"It’s just numbers on a piece of paper.”
March 1, 2018 9:30 AM   Subscribe

"Gaming the lottery seemed as good a retirement plan as any."
The Lottery Hackers
posted by the man of twists and turns (37 comments total) 40 users marked this as a favorite
 
Gerald Selbee broke the code of the American breakfast cereal industry ....

Man, that takes balls, those Kellog enforcers are relentless.
posted by thelonius at 9:52 AM on March 1, 2018 [1 favorite]


including the country’s most frequent winner, a 79-year-old man from Massachusetts named Clarance W. Jones, who has redeemed more than 10,000 tickets for prizes exceeding $18 million.

Doesn't that guy know that winning the lottery will ruin your life, put your family at risk, and drive you to bankruptcy?
posted by The_Vegetables at 9:53 AM on March 1, 2018 [3 favorites]


Damn. That was a good story.
posted by egypturnash at 9:55 AM on March 1, 2018 [5 favorites]


Love it -- I remember when this happened in Massachusetts and was written up in the Globe and I really enjoyed it at the time. And then I thought I'd read a book about it but I found out it was just Bringing Down the House : The Inside Story of Six MIT Students Who Took Vegas for Millions which mentions it. Haooy to hear more about these folks, what an interesting story.
posted by jessamyn at 10:27 AM on March 1, 2018 [3 favorites]


Someone with a bit of technical expertise could probably rig up a machine to check tickets automatically. You'd just need a computer, a camera, some OCR software, and some way to physically move the slips around.

Not gonna lie; part of me is wondering whether I should check the odds and rules of my local lottos.
posted by escape from the potato planet at 10:28 AM on March 1, 2018 [1 favorite]


As I'm reading up to Lu knocking on the door, suggesting they take turns, and Jerry refusing, I thought "oh boy, someone's gonna get hurt now.." (Because it's prisoners dilemma, Jerry, and you just stabbed someone.)

His inflated self-righteousness is pretty funny. Like the folks who get kicked out of casinos for card counting etc, he was gaming the system.
posted by k5.user at 10:29 AM on March 1, 2018


Great story. The math in for the Michigan game confused me for a bit: with a $1 ticket there was a 1-in-54 chance to pick three out of the six numbers to win $50 in a roll-down drawing (less than break even) and a 1-in-1,500 chance to pick four numbers, winning $1,000 (also less than break even). But combining the odds of winning all possibilities made it worthwhile.
posted by exogenous at 10:40 AM on March 1, 2018


God, money is a weird thing. It's like it's got its own gravity; if you already have $100,000 then you can use it to reliably get more of other people's money via this lottery. If you don't have that much then you can't. And the way that it distorts morality: "If you could do it, wouldn't you?" Selbee asks. As if there's no possibility of any answer other than a yes: "If you can legally get more money, wouldn't you?" Why on earth do so many people take the answer to that question for granted?
posted by dbx at 10:43 AM on March 1, 2018 [12 favorites]


"If you can legally get more money, wouldn't you?" Why on earth do so many people take the answer to that question for granted?

What's interesting is he didn't even really do it 'legally'. He broke many of the lotto's rules.
posted by The_Vegetables at 10:47 AM on March 1, 2018


My friends and I broke the code on coke bottle lids for the free cola liners one summer. The bottlers used 3 colours of markers in a certain pattern so they could distribute the winners and losers across stores and not randomly overload a single store. We would BMX from convenience store to convenience store cleaning them out of all their winning bottles. By the end of the day we were buzzed as hell and were all bloated and sloshing whilst riding.

That was the summer I learned to belch.

Good times sticking it to the man.

(My favourite 'summer of cola' memory was sitting on our bikes outside a strip mall convenience store when a heavily customized corvette stingray, like the one in Corvette Summer, screamed into the parking lot and headed right at us trying to scare us. The driver miscalculated and his front air damn shattered on the parking block that protected us. We were completely silent. The driver got out and didn't even look at his car, went into the store bought his smokes, got back into his car and drove off as if nothing had happened and he wasn't dragging fiberglass. After he left we just looked at each other and wondered if it had actually happened or if we were hallucinating because of too much cola. It was a moment.)
posted by srboisvert at 10:52 AM on March 1, 2018 [27 favorites]


His inflated self-righteousness is pretty funny. Like the folks who get kicked out of casinos for card counting etc, he was gaming the system.

He's not upset that the game ended. He's upset that he's made out to be the villain. The house set up the game, they set up the rules, and then he finds the method to win in their "can't win" scenario. It's one thing to say, "can you believe those idiots at the lottery let this happen for years?" It's another to say, "can you believe this asshole."

