Author Topic: Article: Lotto-Winners Gaming the System  (Read 6472 times)

JustGettingStarted1980

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Article: Lotto-Winners Gaming the System
« on: March 02, 2018, 05:26:29 PM »
http://highline.huffingtonpost.com/articles/en/lotto-winners/

These folks REALLY sound like Mustachians. Marge are you over here in MMM-land?

Enjoy,

JGS


living small

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Re: Article: Lotto-Winners Gaming the System
« Reply #1 on: March 02, 2018, 06:34:43 PM »
that is pure gold.

They are totally mustashians.

Appreciate the share!

Sarah Saverdink

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Re: Article: Lotto-Winners Gaming the System
« Reply #2 on: March 02, 2018, 07:37:31 PM »
Long, but interesting read. How neat!

Dee

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Re: Article: Lotto-Winners Gaming the System
« Reply #3 on: March 02, 2018, 07:46:04 PM »
Long read, indeed. They are definitely Mustachian in terms of avoiding lifestyle inflation but certainly not Mustachian in terms of taking their financial independence to spend their time doing interesting things, taking care of their health through fitness and nutrition or avoiding driving. They had a highly sedentary lifestyle doing a terribly boring job for years on end. Overall, I would not seem them as Mustachian.

rpr

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Re: Article: Lotto-Winners Gaming the System
« Reply #4 on: March 02, 2018, 07:55:06 PM »
Awesome story!!!

Travis

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Re: Article: Lotto-Winners Gaming the System
« Reply #5 on: March 02, 2018, 08:04:18 PM »
While interesting that they figured out how to game a state lottery, the man-hours they put in vs profit that had to be shared with investors doesn't look like it amounted to much money.  It was a great side-gig to the investors who just handed over some cash every month and let the math-obsessed retiree do all the work though.

rothnroll

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Re: Article: Lotto-Winners Gaming the System
« Reply #6 on: March 02, 2018, 09:36:38 PM »
Did they actually ever win the thing outright, after all of those tickets?

JustGettingStarted1980

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Re: Article: Lotto-Winners Gaming the System
« Reply #7 on: March 03, 2018, 03:00:09 PM »
Long read, indeed. They are definitely Mustachian in terms of avoiding lifestyle inflation but certainly not Mustachian in terms of taking their financial independence to spend their time doing interesting things, taking care of their health through fitness and nutrition or avoiding driving. They had a highly sedentary lifestyle doing a terribly boring job for years on end. Overall, I would not seem them as Mustachian.

Hey, it wouldn't be my bag either.... but they lived frugal lives, did what made them happy, and kept themselves busy in a productive manner. I'd consider that plenty mustachian.

marty998

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Re: Article: Lotto-Winners Gaming the System
« Reply #8 on: March 03, 2018, 03:15:56 PM »
Brilliant story, well done and good luck to them.


MrsWolfeRN

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Re: Article: Lotto-Winners Gaming the System
« Reply #9 on: March 03, 2018, 03:27:49 PM »
Interesting read, what they did doesn't strike me as any different than credit card travel hacking or extreme couponing. Reminds me of the guy who bought all those pudding cups.

Travis

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Re: Article: Lotto-Winners Gaming the System
« Reply #10 on: March 03, 2018, 04:14:27 PM »
Interesting read, what they did doesn't strike me as any different than credit card travel hacking or extreme couponing. Reminds me of the guy who bought all those pudding cups.

The travel hacker vibe was definitely there, particularly the kind who on occasion tries to buy every gift card in the store in one purchase or sits there at the register for a half hour creating money orders with stacks of cards and gets pissed off when the store manager suspects they're up to no good. 

Dicey

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Re: Article: Lotto-Winners Gaming the System
« Reply #11 on: March 03, 2018, 11:06:52 PM »
Very interesting! Thanks for the link.

dude

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Re: Article: Lotto-Winners Gaming the System
« Reply #12 on: March 05, 2018, 08:06:46 AM »
Fascinating read!!  I live here and MA and don't recall hearing about that story!

coynemoney

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Re: Article: Lotto-Winners Gaming the System
« Reply #13 on: March 05, 2018, 01:48:18 PM »
Fascinating read!!  I live here and MA and don't recall hearing about that story!

