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A rogue Romanian economist legally gamed the lottery

thehustle.co

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Re: A rogue Romanian economist legally gamed the lottery

#21

Post by femto113 »

bryanlarsen wrote: post #16
lev99 wrote: post #9

Earlier quoted context omitted.

Your EV numbers are high. If the EV was really significantly above 1.0 (say 1.5) then everyone would buy a lot of lotto tickets. It would be simple arbitrage. In reality all of those people buying extra tickets (because of the high perceived EV) would mean a higher chance of splitting the pot. Splitting the pot would reduce the real return by 1/2 for every person that purchased a ticket.

The odds of splitting the pot are calculated in my spreadsheet. In the first scenario, that decreases the EV from 2.15 to 1.11.

Problem with this calculation it it assumes that exactly one person/group undertakes the buy-every-ticket strategy. As soon as there are two or more groups the chances of splitting the pot goes to 100%.

Re: A rogue Romanian economist legally gamed the lottery

#22

Post by themodelplumber »

peterburkimsher wrote: post #5

When I was in my final year of high school, Coca-cola was giving away an iPod Nano to lucky winners who entered codes from plastic bottle caps or glass bottle labels. An iPod was given away once per day, except Monday, when they were given out once per hour. I was competing against the rest of Switzerland. Each code had to be entered on a website, earning 0, 5, 10, 20 or 50 points. You could then choose how many poin…

I have to wonder--given those impressive experiences, could you find a way to produce the resources you need without needing a job? From reading about your obvious gifts here, I would guess that if you had a list of criteria like how much you need to earn, and whatever other resources you require, you could figure out a clever way to meet those criteria. Job or no job.

Re: A rogue Romanian economist legally gamed the lottery

#23

Post by legohead »

IkmoIkmo wrote: post #3

Seems kind of silly that they hyped it up as some kind of mathematical savant genius story, when it seems like they just took a simple lottery system (x numbers give y combinations, which sell for $1 per combination, for a total payout of >$3y) where the logistics operation was the more impressive aspect.

Exactly.. from the main header graphic I thought this guy was going to set up some kind of mathematical physics model of a sphere with a lot of balls in it and be able to predict the outcome.

nope. he just bought all the tickets.

Re: A rogue Romanian economist legally gamed the lottery

#24

Post by peterburkimsher »

whamlastxmas wrote: post #18
peterburkimsher wrote: post #5

When I was in my final year of high school, Coca-cola was giving away an iPod Nano to lucky winners who entered codes from plastic bottle caps or glass bottle labels. An iPod was given away once per day, except Monday, when they were given out once per hour. I was competing against the rest of Switzerland. Each code had to be entered on a website, earning 0, 5, 10, 20 or 50 points. You could then choose how many poin…

I had a very similar story for the launch of the Xbox 360. Mountain Dew was auctioning one every 10 minutes with points. The obvious thing for me, though, was that you could get a code when signing up with your email. I had my own domain name at the time so I made a few hundred addresses and signed them all up. I actually won two Xboxes but never got the second one. Either they saw it was the same IP or caught on to…

Selling it after was a good idea - I built my own iPod Video by fixing broken iPods for friends, and didn't need the Nano in the end. After a few years I gave it to a kid at church in Shenzhen.

However, I did find a way to convert UBS KeyClub points into cash. They're a loyalty-card system similar to frequent flyer miles, and are worth 1 CHF per point. When my friends visited Geneva, we planned to spend the points in the Manora restaurant. But it was shut! After some thought, we found a store willing to accept the points, bought a suitcase, and returned it immediately for a cash refund. Then we had cash to buy a cheese fondue!

The exchange rate was even better when I could exchange points for iTunes songs - the songs were worth 1.40 CHF. So that's how I collected a lot of legal music in the early days of the iTunes Music Store.

Re: A rogue Romanian economist legally gamed the lottery

#25

Post by bryanlarsen »

femto113 wrote: post #21
bryanlarsen wrote: post #16

Earlier quoted context omitted.

