The main strategy is the tremendously complicated scheme of "buy as many tickets as you can physically key in, any time the prize pool goes above $x." Everyone who played the Michigan or Massachussets lottery that week was "hacking" the lottery the exact same way!
That's not quite the optimum solution - what if you accidentally played the same numbers a million times, instead of a million different sets of numbers? So you should make sure you spread out your plays. However, I believe spreading them randomly is "good enough": the interesting maths only improves your edge a tiny amount.
TFA is, to put it politely, incomplete. They played both the Michigan and a later Mass state lottery. It looks like the Michigan lottery may not have detected them.
this is the best article on the topic. Probably my favorite article ever, actually. I also like how it frames Selbee as an average joe-turned-convenience store owner with a side interest in math, instead of how TFA frames him as a mathematician.
> All they’ve done is renovate their house and pay for their 14 grandchildren's college funds.
State lotteries love to go on how their proceeds are used for education. But I bet 14 full rides to college on $8MM is a greater impact on education than what the state achieves with the same amount.
>> But I bet 14 full rides to college on $8MM is a greater impact on education than what the state achieves with the same amount
When I was in college, I did some pharmaceutical testing with a local company. We had three colleges in the area so it was perfect for recruiting healthy males between the ages of 18-35.
They came out with some advertising showing they paid college kids more money in six months than the state did in tuition support at all three colleges combined. It was enough to get the state's attention and got them involved in how they both could be doing more for the state's college system. I know at one point the company was donating a LOT of money to all three colleges Pharma school and hiring a lot of their students. It provided them a nice pipeline of talent.
EDIT: The company was out of North Dakota. All the stuff we tested was already FDA approved. Most of the studies were companies looking to get less expensive generic forms of those drugs into the market. Here's some of the tests I was in:
- Naproxen
- Sudafed (it was a nasal variety for decongestion)
They created 14 college funds because each individual 529 allows a lump sum $150k married gift tax free. With that only totalling $2.1m of tax free income, I’m confident they did a lot more stuff with the remaining $5.9m.
Anyway it’s kind of ironic you are comparing the state’s education spending to a tax avoidance scheme.
He won $26M but spent $18M to do so. Still very impressive, but not quite the impression given by the headline.
> But at this point, Jerry had won more than $26 million dollars from the state lottery. After deducting for expenses, they took in more than $8 million in profit.
A lot of gamblers ignore the "expense" column when talking about their winnings. I had a friend would would go to Reno 2-3 weekends a month and brag about winning $500 or 1000. He never really talked about the fact that on most weeks he came home with empty pockets.
This article was written by someone who doesn't understand math or the history of people beating lotteries.
There are many lotteries that have times with an expected positive payout. The key is that the payout can't be shared. Most of the big lotteries have times like this but the chances of having to share it ensure the payout is never positive.
I love that this guy pulled this off. It's a great story.
I was reminded of the story of Mohan Srivastava[1], an MIT/Stanford-trained statistician, who found a flaw in the Ontario Lottery's "Tic-Tac-Toe" instant game. There's a great quote from Mr. Srivastava re: his morality and exploiting the flaw he found:
"People often assume that I must be some extremely moral person because I didn't take advantage of the lottery," he says. "I can assure you that that's not the case. I'd simply done the math and concluded that beating the game wasn't worth my time."
I have a different reaction: it is not an ethical thing to do. There are lots of things people can do to get money - but this doesn't mean people should do them. Isn't the ethical thing to do to report the problem so that the system can't be gamed by others?
Jerry studied those winning odds, and the timing of those Roll Downs. He realized that, statistically, a single one dollar lottery ticket was worth more than one dollar in those final weeks.
The state's error was being too slow with "Roll Downs."
10 years, $26M revenue, $8M profit. $800K/year; I guess taxes were counted in the $18M expenses. Nice "side-gig" to running a convenience store!
In a proper lottery (i.e. balls randomly extracted out of a machine), the odds are the same for each combination of numbers, surely...? How did they produce these odds, artificially?
I don’t understand why the state would care. They take their cut off the top. If there is excess unclaimed jackpot money that accumulates week to week until expected values go positive why does that hurt them?
Question: How can he be right about the estimated value of a ticket when the number of buyers is unknown? Should the game not swing back once the "hack" is made public?
You can also clock how long it takes to sell tickets at gas stations and calculate a theoretical maximum because you can get all of the selling locations.
My (general) understanding is in these lotteries, whenever there's a rolldown, all tickets are positive EV, regardless of the number of tickets bought. Although, it certainly would get slim if the number was very high. I think there were three known large scale buying groups for the MA rolldown lottery?
The exciting technique was determining when your buying could trigger a rolldown, possibly without it being previously announced.
Assuming they sold lotto tickets at their convenience store and that the couple actually worked at the counter, they could probably get a pretty solid gut feel for the relative demand of each drawing based on the number of tickets they sold.
Here in NL it was the state that hacked the lottery. They did not advertise the fact that all the unsold numbers competed for the prize as well and inflated the number of tickets to ensure that this was very often the case.
That's all of a piece with the other state "hack" of advertising one "prize" and actually paying an annuity based on that amount (or the value of the annuity).
how is this not random feel good advertisement? people always assume that when an entity momentarily loses that it was gamed, while that entity may profit in the long run from allowing to be occasionally gamed, which then after the fact spreads like wildfire and while most readers eventually give up trying to find a flaw, it did succeed in obsessing them for a prolonged amount of time that they just roll with it and go out to buy some tickets even though they didn't succeed in finding a flaw...