Same here - I don't remember this story. Actually in 2011 I was still at UMASS Amherst and living in Sunderland. I might've actually seen these two when I was buying beer. Weird.

fattest_foot

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Re: Article: Lotto-Winners Gaming the System
« Reply #14 on: March 06, 2018, 08:43:16 AM »
The article did not say, but I expect it would have if they did.  Based on the numbers I would say no.

And boy if that doesn't drive home how poor the odds of winning are. Several groups over years dumping hundreds of thousands of dollars and still can't hit the jackpot.

The most bizarre thing about the entire article is that the lottery officials just kind of looked the other way.

JustGettingStarted1980

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Re: Article: Lotto-Winners Gaming the System
« Reply #15 on: March 06, 2018, 10:11:01 AM »
Just FYI folks, I first saw the article on Longform.org

One of the few websites that focus on excellent traditional journalism from various outlets (The Atlantic, Wall Street Journal, New Yorker, even GQ and Vanity Fair). Highly recommended website for proper reading.

MrMoogle

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Re: Article: Lotto-Winners Gaming the System
« Reply #16 on: March 06, 2018, 11:27:46 AM »
The article did not say, but I expect it would have if they did.  Based on the numbers I would say no.

And boy if that doesn't drive home how poor the odds of winning are. Several groups over years dumping hundreds of thousands of dollars and still can't hit the jackpot.

They were intentionally avoiding the jackpot option, as I understood it? They only bought for the roll-down option.
Not exactly.  They bought when the roll-down happened, but they still could have won the jackpot during that time.  Roll down only happened if the jackpot wasn't won, but winning the jackpot would have been better.

MrMoogle

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Re: Article: Lotto-Winners Gaming the System
« Reply #17 on: March 06, 2018, 11:37:02 AM »
This was an interesting read, but I wound up with a bad taste in the end.

The thing that stood out to me was that they believed they were actually helping the lottery by buying more tickets.  The theory being that some percentage of each ticket goes to the state.  But then they only bought tickets when they could profit, so the states lost money to these group sales overall.  In reality their scheme contributed nothing, effectively taking profits away from the state.  Keep in mind the scale here - they profited $8M with virtually no risk.  That money should have gone to schools.  Then these people got upset when the games were shut down, I find that incredible and arrogant.

There is also some validity to the statement that they hurt the small time players, if anything by blocking access to several machines and eventually getting the game shut down.  They also broke several rules and engaged in dubious ethics by printing their own tickets and buying tickets outside of normal business hours.

After all this, it's amazing how the article ended portraying them in such a positive light.

The lottery officials still take the most blame for being complicit in the scheme.  They probably had financial incentives linked to the games gross revenues rather than the net profit.  They failed when they designed a game that could be beat, and failed even more by refusing to fix it.
Woops posted before I put a response.

Yes, they were not actually helping the fund.  Sadly, the money rarely actually goes to school funding (as in increases school funding), so it probably didn't hurt the schools, but it did take something away from another government program.  If I was doing it, I probably would have been upset too, I don't really find that incredible or arrogant. 

The whole winfall setup was implemented (intentionally or not) to lose money.  I'm pretty surprised no one on the government side did the analysis.  Or maybe they did do it, and decided it was acceptable.  It could be intentional and have a psychological reason.  If you won during the winfall, you would probably be more likely to play at other times.

I think they should be portrayed in positive light.  They did the analysis and put in the work.  Like someone said, their rates per hour probably weren't that great.  They enjoyed it though, they enjoyed finding and "exploiting" the bug.  They also shared the wealth, by helping a bunch of others. 
« Last Edit: March 06, 2018, 11:48:25 AM by MrMoogle »

MrMoogle

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Re: Article: Lotto-Winners Gaming the System
« Reply #18 on: March 06, 2018, 11:50:13 AM »
Not exactly.  They bought when the roll-down happened, but they still could have won the jackpot during that time.  Roll down only happened if the jackpot wasn't won, but winning the jackpot would have been better.

Jackpot cash would have been great, too, but they won plenty their way. They recognized the chances of winning the jackpot, focused on where their chance was (over many tickets in many games) ultimately certain, and did very well. Personally, I'd be happy with "very well" ;)

But yes, if jackpot was available during rolldown, it does speak to how the jackpot goal is extremely unlikely even with plenty of tickets. But their earnings? Score!
It's also interesting that if significantly more people played, it would no longer have worked, because the probability of hitting jackpot would have increased.  The chance of doing the winfall would have decreased, and therefore the expected value.

bacchi

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Re: Article: Lotto-Winners Gaming the System
« Reply #19 on: March 07, 2018, 02:53:07 PM »
Quote
Jerry was enraged. It was one thing to make large bets based on a certain system, like he had been doing, and it was another thing entirely to manipulate the mechanics of the game to crowd other bettors out.

