Grifters, unite!

July 31, 2011 2:02 PM

Cash WinFall, or how to turn the lottey into a real moneymaker. In Massachusetts, one state-sponsored lottery has become a game you can't lose....if you know the trick. A tale of math, grinding and grifting in the Boston Globe.
posted by Diablevert (47 comments total)

This is interesting, but the Globe wanted me to log in after 3 out of 4 pages…sadness.
posted by silby at 2:14 PM on July 31, 2011 [2 favorites]

I hit single-page view and was able to read the whole thing. Interesting story.
posted by word_virus at 2:16 PM on July 31, 2011 [1 favorite]

Grifting? It sounds all legal to me. Having mathematics on your side.
posted by ericb at 2:20 PM on July 31, 2011 [5 favorites]

Single-page view.
posted by ericb at 2:21 PM on July 31, 2011

Yeah, I don't see any grifting here. No one is being deceived, everyone (including lottery officials) agrees that the system is functioning as it was designed to function.
posted by mr_roboto at 2:28 PM on July 31, 2011 [4 favorites]

Basic advantage play strategy; they are playing smart within the rules. Similar strategy at casino tournament games helped pay off my house back in the 1990's. The article reflects a basic failure to understand the logic of positive EV play, which the savvy player knows does not have to be successful every single time to be successful overall.
posted by localroger at 2:30 PM on July 31, 2011 [1 favorite]

"But the Selbees, who run a gambling company called GS Investment Strategies ... This year’s second-leading Cash WinFall winner - his Random Strategies Investments has cashed in more than 500 winning tickets worth a total of $765,168 so far ... Today, he is the general partner in a company called Tong’s Fortunelot Limited Partnership, which has cashed in the third-most winning tickets this year."

Some may be surprised and not familiar with the fact that there are legitimate gambling (aka gaming) companies (and venture funds) which focus on making returns from various gambling enterprises: e.g. casinos, lotteries, etc.

I have a friend who has had a series of companies which send in players (whom they have trained) to play various casino games. They've worked out systems to 'beat the house' every day/night -- racking up profits over time. Think of MIT's Blackjack Team, Bringing Down the House (written by Ben Mezrich) and the 2008 film '21.'

Card counting is totally legal in the U.S., but casinos are free to ban anyone they suspect of the practice, because the casino is private property, and the owner can decide who is allowed to enter their premises and play. That's why some casino gaming companies manage the timing of their winnings, so as not raise 'red flags' and get noticed ... and 'bank' profits over periods of time.
posted by ericb at 2:41 PM on July 31, 2011

Grifters, unite!

Mathematicians Unite! -- FTFY.
posted by ericb at 2:42 PM on July 31, 2011 [2 favorites]

"One thing is certain, however: The players who invest big money in Cash WinFall do not want to talk about it, refusing to discuss the game or explain the secret of their success. Mark Fettig of Tennessee, one of the top 10 winners during the May rolldown week, urged the Globe not to write a story at all, saying 'it would be immoral’' to attract more people to Cash WinFall and potentially dilute the winnings of current players."

Gotta love it! Trying to psych out others who might 'enter the game' and add more competition to the system!
posted by ericb at 2:45 PM on July 31, 2011 [1 favorite]

I'm surprised that it's so easy to buy massive blocks of tickets. I'm getting the registration page on the article now so I can't see if it's mentioned, but is it possible to just say "give me every ticket from x to y"? Do they actually walk out of the store with a wheelbarrow full of tickets and manually check them all, or is it all done online?

Also, relevant recent smbc.
posted by lucidium at 2:48 PM on July 31, 2011 [2 favorites]

My concern that this is a lottery smart people win is far overshadowed by the fact that this is a lottery that rich people win. A virtually guaranteed return on a 200K investment sounds a lot like a shady investment scheme.
posted by lesli212 at 2:48 PM on July 31, 2011 [3 favorites]

Actually, anybody smart enough to restrict their ticket buys to the rollback periods has positive EV, even if they don't bet enough to get in the long run on one cycle. The people exploiting the game don't want it getting out because every ticket bought by someone else is money out of their pocket, but such is the nature of positive EV play. This has caused some ugly situations in casino play, such as video poker teams intimidating the regular players away from banks of machines that have become positive due to a high progressive jackpot. I suppose the state tolerates the +EV lottery play because it doesn't result in that kind of situation.
posted by localroger at 2:53 PM on July 31, 2011 [2 favorites]

I'm surprised that it's so easy to buy massive blocks of tickets. I'm getting the registration page on the article now so I can't see if it's mentioned, but is it possible to just say "give me every ticket from x to y"? Do they actually walk out of the store with a wheelbarrow full of tickets and manually check them all, or is it all done online?


