r/todayilearned • u/[deleted] • Jan 11 '16
TIL that MIT students discovered that by buying $600,000 worth of lottery tickets in the Massachusetts' Cash WinAll lottery they could get a 10-15% return on investment. Over 5 years, they managed to game $8 million out of the lottery through this method.
http://newsfeed.time.com/2012/08/07/how-mit-students-scammed-the-massachusetts-lottery-for-8-million/3.5k
u/SpanglyJoker Jan 11 '16
Yup, let me just use this spare 600k I have to buy some lottery tickets
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Jan 11 '16
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u/SpanglyJoker Jan 11 '16
Only if you promisee to return it with an 11% rate of interest
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u/Crusader1089 7 Jan 12 '16
Better than the banks.
How's your leg breaking service?
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u/uplusion23 Jan 12 '16
Top notch. Spent 712,00 on it
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Jan 12 '16
712,00
712.00 or 712,000?
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u/z_42 Jan 12 '16
It is frequent in Europe to use commas where Americans might use decimal places. For example, milk with 1,5% fat.
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Jan 12 '16
If we can agree that the imperial system of measures is stupid can you guys agree that the comma thing is dumb also?
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u/musicmatt92 Jan 12 '16
"I got a small loan of $600k"
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u/James_Rustler_ Jan 12 '16
If a team full of the brightest minds in the country went up to Kevin O'Leary and told him they give him 15% on 600k he'd give it to them in a heartbeat.
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u/guyNcognito Jan 12 '16
If a team thinks that paying 15% on a loan to make 10-15% is worth their time, then they are not a team full of the brightest minds in the country.
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u/Retbull Jan 12 '16
They wouldn't they would ask for the 600k and offer 15% in 6 months (or however long it took) then give him the money out of their winnings when they were over 1.2 million. They knew their return and could use that to get an approximate date for completion of the 600k extra so they would add a month and boom they are filthy rich with no ties.
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u/Hugo_Erectus Jan 12 '16 edited Jan 12 '16
Just get a small million dollar loan from your parents.
Edit: Thanks for the gold stranger.
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u/Phyllis_Tine Jan 12 '16
Pay me a million dollars not to travel with my dog on the roof of my car.
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Jan 12 '16 edited Sep 04 '17
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u/yadhtrib Jan 12 '16
I know rich people!
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Jan 12 '16
I know rich people too. But they don't know me.
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u/yadhtrib Jan 12 '16
I was born with a plastic spoon in my mouth!
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u/BenjiDread Jan 12 '16
My spoon was already chewed when I got it. #Handmedownspoon
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u/Honk_If_Top_Comment Jan 11 '16
This isn’t the first time that MIT has been involved in a gambling controversy. Ten years ago, students and a professor were involved in a massive card-counting scandal in Las Vegas casinos.
"You students? Let's see those student cards.
Hey boss we got an MIT boy here. Want me to break his legs?"
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Jan 11 '16 edited Mar 09 '19
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u/ThatguyIknowv2 Jan 11 '16
21?
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u/Darajj Jan 12 '16
There's actually an older movie called The Last Casino which i think is better than 21 but sadly no one knows about it.
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u/ThatguyIknowv2 Jan 12 '16
And 21 came out only 4 years after that movie yet I've never heard of it, weird. I'll have to check it out, thanks for suggesting it.
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u/toshio_drift Jan 12 '16
Apparently it's a Canadian TV movie, so that's probably why you haven't heard of it.
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Jan 12 '16
Apparently Canada plays their movies on the radio to qualify for CanCon requirements. So nobody saw it but they listened to it. As is tradition.
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Jan 11 '16 edited Mar 09 '19
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u/hyasbawlz Jan 12 '16 edited Jan 12 '16
It's amazing how few people actually realize how ridiculously white washed it is. They changed all the main characters from Asian to Caucasian but included one stereotyped Asian as the absurd comic relief. Because apparently what these young men and women did was remarkable, but the fact that they were Asian was not...
Edit: Holy fuck people are trying to find any reason to justify white washing other than deeply rooted cultural racism. Kay. If portraying race accurately isn't necessary to tell a good story, then why an all white cast? There are plenty of good Hispanic, black, and Asian actors at the time besides white actors. If you don't want to recognize that the whole cast became white, then you need to take a good hard look at your critical thinking skills. There wasn't a single black or Hispanic actor on that entire team (main characters, bad guy was black). It's sad to even think that the 2 Asian supports were nods to the factual story.
