That couple in New England that was doing it probably made more money off of selling their story to Hollywood than they did off the lottery tickets.
The amount of time they were putting into their “scheme” sounds brutal. I think a lot of people here could have netted more money per hour by studying up to pass a FAANG interview instead of buying lottery tickets one at a time.
They were making something like $20+ an hour each if I recall correctly. Better than working retail of course but he’d have been better off keeping his career longer.
And also availability bias. They've thought of a cool scheme, and not thought of anything else they'd want to do more, even if it might pay better. I think this is why some prices on ebay seem unusually low, many on ebay are probably paying themselves less than minimum wage.
Manufactured spend is a common arb. My favorite was when the US Mint had a free shipping deal and let you buy coins with credit cards. Someone figured out how to buy many $100k coins, wheel them into the bank, payoff his card and get free airline tickets for many years.
That story was made up. The U.S. Mint charges more than face value for coins purchased through its retail store. It also doesn't accept credit cards for large orders; like most government agencies it requires large payments to be made electronically through the EFTPS system.
> people here could have netted more money per hour by studying up to pass a FAANG interview
My experience of that was that Google asked me to interview, I did, my recruiter congratulated me on passing the interviews and told me to expect a job offer by the end of the hiring cycle, and then at the end of the hiring cycle she informed me that, although I'd passed the interview, my interview performance was too poor to be considered for hiring.
I've never this at Google, but at my company, if you pass the technical screen you're offered to hiring managers. If they don't want you on your team because they want more leadership (or less leadership), or if there were 5 senior python roles and you were the 6th person to pass the interviews, you still won't get hired.
Unironically yes. Although it's arguably a win-win. Google constantly keeps its pipeline of candidates open which means that if you're looking for a job and you clear the resume bar, you'll get an interview. Meanwhile teams are constantly hiring so they'll want a steady stream of candidates.
The alternative would mean that unless your timing for a job search is perfect, you won't even get a foot in the door and teams within Google will also struggle to fill open positions since it would take a while to interview the candidate pool.
The company changed mind on how many people it wants to hire during the interview process. Of course they wouldn't admit "I just got news from the higher-ups that we're not actually hiring because shit is on fire", so they came up with some lame excuse that puts the blame on the candidate. I solved the interview question for Uber, but then there was news that Uber stops hiring company-wide. I solved the interview questions for Microsoft, but then got feedback that I didn't.
1. Weeding out the people you surely don't want... that is it answers: does this candidate meet the minimum bar for working here?
2. Providing enough information about a candidate to give them a score... that is it answers: how good is this candidate?
You can "pass" an interview - that is the answer to question 1 is "yes, this person meets our qualifications", but fail in question 2 under conditions where there are more qualified candidates than there are positions. It's really common actually to wait until there are a few qualified candidates before making a hiring decision, rather than just hiring the first person that meets the minimum standards. This bit of hedging allows for making better teams from the available hiring pipeline (on average anyway).
You should try again, there's a lot of variation on interview performance. Also, Google is a bit unique in that they put a lot of emphasis on what your thought process is, compared to other FAANGs. If you just code a working solution and didn't ask enough questions, that might only get you a mediocre score.
> You should try again, there's a lot of variation on interview performance.
Read the comment again. This is not a story about interview performance. My interview performance didn't change after I completed the interview.
If Google doesn't want to hire you, they won't, and your interview performance is irrelevant enough that they feel free to revise it retroactively. Perhaps they aren't willing to state their actual reasons.
Studying is not a sensible approach to this problem. You would have to address something they actually cared about.
There are hundreds of teams and hiring managers in Google, and an almost infinite number of possible reasons why you weren't hired or why the HM changed their mind. Treating any large company like a monolith is not gonna help you get a job there...
Also, not sure what your recruiter was talking about - there's no concept of "passing" an interview at Google - you're rated on a scale from "strong do not hire" to "strong hire", and the folks doing the selection are provided that rating along with a ton of notes about the interviews.
>I think a lot of people here could have netted more money per hour by studying up to pass a FAANG interview instead of buying lottery tickets one at a time.
Bro, saying stuff like this is why everyone hates us.
Most lotteries, all of them that I'm familiar with, blackout ticket sales for several minutes around the draw to avoid order sensitivity issues like this. It's funny, lotto vending machines here don't say when the drawings are for each game, but you can tell by reading the fine print for the five minute window where tickets are not sold.
Step 6 of this process was to subvert the machine and print a backdated ticket. How does blacking out ticket sales for five minutes around the draw help against that?
