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A rogue Romanian economist legally gamed the lottery (thehustle.co)
286 points by gscott 9 months ago | hide | past | web | favorite | 84 comments



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 points to gamble during the day/hour, and would hear at the end of the day/hour whether you won.

The school had a bottle-cap recycling bin. Every day, I dug through that looking for Coke caps. I volunteered for GAOS (a theatre group) and served drinks outside their show, collecting many paper wrappers from glass bottles.

After collecting 1500 points, at 2 am on a Monday night, I struck with half my points. And I failed! Shocked, I tried again at 3 am, risking all the remaining points I'd saved up. And I won! I was the "lucky" recipient of a 2GB iPod Nano.

Was it worth it? Yes, because I was under the employment age. I couldn't have earned money legally, so my opportunity cost of time was low.

Earlier, in primary school, the classes bought Pizza Hut once a week. During a promotion, their pizza boxes were printed with stars, which could be saved up and exchanged for free pizza. So I went around and asked all the teachers for their old boxes, cut out the stars, and got a second pizza every week!

If only it were that easy for me to find a job nowadays, despite a first-class MEng in Electronic Systems Engineering and 4 years continuous relevant work experience. Even trying to follow the rules and get all the qualifications doesn't seem to work.


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 what I was doing.

As a broke kid who has never won anything in his life, getting that Xbox (right at launch no less) was AMAZING. I was literally dancing with excitement which I don't think has ever happened since.

I sold it after a few months (was more of a PC gamer) and the hundreds that I got for it was also awesome.


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.


Buying a cheese fondue is the most Swiss thing about this story. Cheese fondues were a fad in the US before I was born, and I know a lot of people's parent's who own them and use them maybe once every 5 years.


We still love fondue but mostly do chocolate at home...

The cheese ones are so yummy...


There's a chain of restaurants called The Melting Pot which does fondue entrees and desserts. Not something we do regularly, but it's an interesting niche.


I did the same thing!!! I won two Xboxes, got them both, a controller, and a ton of t-shirts. my poor postal guy had a vehicle filled with just my t-shirts on Christmas Eve, he wasn't too happy about it, lol.


My father was a garbage man when I grew up in the late 80s/early 90s and his crew stayed on top of pretty much any points promotion they found. This meant I grew up riding Pepsi bicycles, listening to Marlboro boomboxes.


I totally hear you at the last part. I'm in the US with a M.S. in Mechanical Engineering with continuous learning and training (either in programming or something MechE related like GD&T and CAD training). But I feel like my peers are totally blowing me out of the water in terms of professional growth especially those not in the MechE field. Maybe I'm doing something wrong, shrug.


Learning how to market yourself can give you a nice leg up. Things like having a web site detailing your accomplishments, writing articles, attending trade conferences, doing piecework for people who need CAD work done, etc.


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.


I don't know why this is getting downvotes - entrepreneurship is something I've considered. It doesn't help me get a visa though.

I tried emailing computer repair shops asking them to advertise my data migration services - using an Apple II to copy off 5.25" floppies, a Mac LC to read DD floppies, and a PowerBook G3 to read SCSI and JAZ disks. Unfortunately, I only got one reply that asked to see a poster before they'd even discuss it with management.

I also tried I tried contacting companies via Seek and TradeMe. Most expect me to already have a work visa. I asked recruiters for help. I put side projects here on Hacker News to try to get attention. I asked friends who I worked with at Fisher & Paykel Healthcare when I was there before. I found random people on Github and offered to work for free on open-source projects just to get an introduction. Nothing has worked. The only interview I had was from an Australian company. Now I'm spamming everyone on the Accredited Employers list who has an email address on their website. I'm willing to take whatever I can get now, wherever that might be.


A visa too! Wow, a fascinating problem with multiple dimensions to consider. And here at the center of it, a gifted analyst.

I wonder what kind of theory or model could be drafted, something that fits the situation like a glove _and_ exposes critical leverage points.

If anyone could do it...(points at you)


What kind of work are you looking for? Have you tried remote work?