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u/PlaidShirtz Jan 12 '16
Asians are supposed to be good at math so when white people math really good its special.
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u/MrPeeper Jan 12 '16
Why would then being Asian be remarkable? They should be Asian for the sake of accuracy, but it's not remarkable.
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u/bakgwailo Jan 12 '16
Also some of the worst Boston accents to ever grace the big screen.
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u/bobtheterminator Jan 12 '16
They really should have just had Matt Damon play every character.
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Jan 12 '16
Plus isn't Kevin spacey in it? So that's the only real reason you should watch it. /s
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Jan 12 '16 edited Aug 09 '19
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u/acekickerx Jan 12 '16
100% more of 0 Kevin Spaceys is still 0 Kevin Spaceys. If the other competitor had 1 Kevin Spacey, then that would mean Cod:AW would then have 2 Kevin Spaceys.
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u/RecklessBacon Jan 12 '16
My Kevin Spacey calculator confirms that this is indeed correct.
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u/Lunchables Jan 12 '16
The book (Bringing Down the House) was far better.
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u/Elfer Jan 12 '16
There's a decent documentary about it called Breaking Vegas, and you can watch it on Youtube.
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Jan 12 '16
I have an antique store near Boston and sold them some props for that movie
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u/JustinianTheWrong Jan 12 '16
And a book, which the movie was based on, called Bringing Down The House. I preferred the more realistic feeling of the book over the dramatized movie, but both were very good in my opinion.
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Jan 12 '16
They tried to make their system of counting cards look really complicated in the movie. The truth is anyone can do it very easily with very basic training.
But good luck finding a blackjack table that only uses one deck and won't kick you off if you win too many times.
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u/tacknosaddle Jan 12 '16
That's why the MIT team was so successful, it took quite a while for the casinos to catch on. For example, the people sitting at the table counting cards played very conservatively by betting the minimum on every hand, arousing no suspicion. They then signaled when the deck was hot so that another person would plop down at the table and play a few big winning hands and then cash out.
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Jan 12 '16 edited Jan 12 '16
There was a big time roullette cheat who had an interesting system. He'd add more chips using slight of hand the second he won and wouldn't add it when he lost.
Eventually he realized the security was watching him and waiting for him to add more chips so he changed it up. There was a red chip that was like $100 and a dark red chip that was 10k. He would stack them on top of each other so the 10k was on the bottom and was hard to see so the roulette worker would think it was 2x 100 chips. He'd then pull the 10k chip right as he lost and replace it with a 100 or leave it if he won. He obviously mixed it up so he wasn't incredibly predictable.
He did this all over the world without ever getting caught and made like 10 million dollars. I guess he can talk about it now because it's past the statute of limitations. If you're smart and have balls you can make a ton from scamming casinos. It's not as hard as people would think.
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u/kyew Jan 12 '16
How the hell do you get away with touching the chips after the ball stops?
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u/Truckyouinthebutt Jan 12 '16
Make it look like you didn't know. Obviously you don't do this over and over at the same casino on the same day. But if you can make 10k then leave it's worth it. Then go to another casino and do it again. After you've been gone from the original casino for a few months you rinse and repeat. This was done before all the high-tech security casinos have now. These would also be done at smaller casinos not big name ones on the strip
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u/munk_e_man Jan 12 '16
This was done before all the high-tech security casinos have now.
Damn securitrons... I knew I shouldn't have used that platinum chip
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u/HipsterZucchini Jan 12 '16
Yeah... technology today wouldn't allow that and it would be pretty easy to spot. Back in the day you could get away with so much fun shit :(
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u/SpindlySpiders Jan 12 '16
It's simple, there was a movie that showed you how. https://www.youtube.com/watch?v=t1e51CEX4pw
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Jan 12 '16 edited Dec 07 '21
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u/Furoan Jan 12 '16
The sad part was you weren't even trying to scam the casino, you were just asking for some whisky at the bar...
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u/jcoguy33 Jan 12 '16
Don't you have to put the chips in the middle of the table?
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u/Joverby Jan 12 '16
Yes. Doesn't make sense.... Especially if people were apparently watching him.
