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Couple wins millions using lottery loophole

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Re: Couple wins millions using lottery loophole

#61

Post by soneil »

caf wrote: post #34
Slartie wrote: post #25

When I read this kind of stories about US lotteries (and there seem to be several of this kind of stories going around), I always wonder how on earth it is possible for so many cases of failed lottery rule design to exist in the first place, and for those clear failures to persist for so long. Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal…

Long before that point, lotteries that decide to innovate in game design don't have a professional actuary on the staff to run the ruler over the designs?

That's the weird part for me. Surely inventing a whole new game mechanic, must be their industry's version of rolling your own encryption?

Re: Couple wins millions using lottery loophole

#62

Post by soneil »

Piskvorrr wrote: post #9
tylerhou wrote: post #5

Earlier quoted context omitted.

But which set of tickets do you buy?

From the article, it seems that it doesn't matter, they're random. (Or were random, apparently it's over now, doesn't matter.) To make up an example: Let's say that betting $1 in some way has a 4% chance of winning, and the payout is 20x bet, so if you win on one ticket, you get $20. So, you buy a lot of tickets (say 1000), and you pay $1000. Most of them don't win anything, but 4% of them win $20; $1000 x 4% x 20 =…

> Of course, this will only work if you buy many tickets; buying one or two, you're unlikely to win anything at all.

That's the important part here. You can always win the lottery if you can buy enough tickets. To match all (n) numbers, you need to buy one ticket for every possible combination. To match (n-1), you need to buy a lot less.

But in a normal game, the cost of doing so is more than the payout. So if I have a dollar-game "guess a number between one and ten", and you can win $6 - it's not worth buying ten tickets, even if it guarantees you a win. But if I say "one day only, double the winnings!" - now $10 guarantees you $12 back.

The odds don't change, just the profitability of them.

Re: Couple wins millions using lottery loophole

#63

Post by soneil »

zawerf wrote: post #24
pliny wrote: post #15

Earlier quoted context omitted.

If the ticket has an expected positive return for the buyer, then the state must be losing money.

I feel like mathematically, you must be right. One of the sides must be calculating their expected value wrong. For example I can offer to pay a $3 jackpot (split across winners) for a $1 game for guessing heads or tails. If more than 3 people play the game, I make money. For each player, the naive way to calculate expected return is $3 * 0.5 + $0 * 0.5 - $1 = $0.5. So the players also think they are making money. Bu…

The simple correction is that the pot doesn't live in your pocket. And the lottery don't offer a fixed jackpot, they offer the contents of the pot.

So a realistic correction of this, would be that for each $1 game, 50 cents goes in the pot, 50 cents goes in your pocket. If 3 people play and all 3 win, their payout is 50 cents. Obviously 50/50 odds lead to a disappointing game for the players - a bigger pot needs lower odds - but either way, the house never loses.

Re: Couple wins millions using lottery loophole

#64

Post by 5555624 »

Slartie wrote: post #25

When I read this kind of stories about US lotteries (and there seem to be several of this kind of stories going around), I always wonder how on earth it is possible for so many cases of failed lottery rule design to exist in the first place, and for those clear failures to persist for so long. Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal…

>Did no one notice that the lottery always lost huge sums of money during the Rolldown draws, while it gained money on normal draws (as it should always be the case)?

The state never "loses." In this case, for example, the MIT group "17 and $18 million ... over a seven-year period, earning at least $3.5 million in profits," yet the state made $120 million. Even if the state noticed, why would they care? Pay out $3.5 million to make $120 million? Why not. The problem is that it :"sounds" rigged.

>No one noticed that certain convenience stores suddenly sold hundreds of thousands worth of tickets in these draws, while most other stores sold a normal amount?

Someone noticed, because they tipped off the Boston Globe that "in certain Massachussetts locations, Cash Winfall tickets were being sold at an extraordinary volume." Again, it "sounds" rigged.

The average person is not going to think that a lottery has a "loophole" in it. The average person thinks something like that can't happen.

Re: Couple wins millions using lottery loophole

#66

Post by js2 »

danielecook wrote: post #16

Love hearing stories like this where people gained because of some loophole. Does anyone know if there is a compilation somewhere of these? See also: https://www.businessinsider.com/us-mint-ends-the-dollar-coin...

“A nationwide reporting adventure tracks improbably frequent lottery winners”:

https://www.cjr.org/united_states_project/lottery-winners-fo...

Discussion:

https://news.ycombinator.com/item?id=15262440

Re: Couple wins millions using lottery loophole

#67

Post by diminoten »

tylerhou wrote: post #5
Piskvorrr wrote: post #4

Earlier quoted context omitted.

If nobody wins the big jackpot ("guess all the numbers") for some time, parts of it are given to the smaller winners ("guess a few of the numbers"). In this case, which happened once in a while, it became more likely that you'll win more than you have bet. Usually this means you'll win some $50; they have bet many, many times, and won $50 times many. Doesn't work any more, rules have changed so this way of winning wa…

But which set of tickets do you buy?

They apparently announced when this was going to happen, so it was more about timing than buying specific tickets.

Re: Couple wins millions using lottery loophole

#68

Post by diminoten »

pliny wrote: post #15
thaumasiotes wrote: post #12

Earlier quoted context omitted.

The state makes money from every ticket purchased. The lottery simply pays out a fixed percentage of ticket revenue. More ticket sales means more money to the state, regardless of whether those tickets, when purchased, had an expected positive or negative return.

If the ticket has an expected positive return for the buyer, then the state must be losing money.

No, because the payout for the state (the amount they planned on losing) was always the same. The amount was "lost" regardless, it just depended on if it went to one big winning ticket or hundreds/thousands of smaller winning tickets.

Re: Couple wins millions using lottery loophole

#70

Post by twic »

The paper's reporting revealed that two groups were dominating Cash Winfall: the Selbee gang from Evart, Michigan, and their competition, a syndicate led by math majors from MIT, the Massachusetts Institute of Technology. These were kids young enough to be the Selbees' grandchildren.

Incredibly, the MIT group bet between $17 and $18 million on Cash Winfall over a seven-year period, earning at least $3.5 million in profits. Almost the exact same rate of return as the Selbees.

A nice illustration of the fact that there is only one mathematics, and it's equally available to everyone!

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