In many ways, WinFall was like all the other lottery games. However, it had one important difference: Usually, when nobody wins the jackpot in a lottery, the prize rolls over to the next draw. If there’s no winning ticket next time, it rolls over again and continues to do so until somebody eventually matches all the numbers. The problem with rollovers is that winners—who are good publicity for a lottery—can be rare. And if no smiling faces and giant checks appear in the newspapers for a while, people might stop playing.
Massachusetts Lottery faced precisely that challenge in 2003, when its Mass Millions game went without a winner for an entire year. They decided that WinFall would avoid this awkward situation by limiting the jackpot. If the prize money rose to $2 million without a winner, the jackpot would “roll-down” and instead be split among the players who had matched three, four, or five numbers.
Before each draw, the lottery published its estimate for the jackpot, which was based on ticket sales from previous draws. When the estimated jackpot reached $2 million, players knew that the money would roll-down if nobody matched six numbers. People soon spotted that the odds of winning money were far better in a roll-down week than at other times, which meant ticket sales always surged before these draws.
As he studied the game, Harvey realized that it was easier to make money on WinFall than on other lotteries. In fact, the expected payoff was sometimes positive: When a roll-down happened, there was at least $2.30 waiting in prize money for every $2.00 ticket sold.
In February 2005, Harvey formed a betting group with some of his fellow MIT students. About 50 people chipped in for the first batch of tickets—raising $1,000 in total—and tripled their money when their numbers came up. Over the next few years, playing the lottery became a full-time job for Harvey. By 2010, he and a fellow team member incorporated the business. They named it Random Strategies Investments, LLC, after their old MIT accommodations.
Other syndicates got in on the action, too. One team consisted of biomedical researchers from Boston University. Another group was led by Gerald Selbee, a retired shop owner and former math student who had previously had success with a similar game elsewhere. In 2003, Selbee had noticed a loophole in a Michigan lottery game that also included roll-downs. Gathering a 32-person-strong betting group, Selbee spent two years bulk-buying tickets—and winning jackpots—before that lottery was discontinued in 2005. When Selbee’s syndicate heard about WinFall, they turned their attention to Massachusetts. There was a good reason for the influx of such betting teams: Cash WinFall had become the most profitable lottery in the United States.
During the summer of 2010, the WinFall jackpot again approached the roll-down limit. After a prize of $1.59 million went unclaimed on August 12, the lottery estimated that the jackpot for the next draw would be around $1.68 million. With a roll-down surely only two or three draws away, betting syndicates started to prepare. By the end of the month, they planned to have thousands more dollars in winnings.