How to Beat the Lottery with Statistical Certainty

Someone very smart once told me that the lottery is like a tax for the mathematically stupid, but apparently you can make playing lottery a profitable venture ... if you're good at math (kids, this is why you should stay in school).

Here's the story of how a loophole in the Massachusetts lottery game Cash WinFall made it a surefire bet for some mathematically savvy gamblers:

Over the next three days, Selbee bought $307,000 worth of $2 tickets for a relatively obscure game called Cash WinFall, tying up the machine that spits out the pink tickets for hours at a time. Down the road at Jerry’s Place, a coffee shop in South Deerfield, Selbee’s husband, Gerald, was also spending $307,000 on Cash WinFall. Together, the couple bought more than 300,000 tickets for a game whose biggest prize - about $2 million - has been claimed exactly once in the game’s seven-year history.

But the Selbees, who run a gambling company called GS Investment Strategies, know a secret about the Massachusetts State Lottery: For a few days about every three months, Cash WinFall may be the most reliably lucrative lottery game in the country. Because of a quirk in the rules, when the jackpot reaches roughly $2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least $100,000 worth of tickets.

During these brief periods - “rolldown weeks’’ in gambling parlance - a tiny group of savvy bettors, among them highly trained computer scientists from MIT and Northeastern University, virtually take over the game. Just three groups, including the Selbees, claimed 1,105 of the 1,605 winning Cash WinFall tickets statewide after the rolldown week in May, according to lottery records. They also appear to have purchased about half the tickets, based on reports from the stores that the top gamblers frequent most.

“Cash WinFall isn’t being played as a game of chance. Some smart people have figured out how to get rich while everyone else funds their winnings,’’ said Mohan Srivastava, an MIT-educated statistician who gained fame in gambling circles when he found a flaw in a Canadian scratch ticket game that allowed him to pick the winners more than 90 percent of the time.

Andrea Estes and Scott Allen of The Boston Globe has the story: Link

Previously on Neatorama: A Statistician Solves a Scratch Lottery Code


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The lottery IS NOT a tax on the stupid.

If it is: every single "risk" you take would be a "tax on the stupid".

You take risks all the time. Life is basically one big succession of one risk after another.

Of course there are bad risks and good risks to take. Buying a lottery ticket for the price of one million dollars hoping to win one and a half would be a bad risk (keeping the same odds in mind of regular lotteries). Paying ten buck to have a chance of winning several millions is worth the risk. Maybe not for everybody, but it's definitely not a stupid bet to take considering the possible winnings.
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Glad to hear someone figured out a way to "beat the system" for once! I'm sure the powers-that-be will notice what is taking place, and will slam that door shut in the future.

Personally, I don't see why they don't increase the dollar amounts of the smaller prizes, and have more winners. That would seem to generate interest in the game and fuel more sales.
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"Some smart people have figured out how to get rich while everyone else funds their winnings,"...

How is this different from the way the American economic system works in general? Well, you can remove the word "smart" a lot of the time and substitute something along the lines of "grandpa did the actual work several generations ago, and the dumb kids are living off the inheritance and the family name." That much is true. But OTOH, there are still certain similarities. Only those privileged enough to have received the best educations of an incredibly specific type and-- even more importantly-- to be taken into the secret, exclusive, private groups and clubs are eligible. Everyone else need not apply. People are not going it alone-- if you read the article carefully, you can see that this is all about private, exclusive little groups that few will ever have the opportunity to join no matter how smart they are.
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