It's like how Phil Ivey and Cheung Yin Sun played by the rules that the casino laid out for them, and then somehow they're considered cheating. It's fine to change the rules if the current rules don't work. But you don't get to call someone a cheater or fraud because they've demonstrated why your rules don't work.
posted by explosion at 11:04 AM on March 1, 2018 [29 favorites]


I think it takes a lot of chutzpah to game the system, but then say it's unethical to join with another group or two and take turns gaming the system for everyone's benefit.

He doth protest too much.
posted by k5.user at 11:09 AM on March 1, 2018 [2 favorites]


Check out Jordan Ellenberg's "How Not to Be Wrong" for more of this story and a whole bunch of other fascinating ones. In this story the Lottery gaming gets tied in with Renaissance understanding of perspective and the Fano Plane. It's really cool.
posted by Navelgazer at 11:24 AM on March 1, 2018 [5 favorites]


God, money is a weird thing. It's like it's got its own gravity; if you already have $100,000 then you can use it to reliably get more of other people's money via this lottery. If you don't have that much then you can't. And the way that it distorts morality: "If you could do it, wouldn't you?" Selbee asks. As if there's no possibility of any answer other than a yes: "If you can legally get more money, wouldn't you?" Why on earth do so many people take the answer to that question for granted?

This is like the elevator pitch for Capital in the Twenty-First Century, money creates money and rich people can spend money to make sure they get more money. If left unchecked, companies become monopolies and wealth concentrates into fewer and fewer hands.
posted by The Whelk at 11:33 AM on March 1, 2018 [5 favorites]


It's an advantage, but it's only an advantage to those who can afford it, which is part of the problem I have with this (admittedly) schadenfreude-filled story. Why not game the lottery? I mean, all it takes is several thousand dollars a pop, and the ability to occasionally lose those several thousand dollars. Oh, and to gather a bunch of people willing to go in with you. And to bend the rules in a way that you won't get caught and hauled out as an example, which it helps when you're an unassuming senior citizen couple...

...I do appreciate that every system has its flaws, but given the number of people bankrupted by gambling addictions all the time, and the fact that the people who most would benefit from a true windfall often throw away the few small bits of cash they have every single week/day/hour on the scam that is the lottery, I just can't feel good about it.
posted by xingcat at 11:56 AM on March 1, 2018 [4 favorites]


I know there are a lot of interesting things to say about lotteries and odds and gambling, but, can we talk about how the Huffington Post does not know the difference between a barn and a garage?
posted by enn at 12:16 PM on March 1, 2018 [3 favorites]


A practical woman who could clear a fallen tree with a chainsaw and sew a men’s suit from scratch without a pattern,
I love her an awful lot. Terrific article, thanks for posting.
posted by theora55 at 12:26 PM on March 1, 2018


Thank you for using up a significant chunk of boring waiting room time by posting this fascinating story! I am very relieved that no one got murdered. In the movie version, someone probably would.
posted by 41swans at 12:43 PM on March 1, 2018 [2 favorites]


Great story with lucid explanations but I still don't get something about the math. If a roll-down week was statistically a good bet for the (bulk) lottery buyer, why wasn't it a bad bet for the (bulk) lottery owner, meaning they would lose money?
posted by ecourbanist at 1:18 PM on March 1, 2018 [2 favorites]


That's mefi's own Jordan Ellenberg who wrote How Not to Be Wrong.
posted by onya at 1:19 PM on March 1, 2018 [4 favorites]


can we talk about how the Huffington Post does not know the difference between a barn and a garage?

Eh, I've seen similar things called pole barns. It's on the small side for such buildings but I'll allow it.
posted by rabbitrabbit at 1:19 PM on March 1, 2018 [3 favorites]


why wasn't it a bad bet for the (bulk) lottery owner, meaning they would lose money?

When the lottery owner sells a ticket for say $1 they keep 10c and divide the other 90c into prize pools. If a prize isn't won on a given week it jackpots to the following week. If you buy a ticket week 2 you also have a chance of winning some of the money left over from week 1.
posted by onya at 1:32 PM on March 1, 2018 [3 favorites]


If a roll-down week was statistically a good bet for the (bulk) lottery buyer, why wasn't it a bad bet for the (bulk) lottery owner, meaning they would lose money?

For "regular" lotteries, if no one hits the jackpot, it sticks around for the next week, to create a bigger jackpot. In this scheme, if no one hits the jackpot, the money "spills over" into the lower tiers of winners. Once the jackpot was over $2M, the money was ear-marked to be given out one way or the other.