These days I'll take anything short-term, even remote.

For a long-term career I have the education & work experience prerequisites for New Zealand's Skilled Migrant Category, Australia's 186, and Canada's Express Entry.

In the past, I did two remote contracts (Pixelgarde and AnswerTo), but in both cases the employer reached out to me first. I'm not really sure how to find jobs. My résumé is here:

http://peterburk.free.fr/PeterBurkimsherResume.pdf


I’m much younger and less experienced, so what I’m going to say could be irrelevant, but your resume seems too busy.

I’d cut it to 1 page, remove all the symbols, flags and logos. I’d also remove most of the extra stuff (personal interests, volunteering, objective, references).

Essentially, almost anything that doesn’t show that I’m a very talented engineer should go. Also, I’d consider using latex if not already and go for a more sobre style that focuses on ease of reading. The way your education part is indented is great, the work experience part seems to have something wrong with it.


Your advice is on point; I would find this resume very difficult to skim (and very easy to skip), need to treat it like a landing page, and distil the important parts.


As someone mentioned above, you absolutely need to sort out your CV. Here's a couple of points that differ from the other commenters:

- make it a one page CV - remove any work experience that's not relevant - write in active voice about each experience. Quantifying your contributions - remove hobbies, particularly anything related to religion. It's not relevant, and is recommended not to include such personal info in your CV. - only show your undergraduate degree. No one cares about GDE (unless applying to grad school) or your high school grades. - remove personal interests; no one cares. It's distracting from selling your work experience. - remove references and write "available on request". Background check happen after interviews. - remove languages unless relevant to the job. - remove volunteering experience; why on earth have you included CouchSurfng there? - remove your address. Too personal. - add link to your LinkedIn. - remove objective. This should come through in your experience what you're interested in. - remove those images. They offer no value to the ready and take up 20% of both pages.

You find jobs by applying. That simple. Your CV must sell your work experience as valuable to the employee and current yours does not.

Assume employers will spend 30 seconds skimming it before deciding if you will get a chance. Your current CV does not cut it.


These people are going easy on you. This resume is abysmal and makes you seem unhinged. Take every flag, symbol, or non-business related piece of information off of it. Don't advertise languages unless you can communicate in them at a professional level. Include your accomplishments at each job. When looking at your resume, a potential employer needs to see immediately why you would be valuable to their organization.


There are dozens of sites that advertise remote jobs (google). Weworkremotely is one example.. most of the recruiters will reply within a week atleast. You definitely need to narrow down your skills and/or presentation of it(cv). Just go through any public cv and just copy it.. learning web development might give higher chance of securing a job but is not necessary.. wish you good luck!


You should take the resume advice to heart.

I’ve hired a number of engineers and I would likely not look at this one for more than a few seconds. When recruiting, you get a deluge of resumes, there’s simply not time to carefully read them all, so the sad truth is you have to resort to heuristics and look for anything at all that lets you discard.

Please comment back if you need help editing your resume, happy to provide some help.

While LaTeX is cool, my advice would be to grab a resume template from a university career center and use it with zero style modifications.

Check out Gayle’s advice: https://www.careercup.com/resume


Wow! Always good to see another Kiwi on here!


Once, when I was in the 5th grade, there was a jelly-bean counting contest at the local library. The jellybeans were in a jar that was roughly cylindrical.

I counted the rough radius of the jar in 1-dimensional linear_jellybean units, as well as the height of the bean-filled part. Using the formula for the volume of the cylinder, I guessed the volume, in linear_jellybean^3 units. Through the sheer coincidence that a jellybean's volume is roughly 1 linear_jellybean^3, I got within 25 or so jellybeans of the correct count, winning the grand prize.

I walked away with a bunch of books, and the jar of jellybeans. I'm glad, that unlike in the story presented by this article, the CIA and the FBI did not get involved in the act, since I used method and cunning as opposed to dumb luck. Maybe it was just a matter of the dollar value at stake.

