Scratch & Win

Ian Coss: Joe's Market in Quincy is one of the busiest lottery retailers in Massachusetts. It has all your convenience store staples, but the area behind the counter is dominated by scratch tickets. At least fifty different clear plastic boxes, all numbered, and all dangling colorful tickets.

Frank Pierce: Here's another guy you want to talk to. Come on over here.

Ian: Maybe five steps away from the counter, at the back of the store is a little nook. A TV, a folding table, a wastebasket, and a swiveling desk chair. I know it sounds like I'm describing an office, but it's more like a very modest lounge for the regular lottery players.

Ian Coss: Could I ask you a few questions for the podcast? Sure. So, uh, what are you playing right now?

Customer: I play 50 every day.

Ian Coss: Have you won yet?

Customer: Not yet. So far I've only spent 300 on the bucket. There's nothing.

Ian: What this man is playing is the state's brand new $50 scratch ticket. He points at the serial number on the top right corner to show he's keeping track. This is ticket number seven for today. The other six are in the trash bucket already. Six fifty dollar tickets.

Customer: Going until I'm broke. So

Ian Coss: why do you keep playing?

Customer: I'm dreaming to get that big one. Yeah. So I can retire. I'm 75 years old. Yeah. I don't have money in retirement. Too late to start now because I already spent so much money. So maybe this one, but end up getting broke and broke.

Ian: This man is happy to talk money. A couple times he opens up his wallet and shows me exactly how much he has left, how much he's spent. But he doesn't want to say much about himself, including his name. I know that he lives nearby, and that he works as a mechanic, which fits with the dark blue work pants and black t-shirt. He comes here on his lunch break, part of his daily routine.

Customer: Yesterday I had fifteen hundred. Count that. Only about nine hundred left. Six hundred already out. If the wife find out,

Ian: He looks at me and draws a hand across his throat.

Ian Coss: you're dead.

Customer: Done.

Ian: There is a kind of grim humor at Joe's Market. Everyone here knows the odds, knows the payout rate, knows that they're probably not getting their money back. One man I met calls it the Massachusetts State Robbery, another calls it Organized Crime with Suits.

And yet everyone is still here, laughing at the folly of it all. And you know what, I'm here too: the well-meaning, presumably liberal journalist who rarely gambles himself, gawking at this man who casually drops half a grand on his lunch break. It's weird. It's weird that we're all here with this thing that we can't turn away from, but can't fully embrace either.

MUSIC: Enter

Ian: The reason I am here is a number. A number that once I saw, I could not stop thinking about.

The U.S. Census Bureau collects lottery sales figures for every state. And the key number to look at -- really the metric of any lottery's success -- is sales per capita, usually per adult.

When I first came across these figures, I could see right away there were some stragglers on the low end -- like Wyoming, North Dakota -- where the average resident only spends around fifty dollars a year on the lottery. Then there are a lot of states in the middle -- California, Texas, Illinois -- all in about the three hundred dollar range, which feels like about what I would have guessed if you asked me to.

But when you get to the top of the list things get weird. New York, Michigan, Georgia -- they're all respectable, at around 5 or $600 per adult. And then there is the lone outlier, way off the charts at one thousand thirty seven dollars. That's one thousand thirty seven dollars of lottery tickets -- per adult, sold every year in the state of Massachusetts.

When I first saw that number, I had a hard time believing it. I had to check it in a few places, make sure I was understanding what exactly was being measured -- it just seemed high. And also unexpected: like, why us? Why here?

Ian Coss: You got a winner? Right

Customer: now, one hundred. O H N.

Ian: On his next fifty dollar ticket, number 8 for the day, the anonymous mechanic catches a break.

Ian Coss: So what are you gonna do with that 100?

Customer: I'm gonna buy number 2, alright? I'm gonna buy number 21. Buy you got 24? Give me number 20.

Ian: He quickly scratches the next round of tickets. Then he takes one last walk from the folding table in the back up to the counter.

Customer: I'm going to buy one more and go back to work.

Ian: Then, another last walk.

Customer: I'm gonna buy another one, see what happens.

Ian: And one last last walk.

Customer: I'm gonna buy one more number 12, that's it.

Ian: This time it sticks.

Customer: That's it. I'm done. Back to work.

Ian: I try to ask his name one more time as he opens the door, and he responds "Jack",

Ian Coss: Jack. Jack. Thank you, Jack, for talking to me. What?

Ian: which I know is not his name, it's the name of the store clerk. Everyone turns to look.

Store Clerk: I am the Jack.