Presumably all ticket sales (including their numbers) are synchronously reported to the lottery office by the sales terminals. That would render backdating attacks detectable.
>2. get access to a router firmware in the lottery datacenter en route to the database
Seems non-trivial given that the database server is likely to be in the same datacenter/rack/physical machine. If you have this much access you might as well plant a backdoor in the server and tamper with the database however you want.
>3. wait for the query to get the winning numbers from the database
Are lottery winners determined immediately after they close? I thought they did a number picking ceremony by picking out literal number balls from a tumbler?
Because you'd also have to submit the money it would cost to buy every combination, and also, you likely couldn't fit every ticket (tens of millions of combinations) with a realistic-looking ticket generation time (approx 1-5 seconds between each ticket created). i.e. if 50,000,000 tickets all had the same timestamp (or were off by nanoseconds) it would be a dead giveaway.
Tldr- about 20 years ago, when off-track betting systems were less sophisticated, an insider past-posted horse racing jackpot winners by waiting until the first 4 races of the Pick-6 were final before creating the ticket. They got busted and served time in federal prison because they had multiple winning tickets for the Breeders Cup Pick-6, basically the Super Bowl of horse racing, where scrutiny was extremely high.
MEV still applies with proof-of-stake. Whoever proposes the blocks can make those arbs. It used to be the miners; now it's the block proposers as selected by the beacon chain.
(Some people call it "maximal extractable value" now, to keep the initialism and help it make more sense.)
I guess I’ll never understand why there are so many restrictions in buying lottery tickets, because in Hong Kong all you need do to buy all the numbers is a single transaction and paying enough money. And it is never a profitable strategy, big jackpots always attract a huge crowd and most of the time it is split at least 4 way
the term they meant is texas lottery "riskless arbitrage".
Buying a whole pizza, then standing in front of the pizza shop shelling the slices for a net profit is arbitrage. but it's risky because you might not be able to sell enough of them (before they get cold, say) to earn back your investment.
when you talk about an arbitrage that is guaranteed profit, that is a riskless arbitrage.
Really? Doesn’t that describe every kind of store where you don’t create the product yourself as an arbitrage? You’re just buying items from a supplier and reselling to make a profit
Buying wholesale and selling retail isn't arbitrage. Wholesale pricing is cheaper precisely because it is a bulk price. There is an overhead to selling individual units. A retail operator adds value by introducing individual unit liquidity, with the price premium of the individual unit offsetting the risks involved in paying the fixed costs of retail (rent etc.), not selling all the inventory, and having enough left over for a profit.
probably best to understand the way people use the term as a risk spectrum, from riskless arbitrage where there is no window for losing money, through say a real estate deal where you find a seller at a good price, and you find a buyer at the market price, and you insert yourself in the middle (a perfect houseflip) even though you don't have the capital to suffer the loss if things get screwed up, to an antique shop that buys on speculation and sells to reliable clients. A pawn shop is arbitrage too.
generally people mean by arbitrage that you enter into a transaction having both a seller and a buyer in mind, or you have two liquid markets with different prices.
I used to work for the Australian parimutuel(aka tote or pool)[0] betting operator.
All the proceeds for a race are placed in a pool, the operator deducts a percentage of pool as a takeout, and the rest is divided among the winners, or. is carried over into a jackpot.
We had special bulk betting integrations for quantitative bettors, and even offered rebates on the takeout revenue, it's not secret, although it's not widely publicised.[1]
There are stories of traders that have made lots of money betting in parimutuel markets[1]
One of the standouts being the syndicate run by David Walsh (of MONA fame) and Zeljko Ranogajec. They made money because the rebates swung the odds in their favour [1].
My take is that: the syndicate wins because the odds were swung in their favour. The tote wins because even with the discounted percentage the increased pool size offset the rebate and made them more money. The rest of the mug punters lost since the syndicate was winning a portion of the pool they would have otherwise won. The rebates are a mechanism to reliably transfer additional money from mug punters to the tote via an enabling middleman (the syndicate).
I mostly agree with your take, the linked article itself seems a little missleading, claiming that you could make money by placing losing bets.
As far as if the regular punter is getting screwed, I'm not so sure.
They certainly aren't getting as good of a deal as the professional punters are getting.
However, if the punter feels like they have some special insight into the race and the predictive performance of the horses, then they stand to win much more money by having the professionals put money into the pool.
I wonder if anyone is keeping a list of all the times this has happened?