This is the only time in my entire life that I had to use the geometrical formula for volume of anything for a practical purpose.

As I type this I realize that each of those jellybeans was manhandled by someone during the counting process. I wonder if they used gloves.


Your whole post but especially the last paragraph prompts me to inform there exists a splendid movie that shall definitely bring a smile on your face: it's a french movie called "La Couperette" or "The Axe" is the English title. It's about a highly qualified person who loses his job and decides to "beat" the competition.

===

There are many theories of economy (capitalism, socialism, communism, ...) but one of them is hardly known and heavily censored since the 19th century. It is starting (in a much milder form) to resurface as the concept of "bullshit jobs". The old theory is roughly the following:

1) From the perspective of governments, as soon as productivity is sufficient to support survival (i.e. there is no longer a material lack of basic necessities), the next threat to government is disobedience. So the government supports in various ways the pacification or neutralization of disobedience. This can happen in various ways: by sorting pupils in all levels of school (elementary, high school and up) not just by skill (which ensures survival) but also by attitude (so that the disobedient don't gain too much intellect, and equivalently so that the resultant intellectuals are significantly obedient). Most of us with higher levels of education have vague memories of kids getting expelled from school due to disobedience, they all slowly got concentrated in less educational schools (for the disobedient). It is hard to emphasize we didn't realize how ridiculously obedient we were because our yardstick of obedience were other highly obedient pupils who had not yet been filtered away. Another way is welfare even if there is plenty of material wealth (for survival) if it promotes obedience. When or how does welfare promote societal stability? That depends on the individual: a disobedient person with free time and resources is relatively more dangerous than an obedient person with free time and resources.

2) From the perspective of employers, employees should be replacable, if they aren't replacable as if they were simple cogs and gears in a machine, survival would hinge on these select individuals. Regarding obedience, from a managerial bossing around perspective there is much more satisfaction from managing a disobedient person than an obedient person (the former is an achievement, while the latter is a given). People do what they like to do, so when a manager chooses to spend his time micromanaging specifically over a disobedient person, he is probably enjoying it.

3) From the perspective of the employee: the goal of jobs is first and foremost survival, but once survival is satisfied, individual goals starts kicking in, perhaps ideology, perhaps greed.

===

So the effective modus operandi of the total system is: neutralize or pacify rebellion by

1) minimizing the intellect and skills of the disobedient and maximizing the skills and intellect of the obedient during education, while

2) prioritizing jobs to some unavoidable fraction of the skilled intellectuals that turn disobedient, in order to keep them busy with work. If a person is murdered, and a number of people are suspected, the unemloyed person falls under the highest suspicion.

Consider obedient person O and disobedient person D of the same level of skill, and a free job position at that level of skill, then the system has 2 options: put O on the job while D has free time, or put D on the job while O has free time. What would you choose if you were the system, trying to ensure stability post scarcity?

The "bullshit jobs" aren't bullshit jobs, at least not from the perspective of the status quo: it's just keeping people who are assessed as disobedient busy.

The last people to recognize this emergent behaviour are typically the most obedient people (the moment they realize they slowly become more and more disobedient, a process the already disobedient experienced during their education). Why are so many people reporting "aholes" at work? Because there actually are people acting as disobedient "aholes" at work. Some of this acting may be genuine, some of it is purely feigned to keep the job. It is unknown what percentage of disobedience is feigned disobedience to keep the job, or genuine disobedience. Any genuinely obedient person who eventually understood this working principle in society, and hence feigned disobedience in order to be assigned a job paying better than welfare, is afraid to speak out about it: the moment he describes this modus operandi, he is effectively revealing he isn't in fact disobedient, so he can be safely put back on welfare and make place at work for the neutralization by employment of a genuine disobedient person.

===

In short, you may want to start signalling your dissatisfaction with society in order to be classified as slightly more dis-allegiant and thus a good candidate for being kept busy:

perhaps in subtle ways like replying the question "Why were you unemployed between ..." with "Yes, there is an attitude problem between me and the rest of the world, but the problem is not on my side"

perhaps in more obvious ways, like starting a blog and posting semi-extreme perspectives on society, with lots of normative and prescriptive language.

