She's 80 and Too Young To Quit Working

[Jim Koepke]

A fun story about a couple who figured out how to game a couple of state lotteries:

http://highline.huffingtonpost.com/articles/en/lotto-winners/

Of course the flaws were discovered and remedied, shucks. This couple, over 9 years, raked in about $27 million.

jtk

[Ted Calver]

That was a good read, Jim. Makes me wish I had that kind of mind. Thanks.

[Mike Henderson]

To be fair, the $27 million was the gross. The net was $7.75 million. Still a good return. They were smart to recognize the odds and they worked hard at it. Similar to a tech startup.

Great story.

Mike

[Steve Peterson]

The story was good.

A few things bother me.

1) It must have been really frustrating to other people in those towns to be shut out because a few people were hogging the machines.

2) The odds of hitting the real jackpot must be really bad. Their entire winnings appear to have been made up of "losing" tickets that benefited from the roll-down. They bought almost $20M in tickets without ever hitting the real jackpot.

[Greg R Bradley]

First the government run education fails to educate people, then it taxes the uneducated by selling them lottery tickets.

[Malcolm Schweizer]

Boy, I hate to be negative, but Huffington Post needs to edit that article down a bit. It had a lot of side stories that distracted from the story. Anyway, loved the meat of the story, and he seems like a great guy who has a gift for figuring things out.

When I lived in Virginia, there was a guy who figured out that there were "X" number of combinations possible in the lottery, and if the lottery went over a certain jackpot, then a person could buy every single possible combination of numbers and be guaranteed a win. The problem was that the rules state that you had to buy the ticket from one of their vendors, and from the machine. This guy created a program to fill in the dots on the card where you buy a ticket, and filled out cards for every single combination. He made agreements with hundreds of vendors in Virginia to agree to run the tickets through for him and he would purchase tickets from them. This meant they had to stand there and run each card through, print a ticket, and run the next card. The guy got investors to buy in, and guaranteed them a return.

The day came, and he initiated the plan. The lottery went over the magic number to make his plan work, and he had already gotten the stores to agree to help him. All was going well. (Side note: believe it or not, I actually delivered the computers to his office in Virginia! I seem to remember he was Australian and had moved in just for this opportunity. It sounded very scammy to me at the time. There is a documentary somewhere on line if you google it that tells the whole story.) He printed all the cards to buy the tickets with, and his temporary staff delivered them to the stores that had agreed to run them. There was one big problem, however. Some of the stores got negative feedback from their customers who complained because they were only running this guy's tickets, so they stopped running tickets for him. When the lottery closed, they had not purchased EVERY combination of numbers. The employees decided not to tell him, and hope for the best. They started auditing the millions of tickets, and long story short- they did end up getting the winning ticket, despite not purchasing all the combinations of numbers!!!

I don't remember all the details, but I do remember that one big risk was that if there was more than one winner, they would have to split the money. That was partly factored into his magic number that the jackpot had to hit before he made his move. I seem to remember that he had factored it so that if two tickets won, he would still come out at least breaking even. Again- google it, and there was a short documentary done on it.

[Andrew Joiner]

Great story. Thanks Jim.

[Bruce Wrenn]

Looks like they made a 25% return on investment. None of mine do that!

[Alex Tonin]

I read that piece on my morning commute this morning, really enjoyed it. Malcolm, I believe someone bought up all the possible combos in the Irish Sweepstakes in the 30s or 40s and made a profit. It's surprising to me that nobody outside the states with the roll-down feature cautioned the Michigan and Mass. lotto authorities it could be gamed.

[Tom Bender]

Let's see...9 years, eighty zillion hours of mind numbing work, huge financial and legal risk, carrying tons of cash around;

Not such a good payoff.

[Jason Roehl]

Boy, I hate to be negative, but Huffington Post needs to edit that article down a bit. It had a lot of side stories that distracted from the story. Anyway, loved the meat of the story, and he seems like a great guy who has a gift for figuring things out.

When I lived in Virginia, there was a guy who figured out that there were "X" number of combinations possible in the lottery, and if the lottery went over a certain jackpot, then a person could buy every single possible combination of numbers and be guaranteed a win. The problem was that the rules state that you had to buy the ticket from one of their vendors, and from the machine. This guy created a program to fill in the dots on the card where you buy a ticket, and filled out cards for every single combination. He made agreements with hundreds of vendors in Virginia to agree to run the tickets through for him and he would purchase tickets from them. This meant they had to stand there and run each card through, print a ticket, and run the next card. The guy got investors to buy in, and guaranteed them a return.

