The Irish Hospitals' Sweepstake: The Charity Lottery Nobody Could Fully Audit

On 21 January 1973 Dublin's Sunday Independent ran an article headlined "Where the sweep millions go". The reporter was Joe MacAnthony, and it ran to some 8,000 words. Its subject was the Irish Hospitals' Sweepstake: tickets sold across Britain, North America and far beyond on the promise that the money would fund Irish hospitals. MacAnthony's finding, as The Irish Times summed it up in 2011, was that the hospitals had received less than 10 per cent of the money collected.

The new government's reaction was cool. Within weeks of the article Liam Cosgrave became Taoiseach, Ireland's prime minister, and appointed Paddy McGrath to the Senate - the son of Joe McGrath, one of the Sweep's three founders. In May the Minister for Justice, Patrick Cooney, told the Dáil that a review of the Sweep was not a priority for him, and that his answer should not be taken as accepting the article's financial analysis. When a deputy asked in July how much the promoters had been paid in organisation fees since 1930, Cooney pointed him to the accounts in the parliamentary library. Detailing officials to add up the figures going back to 1930, he said, was not a priority.

Anyone trying today to work out whether MacAnthony was right runs into the same problem the deputies did. The answer isn't in the accounts. It sits in a gap in front of them, one the law expressly allowed. That gap is the real reason to look at the Sweep at all, because the same question can be put to any charity lottery.

Richard Duggan was a Dublin bookmaker with a history in sweepstakes, lotteries whose winners are tied to the result of a horse race. According to the Dictionary of Irish Biography he ran his first in 1918, for the survivors and dependants of a torpedoed mailboat. Through the 1920s he raised money that way for Dublin hospitals, was convicted in 1924 of running an illegal sweepstake, and in 1927 organised another one anyway, this time from Liechtenstein. His biggest market was Britain.

On 4 June 1930 a law turned it into a legal business. The Public Charitable Hospitals (Temporary Provisions) Act was not a government measure, as the Minister for Justice pointed out that November, but a private members' bill. It let charitable hospitals hold sweepstakes with the Justice Minister's sanction, and it set limits: no more than 30 per cent of the money for expenses, of which no more than 7 per cent for the promoter, and no less than 20 per cent for the hospitals. The operation was run by Duggan's company, Hospitals' Trust Ltd, together with Joe McGrath, a former Minister for Industry and Commerce, and the Welsh-born Captain Spencer Freeman. The first sweep was on the 1930 Manchester November Handicap, and its prize fund reached £417,000 - £317,000 more than the organisers had envisaged.

The Act was set to expire in July 1934. In July 1933 the Public Hospitals Act replaced it. Under that Act and the ones that followed, the surplus from each sweep went into a Hospitals Trust Fund held by trustees whom the minister responsible for health appointed, and the audited accounts of every sweep went to every member of the Oireachtas, Ireland's parliament. On paper it all looked very open.

The gap is in a short clause that was already in the 1930 Act and was carried over as section 2 of the 1933 Act. It defined the "moneys received from the sale of tickets" that every percentage limit referred to: free tickets given to sellers were left out, and all commissions, prizes and other remuneration for selling were deducted from the face value of every other ticket first. Whatever the agents and sellers kept never appeared in the audited accounts in the first place.

Nobody outside the company knew how big that slice was. That wasn't an outside critic's claim in 1976 but the word of Desmond O'Malley, who had himself been Minister for Justice until 1973 and had to sanction every sweep. He told the Dáil that neither the auditors nor the minister could know the amount of those expenses. He had never been told, and there was no obligation to tell him. He could not prove the clause had been abused, he said, but it was known that substantial payments had been made abroad, quite lawfully. MacAnthony had estimated in 1973 that the real gross takings were about a third higher than the figure in the accounts.

Cooney hit back. Either the newspaper's figure was an invention, he said, or O'Malley had been utterly powerless in office. He himself had demanded information and received enough to be satisfied that nothing illegal was going on. He did not make it public. How much a ticket really brought in remained an open question for the public.

In fairness, the ledger has another side. Up to and including the sweep on the 1975 Irish Sweeps Hurdle, the Justice Minister said, the hospitals' fund had received over £81.5 million in all. In 1985 the Minister for Health put the total paid to the health services from 1930 to 1984 at almost £105 million. Even O'Malley accepted that the post-war hospital building programme couldn't have happened without the Sweep money saved up during the war. For 1976, though, he put the contribution at a little over 1 per cent of Irish health spending.

The promoters' officially declared fees, by contrast, were modest: O'Malley put the organisation and management fee up to about the end of 1973 at slightly over £10 million, about 2 per cent of proceeds by Cooney's account. O'Malley added that this was apart from any other income the promoters might draw from the Sweep. The expenses the promoters charged ran at about a quarter of net receipts until 1973. Then they rose while sales fell, with US states and Canada now running lotteries of their own:

On 17 October 1985 the Irish government announced its decision to set up a national lottery. It would be run not by the Sweep but by a subsidiary of the post office, An Post. The company held its last traditional sweep, on the Irish Sweeps Hurdle, in January 1986. That same month it laid off around 200 staff, most of them women, a deputy told the Dáil, many with 30 or 40 years' service. The Justice Minister turned down a plan for fortnightly sweeps because it would duplicate the new lottery. In March 1987 Hospitals' Trust (1940) Ltd went into voluntary liquidation.

Part of the story was lost along the way, quite literally. Joe McGrath's private papers were kept in the Hospitals Trust building in Ballsbridge. When the River Dodder burst its banks in August 1986, they were destroyed.

The state lottery that started in 1987 is best known to players today for Irish Lotto. The principle hasn't changed: part of every stake pays for good causes. What's different is who does the counting.