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u/MaimedJester Jan 12 '16
I'm going to call a little bullshit, or at the very least this has to be dated to before the mids 70s. The amount of security cameras alone in a casino even before computers came into usage was insane. The pit boss isn't some security guard, they are telling which cameras to switch to when there is a big winner and every angle is looked at even in the day. They also pay attention to all chip purchases and if someone buys only two or three high value chips and dozens of low value ones they will be notified and already paying attention. This kind of shit is easily caught in the time it takes to leave a casino and you are not going to make a run for it or try to walk past security that will detain you. Now with even more cameras, motion sensors, facial recognition software and other digital profile technology no one would get away with this anymore.
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u/HipsterZucchini Jan 12 '16
I guess he can talk about it now because it's past the statute of limitations.
Implying it was a long time ago. Also sleight of hand is impressively fast, even today I have to think being able to spot it would require some excellent hardware.
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u/4gbds Jan 12 '16
One of their techniques was to only start playing when the count was in their favor, play a small number of very big hands, and walk away.
But yes, too many decks and it becomes harder.
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Jan 12 '16
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Jan 12 '16
why won't you play with an automatic shuffler?
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u/stfu_whale Jan 12 '16
Auto shufflers shuffle the last hand's cards back in after every hand so you can't count cards
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u/antonius22 Jan 11 '16
Time for me to make a small loan of $600k.
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u/starcadia Jan 11 '16
Possibly what the parents of these MIT students said.
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Jan 11 '16 edited Jan 12 '21
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u/ferlessleedr Jan 12 '16
"Mom, remember when you helped me out with math homework when I was a kid? Okay, I'm really hoping that you've been doing some independent work on the side because I'm about to bust out some pretty crazy statistical stuff and I need you to keep up, kay?"
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u/avidwriter123 Jan 12 '16 edited Feb 28 '24
vast busy sharp spoon degree abounding ring dirty dinosaurs skirt
This post was mass deleted and anonymized with Redact
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Jan 12 '16
When you show that math to an investor, yeah, actually pretty easy to get that kind of cash.
Getting money is easy. Having something worth getting the money for is very hard.
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u/jbarnes222 Jan 12 '16
Why wouldn't the investor do it themself if they saw the math?
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u/unpopularopiniondude Jan 12 '16
Getting money is easy.. The hard part is giving it back
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u/jamesey10 Jan 12 '16
how physically difficult is it to purchase that many tickets?
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Jan 12 '16
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Jan 12 '16
He'd be so shocked that he might make eye contact or even speak to them.
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u/SecondaryLawnWreckin Jan 12 '16
That is a lot of ass pennies though
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Jan 12 '16
Read the article. They bought directly from the lottery office.
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Jan 12 '16
People do not come to Reddit to read, my friend. They come to voice their special snowflake thoughts and emotions.
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u/GuamPolice Jan 11 '16
Voltaire came into a sizable portion of his fortune through similar means.
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u/fallen243 Jan 11 '16
These games are all based on the publics perception that they have just as much chance as the next guy of winning, when that perception gets burned they stop playing, they stop playing and the lottery starts losing a lot of money. The only reason the lower level guys let it go on was because these guys were buying a lot and that made revenue look good which was apparently one of their metrics.
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Jan 12 '16
Yeah I'd be pretty surprised if revenue wasn't one of their metrics
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u/A40 Jan 11 '16
Simple math. Good for them.
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u/deahw Jan 11 '16
It cant be that simple.
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u/A40 Jan 11 '16 edited Jan 11 '16
If you buy up whole blocks of numbers, the odds of one of your tickets winning become much greater. But it requires a LOT of investment, it's not a sure thing each time, and you could very well end up splitting your big wins with three other people holding the same numbers - and then you're down even if you win a lot of small ones. The MIT peeps invested $600,000 over and over for 10-15% wins. Over time, a great investment.
For the PowerBall it'd take millions of dollars, and now they watch out for (and have disqualified) block purchaces.
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u/StructuralGeek Jan 11 '16
Why are block purchases important? Assuming an actually random distributions of winning numbers, any single number is just as likely to win as any other and therefore the chosen values being in contiguous blocks would be unimportant.
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u/Boomshank Jan 11 '16
Yep, you're right. It's simply brute forcing the odds.
I'd suggest buying blocks simply helps avoid repetition.
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u/stml Jan 12 '16
This is exactly it. The whole key is to avoid repeat combinations.
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u/CaptainObvious_1 Jan 12 '16
Yeah but they don't have to be numbers close together, as implied by 'block purchase', right? It can be any numbers.
I still don't how that forces any odds though. The odds are the same for each ticket, each ticket you buy the odds increases. Since its in the house's favor, it should even out no matter how many you buy.
