The Smart People Who Beat the Lottery

By Joshua Green

I'm a little late getting to this, but there's a fascinating story in the Boston Globe about a group of very clever people -- including computer scientists at MIT -- who figured out a way to beat an obscure Massachusetts lotto game called Cash WinFall and have quietly been making a small fortune doing so ever since. (At least they were making a fortune -- presumably the Globe piece will end that.) As careful readers of this blog know, this is a subject that fascinates me and that I've written about previously, first to highlight the story of Mohan Srivastava -- a geological statistician in Toronto who figured out how to beat a scratch-off game and then admirably tipped off the authorities -- and then to confess my own rudimentary and less-than-admirable method for beating scratchers, which I developed as a bored liquor store clerk in my youth. Here's the lede to the excellent Globe story:

Billy's Beer and Wine sold exactly $47 worth of lottery tickets the day before Marjorie Selbee arrived, just another sleepy day for the liquor store in this tiny Western Massachusetts town. But from the moment the 70-something woman from Michigan entered the store early July 12, Billy's wasn't sleepy anymore.

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.

This article available online at:

http://www.theatlantic.com/personal/archive/2011/08/the-smart-people-who-beat-the-lottery/243348/