When Western Union Dominated the Sports Gambling Data Industry
WHY YOU SHOULD CARE
Once upon a time, the telegraph was the main information line for sports gamblers (and other kinds too).
When Western Union President Norvin Green took to the stand to testify before Congress in 1890, he made a startling admission — to save his own business. The United States government was considering taking over and creating a postal telegraph service, as it had done with the mail service 20 years prior. To stop a federal takeover, Green admitted that Western Union’s business wasn’t all messages to Grandma. In fact, he told Congress, just 34 percent of the company’s business came from what he considered “legitimate trade,” and the rest was associated with nefarious and illegal acts.
“He wanted them to know that if you want to nationalize the telegraph industry, you have to know what people are using the telegraph for,” says David Hochfelder, author of The Telegraph in America, 1832–1920. “And one of the things they’re using it for is gambling. So do you want the federal government to basically be a gambling syndicate?” This sentiment is also contained in a letter Green wrote to the postmaster general in 1887. Transmission of sports information was Western Union’s largest revenue generator at the time: In his book, Hochfelder estimates that the decade between 1893 and 1903 saw just over $17 million in company income, $8 million of which was from horse racing and sports event results. While it was illegal to gamble on this information inside a pool hall or saloon, it wasn’t technically illegal to distribute it to be used for that purpose. In fact, professional baseball leagues wanted a piece of the action — and so, less than a decade after Green’s testimony, they started working with Western Union.
In 1897 baseball’s National League agreed to exclusive telegraph rights to its games with Western Union in exchange for $300 of free telegrams for each club — a deal that is often considered the first sale of broadcast rights. This allowed Western Union to sell baseball game reports to newspapers, saloons or any person or business that subscribed to the service.
By 1913, Western Union was reportedly paying each MLB team $17,000 over a five-year period for exclusive distribution rights. In some ways, this is similar to the data war raging today. With the fall of the Professional and Amateur Sports Protection Act last year, data has become king in the sports betting world. Just look at the NBA, MLB and the NFL, which have licensing deals with companies like Sportradar for hundreds of millions of dollars. Sportradar profits in turn by selling the official data to legal sportsbooks and media companies the world over.
Western Union was founded in 1851 as the New York and Mississippi Valley Printing Telegraph Company. Within a few years (after a significant merger), it was renamed the Western Union Telegraph Company. Its goal: to create a single, unified telegraph service, which was achieved by buying off lots of smaller companies until its networks stretched across the continent.
In terms of baseball, Western Union got off to a rocky start with a few teams. The company was even asked to stop supplying certain pool rooms and saloons with game results because the information was being used for gambling purposes. In 1886, one Atlanta pool room to which Western Union supplied a ticker was known as “The Base Ball Exchange.” Yet, according to former Western Union archivist Amy Fischer, gambling-related activities are not in the company’s records.
Hochfelder says that the majority of Western Union’s illegitimate sports-information activity was about horse racing — info that pool halls used to set up illegal gambling syndicates. One such syndicate was depicted in the 1973 Robert Redford film The Sting, which also involves the use of a Western Union ticker.
Not all Western Union customers wanted access to sports information so they could gamble. When the company first began to distribute sports info, newspapers subscribed to the service. Later, baseball results were acted out in ballet theaters or provided as live updates on scoreboards. One of the most famous instances of this was a scoreboard in New York City’s Times Square that was used to broadcast a number of World Series games, including the 1919 series the Chicago White Sox were alleged to have thrown at the behest of a gambling kingpin.
— Old-Time Baseball Photos (@OTBaseballPhoto) October 29, 2017
In 1904, Western Union publicly made a commitment to stop distributing sports information after it received pressure from a major stockholder and an anti-gambling movement. Yet former Western Union employees simply leased equipment from the company and continued servicing pool rooms and saloons with gambling information. “So Western Union says, ‘Sure, we’ll stop doing it,’” Hochfelder says. “But in reality, they basically take a Western manager who sets up a dummy corporation and leases circuits from Western Union, and it basically carries on as before, but there’s no direct connection to Western Union any longer.” Ultimately, he explains, the underground nature of the enterprise helped lead to the proliferation of organized crime.
So what finally stopped Western Union’s involvement in the sports gambling industry? The march of technology. The early 1920s ushered in the so-called Golden Age of Radio, which included baseball broadcasts. At first, radio announcers did not travel with a ball club on road trips, so they read the results from a Western Union ticker live on the air. But in 1946 announcers hit the road — and the use of tickers completely stopped in 1955, when courts deemed that broadcasters had to pay for the rights to re-create a game on the air. Today, Western Union is better known for its money transfer services than for the telegraph — though those too have had their share of scandal, as evidenced by a January 2017 lawsuit that saw the company forfeit $586 million to victims of scams and wire fraud.