I know that its not something new, because 30 years ago when I was in law school one of the cases studied in my class on transnational taxation was that of an Australian group (if I'm remembering the right country...) that tried to buy every possible ticket in a US lottery.
My recollection is that they only ended up getting something like 90% of the possible numbers but that was enough to get the top prizes and questions arose on how that should be taxed and whether the cost of the tickets was deductible.
You're thinking of Stefan Mandel's International Lotto Fund[0]. They tried to buy every ticket in the Virginia state lottery in 1992. They won the money, but IIRC there were years of litigation.
As a side note, my home state also allows online purchasing of lotto tickets through "couriers", which turns out to be a strange workaround that let companies like Lotto.com or Jackpocket operate in some states:
Ah, so if doing this once can net tens of millions, all we have to do is repeat the process a few million times, and the national debt is covered. That's where automation comes in.
> In April 2023, an entity called Rook TX effectively purchased the jackpot, collecting a one-time payment of $57.8 million, by acquiring virtually all of the 25.8 million possible number combinations. The operation was planned in Malta and funded by a London betting company. It was carried out by four Texas retailers, all connected to online sales companies called couriers.
Well, as the saying goes, "It takes money to make money."
A lot of people are focusing on the courier aspect of all this which is fine, but I didn't know there were any lotteries you could just outright win, with a profit, if you had enough money to buy enough tickets. I assumed people would design lotteries where the cost/reward ratio was such that this would never make sense.
There's a couple ways this works. Progressive jackpot games (Powerball, Mega Millions) allocate some amount of every ticket sold for winnings, but if the jackpot isn't won on a particular drawing, excess winnings are added to the prize pool for the next drawing. After a certain point, the jackpot prize for a single winner is more than the cost of buying all possible tickets. There's a chance of sharing a jackpot, which is hard to model, but makes the payout worse.
A similar game feature is "roll down", again excess prize money accumulates over several drawings, and when a certain criteria is met, the excess prize money is distributed over some set of tickets (possibly all winners). Again, this sets up the possibility of a positive expected value, and you have to consider other ticket buyers as well.
A trickier one is for scratch off games. Many lotteries share the number of tickets sold and the prizes left. If you assume all (big?) prizes are redeemed shortly after their ticket is sold, you can estimate the expected value of purchasing the remaining tickets. When the game opens, the expected value of a ticket is less than the purchase price, but depending on the observations of tickets sold and prizes redeemed, you might estimate that the expected value of the remainder of tickets has improved.
Ex: if there were 1 million scratchers printed, the cost per scratcher was $1, and there was only one prize $500,000on open the expected value of a $1 ticket would be $0.50. If the winning ticket was redeemed, the expected value of remaining tickets would be $0. If it was reported that 999,999 tickets were sold and the winner had not yet been claimed, it might be reasonable to assume a higher expected value for the last ticket --- although there's no rigorous proof there, someone may have purchased the winning ticket already and not redeemed it for whatever reason.
I'd imagine scratchers would be almost impossible unless you could somehow get all the tickets from every place they are sold. I'm not into gambling, but I guess it might work if there is X number of prizes/money per roll of tickets.
Even if you can't buy every ticket, there is well-established math about how to optimize profit from a venture with known risk and reward, and the math does not require you to exhaust the statistical universe.
There is clearly a limit on practicality though. Unless you are suggesting someone should sell their 401k and buy Powerball tickets any time the jackpot exceeds the odds of winning simply because it has positive EV?
This has happened. IIRC it was a Stanford statistitian who watched the distribution pattern for winning tickets for a certain scratch off game in Texas. She bought all of that ticket from that particular store and won $10M. I think that was her fourth scratch off win.
The way scratcher play works is that the states are required to report wins over a certain threshold. So if you keep a keen eye on the state website, it’s possible to determine how many of the big awards (say $10k+), which is where the bulk of the value is. Using that you can estimate what the outstanding prize pool is. You won’t know with any precision… but basically the idea is they look for games that have been on the market a long time, and thus sold through a large portion of their inventory, but where the big prizes are still mostly in play.
They absolutely aren’t trying to buy them all, that would just be a guaranteed loss, since they only return about 40 cents on the dollar.
> I guess it might work if there is X number of prizes/money per roll of tickets.
In most cases, there is, which is part of why a huge percentage of scratchoff prizes are won by workers at the place that sells them. Most players will scratch and redeem their prizes right in front of you, so if you watch a certain number of scratches occur in a roll and you know the prize structure of the particular card, you can calculate how many non-winning scratches you need to see for the odds to be in your favor.