That is addressed in the article. Some of the stores were stripped of their lotto licenses for printing tickets for customers who weren't present (a violation of policy), and worse yet, letting customers like Mrs. Selbee operate the machines.
posted by gimli at 2:55 PM on July 31, 2011

Please do not think of the dreadful fairy tale collection Bringing Down the House or the even more awful movie 21, which is one of the few movies I have ever become disgusted enough with to walk out of in the middle. Both depict people getting away with stuff at high betting levels which has not been possible, if it ever was, since the early 1970's. While the techniques depicted by Ben Mezrich worked at one point, they did not work at the betting levels portrayed in either the book or the film. There is a lot of scrutiny of those high limit games and there aren't a lot of people who play them.

The thing that sealed it for me is that Mezrich did a Q&A for kuro5hin back when that site was still somewhat relevant, and I submitted the question "How did your security arrangements change when your action turned orange?" It turned out that Mezrich, who was supposedly a big player for a 21 team, did not know that "orange action" meant $1,000 cheques (also called Pumpkins). And yes, I've hung out with quite a few losing high rollers and +EV sharks and anyone who has ever cashed out for more than a few hundred bucks knows that standard thousand dollar cheques are orange.
posted by localroger at 2:59 PM on July 31, 2011 [3 favorites]

I think of "grifting" as a term that implies fraud. This, this is +EV exploitation of the rules. Good for them.
posted by rmd1023 at 3:22 PM on July 31, 2011 [1 favorite]

The lottery is just a tax on people who don't understand statistics... wait... it's a profit center for people who do now?
posted by panaceanot at 3:29 PM on July 31, 2011 [8 favorites]

It's totally fair and moral for these people to take advantage, but the state officials who knew it was crooked for years belong in jail, the way the government would do any private gambling operation who knew of an edge and allowed certain people to take advantage of it.
posted by stupidsexyFlanders at 3:37 PM on July 31, 2011 [2 favorites]

lucky bastards.
posted by markkraft at 3:41 PM on July 31, 2011

"The lottery is a taxation / on all the fools in creation." - Henry Fielding, The Lottery.

(I poked around a bit once and I think this is the original source of the "tax on stupidity" line.)
posted by madcaptenor at 3:41 PM on July 31, 2011 [2 favorites]

Interesting to see if the legislature closes this little gimme down. Curious that they didn't calculate it in when they first set it up.

Or perhaps they did.
posted by IndigoJones at 3:48 PM on July 31, 2011 [1 favorite]

localroger has it spot-on. There is indeed a lot of scrutiny that goes on when things get fishy.

In deference to the people who've pouted at my long-winded posts, I've just placed a post on G+ about an experience I had playing blackjack in Vegas involving placing large bets alongside colleagues who placed small bets, where we probably looked like the most obvious AND stupid card-counting team around.

Casinos have a lot of surveillance, a lot of people to review video, and a lot of data on you, as a player, if you are a regular player with a player's card. And they really won't let you get away with playing for a long period of time with larger sums of money without getting one. I tried. The pressure's too great.
posted by herrdoktor at 3:48 PM on July 31, 2011

I didn't see any sign of crookedness on the side of the lottery officials, and it isn't illegal or immoral on the side of the ticket buyers. But it is less than expected competence for the lottery officials, and now that they've had the flaws in the game pointed out, they need to change the rules or stop offering the game.
posted by benito.strauss at 3:58 PM on July 31, 2011 [1 favorite]

I don't believe the lottery officials think that this is a flaw, benito.strauss.
posted by wierdo at 4:02 PM on July 31, 2011