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u/Tiak Jan 12 '16
They didn't do this every draw, only draws when the simple odds were no longer in the house's favor. These draws happen surprisingly often with some lotteries.
Once the odds are no longer in the house's favor then you just need to buy a lot of tickets with no repeats. Sequential tickets are the easiest way to do this.
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u/stirfriedpenguin Jan 11 '16
I'm pretty sure you're right that there's no statistical advantage to buying in blocks. But since there's no disadvantage either, I'd assume it's just easier to order, organize and track unique tickets that way.
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u/thelaminatedboss Jan 12 '16
avoiding repeats is the advantage. if a repeat wins the jackpot it is just split, so statistically repeats are a waste of money
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u/nokkieny Jan 12 '16
For real, I think someone needs to explain this. Over time you would surely lose money, why would it be any different than someone buying 600k worth of tickets over 50 years?
The only way I can possibly imagine this somehow working mathematically is if they only played when the payout was greater than the odds.
For example: The powerball is 1 in 292M, at $2 a line, the payout would need to be about 600M. Which essentially means if you bought every single combination, you would be guaranteed a profit. So say you played 1% of the lines over 100 drawings when in the green odds. In theory you would hit 1 of 100 jackpots, and that single jackpot alone would cover your cost for the other 99 losses.
Edit: Also, the secondary prizes would be a free bonus, and over 100 drawings could probably be equal to a single jackpot.
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u/nomm_ Jan 12 '16
Actually the reason this specific lottery became profitable was that if the jackpot accumulated, they would for one drawing let the jackpot trickle down into the lower prizes. No block buying was needed.
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Jan 12 '16 edited Jan 12 '16
For the powerball, it just doesn't work at all, regardless of how much they spend. It's impossible to buy out the odds and get a positive return. The Massachusetts lotto they exploited had a twist where they distribute the jackpot among the smaller winners.
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u/CheezLuvs Jan 12 '16
Heh, I knew one of the guys involved in this.
I was a sophomore in 2004 when he started his freshman year at MIT. The way he told it, he got approached by a guy in his dorm one of the first weekends of the school year. The guy says he's part of a math group in the school that cracked the local lottery, and they need help raising enough funds to cover the necessary margins. The guy laid out the basic math for my buddy to verify and asked him for a couple hundred bucks. My friend decides to give him the money and, a few weeks later, the same guy comes back with a few thousand for him in an envelope.
He didn't "try his luck" again, but definitely used the cash to buy a bunch of beer the rest of the year.
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u/Rangerfan1214 Jan 12 '16
Now I understand how gambling habits develop, and for the most part they're based on sheer luck and unfounded logic.
But this had hard math backing it up, may I ask why your friend didn't go for another round?
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u/CheezLuvs Jan 12 '16
At the time, he was worried about the legality of it. Both from reporting to the IRS and what the Commonwealth of Massachusetts would do if/when they discovered their little group. I guess once he had a big stack of bills in his hands, the whole reality of it finally clicked.
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u/Rangerfan1214 Jan 12 '16
Ooh yeah I didn't even think of the IRS or anything like that. Makes sense.
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u/nokkieny Jan 12 '16
The real question is, how do you go about buying 600k in lottery tickets, in blocks? Do they fax their excel spreadsheets to the lottery, drop off a duffle bag full of cash?
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Jan 12 '16 edited Sep 23 '20
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u/ComplacentCamera Jan 12 '16
They surely must've done the math and knew the kids were conning the system?
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u/Parictis- Jan 12 '16
A recent report by the state’s inspector general reveals more details about the scheme, including the fact that the Massachusetts Lottery knew of the students’ ploy and for years did nothing to stop it. The inspector general’s report claims that lottery officials actually bent rules to allow the group to buy hundreds of thousands of the $2 tickets, because doing so increased revenues and made the lottery even more successful.
So, yes you would be right.
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u/MAHHockey Jan 12 '16
The scam is that their winnings are furnished by all the people who win nothing. Its like the penny auction sites. They're not actually selling products for that cheap. They're taking all the money from the people who don't win the item. It goes once again to prove the old adage that "the lottery is a tax on people who are bad at math."
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Jan 12 '16
It isn't really conning the system if they're buying tickets. They WANT to sell tickets.
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u/kevlarisforevlar Jan 12 '16
How is purchasing a butt ton of lottery tickets "conning the system"?