Frank Pierce: Everybody's Jack.

Ian: "Everybody's Jack" someone says. And with that, the man is gone.

MUSIC: Out

Ian: There's a way in which gambling is the perfect American pastime. We love taking risks, dreaming big, going all in, rags to riches. There's a magic in that. But then why all the gloom and shame, the false names and handwringing? Why me, lingering in the convenience store like an ethnographer observing some exotic ritual?

Maybe it's because gambling is in a way deeply un-American. It flies in the face of our supposed 'meritocracy,' our self-reliance and work ethic, our religious fervor. We love it, and we hate it.

Yet over the last generation the place of gambling in our society has changed radically, and I mean radically. If we go back to the time when my parents were born, Las Vegas had the only casinos in America. And there were no state lotteries at all, let alone legal sports betting. It was a different world. Today, I would argue that legal gambling is more ubiquitous than at any time in American history. This year’s super bowl is being played at the Caesars Superdome in New Orleans. Caesars, as in the casino and sports betting company, which will also take millions of dollars in bets on that game. It's already starting to feel normal, but a few years ago that would not be normal.

MUSIC: Enter

This world we live in now was made possible by state lotteries. It was the lotteries that did the slow cultural work of normalizing gambling, decade by decade, and destigmatizing it to some extent. They made all this possible. But obviously that cultural work remains somehow incomplete. We can't fully accept what we so clearly want.

And no gambling enterprise captures that strange tension quite like the one that brings in one thousand thirty seven dollars every year, for every adult in the state of Massachusetts.

MUSIC: Theme

Ian: From GBH News this is Scratch & Win, the making of America’s most successful lottery. My name is Ian Coss.

If you're sticking around from our last series on the Big Dig, know that this too will be a story about the machinations of state government. There will be wonky policy and backroom deals, but mixed with a little mystical numerology and organized crime. We're going to tell the story of how this small, super liberal, college-filled and once puritanical state somehow created the gold standard of American lotteries. That story both begins and ends with our lottery's signature innovation.

This is Part 1: The Instant Ticket.

MUSIC: Out

BREAK

Ian:  The first modern lottery in America started in New Hampshire in 1964. And it was a world away from the scene I observed at Joe's Market.

Jonathan Cohen: do you want me to go back and like New Hampshire and how preposterous the game was or?

Ian: Jonathan Cohen is the author of For a Dollar and a Dream: State Lotteries in Modern America.

Jonathan Cohen: Yeah, I mean, so the New Hampshire lottery that started in 1964 was, rooted in horse racing But it was, unrecognizable to a modern lottery game.

Ian: At that time, really the only place outside of Vegas that you could legally gamble was at the race track, and there were all kinds of laws limiting or prohibiting other kinds of gambling. So to get around that, New Hampshire, being the first out of the gate, attempted to create a lottery based on horse racing. The result was a strange, hybrid, multi-step game.

Jonathan Cohen: And you had to put your name in a little slot and then you pull a lever down on a box and it cuts your ticket in half and then they draw a ticket but the ticket isn't actually who wins the lottery, it's like to associate a ticket with a horse and then you have like a separate drawing for what horse race we're gonna do and then it's like, oh, Ian Coss like you have horse number seven and number seven won that race so now like you win the lottery, congratulations.

Ian: Tickets went on sale in March. The drawing to select the final contestants and horses was in July. And the horse race itself was in September. So six months from purchase to payoff.

Jonathan Cohen: All this to say the games were slow they were expensive the prizes were small and they were hard to understand.

Ian: That glittering menu of scratch tickets on display in every convenience store has clearly solved for those early problems. The New Hampshire Lottery was not a great success. So the next two lottery states, New York and New Jersey, started to innovate -- bringing the game closer to something we would recognize, with regular drawings, and no horses involved.

Jonathan Cohen: which sort of starts this trend of just like more faster. With bigger prizes.

Ian: But still, a weekly drawing is not the same thing as instant gratification. And it would take a few more years to get there.

It's hard for me to imagine a world without scratch tickets. Get this: Americans spend more on scratch tickets than we do on pizza. More than we do on all Coca-Cola products. Yet the scratch ticket as a consumer item has only existed for fifty years. Not so long ago the very idea of an instant lottery was odd -- scary even. We're talking about huge sums of money at stake, all bound up in flimsy pieces of paper sitting on the shelf of a convenience store. What if the tickets could be copied, or rigged? What if they could be hacked?

The leap to instant was perilous, and almost didn't happen at all. In fact, the creation of the first scratch-off lottery ticket unfolds something like a Rube Goldberg machine: a long chain of events, each of which had to happen just so.