The odds of splitting the pot are calculated in my spreadsheet. In the first scenario, that decreases the EV from 2.15 to 1.11.

Problem with this calculation it it assumes that exactly one person/group undertakes the buy-every-ticket strategy. As soon as there are two or more groups the chances of splitting the pot goes to 100%.

Actually, the spreadsheet assumes that nobody is undertaking the buy-every-ticket strategy, it is calculating the EV for a single ticket.

In scenario #1, there are 1.93 tickets sold for every possible combination, meaning that on average, 1.93 people win the jackpot. If you go ahead and buy every ticket, that means 2.93 tickets per combination, reducing EV from 1.11 to 0.78.

Re: A rogue Romanian economist legally gamed the lottery

#26

Post by eaenki »

peterburkimsher wrote: post #5

When I was in my final year of high school, Coca-cola was giving away an iPod Nano to lucky winners who entered codes from plastic bottle caps or glass bottle labels. An iPod was given away once per day, except Monday, when they were given out once per hour. I was competing against the rest of Switzerland. Each code had to be entered on a website, earning 0, 5, 10, 20 or 50 points. You could then choose how many poin…

I mean, aren't you in Switzerland? With the lowest unemployment in the world it should be fairly easy - if not, maybe the demand for the kinda job you're looking for is entirely met (saturated).

Re: A rogue Romanian economist legally gamed the lottery

#27

Post by kbenson »

gesman wrote: post #11

Virginia Lottery director Ken Thorson pled to the press. “It is an opportunity for the common man to spend a small sum for the possibility of a higher prize… We never anticipated a group trying to make such a large purchase.” Neither corporate lawyers nor government would ever acknowledge that loophole in a business models does not necessarily equals to fraud.

> Neither corporate lawyers nor government would ever acknowledge that loophole in a business models does not necessarily equals to fraud.

There's a lot of negations in there, I'm not sure if I'm reading it incorrectly, or you have one too many, but is sounds like you're saying that corporate lawyers and government will always maintain that a loophole in a business model is fraud?

Re: A rogue Romanian economist legally gamed the lottery

#28

Post by moate »

dfxm12 wrote: post #13
bryanlarsen wrote: post #2

AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…

As the article mentions, lotteries protect themselves by making it logistically impossible for anybody to buy every ticket. I wonder why they care. In fact, they need someone to win big, so as to entice future players...

Because knowing that you're competing against large, well funded organizations on a regular basis makes people suddenly start to realize (to a small degree) how statistics work.

If you assume that everyone else has the same basic odds of winning that you do (1 in a Million for example) you might play. But if you find out that you have a 1:1,000,000 chance and another well funded group has a 1:10 chance, you're going to quickly realize you're just throwing away money.

If an unfair game is equally unfair for everyone, it's fair. If it's only unfair for some/most people to a greater degree than some other people, then it's unfair.

Re: A rogue Romanian economist legally gamed the lottery

#29

Post by mark-r »

bryanlarsen wrote: post #2

AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…

I track the EV of 5 different lotteries available in Minnesota. At this moment only one of them is over 0.5, at 0.55. I don't even think about buying a ticket until it gets over 0.8.

Re: A rogue Romanian economist legally gamed the lottery

#30

Post by [deleted] »

astrodust wrote: post #10
lev99 wrote: post #9

Earlier quoted context omitted.

Your EV numbers are high. If the EV was really significantly above 1.0 (say 1.5) then everyone would buy a lot of lotto tickets. It would be simple arbitrage. In reality all of those people buying extra tickets (because of the high perceived EV) would mean a higher chance of splitting the pot. Splitting the pot would reduce the real return by 1/2 for every person that purchased a ticket.

Sometimes the EV goes above 1.0 and there are several groups of people who closely monitor lotteries all over the US to spot this event. When it does happen, which is very rare, they do calculations on the expected impact, viability and if their conclusions are good, swoop in and buy hundreds of thousands of tickets. They have people printing tickets for an entire day. They pay stores to stay open late. It's a tactic…

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