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Couple wins millions using lottery loophole

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Re: Couple wins millions using lottery loophole

#71

Post by staticautomatic »

soneil wrote: post #60
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…

I think the irony is that from the organizer's point of view, it's essentially working as intended. The "windfall" mechanic was supposed to make rollovers more enticing by increasing the payout amounts for everyone. The only reason to make a lottery more enticing is to sell more tickets. So they sold more tickets, and made more payouts on lesser tickets. Exactly as they planned. The lottery doesn't actually lose out…

I don't understand why this is an issue since each drawing's odds are independent. Perhaps I don't understand how these pools work.

Re: Couple wins millions using lottery loophole

#72

Post by eridius »

soneil wrote: post #62
Piskvorrr wrote: post #9

Earlier quoted context omitted.

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…

In a normal lottery, if the pot gets large enough, even with the normal rules the "expected payout" of a ticket becomes higher than its list price. It's just that the chances of actually winning are so astronomically low that you'd have to be Jeff Bezos to stand a good chance of winning your bet (i.e. being able to buy enough tickets such that your chances of winning are worth the play, and then especially being able to absorb the loss when you lose anyway because it's still random).

What's interesting with the rolldown mechanism is not just that the "expected payout" of a ticket becomes worth more than its price, but that the number of winners is such that you can actually reasonably expect to turn a profit by buying a modest number of tickets.

Re: Couple wins millions using lottery loophole

#73

Post by eridius »

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.

For this to be true, every additional winning ticket purchased must result in a net loss to the state. But it doesn't, every additional winning ticket purchased is money going to the state. The losers in this case are the other people with winning tickets, because their payouts become smaller¹.

¹Well, given one assumption about how the game is run. The other assumption is that the 3- and 4-number winning tickets have a fixed payout calibrated such that this doesn't fully exhaust the pot, and in this case the "loser" for each additional winning ticket is whoever wins the full pot next time as the pot will be lower than it would otherwise have been.

Re: Couple wins millions using lottery loophole

#74

Post by wvenable »

coldcode wrote: post #69

I wish lotteries handed out many $1M prizes instead of giving $250M to one person. People understand what to do with $1M (I think) but most people are ruined by $250M.

The reason they don't do that is marketing; more people play for big jackpot. I think even saying there might 250 $1 million winners this week isn't as big of an enticement.

Re: Couple wins millions using lottery loophole

#75

Post by giarc »

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...

There is a story similar to the dollar coin gig to earn reward miles. A long time ago when plastic gift cards were first a thing, stores didn't have a way to update the balance. The scheme would be to buy a $100 gift card from Walmart using your credit card (getting the miles). You would then use the gift card to buy a $0.35 pack of gum. Since the store couldn't update the balance, they would give you cash as change. You could then just deposit the change to your bank and pay off the credit card. Rinse, repeat.

So for $0.35, you could get $100 in equivalent reward miles. Now stores have changed, they can now update balances on the card and therefore won't issue cash as change.

Re: Couple wins millions using lottery loophole

#76

Post by giarc »

tantalor wrote: post #58
chrismcb wrote: post #45

Earlier quoted context omitted.

You, and everyone else. That is the rule of the game. You aren't doing anything wrong. By that logic, any money winner is taking payours from future winners.

> You aren't doing anything wrong. That's debatable. Lotteries are supposed to be completely up to chance. If by your own ingenuity you exploit a weakness then you are tipping the scales in your favor, which is unfair to less clever players. It's basically the tragedy of the commons; everyone has the same chance of winning, but only you know you can safely risk more and win more, lessening the winning of others.

He didn't have insider knowledge though. He used the games own rules to play an advantage. Those rules were available to everyone, everyone could have done the same.

Re: Couple wins millions using lottery loophole

#77

Post by joshstrange »

js2 wrote: post #65

Previous discussion a year ago: https://news.ycombinator.com/item?id=16494280 On this submission: http://highline.huffingtonpost.com/articles/en/lotto-winners...

This is a MUCH better writeup than this recently submitted link. I remember reading it at the time, very well done.

Re: Couple wins millions using lottery loophole

#78

Post by toss1 »

tantalor wrote: post #58
chrismcb wrote: post #45

Earlier quoted context omitted.

You, and everyone else. That is the rule of the game. You aren't doing anything wrong. By that logic, any money winner is taking payours from future winners.

> You aren't doing anything wrong. That's debatable. Lotteries are supposed to be completely up to chance. If by your own ingenuity you exploit a weakness then you are tipping the scales in your favor, which is unfair to less clever players. It's basically the tragedy of the commons; everyone has the same chance of winning, but only you know you can safely risk more and win more, lessening the winning of others.

In this case, the Rolldown was specifically designed to increase the payouts in order to encourage more people to buy tickets.

This is a feature, not a bug.

The bug was the fact that it was only two groups of people figured this out.

Nobody improperly took anything from anyone.

This really only shows how much the lottery is an innumeracy tax. There was nothing hiding the fact that you can safely risk more and win more -- everyone had full access to this knowledge -- it was published right at the place of purchase. It is not like it was some insider secret available to only to friends of some corrupt programmer or something. It took him only 3 minutes to figure it out. You or I could have done the same.

So, totally fair.

Re: Couple wins millions using lottery loophole

#79

Post by module0000 »

staticautomatic wrote: post #71
soneil wrote: post #60

Earlier quoted context omitted.

I think the irony is that from the organizer's point of view, it's essentially working as intended. The "windfall" mechanic was supposed to make rollovers more enticing by increasing the payout amounts for everyone. The only reason to make a lottery more enticing is to sell more tickets. So they sold more tickets, and made more payouts on lesser tickets. Exactly as they planned. The lottery doesn't actually lose out…

I don't understand why this is an issue since each drawing's odds are independent. Perhaps I don't understand how these pools work.

It's an issue because of "sour grapes". The people that had been in the game longer feel the newcomers didn't deserve to win. Feeling that way led them to no longer play - and that is the issue. Fewer players = smaller pot = fewer players = smaller port = fewer player.... you get the idea.

Re: Couple wins millions using lottery loophole

#80

Post by UncleEntity »

tantalor wrote: post #43
chrismcb wrote: post #38

Earlier quoted context omitted.

Why would you feel bad? What woukd you have down that was wrong? You aren't taking money from anyone else.

You are taking money from the prize pool, i.e. payouts for future winners.

In these cases the prize pool didn't roll over. The states wanted to entice people to play and they fully succeeded in that goal...
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