ARCHIVAL: A new moon is in the sky, a 23 inch metal sphere placed in orbit by a Russian rocket.

Ian: We'll begin the chain in October of 1957, with a 10th grade student in a suburb of Detroit, named John Koza.

Ian Coss: do you remember when Sputnik launched? Like, did you hear it on the news?

John Koza: Oh, absolutely. Everybody was listening to it.

ARCHIVAL: You are hearing the actual signals transmitted by the Earth circling satellite. One of the great scientific feats of the age.

Ian Coss: You could hear those little beep, beep, beep, beep,

John Koza: The beeps. Yeah.

Ian Coss: And so was that part of the inspiration for you? Was it almost like a patriotic duty to study science and computers and be at the frontier of knowledge?

John Koza: Well, this was in the middle of the Cold War, and, uh, everybody from the government to universities to business got interested in promoting science.

Ian: Koza's high school started bringing in guests to lecture on different technical fields -- and one of those lectures was about the very young field of computer science. In 1957 a cutting edge computer weighed upwards of 750 pounds. It was not something you would have at home, but Koza was interested, so he decided to build his own.

John Koza: Using, Surplus, parts from, uh, jukeboxes and pinball machines.

Ian: It was a very simple computer, that did a single task.

John Koza: It was a computer that, uh, calculated the day of the week for the date. Which of course is a fairly simple calculation, but at the time, this was all wired up with relays and, uh, rotary switches and so forth.

Ian Coss: you go, you know, July 4th, 1776. What's the day of the week?

John Koza: Well, I don't know, but you could answer that question.

MUSIC: Enter

Ian: Ten years later, John Koza was -- according to him -- one of the first people in the world to hold an undergraduate degree in computer science, and also one of the first to pursue a PhD in the subject.

John Koza: I think I might have been the 12th or 13th in the country.

Ian: And at this point, a second, and largely unrelated interest begins to alter his course in life: politics.

John Koza: When I was a graduate student at university of Michigan in the sixties, I had published a, uh, board game, uh, involving the electoral college.

Ian: Koza was deeply fascinated by how we select our president, and at the time a lot of other people were too. His board game about the electoral college hit the shelves just before the 1968 election which remember, was a truly chaotic election cycle. Lyndon Johnson dropped out, Bobby Kennedy was assassinated, George Wallace was running as a serious third-party candidate.

John Koza: so it was quite an unusual election, and there lot of attention on the Electoral College

ARCHIVAL: the all important Electoral College Board,

and those all important electoral votes, that gives, uh,

Ian: With all that news coverage, Koza thought that a game about the arcane functioning of U.S. elections might just break through. It was a flop.

John Koza: In any case, uh, an executive of this game company in Chicago, this was a company that made supermarket and gas station giveaway games, read an article about this game that I had produced, and he thought it might be relevant to his company's business.

Ian: The executive invited Koza to Chicago to meet, and Koza agreed.

John Koza: They were looking for somebody who knew something about probability and combinatorics and finite mathematics, which, as it happened, was something I was very much involved in as a student. Now, mind you, that had nothing to do with the game involving the Electoral College, but it was just a, Fortuitous case, they reached out and they, found exactly the right person.

MUSIC: Out

Ian: Think of John Koza as a serial problem solver. In fact, the first line of his Wikipedia page is not even about scratch tickets. It’s about “use of genetic programming for the optimization of complex problems” – whatever that is. There is also a paragraph in there about how he has spent decades leading a campaign to ditch the electoral college, and instead elect presidents by popular vote. He’s still working on that problem. But the point is, when Koza sees something that’s not working smoothly and he gets in there, whatever the problem is. That’s a powerful kind of mind. And this game company had a problem for Koza.

Supermarket games were popular in the 1960s. Stores would give them out for free as a little treat for customers, and the prizes were fairly small -- sometimes less than one penny. But these games did already use a kind of rub-off film -- they were in effect proto scratch tickets.

John Koza: And we got to talking, and it turned out that they were trying to produce a kind of game where every ticket could be a winner.

Ian: The way this particular game worked is there were ten scratch-off spots on the ticket, each of which revealed a playing card: ace, king, queen, jack. Players were allowed to scratch off only three spots, and if they got three-of-a-kind then they won a small prize. The game company already had the basic technology for printing these tickets, where they needed help was figuring out what to print on them.