Anyway good luck, and don't forget to watch "La Couperette", it is genious!


Thank you for the plot summary! It's given me a lot to think about. The name of the film is actually "Le Couperet" if I'm not mistaken.

https://en.wikipedia.org/wiki/The_Axe_(film)

Your comment may be even more fitting to my Ask HN about a fake résumé generator project. You're correct about my feelings of disobedience.

https://news.ycombinator.com/item?id=17934916


Yes that is the correct title.

The fake résumé generator idea is brilliant. But I would beta-test this under a false email unrelated to your name, and in a slightly different target field.

I would suspect they typically check the last employer, or the one before to verify the reason of termination? Not sure though.

If the theory of allegiance holds any truth, it's because you acted too much like a person who is too good for this world.


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).


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 jackpot. The real number isn't publicly available, but newspapers often have numbers for similar jackpots in the past.

As the article mentions, lotteries protect themselves by making it logistically impossible for anybody to buy every ticket.

Here's the calculation for Canada's Lotto 6/49 in 2007: https://docs.google.com/spreadsheets/d/1vHOOdmobb3729ezH1BnO...


While true, expected value isn't necessarily a useful metric at that point.

If I have a one in a googol chance of winning a googolplex dollars, it doesn't really matter that the expected value is going to be huge, I still won't win anything because I'll be insolvent before the requisite number of tries to have a reasonable chance of winning.


Yeah, the Kelly Criterion is a good thing to explore in situations like this. If there's (truly) positive EV, you still should only spend a certain percentage of your bankroll on the bet. And if the bet has high payoff and low odds, your bankroll likely has to be astronomical in order for the bet to be a good decision.


thats why the people who do this work as a company and pool their resources


It's more that the people who do this do more than just buying a single ticket with positive expected value - as described in the article.


True, +EV is useless if the variance is huge, as is the case with lotteries.



Very interesting.


The funny thing is you don't need any stats to win smaller amounts of money. Just the simple question "hey what's the newest 10 dollar ticket" was enough to result in a solid net positive and a lot of beer money in college. They tended to front load the winning tickets for the newest ones.


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.


But someone will win big, sooner or later. It is more enticing that a random lucky person wins rather than a syndicate.


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 tactical operation.

Sometimes the jackpot is so anomalously big that the general public can't buy enough tickets to bring it back down below 1.0.


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.


Because of the payout model (all and only winning tickets split a fixed prize) the EV for buying multiple randomly distributed tickets and uniformly distributed tickets aren't the same. Consider if you were the only one playing a lottery with 100 combinations. If a ticket costs $1 and the jackpot is $100 one random ticket has an EV of $1. However if you buy 100 random tickets on average you'll only cover about 64 numbers, so your EV per ticket is just $.64, whereas if you buy uniformly distributed tickets the EV is constant up to the number of combinations. If you imagine raising the prize to $200 and that two people are playing this lottery and one buys 100 random tickets and the other buys every combination the random player has about a 36% of getting nothing, and will share the jackpot the remainder of the time. Overall the uniform player has an expectation that's almost twice as high as the random player, and makes a pretty strong case for buying every ticket if you're the only one that does it. It falls apart if you have to compete against another uniform player.


Who in their right mind would buy 100 tickets chosen at random _with replacement_ in your scenario?


100 people


Exactly. In fact in practice they do an even worse than random job since many people pick non-random numbers like birthdates or the number of kids they have. Any uniform purchasing strategy would probably have better EV from not buying any of the most popular combinations.


The post you replied to seem to imply a "naive EV", because they already discussed odds of sharing the jackpot.


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.


I'm not sure that is really logical. The odds of winning are the same regardless of if it $400m you can win or $20m. However, the effect on your life would be basically the same in either case.

To be fair, I do much the same thing. But, it doesn't really have a basis in logic. It's all psychological.