It's not a flaw in the game. What happens if the secret gets out is that far more people will buy into the game when the odds get better, which will even out the pay outs, and get rid of the incentive to buy $200,000 worth of tickets.
posted by empath at 4:03 PM on July 31, 2011 [1 favorite]

To address the idea that "gambling is a tax on the stupid", I presentSaturday Morning Breakfast Cereal Comics
posted by rmd1023 at 4:07 PM on July 31, 2011 [5 favorites]

Lotteries are a regressive form of taxation. This is clearly designed to facilitate the upward transfer of wealth, so it is doing the intended job. The real grifting in state lotteries is in who gets the advertising contracts.

There's a wealth of these sorts of tales in Alan Wilson's classic, The Casino Gambler's Guide.

And the ever popular The Eudomonic Pie and its sequel, The Predictors.
posted by warbaby at 4:33 PM on July 31, 2011 [1 favorite]

It's stupid for a state to incentivize smart people to do things that add no value to society.
posted by Kwine at 5:12 PM on July 31, 2011 [6 favorites]

And yet much of the financial industry marches onward.
posted by rmd1023 at 5:18 PM on July 31, 2011 [5 favorites]

To address the idea that "gambling is a tax on the stupid", I presentSaturday Morning Breakfast Cereal Comics

As a mathematician, I don't think I'd end up winning. I know enough about how to win to know that I couldn't pull it off.
posted by madcaptenor at 5:23 PM on July 31, 2011 [1 favorite]

As a mathematician, I don't think I'd end up winning. I know enough about how to win to know that I couldn't pull it off.

{x ∈ humans: x understands how to win at gambling} ⊂ {y ∈ humans: y is capable of winning at gambling}
posted by grouse at 5:33 PM on July 31, 2011 [1 favorite]

I don't know. There might be idiot savants who don't understand how to win at gambling but could do it anyway, for certain definitions of "understand".
posted by madcaptenor at 5:39 PM on July 31, 2011 [1 favorite]

I was disappointed the reporter didn't explain how the gamers came to know about the roll down weeks and when they occur. Is this information made available by the lottery commission?
posted by dobbs at 5:49 PM on July 31, 2011

I'm curious about that too. Googling "rolldown weeks" yields only this article.
posted by madcaptenor at 5:56 PM on July 31, 2011

I agree with everyone above that what they're doing is perfectly legal, and I can see why some people think calling it a grift might be a stretch. I'd still call it a scam, though, verging on a con, because it amounts to breaking the game to cream the take off a bunch of suckers. Lottey's a fools game anyway, of course, as many have pointed out. But it still strikes me as more than a bit dickish, in a way that card counting at black jack does not. To risk a dollar or two on a lotto ticket and dream of hitting it big seems to me harmless enough. To think that one so doing might actually have far less of a chance to win than the infinitesimal one he thinks he has, 'cause a bunch of high rollers already took most of the pot in a gulp, seems wrong to me.
posted by Diablevert at 6:13 PM on July 31, 2011 [2 favorites]

I agree with everyone saying the lottery is designed this way, but it doesn't matter; it needs to be changed as being against the spirit of the game. It is intended to be a fun game, right? A lot of the popular support for the lottery will probably vanish once it starts being regularly used as an investment scheme.
posted by JHarris at 6:29 PM on July 31, 2011

being against the spirit of the game.

Er, respectfully beg to differ, funds diverted from poor, uneducated to wealthy (statistically in this case) sophisticated is exactly the spirit of 'lotteries".
posted by sammyo at 6:42 PM on July 31, 2011 [3 favorites]

Reminds me of an old WC Fields quote:

Sucker: Is this a game of chance?
WC: Not the way I play it.
posted by storybored at 6:47 PM on July 31, 2011

[Explain how] the gamers came to know about the roll down weeks and when they occur. Is this information made available by the lottery commission?

They happen when the unclaimed jackpot exceeds $2M, so I presume they just track the well publicized jackpot total, waiting for the figure to level off.

Lazlo: These are entries for the Frito-Lay sweepstakes, no purchase necessary, 
       enter as often as you want, so I am. 