So while still chipping away at his PhD, Koza worked with this game company to develop a system for generating and printing up to five hundred thousand different ticket combinations, each of which had the potential to win, had a three of a kind. In the 1960s that took some doing. But with the stakes fairly low, the security around these games was also fairly low.

John Koza: probably in about half the games we ran, there would be a sort of a little run of tickets in a little town, and you'd realize that somebody in that town figured out some weakness in the game that we had missed.

Ian: For example, a player might figure out a way to actually see what was printed underneath that scratch-off film, and know where the matching playing cards were.

John Koza: And of course, we would fix it, for the next game. So we never had a big problem, But it was, uh, a knife edge process.

Ian Coss: I don't know if you're thinking about this at the time, but it was giving you a chance to like beta test and experiment with this idea of scratch off tickets. And you sort of like worked out all the bugs.

John Koza: Right, so the biggest single game we ran was the one for Shell Oil in the United States with 150 million tickets, and we had no problems at all with that game. We had perfected a system that, uh, could produce a very, very secure ticket.

Ian: Unpredictable and unhackable -- a perfect game of chance. And just when it seemed like they had it all figured out, this game company he was working for, J & H, went bankrupt. In December of 1972, Koza was cut loose.

John Koza: which coincidentally was, uh, exactly the, uh, month when I graduated and got my Ph. D.

Ian Coss: So now you're a newly minted Ph. D., unemployed, with years of experience in the, the nascent instant ticket business. What do you do with all that?

John Koza: Well, again, a lucky coincidence, uh, in the last year of, uh, J & H's existence, we actually made some sales calls on state lotteries, uh, trying to see if they would like to run a game like this.

MUSIC: Transition

Ian: The idea was to take this ticket design that Koza had perfected in the form of a fun promotional gimmick, and bring it into the big leagues of actual gambling. Instead of fractions of pennies, the ticket would offer up thousands of dollars. That is, if they could find a state willing to try it.

In 1972, there were just seven states operating lotteries,  and it turns out none of them were interested in a scratch ticket. It's hard to imagine passing on that pitch now, but you have to understand that these early lotteries were fragile, and extremely conservative agencies. Gambling at the time was largely associated with the underworld, the mob.

MUSIC: Enter

ARCHIVAL: Mike! You don't come to Las Vegas and talk to a man like Mo Green like that!

Ian: In 1972, just as Koza was first pitching his idea for a scratch ticket, The Godfather was the number one movie in America. It showed the extortion and murder lurking beneath the glitz of Vegas, the almost magnetic attraction between gambling and crime.

ARCHIVAL: you're my older brother, and I love you. But don't ever take sides with anyone against the family again.

Ian: This was a shadowy business the state was wading into, and any whiff of irregularity -- a fixed drawing, a forged ticket -- would shatter the public's trust. Again, Jonathan Cohen.

Jonathan Cohen: they were so concerned about organized crime and this imprimatur of, of legitimacy that they didn't get like people who designed games for a living to run the lotteries. They got like FBI agents.

Ian: In fact, the directors of the first three state lotteries were all former FBI men. Again, Jonathan Cohen.

Jonathan Cohen: to assure the public that the games were fair, even if they were designed poorly.

Ian: That was the focus: security, integrity -- not innovation, and certainly not combinatorial mathematics.

But in the 1970s, the focus would start to change, because just as the specter of organized crime forced those early lotteries to be cautious, it soon would force them to be aggressive, and competitive. One state in particular, would lead that charge. And John Koza, unemployed and looking for an opening, would join them.

MUSIC: Out

BREAK

Ian: The Massachusetts Lottery launched in 1972, offering only one product: a weekly drawing -- so generic it was called simply: The Game. By 1973, excitement around The Game had already worn off. Sales were in decline. But it's not because there weren't people who wanted to gamble...

ARCHIVAL: Good

Ian: That same year, 1973, WGBH ran an hour long special on the issue of gambling.

Host: evening, I'm Alan Raymond, and this is Stateline. Tonight we'll be discussing proposals to legalize gambling in Massachusetts,

Ian: The host interviewed a whole range of experts and public officials with a whole range of opinions, but they could all agree on one thing.

ARCHIVAL: Illegal gambling is a way of life in Boston and across the Commonwealth

Ian: Illegal gambling, run by organized crime, was everywhere.

ARCHIVAL: 2 billion a year is being gambled illegally.

we've averaged about 500 arrests a year

Ian: It was a big problem.

ARCHIVAL: Illegal gambling is wrong

Illegal gamblers have ways of making people pay.

Ian: And no amount of law enforcement could solve it.