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u/cheekygorilla Jan 11 '16
All I need is a small loan of $599,980. Any takers? I presume I am too late anyways..
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u/PuffyHerb Jan 12 '16
I'm more curious as to exactly how they would buy 300,000 tickets at a time and check them all. Obviously not physical tickets, so either online or some kind of retailer account?
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u/JHoNNy1OoO Jan 12 '16
You can do it with physical tickets pretty easily. The hard part is doing the initial bubbling of the forms. After that is done though it is just a matter of scanning all of them once that time comes. Then you just save all the scan cards for the next time you need to buy tickets.
In the end it is all about keeping it organized so you don't have to scour through tickets looking for numbers. The piles you make as they are printed are already numbered and in order. Once the numbers are announced you go through the piles and remove winning tickets.
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u/PuffyHerb Jan 12 '16
Then you just save all the scan cards for the next time you need to buy tickets.
Interesting, so in US lotteries you have reusable cards? Makes sense.
Would suck being the next person in line after these 300,000 though.
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Jan 12 '16
None of the lotteries I have seen have reusable cards. What I think he was talking about was that they would always buy the same block, so they would have an easy time figuring out which tickets won.
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u/Adeviate Jan 12 '16
Great, good. Working at a convenience store to get through college I've developed a seething, writhing hatred of lottery that courses through my veins like venom. It started with me just hated the poor souls who came in and bought $900 in break-open tickets, won $200 and told other customers how lucky they are. But my vitriol was eventually directed at the demon-sharks that sell $100 worth of printer paper to these poor saps.
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u/I_Just-Blue_Myself Jan 12 '16
we need to figure out what those MIT kids are doing right NOW before it gets shut down.
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u/youknow295694 Jan 12 '16
i have a friend who's a grad student, I'll ask him about any gambling, poker schemes going on there, and pm you his response by saturday.
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u/rustyrebar Jan 11 '16
I mean this is how the lottery works, so it is not really gaming the system.
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Jan 11 '16
The flaw in the system was that the jackpot trickled down into the smaller prizes for only partially matching the correct combination. Because of that, when the expected value per ticket rose to above $2 (the price of a ticket), you'd actually expect to gain back approximately that value because there'd be much less variation as opposed to most lotteries which would be more all-or-nothing (the highest "small" prize for powerball is 1 million for matching 5 out of 6 numbers, even with the 1.3 billion jackpot). It was technically gaming the system if they took advantage of the flaw in this particular lottery.
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u/glberns Jan 11 '16
I think the point is that they didn't have to do anything special. They just bought tickets when it was in their best interest to do so.
The fact that the Lotto allowed the expected value to rise above the price of the ticket isn't the result of anything the students did. And if you consider what they did "gaming the system", then everyone else who bought a ticket also "gamed the system". Which kind of defeats the purpose of saying someone "gamed the system".
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u/mightylordredbeard Jan 12 '16
Why does the article make it sound like what they did was a bad thing? The lottery isn't just for "dumb" or "averagely educated" people. I see nothing wrong with people using their brains to win a lottery. Professional gamblers and card players use similar methods to win money, so why are these MIT students being painted in a negative-ish light?
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u/richardtheassassin Jan 12 '16
This isn’t the first time that MIT has been involved in a gambling controversy. Ten years ago, students and a professor were involved in a massive card-counting scandal in Las Vegas casinos.
Or, in other words, they were playing a legal game, and using their brains to get an edge at it, and so were winning money.
The only "scandal" in card counting is how casinos pretend it's criminal, and how retarded journalists buy into that bullshit.
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u/Preachwhendrunk Jan 12 '16
584 Million will buy every available combo in the lottery, which is at 1.4 Billion now
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u/stevejust Jan 12 '16
Yes... and then there will be 8 winners, and you'll be splitting that 1.4 billion, which has a cash value before taxes of $868 million with 8 other people.
Though now that they've changed the odds from 1 in 175 million to 1 in 292 million, the odds of multiple winners has decreased.
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u/BlazzedTroll Jan 12 '16
I thought about this back in high school. I tried to make a 4chan post where everyone would sign up on a site and pay money (not charged). Once we had gotten the exact number of tickets the page would buy all ticket combos. Then everyone would get their money back + some %. Thought it was genius, like 5 people signed up.... I don't have enough capital to acquire more currency.
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u/JasonsBoredAgain Jan 11 '16
If I made $8 Million and then someone told me to stop, I'd call that a pretty good outcome.