MA was giving away only 60% of the money no matter what, the spillover didn't create additional obligation. It's just that the "big buyers" were only betting when the spillover money made the expected value good, and letting "suckers" fill up the tank the rest of the time.
posted by explosion at 1:34 PM on March 1, 2018 [4 favorites]


It's an advantage, but it's only an advantage to those who can afford it, which is part of the problem I have with this (admittedly) schadenfreude-filled story. Why not game the lottery? I mean, all it takes is several thousand dollars a pop, and the ability to occasionally lose those several thousand dollars.

It says pretty clearly in the story that the money they made was equally available to people who bet less money -- the differences being that it takes more bets for the results to converge (so they would potentially have to do it for longer) and that the return is proportional to the number of tickets. It's like getting indignant that someone who invests $100,000 in a government bond gets $2,000 when it comes due, while someone who invests $1,000 only gets $20.


Great story with lucid explanations but I still don't get something about the math. If a roll-down week was statistically a good bet for the (bulk) lottery buyer, why wasn't it a bad bet for the (bulk) lottery owner, meaning they would lose money?
The roll-down is essentially a variation on a progressive jackpot - the extra money paid out on those weeks was money from previous weeks of players but which wasn't awarded in the jackpot. The cash rolls over until (in this case) the lottery pays it out in small roll-down prizes.

For instance, let's say that every week $1M is bet. Week 1, the lottery takes maybe $500K, pays out maybe $300K in small prizes and the jackpot is $200k but no one wins. Week 2, the first two are the same but the jackpot is now $400K ($200K from last week and $200K from this week). Eventually (at this rate, on week 9), the jackpot rises to $1.8M. The next week, the lottery takes their $500K, and if the jackpot is won, they pay $300K in small prizes and the $2M jackpot. Otherwise, they pay the total prize pool - $2.3 million - into the small prizes pool, so it's worth it to have a ticket. (For a $1 ticket, you would expect to get $2.30 -- unless someone wins the jackpot, when you would only get $0.30.) Note that the lottery commission has been collecting $500K per week, rain or shine.

It's interesting that these "WinFall" lotteries work this way -- in theory, the same positive return is available with single-jackpot progressive lotteries like PowerBalls, but in practice, the huge jackpots drive up lottery sales so much that the increased payoff is arbitraged out of existence by the wisdom of the crowd. In this case, the prizes were so unimpressive that they didn't drive up sales enough for that to happen.
posted by Homeboy Trouble at 1:42 PM on March 1, 2018 [2 favorites]


Interesting story. I'd love to hear an honest report from the gaming commissions about the design of these lotteries. It's such a simple loophole that's also beneficial to the state (and to convenience store owners), that I would find it hard to believe that it wasn't either intentional, or well known and ignored. In the end, Jerry is right - he didn't really change the odds of any small-timer, apart from draining the prize pool for a mega-jackpot. Those 5 tickets a week are still as worthless as they were at any other time. It's more the illusion of fairness that he broke, which is a necessary piece of the game design of a lottery system - much like having a meaningless lever to stop reels on a slot machine.
posted by codacorolla at 2:14 PM on March 1, 2018 [2 favorites]


It also reminds me of a story I read here a few years ago, but with scratchers: someone figured out that winners had a regular distribution among the serial numbers of scratchers (I might have some details wrong). They went into business with local convenience stores, and would pre-buy certain rolls of tickets that were guaranteed winners. I think that was slightly more illegal, due to the license that the stores had with the gaming commission, where boxes of tickets couldn't be altered or sold in bulk, or something to that effect.
posted by codacorolla at 2:33 PM on March 1, 2018


The book "Getting the Best of it" (by David Sklansky) covers a lot of the theory/math behind spotting these types of situations. Useful, even if you cannot organize a cartel of your own that easily.
posted by bashos_frog at 3:17 PM on March 1, 2018 [2 favorites]


Like the folks who get kicked out of casinos for card counting etc, he was gaming the system.

Except card counting isn't illegal. But if you get caught winning too often, they'll kick you out and blacklist you from all casinos in town.

But the regulated gaming industry allows the house to have a statistical advantage. It's the same way professional poker players win from playing many hands. But as a customer in a casino, the deck is stacked against you, but to fool you they'll even advertise, say, if they adhere to the bare minimum of statistical winning percentages. And the lower dollar casinos even advertise two-deck blackjack.