ARCHIVAL: perhaps the most you can hope to do, with such a public desire to indulge, is to try to keep it at some kind of tolerable level.

Ian: The discussion around gambling policy in the 70s really reminds me of the discussion around drug policy in more recent years. We were losing the 'War on Gambling' just like we lost the 'War on Drugs.' The demand was just too strong.

And this looming presence of illegal gambling exerted two opposing forces on the state lotteries. I’ve mentioned how it required caution, to avoid any appearance of corruption. FBI Agents as lottery directors. But on the other hand it required urgency, action.

Because one of the reasons to have a state lottery in the first place was to put those illegal operations out of business. And in 1973 the state's brand new lottery with its single weekly drawing… wasn’t going to cut it.

ARCHIVAL: If legalization is to have any effect on organized crime, Better services have to be provided by the legal operation.

Ian: That last voice in the radio special was Ted Harrington, who served for several years as the head of the region's Organized Crime Strike Force.

Edward Harrington: Most people like to gamble, and yet it was declared illegal.

Ian: That's Harrington speaking today.

Edward Harrington: As Al Capone said, I'm performing a public service. I'm giving the public what they want, and, uh, At the initiation of the lottery, the underworld was still providing better services.

Ian: In the early 70s, Harrington had helped to develop a key mafia informant named Vincent Teresa, known to his critics as Fat Vinny the Stool Pigeon. The two would meet in guarded motel rooms around the state, to discuss new intelligence or prepare for testimony -- testimony that would influence the national conversation around organized crime.

ARCHIVAL: Vincent Charles Teresa has 28 years experience in the criminal world.

Ian: Teresa made national news in 1971 when he testified before a Senate committee. And the coverage focused on his main message.

ARCHIVAL: I'm talking about a definite syndicate operation that strictly starts with gambling. It all starts with gambling. All starts with gambling. Without gambling they got nothing.

Ian Coss: Did his testimony inform your thinking?

Edward Harrington: Well, of course, it, uh, shaped everybody's conception of organized crime.

Ian: Teresa once described gambling as quote: "a chain link fence that stretches to every place in the world, the standby and the foundation. From it comes the corrupt politician and policemen, the bribes and payoffs, and sometimes murder. If you could crush gambling, you would put the mob out of business."

This is why Harrington and others were pressuring the state to be much more aggressive in the legal gambling services they offered.

At that time, numbers rackets and sports bookies could offer their customers daily action, tax free winnings, better odds, better payouts, anonymity, and the ability to bet on credit. So why on earth would you play the boring state lottery?

ARCHIVAL: We have run out of time. I'd like to thank you all for being here tonight, and thanks to all of you who called.

Ian: In 1973, it was time for the lottery to up its game, to provide what Al Capone would call a public service, but wrapped up in new legal packaging. And John Koza, the unemployed computer scientist, had the perfect idea for them: the instant scratch ticket..

To Koza, the potential of this game design seemed obvious. You could print millions of lottery tickets, ship them to every corner of the state, and packaged within each one would be suspense, entertainment, and the promise of instant riches. So after he was laid off, he and another jobless colleague, Dan Bower, decided to start their own company: Scientific Games. It was just the two of them, operated out of an apartment in Ann Arbor, Michigan, and a kitchen table in Chicago. They started going back to those same lotteries they had pitched before. But this time, there was one that was ready to hear them out: Massachusetts.

MUSIC: Enter

Ian: Even better: the director of the Massachusetts lottery was not an FBI agent.

John Koza: the director there was a PhD in mathematics, um, so he happened to really understand the, uh, scientific basis for what we were doing,

Ian: Everyone called the lottery director Doctor: Dr. Perrault. And in addition to being a mathematician, Dr. Perrault also happened to be an expert bridge player who once took his eight children on a family vacation to Las Vegas, in part to study the wheels and cards as illustrations of statistics.

So when John Koza, PhD in computer science, arrived in Massachusetts, things seemed promising. The man in charge spoke his language, combinatorics and all. And the people around him were eager to try something new.

John Koza: The Massachusetts lottery was very innovative. That is, they were prepared to try an instant game.

Ian: There was just one problem.

John Koza: they had already given a contract for the instant game to another company.

Ian: Another company had beaten them to the same idea. It was not a scratch ticket this other company was offering -- it was more low-tech, like an advent calendar with little paper flaps -- but still, it claimed to offer the same basic novelty of an instant reveal. The brand new tickets, it turned out, were already on their way, and Koza could see immediately, that those tickets were deeply flawed.

