Follow the money - the hidden tale of greed behind the first Irish Hospitals' Sweepstakes and where those millions went
The first Irish Hospitals' Sweepstakes draw took place 90 years ago this month and it quickly became a global phenomenon. Behind the razzmatazz and the instant riches, however, was a hidden tale of greed. More than four decades later, investigative journalist Joe MacAnthony broke the biggest story in the history of the Sunday Independent and revealed where the Sweep millions went. Liam Collins reports on an astonishing saga
If you poke around in the courtyards behind Cabinteely House in south Co Dublin, you will find the last relic of the Irish Hospitals' Sweepstakes - the massive drum which held the hopes and dreams of millions of people all over the globe. It is becalmed behind a locked gate, an unseen monument to what became known as "the greatest bleeding hearts racket in the world".
At its core 'The Sweep' - as it was popularly known - was a government-sponsored lottery tied to horse racing that aimed to raise money to prevent the hospital system from collapsing. However, in the process it funnelled vast amounts of cash into the hands of its founders: one-time Irish Republican Brotherhood (IRB) gunman Joe McGrath, bookie Richard Duggan and World War I veteran Spencer Freeman.
Launched on November 23, 1930, its worldwide success and vast earnings made multi-millionaires of the three men. But the full extent of that enrichment remained shrouded in mystery for decades.
Then, one winter's morning in 1971, the editor of the Sunday Independent, Conor O'Brien, and reporter Joe MacAnthony decided to have a look behind the smoke and mirrors of the Irish Hospitals' Sweepstakes to see where the money had gone in the intervening 40 years.
O'Brien, a trained barrister, didn't just want his paper to report the news, he wanted it involved in cutting-edge investigative reporting. In MacAnthony he had the perfect sleuth.
Counterfoils are mixed before being selected. Photo: Hulton Archive/Getty Images
It took more than a year to unravel, but the results were truly shocking. When the story was published on January 21, 1973, MacAnthony's scoop uncovered what the paper called "the disturbing secrets of the world's most extraordinary lottery".
He revealed how figures published by the Hospitals Trust (1940) Ltd after each race were "considerably less" than the amounts involved; that the hospitals received only 10pc of the gross proceeds, and 25pc of that was skimmed off to pay government stamp duty.
Huge amounts of expenses and promoters' fees poured into the pockets of the three founding families. But probably the figure that brought home to readers the staggering scale of their wealth was that the biggest shareholders were racking up earnings of £8,000 a week at a time when the average industrial wage was £56 a week and the female workers in the Irish Hospitals' Sweepstakes were paid considerably less than that.
Despite the major revelations, prominent figures in politics, business and horse racing regarded the story as "unpatriotic" and against the national interest.
Entries are paraded through Dublin before the draw in October, 1932. Photo: General Photographic Agency/Getty Images
For MacAnthony and O'Brien, the biggest story of their lives did nothing for their career advancement.
Within 18 months of its publication, MacAnthony would be forced to emigrate. Little more than a year after his star reporter's departure, O'Brien was eased out of the editor's chair.
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"It's a story that had never been done before and I was actually going to give it up, because there was no information I could find that would have been useful," MacAnthony recalled last week.
Now back in Dublin after many years living and working in Canada, he ultimately found informants who were willing to talk. He also discovered that much of the financial information concerning the Irish Sweepstakes was buried in the library of the Oireachtas in Kildare Street.
He travelled to the US and Canada to interview ticket sellers. With the help of contacts and TDs, he managed to smuggle out and decipher information which had remained hidden and ignored by successive governments and politicians for four decades.
"The publication of MacAnthony's article was a watershed in the public attitude to the Sweepstakes," wrote historian Marie Coleman.
Critics, she said, were more willing to attack it publicly as a result of the detailed information that emerged from his research.
Speaking two years later, Desmond O'Malley, who as justice minister had unsuccessfully objected to the amounts of money flowing to the founding families, acknowledged that the Sweepstakes, in the 1930s and 1940s, "made a significant contribution to the health of this country... but the contribution now is very much less significant".
In the same debate, Labour TD and businessman Dr John O'Connell told the Dáil he had been "intimidated" and warned he would be "smeared" and "everything done to get me out" if he did not support the Public Hospitals Amendment Bill 1976, allowing the promoters of Irish Hospitals' Sweepstakes to increase their expenses from 30pc to 40pc of the gross proceeds.