I looked into this a few years ago and considered starting one of those stands that sells scratchoffs to do just this, but decided a) it wasn't quite lucrative enough to be worth it, and b) I wasn't sure of the ethics of skewing the odds against your customers like this anyway.
> I wasn't sure of the ethics of skewing the odds against your customers like this anyway.
This is interesting because I don’t think anyone would view the store as unethical for continuing to sell tickets from a roll when they know there have already been X winners from that role and therefore customer odds have gone down.
There's similar for "pack hits" and trading cards, and the regulars learn which hobby shops are reputable and which ones to avoid. Most that remain in business are not scum.
IIRC the remaining risk lies in multiple people winning or attempting arbitrage simultaneously, thus dividing the expected revenue by the number of winners. So not a free lunch.
IIRC, there was at least one case where the lottery got wise that this was happening and refused to sell the parties involved any more tickets. They had enough tickets for better than even odds, but not a guarantee. IIRC, they won.
I remember a 1990s lottery event in which a "buy all combinations" was attempted, but their physical machines they acquired were partially deficient, and they simply couldn't physically acquire enough tickets in time (as the procedure was relatively time intensive), but they still won with something like a 75% probability of success
On its face this sounds like it makes sense but why would the lottery care, at all? They get money per ticket, a story that buying lots of tickets increases your chances of winning, it's win win win for them.
I believe it's a marketing/psychology thing - people like to hear stories about how people like them won (busy person wins big from inexpensive last minute purchase) because they can relate and are more likely to buy a ticket in the next draw. Hearing that some international syndicate with big money and clever mathematicians won makes the everyman think that a big win is out of reach for them.
This scenario happens in basically any form of gambling with a progressive (grows over time until hit) jackpot. For instance there are literally pro video poker players. For some imaginary numbers let's say there's a video poker game where you play for $1 and the house has a 2% edge against perfect play. This means each time you play (in the longrun) you lose $0.02. But now let's say there's a jackpot that you have a 1 in a million chance of hitting, that has $1 million in it. This means that your expected value from the jackpot is $1 per play.
So the net result in our game is that each hand you play, you win $0.98. A skilled video poker player can get around 1000 hands per hour, so you'd be earning around $980 per hour in the longrun. Casino comps make this even more profitable. Depending on the game/casino casinos will generally comp around ~20% of their expected profit against you, and that excludes jackpots. For our imaginary $1 game with a 2% margin that means you'd also be getting $0.004 per hand back in comps. It becomes quite significant at high stakes.
If I did the math correctly, a positive-EV lottery is still guaranteed to make money for the state, because the total value of tickets purchased always exceeds the jackpot.
The lottery is always negative-EV for the average ticket-buyer, but it can sometimes be positive-EV for the marginal ticket-buyer.
It's about expected value. The assumption is more people buy in at higher payouts causing the pot to split. Usually the EV is negative. The real insight here was that this state lottery was not so popular as evidenced by long spans of time between payouts.
Net EV=cost to buy in - probability of winning * (jackpot size / number of people you split it with)
If you have a 1% chance of winning $100 your EV is $1. If you pay $1 to play you breakeven. If the pot is $200 then your EV is $2. You would pay $1 all day for that. But again the risk is more people want to play. If 2 people win then your EV drops back to even.
The lottery doesn't work the same way as most other forms of gambling. For the house, it is not zero-sum. Their profit is a fixed percentage of sales, and the bigger the prize, the more tickets people buy. The money won from the lottery was set aside at the time of purchase, it's already gone to the people running the lottery.
So the lottery makes more the bigger the prize gets. They don't really care who wins or how much they get.
Lottery couriers are companies that will buy and scan lottery tickets for you for a fee. Most of the time, they're not actually doing much courier work. If you win a small amount, they'll cash the ticket for you and credit it to your account, and if you win a big enough amount that you have to cash it in directly with the state, they'll actually deliver you the winning ticket.
It's basically a workaround for restrictions on online lottery sales. I'm not sure how states should handle online lottery gambling—there are a lot of considerations around addiction, potential fraud, money laundering, and erosion of retailer lottery revenue and shopper base—but I don't think this is it.
The Texas lottery has an app you can use to scan the tickets unique barcodes printed under the scratch off layer and find out if and how much the ticket won.
Haven't ever dug into it but the app doesn't require a login to use that function so I'm willing to bet there's an unauthenticated API endpoint that could be sniffed out (they may possibly have it documented somewhere too).
Outside of being a fun itch to scratch, using the app directly is fast enough with very little effort.