John Koza: and had they run it, it would have been a disaster . And there would never have been an instant lottery, in any state for decades. It would have been a totally discredited idea at that point.

MUSIC: Out

Ian: The genius of an instant ticket was that it offered something no illegal operation could, and it did that by playing to the state's advantage: technology. The only way a ticket like this could work was if it was so sophisticated no one could copy it, no one could alter it and no one could hack it.

The Massachusetts Lottery had already rejected nearly twenty prototypes by the time they settled on a final design -- the one with the paper flaps. Only to have John Koza, this recently graduated wiz kid with a dimpled chin and a combover, show up and tell them it was flawed. So on the spot they made a deal. Koza could take home 50 tickets and do his best to prove they could be hacked.

MUSIC: Enter

John Koza: They gave us the tickets, I went back to Ann Arbor, Dan went back to Chicago, and they gave us a week or so.

Ian: Armed with his obsessive personality, plus years of experience playing cat and mouse with would-be scam artists on his supermarket games, Koza got to work. The competitor's ticket was made of pretty thin paper, with flap doors over the hidden numbers, held down by glue. Koza's goal was to reveal those numbers without visibly altering the ticket. And within 24 hours, he had done it -- not just once, not twice, but three separate ways.

John Koza: as I said, they were extremely flimsy tickets.

Ian: So the two salesmen got back on a plane and flew back to Boston. This time, Dr. Perrault was waiting on the runway to greet them and carry their bags. Everyone reconvened at Lottery headquarters -- probably half a dozen men in dark suits gathered around a conference table, eagerly awaiting the presentation.

John Koza: Remember they had not only given a contract to this company to print the tickets, tickets were already printed and in the warehouse ready to be issued, and there were 25 million of them.

MUSIC: Post

Ian: Patiently, Koza walked the Lottery staff through each potential vulnerability.

John Koza: one of them involved a cystoscope, which is a medical device.

Ian: A cystoscope has a tiny lens on the end of a thin, flexible tube. A doctor might use it to examine the inside of a patient's bladder. Koza used it to peer underneath the ticket's flap doors.

John Koza: That was one way in. And, these tickets were printed on just really ordinary paper. With, uh, Line printers, a line printer is like a typewriter. It would make a physical bang impression and indent the paper.

Ian: So method number two was that if you ran the tickets through a photocopier, that raised impression was just prominent enough that the hidden numbers would come out in the copy.

The danger in all this is that any convenience store clerk with a stack of tickets would be able to figure out which ones are the winners and decide who gets them. Again, lotteries were terrified of losing credibility, and this would have done just that.

Now the average convenience store clerk might struggle with the first two methods Koza demonstrated -- especially the cystoscope -- and so to drive the point home he had a final, foolproof technique. In a dramatic demonstration, Koza opened a bottle of Fresca, something you could certainly find in the average convenience store. He poured the Fresca on the ticket, and the glue -- which was supposed to be the ticket's sacred seal -- simply let go. You could peel the whole thing apart, read the numbers, and glue it back together again.

MUSIC: Out

Ian: The Lottery staff were horrified.

John Koza: It was compelling, let's put it that way. When the demonstration was over, there was no doubt.

Ian: The Lottery canceled their existing contract and put out a new bid. John Koza’s company, Scientific Games, won the new contract. Their product, which used heavy paper, an indentation-free printer, and of course that famous shiny metallic film -- became the world's first scratch ticket.

John Koza: Now, mind you, this was the very first ticket. As you can see, it was not very artistic.

Ian: Koza kept one of those original tickets, preserved like a rare plant specimen in a block of solid resin.

Ian Coss: Yeah, I mean, the first ticket looks more like, a receipt or something. It's not,

John Koza: receipt, yeah,

Ian Coss: it's not very glamorous looking at all.

John Koza: it's not glamorous at all, uh, very boxy and wordy. it says, One in five tickets wins. And then it says, using edge of coin, rub square spot at right, and a number appears, so we had to tell people that. So rub the spot, then rub the four round spots. And if four matches you win 10, 000, and with three you win 1, 000, and two you win 10, and one match you got two free tickets.

Ian Coss: Wow. I love that you have to explain on there. That you have to use a coin, and voila, a number will appear. Like, the fact that you had to explain that is hilarious.

John Koza: Absolutely. Nobody had seen a ticket like this before in a state lottery.

Ian: On May 29th, 1974 -- just over fifty years ago -- people walked into convenience stores and gas stations around the state, and saw that ticket.

