects.
For most of the 18th century lotteries were used to finance important community projects, such as building churches, roads, bridges, even colleges. Unfortunately, as we all know, all good things eventually come to an end and by the middle of the 1800s the swindlers and scammers had moved in on the lottery business. Although lotteries were still occasionally a way to assist in community projects, the swindlers and sharps caught on to the fact that there were no laws or regulations.
Lotteries Become a More Obvious Form of Gambling
Often the promoter would disappear with the money without paying the prize to the winner, moving on to the next town to start a new lottery and scam a new town. Lotteries were increasingly risky in large cities. In small towns the townsfolk--or at least those who were wise to the business--new enough to invest their money only when they were familiar with the promoter, but in large cities where roads and bridges were even more of a necessity, the lottery was a huge gamble as residents rarely knew the lottery agent.
James Monroe Patee
Gradually, as more people were swindled by unscrupulous promoters, the townspeople began to fight back. Laws were passed in many states banning lotteries, but promoters continued to draw people in, even though they knew they were now breaking the law and the odds of all of the money disappearing were high. One would think that the people in the West would be wise enough to recognize such an obvious scam, but there were times when the well-intentioned players were scammed by people they would trust with their lives. Such was the case with James Monroe Pattee, a schoolteacher, bored with teaching, who headed West.
James Monroe Pattee and the Lottery Business
The story of James Monroe Pattee (1823-1889) is an interesting one because there is such a wide variety of details about his life available from different sources. One thing is certain, though, when he was a young man, Pattee was a restless man. Pattee was a writing teacher born and raised in New Hampshire, but Pattee enjoyed the finer things in life and he knew he would never live the lifestyle he desired as a school teacher. When he turned 30, which seems to be a pivotal point for many young men, Pattee headed west, and by 1868 he'd made a small fortune investing in land and grubstaking miners. Some of these land investments, particularly those in Illinois, were questionable, but there is evidence that in most of his early endeavors, Pattee made an attempt toward honesty.
In 1870-71, Pattee helped organize the Cosmopolitan Benevolent Association of California Grand Fair, which included a lottery designed to pay off school debts in Nevada City. This lottery was very successful and built Pattee's reputation in lotteries. Over the next two years he held numerous lotteries in Nebraska--"Great Legal Drawings"--that are believed to have been honest dealings for the most part, benefiting local libraries and hospitals. However, the definition of honesty and lotteries in the 1800s is tricky. As there were no regulations or rules, the person running the lottery was free to keep as much money as he or she pleased after the winnings were paid.
Nebraska, like many other states, caught on to the huge number of scam lotteries taking place and passed a law against lotteries. Pattee was also in serious trouble with the Omaha Postmaster. He was accused of issuing duplicate and sometimes triplicate tickets. It was time for Pattee to move on, and fast, before he could be charged with a crime. He was never formally accused or placed on trial in Nebraska, and whether or not Pattee's Nebraska lotteries were on the level is immaterial. The fact of the matter is, a greedy man never stays honest for long. Pattee was a greedy man.
Serving Time in Kansas
Now, I must admit that I am reporting on this portion of Pattee's life using bits and pieces from a wide variety of sources. It is difficult to determine precisely what happened during this time in Pattee's life as he was, for obvious reasons, a bit secretive...until he was caught.
Pattee arrived in Leavenworth, Kansas around 1873. He may have intended to leave for Europe, but some of his previous dealings, and victims, caught up with him and he was arrested. He was charged with running a fraudulent land scam in Illinois involving a development called Monroeville. According to the "Atlas of Henry Co. and the State of Illinois, 1875," the accusation was that the lots he sold were later disposed of, or resold, "in a manner altogether too sharp to be honest." Apparently, there wasn't enough evidence to hold him because he was back in the lottery business again rather quickly.
However, in 1873, James Pattee granted an interview to the editor of a local newspaper who described him as a man who "seems to delight in boasting of his own villainy in swindling weak human nature. He said his conscience did not trouble him, that people wanted to be humbugged, and it was his business to do it." Since the interview took place in 1873 and he was listed in the Atlas in 1875, it's also possible he may have served two years in Leavenworth. The next time his name shows up in the documents I found was in 1875.
The Wyoming Lottery King
Pattee's next move was to Laramie, Wyoming where anyone could pay $100 to the county sheriff for a lottery license. In the spring of 1875, Pattee ordered 40,000 flyers from a local newspaper publisher, then he hired 20 clerks. He sent the flyers out of state, often advertising his lotteries in the New York Herald and other publications, collected his mail in laundry baskets, deposited around $5000 a day in his bank account, and kept the locals happy by continuing to invest in roads, bridges, churches, and charities. His first year, Pattee made $7 million, minus the cost of the flyers, the salaries for his clerks, and $400 in license fees.