In Michigan lottery tickets have (used to?) a one letter code somewhere in the blank area that gives you the winning amount. I used to be careful not to scratch non-play areas back when my grandfather owned a store as it might reveal the winning amount. Might be useful.
It'd be better to scan the barcode that lotto machines scan to determine if it won. It's possible, but rare, to get a misprint where the ticket does not have winning symbols, but scans as a winner.
I pick up and scan any scratchers I find littered near stores. I've made a few hundred dollars over the years on misprints like that.
In the US most places have a little reader thing that scans the barcode and tells you how much you’ve won. This helps cut down on the time it takes the cashier to scan each one. You know instantly if you’re a winner, no need to look at symbols.
For a visual version of the above. Go check out Mr Beast’s video where they scratch off 1,000,000 dollars worth of scratch offs. The ending wasn’t surprising to me but may be to some.
A very common, sad sigjt in rundown areas is some old person, clearly with limited funds, standing at the lotto counter in a convenience store, just rapid fire scanning scratch-offs. And then buying more scratch offs and rapid fire scanning them, etc.
How are customers protected against sellers pre-scanning tickets to find winner? In my location, winners can only be determined by scanning the barcode, and entering a value hidden under the scratch panel.
According to[1], Rook TX bought 99.3% of all possible number combinations. I couldn't find a site that says why the last 0.7% was missed. Maybe they meant to buy all the tickets, but due to logistical errors or whatever, they discovered they missed a few?
You're overcounting by a factor of 6! = 720, because you're counting different orderings of the same numbers multiple times. "1,2,3,4,5,6" and "6,5,4,3,2,1" are not different tickets.
> “We fully expected that they would laugh at us and say, ‘Well, no, of course you can’t do this,’” he said. But the company agreed it would at least sound out the lottery agency.
> “We were very surprised that the answer was yes,” Potts added. “As a person and a lottery player, I cannot believe they said yes. I was shocked.”
Well Texas bills itself as the most business friendly state in the country. I'm not surprised that extends to some shadowy Maltese concern effectively purchasing the lottery jackpot at 25 cents on the dollar.
I don't get why you shouldn't be allowed to do this and it's not the first time it has happened either[1]. "Investors" in this kind of thing are still taking a small risk that they might have to share the winnings with another winning ticket.
I don't think that it's very likely that many lottery ticket buyers would find out, or that they'd all stop even if they did. The Illinois state lottery is still selling tickets even though they've refused to pay winners https://www.illinoispolicy.org/illinois-sitting-on-upward-of...
Lotteries. Retail crypto trading. Sports betting. Casinos. These are systems legitimized to vacuum up fiat from rubes. Your average human is unsophisticated as it relates to statistics, financial literacy, etc. They are simply different versions of alcohol and recreational drugs, hitting the same reward centers in the brain.
I know "fairness" is a virtue we teach to children, but honestly there is nothing fair about any part of life.
Where you are born, what ethnicity you are, how rich your parents are, how healthy, athletic, brainy, beautiful you are, what you eat, how you live, nothing in any part of your life is "fair".
So sure, play the lottery if you like, but don't pretend it's fair. Indeed the unfairness of the winning is entirely the point of it.
Of course if you are playing the lottery and dreaming of a better life, you already know how unfair life really is.
How is a company buying a bunch of tickets "unfair" when there's never a limit on how many tickets you can purchase? Is a compulsive gambler who buys 10 tickets also being "unfair" by buying 10 tickets?
Well in this case the "unfairness" (loaded term) would the lottery commission going out of their way to accommodate this scheme. If this outfit wanted to arbitrage the lottery they should have to go about buying the tickets any other party would have.
If the state wants to encourage this kind of large scale game playing, then they should outline the process for taking part in it clearly and ensure everyone has equal access to the tools that enabled it.
It's tough to draw a clear bright-line rule for this, but the line sits somewhere between "buy 10 tickets" and "buy every ticket". You can write a law saying not to run this kind of operation and let the jury decide whether someone broke it.
You might be right. But to me, this doesn't feel any less unfair than a lottery does in the first place. But I probably don't understand the state of mind or motivations that would compel someone to buy a ticket in the first place.
And you don't need to spend very much money to do that. For example, buying a ticket once per year is sufficient. You can still dream about the win you'll get the next time you buy a ticket.
Group buys add a social context that has significant value too.
Well, I don't think it should be allowed because it basically defeats the purpose of a lottery, but, as Matt points out in his article, I think a better way to prevent it is to make it easier.
