Boston Globe blows the lid off an M.I.T. syndicate that appears to have made a cool $8 million fixing the lottery:
[Massachusetts Inspector General Gregory W.] Sullivan’s report details the way a handful of math and science wizards, including Massachusetts Institute of Technology undergraduates looking for an interesting school project, turned Cash WinFall into a nearly fulltime business, spending $40 million on tickets over a seven-year period and winning an estimated $48 million.
And lottery officials were happy about the huge sales to these sophisticated gamblers, bending and breaking lottery rules to allow them to buy hundreds of thousands of the $2 tickets, Sullivan found. If anything, lottery officials were envious, with one supervisor asking in an e-mail: “How do I become part of the club when I retire?”
The scheme revolved around using large numbers of ticket sales to trigger a period in which the odds of winning big increased. At least, as far as I can tell. I can see why the officials wouldn’t want to be *too* specific here.
The Globe reported last summer that a few gamblers with an extraordinary knowledge of math and probability had found a quirk in Cash WinFall shortly after it was introduced in 2004, allowing them to make an almost guaranteed profit as long as they purchased enough tickets at the right time. They figured out that, for a few days every three months or so, Cash WinFall became the most reliably lucrative lottery game in the country.
[MIT student] James M. Harvey told investigators he was looking for an interesting senior independent study subject for his final semester in 2005. He said it took only a few days to determine that during so-called “rolldown weeks,” it was easy for large-scale bettors to win more than they lose.
Here’s why: Unlike most lottery games, the biggest prize in Cash WinFall was capped at $2 million. If no one won the jackpot when it reached $2 million, the jackpot was then redistributed — or “rolled down” — into the smaller prizes, making them 5 to 10 times bigger than normal. Matching 5 of the 6 numbers drawn in Cash WinFall would normally produce a $4,000 prize, but during a rolldown week, the prize could top $40,000.
The groups figured out that if they bought at least $600,000 worth of tickets, the chances were excellent that they would win back 15 percent to 20 percent more than they spent. As a result, whenever the Cash WinFall jackpot got close to $2 million, the syndicates rushed to stores to buy as many tickets as possible.