It's like they're saying, 'Look! Our two deck blackjack tables make it even easier to count cards! By the way, if we even suspect that you're counting cards, you will be banned for life.' Because it's designed where trying to gain an advantage on the house based on the same statistical strategies the casinos use by law, well, that can't be allowed. The only games you're allowed to play against the house are games where you always have a statistical disadvantage. If you're consistently winning money legally, you're a liability to their business. That's a damn cynical way to make money, by taking winnings and ensuring nobody wins more than you do.

I get why it's set up like this. They're not in it to lose money. But to me, people counting cards aren't unethical, because they're not cheating; they're playing the game well, but it's not good for the casino's business model. If the only ethical way to gamble is to let the casino always have the only legally available edge, then to be ethical is to accept that casinos are a sucker's bet. Which they are, but more power to people who beat the casinos at their own game.
posted by krinklyfig at 6:51 PM on March 1, 2018 [7 favorites]


It's interesting that he lost money the first time he tried it and again the first time he pooled a bunch of his family's money, but was so certain of the math that he went right back and tried it again with more money, and convinced his family to do the same.

It's like the opposite of a gambler who wins a couple times and convinces himself he's on "a streak."
posted by straight at 7:09 PM on March 1, 2018 [5 favorites]


It's an advantage, but it's only an advantage to those who can afford it... all it takes is several thousand dollars a pop

This is a really deep point! There are a lot of things that have a positive expected return, but will lead to bankruptcy if you don't have a lot of money to start with. Pascal and Fermat explored this in the 1650s. In normal life, this comes up all the time. I could almost certainly make money flipping houses, but even a single failed house flip could lead to bankruptcy, so I don't do it. I could almost certainly make more money by getting a different job, but if it didn't work out I'd be unemployed and homeless, so I don't. Even if rich people didn't capture the tax system to make themselves richer, they would naturally be able to take bigger risks and make more money than everyone else.
posted by miyabo at 8:09 PM on March 1, 2018 [11 favorites]


The thing that struck me is that so few people apparently understand enough math to have noticed that loophole in the lottery. I didn't realize the situation for knowledge of math was that dire.
posted by Nancy Lebovitz at 9:41 PM on March 1, 2018


The thing that struck me is that so few people apparently understand enough math to have noticed that loophole in the lottery.

To be fair, even on MetaFilter the consensus trotted out again and again is that lotteries are a scam and not worth it, you're vanishingly unlikely to win, etc. So why would I go around checking the maths behind lottery odds when everyone says they're a scam? Few people notice the loophole because few people look for it.

What's the deal with the people keeping all the losing tickets "for the IRS"? Is it to show they bought loads of tickets and didn't somehow fake just the winning ones?
posted by EndsOfInvention at 2:29 AM on March 2, 2018 [1 favorite]


What's the deal with the people keeping all the losing tickets "for the IRS"? Is it to show they bought loads of tickets and didn't somehow fake just the winning ones?

I assume they declared the price of the losers as business expenses or losses for their betting corporation to minimize their tax obligations, and therefore needed to keep them around to prove they hadn't inflated their declared losses.
posted by aerobic at 3:08 AM on March 2, 2018 [5 favorites]


It's like they're saying, 'Look! Our two deck blackjack tables make it even easier to count cards! By the way, if we even suspect that you're counting cards, you will be banned for life.'

Yeah, I've heard this is pretty much what they're saying except that they really love most "card counters" and won't ban them because they're terrible at it. It's only the competent ones they don't want playing.

The "best" is when someone is banned for winning too much without even doing something like counting cards or negotiating their way into an edge (à la Ivy & Sun, it wasn't exactly "laid out for them", afaik explosion). I can't find the story right now, but I seem to remember Tony G being banned from a casino for winning too much on one of their high stakes video poker machines. Maybe they assumed he had an exploit (and hell, maybe he did?), but as far as I can remember it was just persistence, a high bankroll, and luck.

And the way that it distorts morality: "If you could do it, wouldn't you?"

Distorts the morality of taking money from a lottery?
posted by ODiV at 7:39 AM on March 2, 2018


Few people notice the loophole because few people look for it

The description of the actual job (sit at a loto machine printing lotto tickets in some convenience store for 10 hours a day) is enough to ward me away from it, money or not.
posted by The_Vegetables at 9:00 AM on March 2, 2018 [3 favorites]


Pedant Moment: There is a yellow Dodge Omni or Plymouth Horizon in the background of the photo labelled "Marge and Jerry Selbee in 1974" but those cars were made from 1977 to 1990.
posted by Kwine at 9:20 AM on March 2, 2018 [2 favorites]


After a day's reflection, the most fascinating part of the story, to me, is that none of the 3 high-betting pools ever won the jackpot.
posted by smokysunday at 9:31 AM on March 2, 2018 [6 favorites]


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