If it becomes super easy to purchase millions of lottery tickets, then any arbitrageur would likely be dissuaded because the risk of someone else doing it (and having to share the winnings) go up by a ton. You could still have collusion, but that should be enforceable by laws against collusion I'd hope.
It this case there were rules to prevent arbitrage that were basically just not enforced by the lottery commission, and that's really the only reason this was possible.
For the same reason corporations shouldn't be purchasing Residential Real Estate (individual houses) it destroys the market for the consumers its intended to serve.
What's the market that lotteries are supposed to "serve"? Taking money from poor people (lottery tickets are disproportionately bought by them) and giving them to the government, basically working out to an regressive tax?
Because "normal" players will get upset, so it's bad for your business.
The same thing happens in sports betting, where retail punters absolutely hate if someone places a bet online during a game exactly after a goal was scored, but before the odds move. So even sports betting exchanges like Betfair forbid this kind of arbitrage and void it. Not because they really care, but because it annoys the other players.
While I don't understand what "retail punters" refers to, how does someone else's bet affect mine? I can't think of any scenario where I'd care once my bet was placed
Spinola Gaming are hardly shadowy. Since a few years back they're owned by HeadsUp Entertainment, HDUP on whatever stock market.
It's not surprising that a corporation specialised in producing B2B products for lottery and gambling corporations sussed out this opportunity, it's kind of their core competency to figure out such things and make them obvious to their customers in their offerings.
The key here is that only 1 million tickets per week are sold, which is the reason the company could estimate a probability that others buy the winning ticket forcing a split
Jackpots higher than the probability of winning happen so the time, but thats not enough information to take the risk
It's article is filed under Bloomberg opinion, but I failed to find a common thread or observation has I read to the end. Is this just a weekly Roundup of financial events?
About the 23andMe and pharma events were specially interesting.
That said, I disagree with Matt interpretation that the computer entry overrode the contract. Arbitrator stipulated compensation based on the contract date, not the computer executed date
When someone has 35 million of options, i would expect both parties have some duty to understand the terms. That said, they also have a duty to not misrepresent the contract after the fact.
[edit] My primary point is that I didnt see much opinion or rant
It's one person's column, having it filed under opinion probably gives him a bit more freedom to say what he wants even if he doesn't always exercise it. (It's always amusing when Michael Lewis is in the news to watch Levine finds ways to make it clear he thinks he's an idiot without ever directly badmouthing his colleague).
HN moderation policy is to replace useful or informative user-submitted titles with the title of the page itself in most cases.
It's not only a column but a daily email. Of 20 unread emails in my inbox 17 are these ones. It's too good to archive without at least skimming through. But it's a longish read and accumulates fast.
I have read a lot of Matt Lavine, but just remembered it having more editorial analysis. Maybe that is the difference between the daily and other articles?
>Is this just a weekly Roundup of financial events?
Matt publishes his newsletter Monday-Thursday, and a podcast on Fridays. It is a roundup of stories with high quality commentary on 2-4 stories, and a list of additional interesting articles at the bottom. He used to be an attorney with Goldman Sachs, giving him a good background for adding context to market corner cases people exploit, incentives of different parties involved in deals, legal perspective, etc.
Two of his main lines is "everything is securities fraud" and "everything might be insider trading", with probably 100+ examples of each over the years.
He was an m&a lawyer with Wachtell and then a derivatives structurer at Goldman. But your point stands - a background in both the legal/deal making and trading sides of high finance gave him a terrific context. Then his insight, writing style and sheer unbelievable volume of throughput made him essential reading.
[Offtopic] It drives me crazy that government sponsored lotteries are legal, but me playing a round of poker in the basement with a few friends is technically illegal. Nevermind sports betting apps being legal and poker apps not.
At least here in Germany, half of sale proceedings of state-licensed lotteries go into social causes (our open source ecology germany e.v. managed to get several projects funded through this). Also, they are obliged to check each player against a black list of gambling addicts, which unlicensed online gambling venues probably don't give a toss about.
It's not that the money from the lottery ends up in a slush fund, it's that the government cuts funding for education by the amount that it gets from the lottery. The money from the cuts gives the government the same amount of "clean" money to do whatever they want with.
Money is fungible and exactly this trick is common. Best to think of the education funding as a minimum below which funding cannot be cut. In Florida, where I live, it actually funds a specific scholarship program, so it really does have the effect of making the program difficult to slash.