One significant difference compared to the U.S. jackpots - you need to pay taxes, unlike in Canada.


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.


From the linked article [1](Romanian language) it sounds like he had claimed to have a special mathematical method to convince his early investors in Romania but it was entirely made up. He was basically scamming them and had no idea if they would actually win.

[1] http://www.bursa.ro/industria-de-gambling-iulie-1994-primul-...


> Meanwhile, Mandel paid himself ... $1.7m, and ... $14m. After overhead fees ($5.5m for the tickets, and $500k in expenses), he was left with a princely sum.

> Records show that he funneled this cash into the Pacific Basin Fund, a Hong Kong-based account managed by his brother-in-law. “What we calculated to be the reality has changed,” he wrote in a 1994 letter to investors. “It may not seem such a hot investment now.” After that, his investor updates went cold.

Proof that it was a scam all along.


"Reading the works of Fibonacci" sounds like the sort of narrative garnish that would charm a journalist with little knowledge of math -- but would sound contrived to anyone who's take a stat class or two.

Given how well-known the Fibonacci sequence is today, poring through Liber Abaci (1202) in search of secret insights is teetering on the edge of madness.


> poring through Liber Abaci (1202) in search of secret insights is teetering on the edge of madness

Sounds like something straight out of Foucault's Pendulum.


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.


Others have tried this, and the lottery was cancelled and they got their money back. The reason was they fundamentally changed the nature of the game.


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?


Exactly, because they want business model to benefit them, not customers.

Think about casinos banning players for counting cards in Black Jack: the only reasonable strategy of playing the game is considered illegal.

In other words - you are welcome to play if you are bad at it, but once you get good you are considered "fraud"


Card counting is generally legal in the US as long as it's done with the mind, and not an external device[1]. That said, it's usually against casino rules, so they will make you leave if they suspect it, and possibly put your face on the internal list they have of known card counters if you do it enough or win enough.

1: https://en.wikipedia.org/wiki/Card_counting#Legal_status


Ok, so maybe it is not against a federal law but still, making you leave the casino because you are too good at the game you're playing seems weird.


Eh. They've defined rules that say you can't count cards. If you do so, you aren't playing by the rules, therefore you aren't allowed to play.

It's slightly odd to set rules that define what you can and can't do within your own mind, but it's not out of bounds, just hard to correctly enforce. Lucky for casinos, they don't care about correctly enforcing, they just care about making money. They're happy to let you count cards badly and lose money, and they're happy to kick out people winning a lot, regardless of whether they are actually breaking any rules.

It's sort of like cheating at playing Marco Polo. Sure, you're capable of opening your eyes when people can't see, but doing so is cheating, and calling out people you suspect of cheating but can't prove can be somewhat common.


Yes, that's correct. (It's not actually literally always, even in cases like this, but "always" makes a pretty good aproximation in practice.)


No, not necessarily: https://thetech.com/2012/08/01/cashwinfall-v132-n30

Specifically https://www.mass.gov/files/documents/2016/08/vv/lottery-cash...

>Based on the documents reviewed by the OIG and the interviews described above, I have concluded that Cash WinFall was a financial success for the Lottery . It generated about $300 million in ticket sales, with nearly $120 million of that going to Lottery operations and the pool of funds distributed to cities and towns. The high -volume bettors were a financial boon to the Lottery, collectively buying roughly $2 million in tickets for a typical roll -down drawing – 40 percent of which the Lottery would keep to redistribute to cities and towns. Cash WinFall was designed to attract a huge influx of betting by distributing a windfall to bettors whenever the jackpot reached $2 million. The emergence of individuals and groups buying large volumes of tickets was legal and financially advantageous to the Lottery . As long as the Lottery announced to the public an impending $2 million jackpot that would likely trigger a roll -down, an ordinary bettor buying a single ticket or any number of tickets was not disadvantaged by high- volume betting. In short, no one’s odds of having a winning ticket were affect ed by high- volume betting. Small bettors enjoyed the same odds as high- volume bettors. When the jackpot hit the roll -down threshold, Cash WinFall became a good bet for everyone, not just the big -time bettors . However, the unique structure of the game created unprecedented enforcement challenges for the Lottery.