"I am not happy about the Hospital Sweepstakes, it has a smell about it," said O'Connell.
"It has damaged our good name abroad. I have grave reservations. People abroad are under the impression that the Hospitals' Sweeps finance our hospital services. That is a great myth."
THE SWEEP
The excitement was palpable, the money life-changing. In a world starved of gambling 'the Irish Sweep' was an opportunity for ordinary people to make all their dreams come true for an outlay of just 10 shillings.
But the real genius was a twist that played out the suspense for weeks, with the public on both sides of the Atlantic Ocean gripped.
After tickets were sold, 90pc of them illegally through an 'old boy' IRA network in Canada, the United States, Britain and Ireland, the counterfoils came back to Dublin in their millions.
The boxes of tickets were then paraded down O'Connell Street, often with elephants and other exotic creatures in tow, getting thousands involved in the pent-up excitement.
In an act of high drama, the winning tickets were then drawn from a giant drum by a heart-tugging mixture of boys from a home for the blind or smiling, uniformed nurses.
The garda commissioner and other worthies of the new State beamed on approvingly, giving the enterprise the seal of approval.
Each winning ticket was attached to a horse race at a big meeting in England or Ireland on the following Saturday. The ticket corresponding to the first horse past the post won the big money and the prizes diminished according to where each horse was placed down the field. Even the non-runners got a prize.
This also created a secondary market, where canny bookmakers, especially the promoters of the Sweepstakes using inside information, paid relatively large sums of money to the ticket holders for a share of the favourite or a horse they fancied would be in the big money. It was a way for ticket-holders to hedge their bets.
When Glorious Devon won the Manchester November Handicap in the first Irish Sweepstake on November 23, 1930, three friends from Belfast, Carrickmacross and Ardee scooped £204,764 - or €11m in today's money.
They didn't get all of that, as they had already sold a half-share to the London bookmaker Ladbrokes for a guaranteed £2,500 - about €135,000 today.
A picture of all three graced the front page of the Sunday Independent.
"This is the happiest day of my life," said Frank Ward, aged 23. "I felt sure the horse would win," he added. "I had a bet on it as well."
"It seems like a dream, but the money will be a glorious reality," said his friend John Tormey (24).
The Sweep was an opportunity to win staggering riches cleverly wrapped up in a good cause, leading Readers Digest to brand it a "bleeding hearts racket".
Those with a more benign view argue that it was a life-support system for the neglected Irish health services.
Starved of cash by successive governments, it was left to orders of nuns to run the hospitals with funds provided by the Sweepstakes. The money paid into the Hospitals Trust Fund was distributed for the building and running of hospitals around Ireland.
"It funded Irish hospitals for over 50 years," wrote Marie Coleman in the introduction to her academic history, The Irish Sweep (UCD Press).
"It was a landmark institution in the new Irish State, attracting millions of pounds in foreign currency into Ireland to build and equip hospitals and providing employment for thousands.
"It also had an important impact on the development of Irish advertising and broadcasting, horse racing in Britain and Ireland, the development of indigenous Irish businesses, and the commercial sponsorship of sport."
At its height the Sweepstakes operation employed more than 3,000 low-paid women workers at its giant warehouse in Ballsbridge.
Thousands more were employed in various enterprises founded or funded by the biggest shareholders, the McGrath family - from glass manufacturing to mattress production.
But, Coleman concluded: "The role of Hospital Trust Ltd as a buffer between the State and the source of its hospital funding did not permit sufficient oversight of how sweepstake revenue was spent. This is most blatantly obvious in the case of the large personal fortunes compiled by the three promoters, Joseph McGrath, Richard Duggan and Spencer Freeman."
Long before that book - and a subsequent history by the writer Damian Corless - there was MacAnthony's groundbreaking news story.
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"No one knew better than Conor O'Brien the risks involved in publishing that article," MacAnthony said last week.
He remembers his editor's reaction after reading it: "Jesus, you better be right."
"Not only were we going head to head with the most powerful financial interest in the country, but those same people were close friends of the Murphy family, who owned Independent Newspapers."