While I understand concerns about the lottery exploiting vulnerable people, one reason for having a state lottery is that it provides a legal alternative to illegal numbers rackets (https://en.wikipedia.org/wiki/Numbers_game), which were widespread before state lotteries became common. Criminal organizations profited from these underground games, often operating without oversight or consumer protections. A state-run lottery at least ensures transparency and directs revenue toward public services rather than illicit enterprises.
OTOH, legal lotteries get a lot more people to gamble. I suspect that people who gamble either way gamble more as well, though this needs a fact check that I don't know how to find.
Probably, although Australia's lottery operator experimented (briefly I understand) with making their lottery and wagering products available through a single website/gateway - I don't think it lasted because while there was some overlap between lottery players and gamblers, it wasn't big, and I think while gamblers could be enticed to buy lottery tickets, it was much harder to entice lottery players to dabble in betting on horses or sports games.
That's just a quality vs quality argument with an appeal to emotion at the end.
Not everyone impoverished by state sanctioned gambling would do so in an illegal only world. You can bicker about what the conversion ratio is but the fact of the matter is that it exists. And no, I don't know what it is.
If you really believe that argument, why don't we follow it to the logical conclusion, that all crimes should be made into state enterprises. State home burglary? State cryptocoin rugpull? State hitman? State jaywalking?
That's a slippery slope argument. Gambling fundamentally differs from crimes like burglary or fraud — gambling is a consensual activity that can be regulated and taxed, while burglary and fraud inherently harm unwilling victims.
State lotteries don't represent "state-run crime" but rather transform existing underground markets into legal, regulated alternatives. Illegal gambling operations have long existed, typically run by criminal organizations offering no consumer protections or public benefits. State lotteries provide transparency and channel revenue toward public services instead of organized crime.
Following your reasoning would suggest that legalizing and regulating alcohol or cannabis equates to "state burglary" or "state fraud" — clearly an absurd comparison. The objective isn't to convert crimes into government enterprises, but to acknowledge when prohibition is ineffective and provide a safer, regulated alternative.
As long as you do the math on the trade off of added safety vs added availability and pick the best option in every specific case you can apply the technique consistently to every situation without issue.
I get the sentiment but I've never really understood why this saying is so popular. A tax is a specific word with a real meaning. It is not voluntary. By this logic alcohol and cigarettes are themselves a tax on people with poor judgement, as well as many other products.
I myself have never understood the thrill payoff that must exist for lottery ticket buyers, but I cannot call it a tax.
I call it a tax because it is a government organized/run operation with the objective of removing wealth from individuals for (ostensibly) the betterment of the citizenry as a whole.
My complaint is about the targeted nature of lotteries and the extremely poor investments they make for individuals who tend to already struggle in this area. This is compounded by the nature of the education system being operated primary by the same government.
The only reason the government is involved is because organized crime is who runs lotteries in the absence of the state. People would still gamble with black market lotteries.
Organized crime ran very small, very basic "numbers" games that are the equivalent to the low-profile "Pick 3" or "Quick 4" games most states run. Hundreds, maybe a few thousand dollars of prizes. No organized crime ring paid out multi-million dollar jackpots -- this is entirely the invention of government lotteries and the private administration companies that run them, like G-Tech. When 8-digit jackpots weren't enough to draw desired participation, states joined together (MegaMillions, Powerball) to create 9- and even 10-digit jackpots.
> The only reason the government is involved is because organized crime is who runs lotteries in the absence of the state.
This isn't really a concept that makes sense. Organized crime is a state. They serve the same functions, care about the same things, and draw legitimacy from the same sources.
The government doesn't make as much as the ticket printers and lottery machine manufacturers/owners. It's not about the money for the state. It's about the lobbyists who are now entrenched, same as virtually any US lottery.
> There are also a few who spend all their money they might have on lottery tickets, but those aren't much of the total number of people.
Is there any evidence of that? I can recall reading that alcohol consumption, for example, has a Pareto distribution skewing in favor of so-called "heavy users" (whom most of us would refer to as alcoholics). I'd imagine a lot of vice industries are similar. Is there any evidence to suggest lottery ticket purchases are distributed across a large number of infrequent, low-volume purchasers?
I don't have numbers but many years ago I worked for a lotteries company and I know one person had the responsibility (among other things) of phoning up big spenders to check if they were exceeding their means. I remember one huge spender being an off-shore syndicate.
The company (and most lotto companies would be the same I'd guess) had little interest in taking money from problem gamblers too because in most cases their business is a monopoly so they're making good money anyway, and enabling problem gamblers would almost certainly be a breach of their license, so they'd be up for big fines (or in an extremely unlikely scenario, loss of their license). Contrast that with horse and sports betting companies where there's lots of competition and slim margins, so if you want to make money you need to take a bit from the problem gamblers.
