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Disorganized Crime - The Economics of the Visible Hand

NCJ Number
P Reuter
Date Published
New York's 'illegal markets' of bookmaking, the numbers game, and loansharking do not conform to the 'orthodox' view of domination by the Mafia through violence and the corruption of public officials.
Police files, interview with informants, and confiscated records of illegal operations indicate that bookmaking businesses (horses or sports) are generally small, that entry into the market is easy and frequent, and that efforts to coordinate pricing policies have failed, indicating the existence of a competitive industry. Neither are the significant 'input markets' in bookmaking -information (race results, football scores), capital, and reinsurance (layoff betting) -- structured to permit effective Mafia control. The traditional view of numbers 'banks' as strictly territorial and monopolistic cannot be supported by the evidence. Their most important characteristics are smallness and great variation in profit. Loan sharks have typically been viewed as employing violence and using illegal loans as springboards to take over legitimate businesses. The evidence, however, indicates that intimidation and violence are not a necessary part of the collection process, since most loansharks require some form of tangible collateral. Takeovers of legitimate businesses by loansharks are exceedingly rare. Overall, the organization of illegal markets is largely determined by economic forces, and there are substantial disincentives for concentration or going national (increased difficulty of monitoring agents, additional hazards of transportation and communication, and attention from more enforcement agencies). The appendix discusses data sources, and chapter notes, about 125 bibliographic listings, and a subject index are provided. (Publisher summary modified)