Chris: That's great! How many times? 

Lazlo: Well, this batch makes it one million, six hundred and fifty thousand. 
       I figure I should win 32.6% of the prizes, including the car.

Chris: Kinda takes the fun out of it, doesn't it?

Lazlo: Yes, well, I've come to realize that I have certain materialistic needs, 
       and they made up the rules...

posted by ceribus peribus at 7:05 PM on July 31, 2011 [6 favorites]

Some of the stores were temporarily stripped of their lotto licenses, and will be barred from selling more than $5000 worth per day

FTFY
posted by pmurray63 at 7:08 PM on July 31, 2011

This has been going on for a while - at least 4 years, and has been relatively public since at least '09, so the Mass lottery commission is aware of this. From what I read of a similar situation involving scratchers, (previously) as long as they're not laundering drug/mob money, it's (as far as the cops are concerned) all good.
posted by fragmede at 9:26 PM on July 31, 2011 [1 favorite]

after a lottery player survey showed people wanted a game that had better odds of winning.

As opposed to all those other surveys that said GIVE US SHITTIER ODDS PLEASE
posted by gottabefunky at 10:07 PM on July 31, 2011 [4 favorites]

I can't speak for US lotteries, but UK and European ones actively promote their big rollover draws by trumpeting the huge sum the total has now reached. Ticket sales seem to increase sharply in weeks like these, partly because of the rollover ads they run, and partly because many people will buy a ticket for a £20m prize when a "mere" £15m didn't seem worth the trouble.
posted by Paul Slade at 2:33 AM on August 1, 2011

A virtually guaranteed return on a 200K investment sounds a lot like a shady investment scheme.

Huh? Stay out of the bonds market, then, lesli212.
posted by IAmBroom at 11:33 AM on August 1, 2011

>being against the spirit of the game.

Er, respectfully beg to differ, funds diverted from poor, uneducated to wealthy (statistically in this case) sophisticated is exactly the spirit of 'lotteries".

No, that's the spirit of the legislation, of the transfer of wealth, of the system. The spirit of the game is something else. It's why shouting at your opponent while he's trying to think of his move in chess is technically not outlawed (in casual play) but frowned upon. If you're going to pursue any means to win, you're not playing chess any more, you're playing some crazy bigger game of ego satisfaction that hinges on the chess match.

So it is with lotteries. Most people play the lotteries as a game, something fun to do with a (very) slim chance of paying off for them. They don't honestly expect to win, but it gives them a little thrill. (I think this is because they are easily thrilled, but no matter.) Groups treating it as an investment opportunty in order to collect disproportionately high prizes risks damaging that attitude.
posted by JHarris at 11:59 AM on August 1, 2011

Somewhat, kinda related. Maybe.

60 Minutes segment broadcast last evening:

Playing the odds.

posted by ericb at 3:34 PM on August 1, 2011

Well, so much for that:

Lottery Restricts High-Level Players

Stores can't sell more than $5,000 worth of tickets in one day, and they're phasing the game out entirely next year.
posted by Mayor West at 7:41 AM on August 2, 2011

JHarris: Most people play the lotteries as a game, something fun to do with a (very) slim chance of paying off for them. They don't honestly expect to win, but it gives them a little thrill. (I think this is because they are easily thrilled, but no matter.) Groups treating it as an investment opportunty in order to collect disproportionately high prizes risks damaging that attitude.

I covered this toward the end of one of my more famous kuro5hin articles. I made tens of thousands of dollars -- not a living, but enough to make the difference between debt and a paid-off house over a decade -- in large part playing in casino tournaments, where most people are just playing for fun but a really dedicated shark *tucks fin under briefcase* can realize a good fraction of those recreational players' entry fees over the long run.

I don't consider my play in those years a bad thing since everyone knew some of us had fins under our briefcases, but as long as our play didn't make the game less fun nobody cared. Most players were playing more for the thrill of betting hundreds of fake dollars (you enter for $20, get $500 in fake cheques for the round) than the expectation of winning. Those were the guppies who helped pay off my house.
posted by localroger at 4:45 PM on August 2, 2011 [2 favorites]