Because of this closeness - through business and racing interests - O'Brien decided to run the entire 8,000-word exposé in a single issue on January 21, 1973. His fear was that if he had stuck to his original plan of running the story over two weeks, the second part of it would never see a printing press.
The story ran across pages 1, 8, 9 and 10.
"The owners of Irish Hospitals Trust (1940) Ltd," MacAnthony wrote, "have amassed wealth close to £100 million, which makes them not only the richest people in Ireland by far, but also places them in a bracket with the wealthiest in Europe."
For decades they were so powerful and "arrogant" that government departments, Irish embassies and the P&T, as the postal service was known, were expected to serve the interests of the Sweep rather than the State.
Although the postal authorities in both the US and the UK, where 90pc of the tickets were sold, did their best to thwart it, periodically seizing tickets sent by post or raiding homes and offices of known Irish Sweepstakes agents, it was unstoppable.
MacAnthony's story was jaw-dropping in its detail. He described how the men who began the Sweep - and benefited so spectacularly from its success - "were reticent about the manner in which they organised it from the very beginning".
In a strongly worded editorial, O'Brien wrote: "We still persist in seeking the world's charity to maintain our health services. And we are prepared to countenance illegalities in order to do so. This simply will not do… The poor mouth is no longer representative of the New Ireland."
That Sunday morning, before he had time to sit down to breakfast, Thomas V Murphy - chairman of Independent Newspapers, who lived in 'Swynnerton' on Brighton Road, Foxrock, south Dublin - received a phone call from his neighbour, Paddy McGrath, who lived in Rue-de-Bac on Brennanstown Road, Cabinteely.
Murphy was instructed to remove all of the Independent Newspapers advertising hoardings from the Curragh racecourse that day. The Irish Sweep - and a myriad of companies in which the McGraths had shareholdings - also withdrew their advertising.
The embarrassment caused to the Murphy family, as they saw it, is said to have hastened their decision to sell a controlling interest in the newspaper group to a 38-year-old businessman and rugby international, Tony O'Reilly, who took control of the group less than two months later, on March 16.
THE AFTERMATH
MacAnthony's story did little to dampen the public appetite for gambling on the Irish Sweepstakes. In the months that followed, the gross proceeds from four Irish Sweeps-sponsored races - the 1973 Lincoln, Irish Sweeps Derby, the Cambridgeshire and the Sweeps Hurdle - came to more than £15.3m.
But as the 1970s progressed the prize fund dropped, from over £2m in 1971 to £500,000 by 1978, and the money going to hospitals had turned into a trickle. Paddy McGrath later said that a postal strike in Ireland in 1975 was the killer blow from which the Sweep never recovered. Tickets couldn't get back to Dublin and so several sweeps were cancelled.
Legalised gambling, the football pools in England and the national embarrassment of running an illegal sweepstakes operation to fund the health service were also taking their toll and eroding returns. The creation of the government-sponsored National Lottery in 1986 put the final nail in the coffin.
That year the last Irish Sweeps Hurdle was run at the Curragh and the curtain came down on the 56-year roller coaster without any of the customary fanfare or fizz. After the liquidator was finished, there was still over £4m in the coffers to be distributed among the Sweeps shareholders.
Irish Business magazine estimated that between 1973 and 1984 the McGraths had lost £18m "as a result of bad timing, bad investments, bad luck and Patrick McGrath's misplaced patriotism that insisted upon investing in solely Irish companies".
Now, 90 years after the first Sweepstake, the vast fortunes of the founding families have been dissipated, their houses and estates sold and their names almost forgotten.
There is no plaque or memorial to the Irish Sweeps, save only a public park based around Cabinteely House where Joe McGrath once lived in splendour.
For all the employment they gave, the wealth they created and the millions contributed to the Irish health service, particularly in the early decades of the State, all that remains is the half-remembered derision at the abominable way the company treated its workforce and pensioners, even as its shareholders walked away from the gambling empire that had made them vastly wealthy.
The last remaining tangible vestige of Irish Sweeps wealth was Walford, the gloomy red-bricked house on Shrewsbury Road, Dublin, bought with Sweepstakes money by Patrick A Duggan and sold to property developer Sean Dunne and his then wife, Gayle, for €58m.
Even that monument to one of the great gambling ideas of the 20th century was subsequently torn down, to be replaced by a modern trophy home.
