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Couple wins millions using lottery loophole

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Re: Couple wins millions using lottery loophole

#121

Post by caymanjim »

izzydata wrote: post #95
ptaipale wrote: post #89

Earlier quoted context omitted.

Everywhere, people say they prefer lotteries where there are more prizes with smaller wins, instead of one winner with huge jackpot. But also everywhere, their actual bahaviour is that when there is one big jackpot, they bet more. And those who arrange lotteries do know their business.

That's probably true. They should try to educate people that if there are 250 times as many winners that your chances of winning a significant amount of money is much higher.

People aren't betting that way because they're uneducated. People generally don't play the lottery because it's statistically wise. They play because dropping $1-3 on a ticket is no big deal, and it provides a little excitement and lets them fantasize about the winnings. Fantasizing about what you'd do with $250M is a lot more exciting than fantasizing about what you'd do with $1M, and once the odds are low enough, any emotional investment in the math is going to be lost in the rounding error.

Re: Couple wins millions using lottery loophole

#122

Post by ikeyany »

izzydata wrote: post #95
ptaipale wrote: post #89

Earlier quoted context omitted.

Everywhere, people say they prefer lotteries where there are more prizes with smaller wins, instead of one winner with huge jackpot. But also everywhere, their actual bahaviour is that when there is one big jackpot, they bet more. And those who arrange lotteries do know their business.

That's probably true. They should try to educate people that if there are 250 times as many winners that your chances of winning a significant amount of money is much higher.

If the lottery was in the business of educating people, they would lose their customer base.

Re: Couple wins millions using lottery loophole

#123

Post by [deleted] »

yomly wrote: post #27
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...

Look up Joan Ginther - ex-Stanford statistician and she won scratchcard lotteries multiple times (I seem to recall by arbing non-uniform geographical distribution of winning cards). Unfortunately I can't find a technically satisfying article and don't have ability to find one right now...

[deleted]

Re: Couple wins millions using lottery loophole

#124

Post by kazinator »

SilasX wrote: post #118
twic wrote: post #70

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 pr…

Um, needing millions to risk on this means it isn't "available to everyone". And yes, it is a risk, even if your mask is solid. There's always the risk that the lottery commission could say "oh, come on, the terms and conditions prohibit this kind of thing", leading to a protracted legal battle.

If you have a 60% rate of return from a single play, it only takes some 15 rounds of compounding to pass your first million, starting with $1000.

Re: Couple wins millions using lottery loophole

#125

Post by gylterud »

basementcat wrote: post #114
Johnny555 wrote: post #112

Earlier quoted context omitted.

I think if you could educate people on their expected return from a lottery ticket purchase, they wouldn't play at all. Telling people that they have a 95% chance of winning nothing at all is not a good way of selling lottery tickets.

Expected return may be helpful but imo not sufficient without variance. Some cumulative jackpots are large enough that the expected return is actually profitable but the probability of actually hitting the numbers is vanishingly small.

However, even with positive expectation value, you should not always play. One should first check the Kelly criterion, which is well explained Russel O’Connor’s blog post:

“Do Not Play the Lottery Unless You Are a Millionaire” http://r6.ca/blog/20090522T015739Z.html

Re: Couple wins millions using lottery loophole

#126

Post by [deleted] »

maxxxxx wrote: post #117
ptaipale wrote: post #89

Earlier quoted context omitted.

Everywhere, people say they prefer lotteries where there are more prizes with smaller wins, instead of one winner with huge jackpot. But also everywhere, their actual bahaviour is that when there is one big jackpot, they bet more. And those who arrange lotteries do know their business.

When I play (I don't know why but somehow I find it fun) I actually play SuperLotto which has a chance of 1 in 41,416,353 vs 1 in 292,201,338 with PowerBall. Better to make a few million with better odds than a few hundred million with worse odds. Never mind that it's much more likely that I will get struck by lightning :-(

[deleted]

Re: Couple wins millions using lottery loophole

#128

Post by kickopotomus »

treydey wrote: post #2

Can anyone explain the strategy like I'm 5? I'm confused by his answer.

It might make a little more sense with the numbers. WinFall was a typical lottery game where you choose 6 of 46 numbers[1]. As with most lottery games, there is a jackpot payout but there are also payouts for matching 3, 4, and 5 of the numbers. The odds breakdown goes like this[2]:

  Result | Odds
  -------------
  6 of 6 | 1 in 9,366,819
  5 of 6 | 1 in 39028.41
  4 of 6 | 1 in 800.58
  3 of 6 | 1 in 47.40
  2 of 6 | 1 in 6.83
The issue with WinFall is that when the jackpot increased past $5MM, the expected value of the non-jackpot winnings becomes favorable to the player. I.e. a 5-of-6 matching ticket might normally yield $4,000 but may yield >$20,000 for a "Roll-down" game. So if you go out and buy 200,000 tickets for the roll-down game (assuming all tickets are different and numbers are selected at random), you should expect to have 5 5-of-6 tickets, 250 4-of-6 tickets, 4,219 3-of-6 tickets, and 29,283 2-of-6 tickets. The combined winnings of all of those tickets makes it profitable.

[1]: https://www.mass.gov/files/documents/2016/08/vv/lottery-cash...

[2]: https://en.wikipedia.org/wiki/Lottery_mathematics

Re: Couple wins millions using lottery loophole

#129

Post by p1necone »

Johnny555 wrote: post #112
izzydata wrote: post #95

Earlier quoted context omitted.

That's probably true. They should try to educate people that if there are 250 times as many winners that your chances of winning a significant amount of money is much higher.

I think if you could educate people on their expected return from a lottery ticket purchase, they wouldn't play at all. Telling people that they have a 95% chance of winning nothing at all is not a good way of selling lottery tickets.

I think it's naive to value a lottery based solely on your monetary expected value. The value of money doesn't increase linearly, and isn't the same for everyone. $20 could have an inconsequential effect on my quality of life, while winning say $2 million could be a total life changer.

Likewise, the difference in impact between winning $0 and winning $2 million is likely a lot larger than the difference between winning $2 million and winning $4 million. So a straight EV calculation doesn't really tell the whole story.

There's also the entertainment value of participating in the lottery to consider, even when you win nothing.

Re: Couple wins millions using lottery loophole

#130

Post by dsfyu404ed »

SilasX wrote: post #118
twic wrote: post #70

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 pr…

Um, needing millions to risk on this means it isn't "available to everyone". And yes, it is a risk, even if your mask is solid. There's always the risk that the lottery commission could say "oh, come on, the terms and conditions prohibit this kind of thing", leading to a protracted legal battle.

> There's always the risk that the lottery commission could say "oh, come on, the terms and conditions prohibit this kind of thing", leading to a protracted legal battle.

Not sure why this is down-voted. It's spot on.

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