The day came, and he initiated the plan. The lottery went over the magic number to make his plan work, and he had already gotten the stores to agree to help him. All was going well. (Side note: believe it or not, I actually delivered the computers to his office in Virginia! I seem to remember he was Australian and had moved in just for this opportunity. It sounded very scammy to me at the time. There is a documentary somewhere on line if you google it that tells the whole story.) He printed all the cards to buy the tickets with, and his temporary staff delivered them to the stores that had agreed to run them. There was one big problem, however. Some of the stores got negative feedback from their customers who complained because they were only running this guy's tickets, so they stopped running tickets for him. When the lottery closed, they had not purchased EVERY combination of numbers. The employees decided not to tell him, and hope for the best. They started auditing the millions of tickets, and long story short- they did end up getting the winning ticket, despite not purchasing all the combinations of numbers!!!

I don't remember all the details, but I do remember that one big risk was that if there was more than one winner, they would have to split the money. That was partly factored into his magic number that the jackpot had to hit before he made his move. I seem to remember that he had factored it so that if two tickets won, he would still come out at least breaking even. Again- google it, and there was a short documentary done on it.

Wow. I thought of that 20 years ago, but I had 3 problems with it: 1) the multi-winner problem that dilutes the winnings and potentially blows the investment, as you noted, 2) the logistics of physically buying hundreds of millions of tickets, and 3) I hate the lottery on principle.

[Jason Roehl]

First the government run education fails to educate people, then it taxes the uneducated by selling them lottery tickets.

Bingo!

My thoughts exactly.

[Jim Koepke]

Let's see...9 years, eighty zillion hours of mind numbing work, huge financial and legal risk, carrying tons of cash around;

Not such a good payoff.

Kind of reminds me of the guy who said, "I'd give a hundred dollars to be a millionaire."

Most people do not have as much to show after 9 years of "mind numbing work." They are lucky if they have enough so they can retire in comfort someday.

jtk

[Steve Peterson]

Buying every number combination to guarantee a win is nearly impossible with the latest games that have 280,000,000 to one odds. Taxes and the possibility of multiple winners makes this a risky gamble.

The story focused on a roll-down feature where there was positive cash flow on "losing" tickets as long as 3 or 4 numbers match. You don't need to buy 280 million tickets, but you still need to buy a few thousand to make it worthwhile. It is amazing that the lottery offices never noticed. With or without the corporate players, the roll-down weeks would pay out more in winnings than the total ticket sales.

[Mike Henderson]

...With or without the corporate players, the roll-down weeks would pay out more in winnings than the total ticket sales.

It's possible that the lottery people have a goal of how much (what percent) to pay out and the rollover was designed to maintain that percent.

Mike

[Wade Lippman]

Two interesting things....

1) The article says "His tickets would have the same odds of winning as anyone else’s. He would just be buying a lot more of them." So, each lottery would lose money, as it wouldn't matter if he bought a lot of tickets, or someone else. Wouldn't you think someone would notice they were losing money each time?
2) Not a single major news service picked this story up; either as Jerry (as this article, or Gerry, as most of the others). Odd.

[Jason Roehl]

Two interesting things....

1) The article says "His tickets would have the same odds of winning as anyone else’s. He would just be buying a lot more of them." So, each lottery would lose money, as it wouldn't matter if he bought a lot of tickets, or someone else. Wouldn't you think someone would notice they were losing money each time?
2) Not a single major news service picked this story up; either as Jerry (as this article, or Gerry, as most of the others). Odd.

The lotteries in the story weren't losing money.

[Wade Lippman]

The lotteries in the story weren't losing money.
Exactly.....

[Jim Koepke]

The lotteries in the story weren't losing money.


Exactly.....

What was happening was when the top prize went unclaimed and the jackpot reached a predetermined level all the lesser prizes, such as 2 correct numbers would increase in value if the jackpot was not won again. What it came down to was the odds for picking a few of the correct numbers were better than even for those picking less than all the winning numbers.

jtk