from Hacker News

How MIT Students Won $8M in the Massachusetts Lottery (2012)

by onuryavuz on 6/8/15, 12:47 PM with 204 comments

  • by downandout on 6/8/15, 1:16 PM

    This isn't the first time someone has been able to turn lottery odds in their favor. A woman named Joan Ginther, who has a PhD in Statistics from Stanford, won more than $15 million from a Texas lottery scratch card based game [1]. Though she has never spoken and exactly how she did it remains a mystery, her odds of winning the number of times she did as a random buyer of scratch cards were 1 in 18 septillion and should occur approximately once every quadrillion years. Here's another case, where a geologist named Mohan Srivastava cracked several different lottery scratch ticket games [2]. He warned lottery officials, who did....nothing.

    [1] http://www.forbes.com/sites/kiriblakeley/2011/07/21/meet-the...

    [2] http://www.wired.com/2011/01/ff_lottery/

  • by caminante on 6/8/15, 1:10 PM

  • by stygiansonic on 6/8/15, 2:02 PM

    The Irish National Lottery format used to be 36 choose 6, giving odds of a jackpot win at 1 in 1,947,792. The cost of a single ticket was £0.50; therefore you could buy up the entire "space" for £973,896.

    Thus, when the jackpot rose above this value, it became economically viable to buy up the entire "space" to guarantee a win; this would result in a profit so as long as no one else bought a winning ticket. This is what a group of individuals attempted to do in May 1992.[0]

    They were limited by the physical requirement of filling out all such possible combinations on the paper tickets, but they attempted to spread out the work by pre-filling out combinations over several months and waiting for the jackpot to rise to a large value before "deploying" the tickets.

    0. https://en.wikipedia.org/wiki/National_Lottery_(Ireland)#His...

  • by tokenadult on 6/8/15, 2:44 PM

    As this article from 2012 makes clear, the positive return on investment resulted from unusual rules in one state lottery game that has now been discontinued. The typical state lottery in most parts of the United States has parimutuel pay-outs for winning tickets, meaning that if multiple purchasers have winning numbers, they split the prize in a way that ensures that the lottery doesn't pay out more money than was bet for that drawing. An example from Britain was a national lottery that had something like seventy-six different winners, who all bet on the same "lucky" number that happened to be drawn in that drawing. They split the prize equally, so that each bettor's individual winnings from a large prize were not particularly large. The number may have been lucky in the sense that it matched the drawn number on that one occasion, but the number wasn't INDIVIDUALLY lucky for each person who bet it.

    Over and over and over, some people have winning tickets, but most people have losing tickets. When a lottery is structured in the typical parimutuel way, as most lotteries are, even if you buy all the tickets available for sale in the next drawing, which takes a big investment, you can't be sure of winning a full prize individually, because other bettors may have a collision with your choice of a winning ticket number. tl;dr: A bug in one state lottery game was discovered by MIT students, who invested in exploiting the bug until the game was closed.

  • by randlet on 6/8/15, 12:59 PM

    The url of this article and the titles of other uses the word "scammed" which is unfortunate since they don't seem to have done anything of the sort.

  • by hownottowrite on 6/8/15, 1:00 PM

    "This isn’t the first time that MIT has been involved in a gambling controversy."

    If it isn't illegal, what's wrong with using brains to make money?

  • by pmorici on 6/8/15, 1:10 PM

    This article strongly implies there was something morally wrong about what the students did but doesn't detail any actual misconduct on anyones part. Sounds like the lottery officials just got their pants in a bunch because they like to be the ones taking advantage of other people's naiveté and not the other way around. Ironic that the article embeds a video of John Oliver ripping the lottery for taking advantage of those who can least afford it.

  • by baldfat on 6/8/15, 1:08 PM

    Lottery = Poor People Tax and should be removed from Government.

    http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-...

  • by plorg on 6/8/15, 4:26 PM

    Here's the Boston Globe source article for the Time piece.

    * http://www.boston.com/news/local/massachusetts/articles/2012...

    And a couple of investigative pieces the Globe had run previously:

    * http://www.boston.com/news/local/massachusetts/articles/2011...

    * http://www.boston.com/news/local/massachusetts/articles/2011...

    A fun quote from the first piece they ran:

    Mark Fettig of Tennessee, one of the top 10 winners during the May rolldown week, urged the Globe not to write a story at all, saying “it would be immoral’’ to attract more people to Cash WinFall and potentially dilute the winnings of current players.

  • by kdamken on 6/8/15, 7:24 PM

    It bothers me how the article implies that they were doing something wrong. They figured out a trick to the system and used it to their benefit.

  • by chrisBob on 6/8/15, 1:12 PM

    I don't understand why the lottery commission would know and not stop this. If they are guaranteed to win I think that is the same thing as the state have a guaranteed loss.

  • by bradfa on 6/8/15, 1:08 PM

    This is from 2012, probably should include in the title.

  • by rglovejoy on 6/8/15, 1:08 PM

    The card counting rings mentioned in the article have been going on for decades. Edward Thorp, while a math professor at MIT, was the first to do a rigorous analysis of card counting.

    http://en.wikipedia.org/wiki/Edward_O._Thorp

  • by delinka on 6/8/15, 3:04 PM

    "While most students at [MIT] use their powers for good [...] others are busily using their prodigious math skills to" win the lottery.

    Interesting morals on display by the author.

    Further: "While the students’ actions are not illegal, state treasurer Steven Grossman, who oversees the lottery, finally stopped the game this year."

    I expected the last part to say they'd filed charges against the students. Since they didn't (because their activity wasn't illegal), the state treasurer made the right decision to stop the game.

    I'm not impressed by this author's writing skill.

  • by S4M on 6/8/15, 1:27 PM

    Doesn't that mean that the lottery was losing money? How is that even possible?

  • by SonicSoul on 6/8/15, 7:30 PM

    This story (and the math behind it) is discussed at length in "How Not to Be Wrong: The Power of Mathematical Thinking" by Jordan Ellenberg. I highly recommend it, the other stories in it are equally enlightening.

  • by peter303 on 6/8/15, 2:32 PM

    It takes a fair amount of man power to buy hundreds of thousands dollars of lottery tickets. Especially if you have to fill out forms and submit them to a cashier. I've heard of consortiums hiring people to do such.

  • by topynate on 6/8/15, 1:15 PM

    So I suppose there's a sort of intergenerational underground community of advantage players at MIT that these exploits come out of? Hard to imagine that MIT just happens to be the source of unrelated rings.

  • by reagency on 6/8/15, 2:00 PM

    Reading between the lines, there is a very strong hint that lottery officials violated lottery rules to enable the exploitation, possibly for indirect benefits. What the students is very similar to how card counting is supposed to not work: they violated the maximum bet. And lottery officials let them, against the rule of the lottery system.

    It seems like no real harm done though: they guaranteed themselves winnings, causing the jackpot to never grow, before anyone else bought tickets against the larger jackpot. So in a sense they just stomped the game before it started, no other players got screwed out of their chance at any existing jackpot.

  • by akhilcacharya on 6/8/15, 1:05 PM

    Hah, what can't these people do.

  • by helloz_0707 on 6/8/15, 2:15 PM

    This is overrated.

    Grant that you can make 15-20% ROI on your 600K investment, however, you could have 95% chance to lose all of it and 5% chance to hit jackpot and win say 26 mil. Your expected value is high but no one would play 600K like that, unless you are some rogue hedge fund manager.

    You might well invest it in stock market, which has better Risk-reward ratio.