THE FOUNDERS
RICHARD DUGGAN
The Dublin bookie was the founder of the Irish Sweepstakes. Said to have a "great head for figures", he discovered how lucrative sweepstakes could be after the mail boat RMS Leinster was torpedoed off Dún Laoghaire in 1918 with the loss of an estimated 500 lives.
Duggan organised a sweepstake for the victims' families and discovered the vast public appetite for gambling wrapped up in a good cause.
Nimbly dodging authority, he continued with various other sweepstakes ventures, including a highly successful fundraising sweepstake for the Mater Hospital. He eventually teamed up with Joe McGrath to form what became Hospitals Trust (1940) Ltd.
Duggan, the oldest of its three promoters, died in 1934. He was succeeded in the enterprise by his sons, Patrick A Duggan and Richard G Duggan, both of whom took an active part in the business and some of the spin-off enterprises bought with its proceeds.
A former trainee accountant, trade union official and close associate of Michael Collins, McGrath came from Rutledge Terrace, off the South Circular Road in Dublin.
Government director of intelligence during the Civil War, he successfully sued a newspaper which alleged he was involved in the kidnapping and murder of Noel Lemass, brother of the future taoiseach Seán, who he later played poker with.
In 1924 McGrath resigned as minister for commerce in the Free State government. The Irish Sweepstakes quickly made him a wealthy man and within a few years McGrath was living in splendour on his 222-acre estate in south Dublin, Cabinteely House, and driving around the city in a Rolls Royce Phantom. The McGrath wealth was poured into horse racing and their colours carried to victory in the Epsom Derby and the Arc de Triomphe.
Joe McGrath died in the Sweepstakes offices in Ballsbridge in 1966 at the age of 77 and was succeeded by his son Paddy. Brothers Joe and Seamus were also part of the enterprise. Paddy McGrath was appointed to the Senate by Liam Cosgrave, illustrating the solid bond between Sweep and State.
Originally from Swansea, Wales, Freeman was raised in South Africa. He had fought in World War I and was a footloose entrepreneur when he was sent to Dublin to look after the interests of his brother, a businessman and bookmaker, who put up a considerable amount of cash to help launch the Irish Sweep from a gloomy house in Earlsfort Terrace, Dublin.
Freeman had a flair for organisation. He got to work mailing Irish emigrants in the US, Canada and England, holding out the prospect of untold riches and helping to save cash-starved Irish hospitals.
Added to this was his capability as a showman and publicist. He wanted parades, large circus animals and all the theatrics he could devise for the large press corps he had invited to drab Dublin. There they were feted at the opening draw, which generated £666,701 in revenues and £409,233 in prizes.
Like his fellow promoters, Freeman never looked back. He lived out the rest of his life between Knocklyon House in Templeogue, Dublin and the Ardenode Stud in Ballymore Eustace, Co Kildare. He died in 1982 while working on his first novel.
Joe MacAnthony pictured in Dublin last week. Photo: Steve Humphreys
The year after breaking the Sweepstakes story, Joe MacAnthony became the first journalist to expose corruption by Ray Burke — decades before the politician’s disgrace was fully revealed in the Flood Report. MacAnthony found a payment to Burke for £15,000 made by builders Brennan and McGowan and his front-page story reported that Burke had sponsored Dublin County Council motions on the rezoning of land in Dublin owned by the builders.
Ultimately, however, MacAnthony did not prosper under the new regime of Tony O’Reilly. He saw the removal of “merit money” he had previously earned as a sign his services were no longer valued and he was advised to move on by Conor O’Brien, whose career also began foundering under the new ownership.
In 1974 MacAnthony emigrated to Canada where he had a highly successful career as an investigative reporter in broadcast and print journalism.
CONOR O'BRIEN
Appointed editor of the Sunday Independent in 1970, O’Brien had made his mark at the Evening Press in the 1950s as the country’s youngest editor of a national title.
He was known as Conor ‘News’ O’Brien, to distinguish him from the better-known future minister Conor Cruise O’Brien. Despite presiding over a strong run of big investigative stories soon after his appointment at the Sunday Independent, his editorship of the paper lasted less than six years.
In February 1976, O’Brien was moved into a managerial role at the paper and relocated to a back office at the Middle Abbey Street headquarters, where he could exert no meaningful editorial influence. He died in 1985, aged 57.
