# A Lottery Loophole (Sorry, Now Closed) in Massachusetts

(iStockphoto)

In the Boston Globe, Andrea Estes and Scott Allen write about how people have been taking advantage of a statistical quirk in the rules of an obscure Massachusetts Lottery game called Cash WinFall. A Michigan couple in their 70s, Marjorie and Gerald Selbee, spent three days buying more than \$600,000 in Cash WinFall tickets from two convenience stores in Sunderland, Mass. Their timing was purposeful:

For a few days about every three months, Cash WinFall may be the most reliably lucrative lottery game in the country. Because of a quirk in the rules, when the jackpot reaches roughly \$2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least \$100,000 worth of tickets.  During these brief periods – “rolldown weeks’’ in gambling parlance – a tiny group of savvy bettors, among them highly trained computer scientists from MIT and Northeastern University, virtually take over the game. Just three groups, including the Selbees, claimed 1,105 of the 1,605 winning Cash WinFall tickets statewide after the rolldown week in May, according to lottery records. They also appear to have purchased about half the tickets, based on reports from the stores that the top gamblers frequent most.

The Globe got a statistics professor at Boston University, Mark Kon, to calculate some odds.

[A] bettor buying even \$10,000 worth of tickets would run a significant risk of losing more than they won during the July rolldown week. But someone who invested \$100,000 in Cash WinFall tickets had a 72 percent chance of winning. Bettors like the Selbees, who spent at least \$500,000 on the game, had almost no risk of losing money, Kon said.

The state treasurer has since announced that stores can only sell \$5,000 of Cash Winfall tickets in a given day. Cash Winfall is based on six randomly chosen numbers. The odds of picking all six correctly and winning the \$2 million jackpot are 1 in 9.3 million. The game has paid off its full jackpot just once since 2004, and has so far generated \$11.8 million in profits in 2011, though it accounts for just 1% of state lottery revenues.

The Globe reports that the Selbees have already claimed nearly \$1 million in prize money this year. But because winners have a year to claim their prize, there’s likely more to come.

#### NhytFahl

If they have a half million to drop on lottery tickets, why do they need to play the lottery at all?

Invest that money at 6 or 7 percent, and you can live a lavish lifestyle on just the interest.

#### DavidA

@NhytFahl
Where are you getting low risk 6 or 7 percent returns these days?

#### coldtusker

@nhytfahl - 7% of \$500,000 = \$35,000 before taxes. Lavish lifestyle? Not on \$35,000 unless they dig into the \$500,000 itself & have a house that is debt-free & are covered by a decent health insurance plan...

Why isn't the State Treasurer going to jail for letting people steal from the state? If the Boston Globe can figure this out shouldn't the state be able to? If they should have know and let the game go on that is fraud.

#### jack

It's not fraud; it's statistics.

#### Doug Huber

It doesn't sound like they have closed the loophole as much as they have just made it harder. Could I pay 20 people to wait for the store to open and be the first to buy \$5,000 in tickets each day for five days and still be profitable? The odds haven't changed, just the barriers to entry.

#### chris jones

I believe you mean the 'carriers to entry?'

#### RGJ

I read the story...Freak Brothers, why does your subhead say "Sorry, Now Closed" ? Not technically....the story says they were now limiting purchases to \$5,000 per store...but there must be thousands of stores selling lottery tix, and it is a week long window, right? You can still get a team out there at dawn and buy a few \$100k of tix. Let's roll!

#### Caleb b

I believe the lottery to be a net negative for society. While I tend to shy away from legislating morality, it seems to me that society would benifit by reinstating outlaws agains gambling and lotteries. The poor are overwhelmingly the largest consumers of gamble and can least afford to lose. I usually take the stance that people should be free to do what they like, but I can't shake the thought that we'd all be better served if people did not have the option to gamble. Does anyone else feel this conflict?

#### mickigal

Let the poor buy lottery tickets! It is the poor-man's tax. About the only tax they pay.

#### Steve Nations

"Bettors like the Selbees, who spent at least \$500,000 on the game, had almost no risk of losing money, Kon said."

Why do writers say things like this? It really annoys me. What is the actual risk? Put a number to it. The statistics professor calculated the number, right? What is it? 98? 99? 99.5? Tell me!

#### Caleb b

"Let the poor buy lottery tickets! It is the poor-man’s tax. About the only tax they pay."

Yeah, and maybe if they didn't play the lottery They wouldn't need my tax dollars.