Ha. Play within the rules of the game to manipulate the outcome? Outrageous!

alanB

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Re: Article: Lotto-Winners Gaming the System
« Reply #20 on: March 16, 2018, 01:33:28 PM »

YYK

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Re: Article: Lotto-Winners Gaming the System
« Reply #21 on: April 14, 2018, 05:45:45 PM »
If anyone was wondering how this worked, here is how.

Quote from: Artice
Jerry saw that you had a 1-in-54 chance to pick three out of the six numbers in a drawing, winning $5, and a 1-in-1,500 chance to pick four numbers, winning $100.

Quote from: Article
With the jackpot spilling over, each winning three-number combination would put $50 in the player’s pocket instead of $5, and the four-number winners would pay out $1,000 in prize money instead of $100

So if you buy 1500 tickets with randomly picked numbers, you would expect on average to get one ticket with four winning numbers, getting you the $1000 rolldown prize. And in those 1500 tickets, you would expect to get 1500/54 = 27 sets of three winning numbers, getting you $1350, for a total of $2350 with 1500 tickets, yielding a value of $1.57 per ticket. Now if you only buy 1500 tickets there's a good chance you will still lose money, as Jerry found out. As the number of tickets you buy gets higher, your payoff will approach 1.57x your buy-in.

Also,

Quote from: Article
Flip a quarter six times and you might get six heads even though you have better odds of getting three heads and three tails.

This is wrong. Every sequence of tosses of a fair coin is equally as probable as any other. So you are just as likely to get six heads, or six tails, or three heads and three tails. Indeed, out of 5000 coin tosses, you are just as likely to get 5000 heads as 2500 heads and 2500 tails. However, there are a lot more outcomes that have a mix of heads and tails, so you are more likely to get something approaching a near equal distribution of heads and tails than you are to get all heads or all tails.

mrmoolaman

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Re: Article: Lotto-Winners Gaming the System
« Reply #22 on: April 14, 2018, 09:40:56 PM »
so you are more likely to get something approaching a near equal distribution of heads and tails than you are to get all heads or all tails.

So what he said isn't wrong, then?

YYK

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Re: Article: Lotto-Winners Gaming the System
« Reply #23 on: April 15, 2018, 09:33:31 AM »
so you are more likely to get something approaching a near equal distribution of heads and tails than you are to get all heads or all tails.

So what he said isn't wrong, then?

Yes, that part is correct. The bit I quoted is not. There are 1.41e1505 possible ways to toss a coin 5000 times. Out of those, there are several thousand runs that differ from a perfect half and half distribution by only one toss, whereas there is only one run of 5000 heads and only one run of 5000 tails. So it is more likely to get a distribution that is nearly equal, even though an exactly equal distribution is exceedingly rare.

MrMoogle

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Re: Article: Lotto-Winners Gaming the System
« Reply #24 on: April 16, 2018, 10:08:45 AM »
*snip*

Quote from: Article
Flip a quarter six times and you might get six heads even though you have better odds of getting three heads and three tails.

This is wrong. Every sequence of tosses of a fair coin is equally as probable as any other. So you are just as likely to get six heads, or six tails, or three heads and three tails. Indeed, out of 5000 coin tosses, you are just as likely to get 5000 heads as 2500 heads and 2500 tails. However, there are a lot more outcomes that have a mix of heads and tails, so you are more likely to get something approaching a near equal distribution of heads and tails than you are to get all heads or all tails.
Actually, the article is correct.  Here's the case for 4 flips:
H H H H
H H H T
H H T H
H H T T
H T H H
H T H T
H T T H
H T T T
T H H H
T H H T
T H T H
T H T T
T T H H
T T H T
T T T H
T T T T

There's one case of 4 Heads, one case of 4 Tails, and 6 (4 choose 2) cases of 2 heads and 2 tails.
If you are assuming order when you say 2500 Heads and 2500 tails, meaning 2500 heads in a row, then 2500 tails in a row, then you are correct, but there are many combinations that give a total of 2500 heads and 2500 tails.  The higher the number, the less the relative standard deviation (I'm sure there is a real statistical term for that).

