Stories
Slash Boxes
Comments

SoylentNews is people

How MIT Students Won $8 Million in the Massachusetts Lottery

posted by janrinok on Tuesday June 09 2015, @05:58AM   Printer-friendly
from the don't-laugh-at-geeks! dept.

ticho writes:

Several years ago, while doing research for a school project, a group of MIT students realized that, for a few days every three months or so, the most reliably lucrative lottery game in the country was Massachusetts' Cash WinFall, because of a quirk in the way a jackpot was broken down into smaller prizes if there was no big winner. The math whizzes quickly discovered that buying about $100,000 in Cash WinFall tickets on those days would virtually guarantee success. Buying $600,000 worth of tickets would bring a 15%–20% return on investment, according to the New York Daily News.

When the jackpot rose to $2 million, the students bought in, dividing the prize money among group members. But they didn't stop there; they were so successful in their caper that they were eventually able to quit their day jobs and bring in investors to front the money they needed to purchase the requisite number of lottery tickets.

Original Submission

 
This discussion has been archived. No new comments can be posted.
How MIT Students Won $8 Million in the Massachusetts Lottery | Log In/Create an Account | Top | 46 comments | Search Discussion
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.

  • (Score: 2) by istartedi on Tuesday June 09 2015, @07:55AM

    by istartedi (123) on Tuesday June 09 2015, @07:55AM (#193992) Journal

    This sounds like arbitrage, or close to it. Enjoy it while you can, kids; because arbitrage is fleeting. It "closes" eventually.
    I think the most famous case of people forgetting this was the Barings [wikipedia.org] failure.
    When the arbitrage closed, that trader tried to extend the party with high risk trades.

    Ponzi, yes, *that* Ponzi, also started out as a legitimate arbitrageur. When his arbitrage closed, his
    method of prolonging the money train was to hatch his now infamous scheme.

    They're bright boys. Hopefully they're aware of these examples.

    --
    Appended to the end of comments you post. Max: 120 chars.
    Starting Score:    1  point
    Karma-Bonus Modifier   +1  
    Total Score:   2  

  • (Score: 2) by aristarchus on Tuesday June 09 2015, @08:02AM

    by aristarchus (2645) on Tuesday June 09 2015, @08:02AM (#193994) Journal

    They're bright boys. Hopefully they're aware of these examples.

    Smartest guys in the room, or in the prison cell, as the case may be.

  • (Score: 2) by FatPhil on Tuesday June 09 2015, @09:10AM

    by FatPhil (863) <pc-soylentNO@SPAMasdf.fi> on Tuesday June 09 2015, @09:10AM (#194020) Homepage
    It doesn't sound like arbitrage. It sounds like a bet with a nett positive value. The maximum gain, assuming you can predict how many other groups will also be playing these games, and the number of schmucks otherwise participating in multi-roll-over lotteries, is finite. There is no it-takes-a-bigger-bet-to-cover-my-previous-losses aspect about it, it's pure repetitive constant handle-turning. Sure, they took hits occasionally, but they won more than they lost. I think there were up to 3 groups playing at the same time at one point. There was an official investigation into it and the findings have been published, it makes a very interesting read.
    --
    Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves

    • (Score: 1) by negrace on Tuesday June 09 2015, @03:24PM

      by negrace (4010) on Tuesday June 09 2015, @03:24PM (#194103)

      It is a form of arbitrage called "statistical arbitrage".

      One ticket might not win, but the expected value is greater than the price of the ticket, and by buying lots of them they virtually guarantee an overall win.

      • (Score: 2) by FatPhil on Tuesday June 09 2015, @10:19PM

        by FatPhil (863) <pc-soylentNO@SPAMasdf.fi> on Tuesday June 09 2015, @10:19PM (#194278) Homepage
        "statistical arbitrage"

        If you can find a reference to that term which predates Nash, I'll take it seriously. Stop reinventing concepts and recycling words.
        --
        Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves

  • (Score: 2) by gallondr00nk on Tuesday June 09 2015, @01:56PM

    by gallondr00nk (392) on Tuesday June 09 2015, @01:56PM (#194067)

    There's quite a number of sites dedicated to sports betting in a similar fashion. Using different bookmakers worldwide, it's possible to hedge on both sides of a sports result and win money regardless.