MUSIC: Enter

Ian Coss: could you, um, just introduce yourself

Geraldine Stewart: Hi, my name is Geraldine Stewart. I live in Springfield, Massachusetts.

Ian Coss: and can you take me back to 1974 and how you first heard about this thing called an instant ticket?

Geraldine Stewart: I don't remember exactly how I heard about it. I'm sure it was on the news. So I thought I would go out and buy a ticket.

Ian Coss: Do you remember the store you went to?

Geraldine Stewart: I believe it was the Pride Station in East Longmeadow. It's a gas station, and they also sell lottery tickets there. So I thought, well, hey, I could use that, so I'll try it. And I was lucky.

Ian: Stewart won $1000 on that first ticket. And she wasn't the only one playing.

Glen Myette: these people were ready. They knew it was coming.

Ian Coss: Like they were lined up in the morning when you opened?

Glen Myette: Yeah, lined up.

Ian: In 1974, Glen Myette ran a country store in Hanover, MA.

Glen Myette: People would scratch them immediately on the counter. Some would take two steps away and scratch it on an ice cream chest. Some would feel like they had to go outside and sit in their car.

Ian: He remembers the very first customer of the day was a lottery regular, and she just kept coming back up for more tickets then going back to scratch them in the freezer section.

Glen Myette: It was just crazy, it's like I thought she was going to lose her mind.

Ian: The appeal of the instant game is the same appeal as the slot machine. There's no waiting, so if you don't win you can always try again. And if you do win, well now you've got more money to play with. It was self feeding in a way that no lottery had ever been before.

One liquor store owner described the scene as "Instant Insanity." A pharmacy set up a separate sales counter at the back of the store just for lottery tickets, so non-lottery customers wouldn't be disturbed by the unruly crowds. Within a day, stores across the state had run out of tickets and were waiting to be resupplied.

Glen Myette: People just like it fast. They don't want to wait.

Geraldine Stewart: It's the drama in it.

Glen Myette: It's like fast food. You go pull up at a McDonald's, you don't even have to get out of your car. Give me this, that, and the other thing fast and snappy.

Geraldine Stewart: Sometimes, well, if I scratch the ticket, if I'm sitting in my car after I buy it, will it be a winner? Or will it be a winner when I scratch it when I'm home? You just think of all these crazy things that, now hopefully you're a winner

Ian: That first ticket also had a secondary game on it, where you scratched a spot to reveal a single letter. If you then collected all the letters to spell the word INSTANT, you won ten thousand dollars. The catch, which was not well advertised, was that only one out of every half million tickets had the letter "S" -- sending players with all the other letters on a frantic state-wide search for stores that were rumored to have the mythical "S."

The state sold over twenty million tickets in two months.

MUSIC: Post

Ian Coss: did you realize that you had created something that would be huge, that would spread?

John Koza: uh, In fact, when, when I submitted the business plan to our local bank, I had predicted that we would sell 6 million in tickets, the first year. And the vice president of the bank that I was working with at the time, he said, I can't submit this to the loan committee. They, they will just laugh at this . So we cut it back to a million and the first year sales was six million dollars.

Ian Coss: Wow.

John Koza: And that was because the other lotteries in 75, I think it was five or six other state lotteries simultaneously, started Instant Games.

Ian: The other states had waited for someone else to take the plunge. But once they saw what was happening in Massachusetts, they jumped right in.

John Koza: We knew we had the world by the tail.

MUSIC: Out

Ian Coss: Do you still play scratch tickets?

Geraldine Stewart: Oh, sure. I haven't been as lucky though.

Ian: Again, Geraldine Stewart, the thousand dollar winner.

Ian Coss: Here's the question, I guess. Do you think you've spent more than a thousand dollars on lottery tickets at this point?

Geraldine Stewart: Yes, absolutely. But I wanted to tell you that my son never bought a scratch ticket in his life. And he's 50. And he decided a day ago, he had some extra money. So he bought a ticket, he won 500 on that one ticket. His first scratch ticket and he won 500.

Ian Coss: Did you tell your son that, uh, he should quit while he's ahead and keep the money from that first ticket and never buy another?

Geraldine Stewart: No. No, I know my son.

MUSIC: Transition

Ian: Today, Americans spend over one hundred billion dollars a year on lottery tickets. Almost two thirds of that total is spent just on scratch tickets.

Yes, the big Powerball jackpots are what you see in the window of the convenience store, they get more press. And the Keno numbers are always flashing on the TV screen in the corner. But the scratch ticket is the bread and butter, day in day out game that keeps the money flowing. We spend more on scratch tickets than we do on movie tickets, concert tickets and sports tickets combined. At 5, 20, maybe fifty dollars a pop, that’s a lot of scratch tickets.