Silver dollar, 1870
His method was a bit devious. According to The Gamblers, the number of tickets in the monthly Wyoming Lottery drawings were 551,300. They cost $1 each, or six for $5, 20 for $16. Each month, Pattee offered 70,755 in prizes, which came to around $200,000 total. The grand prize ticket was $50,000. However, only 35 of the tickets paid more than $100. Therefore, 70,000 ticket holders made less than $.50. If my math is correct (and to my embarrassment and shame it rarely is) that would leave a profit of over $300,000 for Pattee's personal bank account. If he held four lotteries a year, he profited over a million dollars his first year.
This didn't stop Pattee or the gamblers. After the lottery drawing, Pattee notified the gamblers that it would cost him more money to send their winnings than they were worth, (if I received such a letter, I would ask "How did you come up with the money to mail this letter to inform me that it would cost money to mail me a letter?" Instead of sending the money, Pattee offered the "winners" the opportunity to invest $10 in his Bullion Gold and Silver Mining Company; or the Seminole Mining Company; or the Cabarres Gold Mining Company; the American Gold and Silver Mining Company, and the Black Hills Information Company.
He encouraged these "winners" to work for him as agents, offering them an additional share in the company for every five shares they sold to others. The problem, of course, was that there never really was a Bullion Gold and Silver Mining Company, or any other mining company owned by Pattee, and when the mailboxes of the local newspaper editors began to fill with letters from panicked investors inquiring about these companies, the investigations began.
According to an editorial in The Laramie Sentinel, "We are frequently receiving letters asking for information about the Seminole Gold and Silver Mining Company. We can't answer these letters--there are too many of them. But we will state in the most public manner possible, that the Seminole Gold and Silver Mining Company, J. R. Brown, President, with headquarters at Rawlins, W.T., IS A PURE FRAUD, SWINDLE AND STEAL. J. M. Pattee of lottery fame, is a the bottom of it. THERE IS NO MINE, NO MILL, NO MACHINERY THERE, and never will be, and every man who purchases stock in it, is merely contributing to a lot of dishonest Dead Beats who are making their living by fooling the public. If anyone has any doubts on this score we refer them to the Governor, the Judges of the Supreme Court of Wyoming, or any other responsible party."
All Good Things Must Come to an end...Temporarily
The local newspapers were beginning to catch on to Pattee's scam. He tried using fake names and hiring others to pose as the lottery front man, but the news editors were too savvy for his various tricks, referring to him derogatorily as "The Lottery King." So, he packed his bags (full of money) and moved from Laramie to Cheyenne. He started the Cheyenne State Lottery, which he claimed was managed by Marshall S. Pike, President of the State Bank of Cheyenne.
Cheyenne, Wyoming 1868
Now, before you judge the intelligence of those investing in this lottery, keep in mind that Cheyenne was a railroad town with a population of around 10,000, a lot of money, and a lot of gambling. The town supplied miners with provisions and equipment. The Cheyenne Black Hills Stage Company ran passengers and cargo between the town and the mines. Cheyenne installed electric lights in the city in 1882. It had townspeople, businesses, ranchers, sheepherders, farmers. According to City Data, Cheyenne was the wealthiest city per capita in the world. If a man was looking for a place to run a scam, he would follow the money.
Orange Judd and The American Agriculturalist
One could easily say that Pattee's greatest enemy was the newspaper editors of the 1800s. They were fighters, scrappers. They viewed themselves as the overseers of the town, protecting the people from scandal and harm. They kept a close eye on politicians, the wealthy, and even the law. To make matters worse, Pattee's reputation followed him from Laramie to Cheyenne.
The American Agriculturalist
Orange Judd, Editor of The American Agriculturalist was definitely a fighter. He attacked Pattee's Cheyenne enterprise with everything he could muster. In an editorial printed in February of 1877, Judd said, "If anyone supposes that the Wyoming Lottery is dead while Pattee still lives, he has small knowledge of the nature of things. It still waves its banners, but they are now inscribed "The Cheyenne State Lottery." He ended his editorial with the lamentation, "Poor Wyoming, were not the grasshoppers enough?" (Referring, of course, to the now extinct Rocky Mountain Locust that swarmed the West between 1873 and 1877 causing $200 million in crop damage.)
Sketch of Rocky Mountain Locust by Julius Bein, 1902.
Judd's editorial caught the attention of lottery reformers from other states who soon arrived in Cheyenne to investigate the situation and Pattee realized, once again, that it was time to move. According to The Gamblers, he left Wyoming for Canada, and I was unable to trace him from there. He most likely changed his name and continued his lottery operations in Canada and possibly Europe.
So, now we know why lotteries were illegal for so many years, and are heavily regulated now in the United States, thanks to James Monroe Pattee and the many other Old West lottery kings!
- "Super Swarms." Mega Disasters. Science/Nature Locust Documentary. First aired 2007.
- The Gamblers: The Old West. Compiled by Time Life Books Editors. Alexandria, Virginia: 1978.
- Wheeler, Keith. The Townsmen: The Old West. Canada: 1975.