> His legacy lives on in US legislation: All 44 states that run lotteries have enacted laws preventing the profitable replication of Mandel’s strategy. In effect, this secures him a title as the first and last man to ever successfully game the lottery by buying every possible combination.

This doesn't seem true? He didn't buy all of the tickets in question, he only bought most, and people have been running lottery syndicates under the same logic which buy some or most tickets to ensure winning for centuries. Even Voltaire ran one.


It seems strange to me that any lottery would ever let itself get an EV > 1.


Well it also has to do oddly with 'fairness'. If the pool never grows from failures they are more likely to suspect that it is 'rigged' against them instead of merely being unlucky. But if the pool growth is fixed as either an absolute or a percentage there is no incentive for the running agency to try to make people lose.

So long as people keep buying in they really haven't lost anything even if the build up turns it into a sure bet. And winning splitting solves the equilibrium as well in a rather market allegorical way - if everyone puts money into a sure bet the returns eventually diminish.


Sometimes, the big lotteries like Powerball and Megamillions do get to EV > 1. Not only is it unreasonable to buy the 240 million tickets for every combination (financially and logistically), but even if you did, if you end up sharing the winnings, then you lose millions. EV > 1 is still not horrible.


It only happens when you don't factor in split prizes. When you include the odds of having to share the prize it never goes over 1.


Over the long run, sure. In the short run, temporary excursions above 1.0 provide huge amounts of free advertising and buzz.


It's interesting that Jefferson had thoughts about the original intention of the lottery system. The logistics of buying each ticket seems nightmarish. I wonder if this same gaming can be applied to other things


Look into arbitrage betting: https://en.wikipedia.org/wiki/Arbitrage_betting

The basic idea is you bet on every possible outcome of a match (win/lose/draw) with different bookies offering different odds that cover each other.


This was also possible in Poland last year or two years ago.

The string of failed top prizes was so big that cummulated prize was so big in the end that buying tickets for all combinations was abt 2/3rds of the top one.

This isn't gaming the system though its brute forcing it. And you are not guaranteed a profit. You bet against other ppl hitting the jackpot. Excluding oneself from the system, what is the chance that after N fails for top prize N+1 will also fail? Earning this way is not so easy as just winning the lottery.


That brought some memories. I calculated that Spanish football quiniela had a little more than three million possible results. Since you could make multi-result bets, only a few thousands boletos were needed to make a sure win. The rules required to manually fill the bets, but it was workable building a robot.

Then the government, that was not happy of paying a percentage of the profits to football teams, introduced loto and prizes plummeted.


>... he was a natural with numbers who spent every spare minute analyzing theoretical probability papers written by the 13th-century mathematician Leonardo Fibonacci.

Hope Pascal doesn’t read this.


Don't they split the prize if there are multiple winners? How can they ensure +EV?

They could spend money to buy every combination but split the jackpot with multiple winners? Am I missing something?


I think they know it's still a gamble...


Similar to David Walsh, he set up MoNA with his profits.


The investors — small business owners, machine operators, housekeepers, and doctors — had been regaled with tales of riches, and promised participation in up to 9 lottos per year. Yet, they’d only received a $1.4k return on their $4k investment.

Folks: thats > 25% return on investment. I'm sorry but my sympathies with these investors walked out the door at this point: If you can get 25% ROI, stop looking for more.


Is that $1.4k in addition to getting their $4k back? I always assume that with lotto-based shenanigans, the "return" isn't actually a profit, but the maximum of payouts after having bought all the chances their money could buy. I'll spend $20 on tickets for a large jackpot, and I'll will $2 on occasion - that's not a "10% return" but a "10% refund," and I'd expect a non-finance journalist to get that wrong.


Oh I totally misread it (or read it the other way). If its a loss of 3/4 of their investment, thats a poor investment indeed.




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