THE NUMBERS RACKET HAS ALWAYS BEEN VIEWED AS THE QUINTESSENTIAL ORGANIZED CRIME ACTIVITY. IT IS WHOLLY ILLEGAL, YET REQUIRES THE COOPERATION OF THOUSANDS OF CITIZENS THAT NORMALLY REGARD THEMSELVES AS LAW ABIDING. IT REQUIRES RELATIVELY LARGE ORGANIZATIONS, THE COOPERATION OF THE POLICE, AND IT GENERATES LARGE SUMS OF MONEY. ALSO, IT IS AN ACTIVITY THAT LENDS ITSELF TO CONTROL BY A SMALL NUMBER OF OPERATORS. AN OVERVIEW OF THE HISTORY OF THE NUMBERS RACKET IS PROVIDED, AND THE OPERATION OF THE RACKET IN NEW YORK CITY IS EXAMINED. THE RELATIONSHIP, LAW ENFORCEMENT VIS-A-VIS THE NUMBERS RACKET IS ASSESSED, AND THE STRUCTURE OF THE RACKET IS DETAILED. THE PUBLIC POLICY IMPLICATIONS POSED BY THE RACKET ARE ALSO EXAMINED. IN GENERAL, IT IS FOUND THAT THE NUMBERS BUSINESS IS MUCH LESS CENTRALIZED AND CONTROLLED THAN IS POPULARLY BELIEVED. WHATEVER MAY HAVE BEEN THE CASE IN EARLIER ERAS, THE RACKET IN NEW YORK APPEARS TO BE RATHER LOOSELY DIRECTED BY COLLABORATIVES. IT ALSO APPEARS THAT THE ROLE OF CORRUPT POLICE IN MAINTAINING STABILITY IN THE MARKET IS GREATLY EXAGGERATED. AN EXAMINATION OF THE FINANCIAL RECORDS OF NUMBERS OPERATIONS SUGGESTS THAT THE FLOW OF PROFITS FROM THESE OPERATIONS IS FAR LESS THAN IS USUALLY SUGGESTED BY CRIMINAL JUSTICE AGENCIES. IN TERMS OF PUBLIC POLICY, THIS ANALYSIS SUGGESTS THAT THE STRESS OF CRIMINAL JUSTICE AGENCY RHETORIC ON THE IMPORTANCE OF INTENSIVE ENFORCEMENT AGAINST THE OPERATORS OF NUMBERS BANKS IS PROBABLY MISPLACED. IT IS EVEN POSSIBLE THAT SUCH EFFORTS LEAD TO GREATER CENTRALIZATION OF CONTROL IN THE MARKET. FINALLY, IT IS SUGGESTED THAT THIS ANALYSIS MIGHT BE SEEN AS A MODEL FOR EXAMINATION OF RACKET MARKETS GENERALLY. TOPICS DISCUSSED IN THE APPENDIXES INCLUDE THE PROCESS OF COLLECTING RAID DATA, THE SAMPLING SCHEME FOR ANALYSIS OF NUMBERS BETTING IN NEW YORK, BOOKMAKING, AND THE ANALYSIS OF POLICE ESTIMATES OF NUMBERS BANK CASH FLOW CAPABILITIES. REFERENCES ARE PROVIDED. (AUTHOR ABSTRACT MODIFIED--KBL)