YYK

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Re: Article: Lotto-Winners Gaming the System
« Reply #25 on: April 16, 2018, 05:20:13 PM »
*snip*

Quote from: Article
Flip a quarter six times and you might get six heads even though you have better odds of getting three heads and three tails.

This is wrong. Every sequence of tosses of a fair coin is equally as probable as any other. So you are just as likely to get six heads, or six tails, or three heads and three tails. Indeed, out of 5000 coin tosses, you are just as likely to get 5000 heads as 2500 heads and 2500 tails. However, there are a lot more outcomes that have a mix of heads and tails, so you are more likely to get something approaching a near equal distribution of heads and tails than you are to get all heads or all tails.
Actually, the article is correct.  Here's the case for 4 flips:
H H H H
H H H T
H H T H
H H T T
H T H H
H T H T
H T T H
H T T T
T H H H
T H H T
T H T H
T H T T
T T H H
T T H T
T T T H
T T T T

There's one case of 4 Heads, one case of 4 Tails, and 6 (4 choose 2) cases of 2 heads and 2 tails.
If you are assuming order when you say 2500 Heads and 2500 tails, meaning 2500 heads in a row, then 2500 tails in a row, then you are correct, but there are many combinations that give a total of 2500 heads and 2500 tails.  The higher the number, the less the relative standard deviation (I'm sure there is a real statistical term for that).

You are quite right! For some reason I was thinking of a fixed order, completely disregarding that there are many orders that would get you the desired combination. Should've refreshed myself on prob theory before I go posting about it.

Seadog

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Re: Article: Lotto-Winners Gaming the System
« Reply #26 on: April 22, 2018, 05:23:46 AM »
The whole winfall setup was implemented (intentionally or not) to lose money.  I'm pretty surprised no one on the government side did the analysis.  Or maybe they did do it, and decided it was acceptable.  It could be intentional and have a psychological reason.  If you won during the winfall, you would probably be more likely to play at other times.

I think it was fairly obvious to them and intentional, and that was the point. When the jackpot got to big, they wanted to bring it back down to a normal size, so they increased the payouts. From a macro view point (and with the benefit of hindsight...) its painfully obvious. Say it was 2m and a winfall. Then, the next week its back to normal. Clearly, in order for that to occur the payout had to exceed 100% of ticket income in order for the jackpot to shrink.

I also thought about the jackpot question, and you must have been able to model that fairly easily too. Have an idea of how many tickets are sold, odds of the numbers hitting, and then just reduce your the EV of 1.57 appropriately.

I don't really see how anyone can be upset at them. It was a good deal for everyone whether you bought 1, 10, or 100k tickets, and you should have expected to make money. They were just clever enough to spot it.

atmartens

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Lotto-Winners Gaming the System
« Reply #27 on: July 11, 2018, 07:16:47 PM »
Just because something is legal doesn't make it right to do. Their winnings came from people who can't afford to play the lottery in the first place. But Gerald Selbee had a long habit of taking advantage of people even before his lottery scheme. Defrosting his fridge to make the beer look colder? Taping "lucky" pennies to lottery tickets to get people to buy them? I'm not impressed -- this couple could have made a much greater contribution to society had they wanted to.

Johnez

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Re: Lotto-Winners Gaming the System
« Reply #28 on: July 14, 2018, 07:16:59 PM »
Just because something is legal doesn't make it right to do. Their winnings came from people who can't afford to play the lottery in the first place. But Gerald Selbee had a long habit of taking advantage of people even before his lottery scheme. Defrosting his fridge to make the beer look colder? Taping "lucky" pennies to lottery tickets to get people to buy them? I'm not impressed -- this couple could have made a much greater contribution to society had they wanted to.

Their winnings came from the lottery. The lottery takes those people's money and then keeps 40% of ticket sales win or lose.

It's a shame that people who exercise a bit of thought and intelligence get demonized so easily. Everyone had the same info, this guy just spotted the flaw. The MIT guys were pretty shady tho.

GreenEggs

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Re: Article: Lotto-Winners Gaming the System
« Reply #29 on: July 14, 2018, 09:49:45 PM »
That was a good read.  I'm glad to hear that you can beat the odds if you're smart enough.  Wish I'd been smart enough...   ;)