Ian Coss: do you come in here every day?

Speaker 35: Of course I do. I live right across the street.

Ian: At Joe's Market in Quincy, for every hard core player I meet, like the man who called himself ‘Jack’, there are many many casual players.

Speaker 35: Usually cigarettes and the newspapers.

Ian: The people who stop by for cigarettes, or to get cash from the ATM for the car wash. And the tickets are right there -- so why not try your luck?

Ian Coss: Have you, do you play other lottery games or just scratch tickets?

Speaker 30: Um, just scratch tickets.

Ian: I met a lot of those people.

Ian Coss: Why this ticket of all the options up there?

Speaker 37: Uh, because it caught my attention, and I just decided to buy it. It was a whim.

Speaker 25: If I win, I share with you, right? If I lose, you share with me? Ha, ha, ha, ha. ha, ha, ha, ha. Oh no, ha, ha, ha, ha, ha, ha, ha.

Ian Coss: And, uh, what are you, what are you playing today?

Speaker 33: Uh, $28 cash word and two $10 ones.

Ian: These games have changed since 1974, in important ways, which we'll get to later in the series. They are not the same boxy wordy ticket with just four spots to scratch and a max prize of $10,000. But the basic appeal remains the same.

Speaker 35: it's just been a hit. Scratch tickets, people want scratch tickets.

Speaker 36: Absolutely. You want to win, run the spot. Is that why you still play? Yeah, lack of brains.

Ian: There is this innocuous quality to scratch tickets. They don't really feel like gambling at all. When I was a kid, my step-dad's family would throw a big Easter party. But the prize for the egg hunt was not candy or knick knacks -- it was scratch tickets. Every kid ended the hunt with a lap full of scratch tickets. I've heard so many stories like this: the stocking stuffers, the work party gifts. These tickets have found their way into every corner of life, and of course, nowhere is that more true than in the place where it all began.

Ian Coss: Could you tell me about this dream involving the number 2?

Speaker 33: Um, I just scratched a 2 and underneath it was 4 million. But. I mean, like I said, it's a dream, so.

Ian Coss: But you put some weight in it.

Speaker 33: Come true, you know. You want to believe that.

Ian: If you've ever been to this state, you know we love to celebrate our distinctions. The first public school in the country, the first public park, the first newspaper, the first college, the cradle of liberty, the best educated state in the nation. We even had bumper stickers made after the 1972 election when we were the only state that voted against Nixon. They said "Don't Blame Me, I'm From Massachusetts."

And yet, for all that chest thumping, no one here seems to talk about the fact that by pretty much every measure, we have the most successful and innovative lottery in the nation – the gold standard. Why isn't that on a bumper sticker? Why isn't the invention of the scratch ticket celebrated on the wall of the airport terminal, alongside the telephone and the game of basketball.

This is a story we've been looking away from for a long time, and it doesn't end with that first instant ticket. It took the better part of two decades for the Massachusetts Lottery to crawl its way into that number one spot -- bringing in more dollars per capita than any other state, by a lot. That is the story we will tell over the rest of the series. It's a story of power, money, politics, crime and...vaudeville.

ARCHIVAL: You made me love you. I didn't want to do it. I didn't want to do it.

Ian: In episode 2 we meet the singing, dancing state treasurer who got the lottery started in the first place. That episode’s out now, so why not give it a chance.

ARCHIVAL: You made me happy sometimes. You made me sad. But there were times. You made me feel so bad.

Ian: The series is produced by Isabel Hibbard and myself, Ian Coss. It’s edited by Lacy Roberts. The editorial supervisor is Jenifer McKim with support from Ryan Alderman. Mei Lei is the project manager, and the Executive Producer is Devin Maverick Robins.

Special thanks to Jonathan Cohen for helping me connect with John Koza, and just in general, for sharing so much material and insight from his own research. His book, “For a Dollar and A Dream” is really a fascinating and important work on this topic. Thanks also to the staff of Joe’s Market in Quincy, and Myette’s Country Store in Hanover for being so welcoming. They didn’t have to let me hang out and talk to their customers; it means a lot that you did.

The artwork is by Bill Miller and Mamie-Hawa Bawoh (Mah-mee How-wah Bah-woh - like whoa, slow down). Our closing song is “You Made Me Love You,” performed by Massachusetts State Treasurer Bob Crane.

Scratch and Win is a production of GBH News and distributed by PRX.