How is gaming a lottery a subject for a founders handbook? That seems like over emphasis on the role of chance in starting companies and arguably the opposite of achieving market fit.
[+] [-] lqet|5 years ago|reply
If you are interested in how exactly he did it, here is a more detailed description:
https://math.berkeley.edu/~kpmann/ellenberg.pdf
[+] [-] dmurray|5 years ago|reply
That's not quite the optimum solution - what if you accidentally played the same numbers a million times, instead of a million different sets of numbers? So you should make sure you spread out your plays. However, I believe spreading them randomly is "good enough": the interesting maths only improves your edge a tiny amount.
[+] [-] knuthsat|5 years ago|reply
From my own research, the sets of tickets that give you the best chances still have negative expectation of reward.
[0]: https://en.wikipedia.org/wiki/Lottery_mathematics#Minimum_nu...
[+] [-] based2|5 years ago|reply
[+] [-] ab3rC1te|5 years ago|reply
[deleted]
[+] [-] phreeza|5 years ago|reply
[+] [-] actusual|5 years ago|reply
[+] [-] muststopmyths|5 years ago|reply
https://highline.huffingtonpost.com/articles/en/lotto-winner...
[+] [-] kevinwang|5 years ago|reply
Previous discussion on the good article: https://news.ycombinator.com/item?id=16494280
Honestly, the currently linked article seems to me like low-effort blogspam.
[+] [-] Udo_Schmitz|5 years ago|reply
[+] [-] mywittyname|5 years ago|reply
State lotteries love to go on how their proceeds are used for education. But I bet 14 full rides to college on $8MM is a greater impact on education than what the state achieves with the same amount.
[+] [-] at-fates-hands|5 years ago|reply
When I was in college, I did some pharmaceutical testing with a local company. We had three colleges in the area so it was perfect for recruiting healthy males between the ages of 18-35.
They came out with some advertising showing they paid college kids more money in six months than the state did in tuition support at all three colleges combined. It was enough to get the state's attention and got them involved in how they both could be doing more for the state's college system. I know at one point the company was donating a LOT of money to all three colleges Pharma school and hiring a lot of their students. It provided them a nice pipeline of talent.
EDIT: The company was out of North Dakota. All the stuff we tested was already FDA approved. Most of the studies were companies looking to get less expensive generic forms of those drugs into the market. Here's some of the tests I was in:
- Naproxen
- Sudafed (it was a nasal variety for decongestion)
- Diclofenac
- Zinc Acetate
- Doxycycline
[+] [-] an_opabinia|5 years ago|reply
Anyway it’s kind of ironic you are comparing the state’s education spending to a tax avoidance scheme.
[+] [-] gnicholas|5 years ago|reply
> But at this point, Jerry had won more than $26 million dollars from the state lottery. After deducting for expenses, they took in more than $8 million in profit.
[+] [-] ogre_codes|5 years ago|reply
[+] [-] driverdan|5 years ago|reply
There are many lotteries that have times with an expected positive payout. The key is that the payout can't be shared. Most of the big lotteries have times like this but the chances of having to share it ensure the payout is never positive.
[+] [-] EvanAnderson|5 years ago|reply
I was reminded of the story of Mohan Srivastava[1], an MIT/Stanford-trained statistician, who found a flaw in the Ontario Lottery's "Tic-Tac-Toe" instant game. There's a great quote from Mr. Srivastava re: his morality and exploiting the flaw he found:
"People often assume that I must be some extremely moral person because I didn't take advantage of the lottery," he says. "I can assure you that that's not the case. I'd simply done the math and concluded that beating the game wasn't worth my time."
[1] https://www.wired.com/2011/01/ff-lottery/
[+] [-] Upvoter33|5 years ago|reply
[+] [-] Scoundreller|5 years ago|reply
I don’t see why this is a mistake. Every lotto should do it, but I can see why they don’t.
[+] [-] adolph|5 years ago|reply
The state's error was being too slow with "Roll Downs."
10 years, $26M revenue, $8M profit. $800K/year; I guess taxes were counted in the $18M expenses. Nice "side-gig" to running a convenience store!
[edit: 10 years, not !0 years.]
[+] [-] driverdan|5 years ago|reply
[+] [-] mikewarot|5 years ago|reply
[+] [-] toyg|5 years ago|reply
[+] [-] dangus|5 years ago|reply
[+] [-] ajarmst|5 years ago|reply
[+] [-] JackFr|5 years ago|reply
[+] [-] Maxburn|5 years ago|reply
[+] [-] choeger|5 years ago|reply
[+] [-] busterarm|5 years ago|reply
You can also clock how long it takes to sell tickets at gas stations and calculate a theoretical maximum because you can get all of the selling locations.
[+] [-] toast0|5 years ago|reply
The exciting technique was determining when your buying could trigger a rolldown, possibly without it being previously announced.
[+] [-] kyleblarson|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] the_decider|5 years ago|reply
[+] [-] czottmann|5 years ago|reply
I don't think the headline "Old man used math to win $26M" would've fared worse.
[+] [-] iainctduncan|5 years ago|reply
[+] [-] mxie-ca|5 years ago|reply
[+] [-] jo6gwb|5 years ago|reply
[+] [-] fitzroy|5 years ago|reply
https://highline.huffingtonpost.com/articles/en/lotto-winner...
[+] [-] mhb|5 years ago|reply
https://www.theatlantic.com/business/archive/2016/02/how-mit...
[+] [-] jacquesm|5 years ago|reply
[+] [-] mhb|5 years ago|reply
[+] [-] DoctorOetker|5 years ago|reply
[+] [-] m0llusk|5 years ago|reply