That said, it probably is a Pareto distribution, but skewed: maybe 95% low/normal spenders, 4% syndicates/big spenders with means, 1% problem gamblers.
I think it's not meant as a literal tax. The idea is that "poor" (I've always understood it as a tax on the poor) people don't understand the math enough to know how minuscule the chances are of winning. Because they don't know, they think buying lottery tickets is a financially good idea and that's why they do it.
'Tax' like most words, does not in fact have a real well defined meaning.
Remember how Pluto stopped being a planet because 'planet' went from just a word to a technical term with a well defined definition? Most words don't have that.
So, tax is any money given to the government. Income tax, sales tax, fees for registering cars, admittance to national parks, etc etc. Anytime the government collects any money that is a tax.
To paraphrase a great statesman---a lottery is just a tax with extra steps.
I've always considered it a Freudian slip because the people who see gambling as screwing poor people out of their money are mostly the same people who are in favor of boutique taxes and government carrot and stick type stuff.
As far as I am familiar, considering the actual cash flows, state lotteries do very strongly tend toward screwing poor people out of their money. Do you have some evidence otherwise?
The same people screaming to legalize weed because enforcement doesn't work. If I could change the lottery I would remove the inflated annuity value vs lump sum. And incorporate the tax into it too, so the jackpot amount is, in fact, the amount the winner gets deposited. I would also like to see a limit on the odds. The current 175M-1 or whatever is just obnoxious. Maybe 50m-1 or a bit higher. I once approximated the chances by expressing it as choosing one particular house, in a major US city. And from there, choosing one specific power outlet in one room. What's worse is the ticket prices is increasing soon to $5 from $2. So we're going to see more of these multi billion dollar jackpots that the media love to play up.
I call it passive taxation, because the state collects funds without any effort.
I don't get the winning thrill either, but several gambling addicts I used to work with described it as a feeling like none other. When I offered to go with them, as support to get help, they weren't interested in that feeling.
I bought one ticket once ($1 or whatever). I reasoned that if the universe wanted to give me a win, I had to help it by purchasing a ticket. Apparently it didn't have that in mind so that's all I'll ever buy.
Who gets excited about negative expected value? Now, suppose the expected value of a $1 lottery ticket was about $0.97 so people could be indifferent between zero-interest savings accounts and lottery tickets, and maybe I could see that being exciting.
But clearly the gambling industries are predicated on quite a lot of volume going to negative expected value purchases which sounds depressing rather than exciting.
Presumably if the state is functioning well and redistributing wealth, it is the poor who benefit more of the state's increased revenue. Perhaps not in America.
I feel like this argument could have legs, but I can also see some easy counter points depending on how you proceed with it. Thank you regardless, as this made me think for a bit.
True, but it is also true that lottery money often goes back to cities and towns, so those people get a tiny little bit of benefit back for themselves.
What's the evidence that it's better than a private entity?
State lotteries pay out ~60% on average, compared to ~90%+ for casinos. Not apples to apples, but it seems like competition does shrink profit margins, for the benefit of the buyer. It's not clear to me which is better, but I'd be curious to read good analyses, if anyone has a pointer.
> What's the evidence that it's better than a private entity?
In this case, texas voters can demand the changes to prevent some company from buying all the numbers again. A private entity wouldn't be accountable to the public for anything. We have countless examples of private companies screwing over people both in secret or openly no matter how much the public wishes that they would stop.
I'd be interested to see numbers on that. Vegas has a 75% minimum payout on slot machines. Table games have their own return. Roulette, for example has a 98% return. Casinos definitely compete on table rake for poker
Not really. The actual value to your life per dollar is lower the richer you are. So if you’re well enough off that a few bucks won’t make any difference when they go missing vs life changing money on the off chance it hits, it is worth it to buy some number of tickets. It basically equates to no change if lose, rich if win. The problem is when people are spending dollars that will actually affect their lives hoping to win.
I’ve not seen it applied to the lottery specifically but you might even be able to use the Kelly Criterion to determine how much you can lose.
Hm call me old fashioned, but hearing that this was done by people in Malta backed by people in London sort of broke my heart
I get HN isn’t sympathetic to this kind of stuff (ovarian lottery and all that jazz), but I, personally, much rather this have been some kids from a random town in Kansas or something vs pros from other countries
Edit: I think you are all confused and acting as if I didn’t understand why this happened or how, I was just making a sentimental lament, but I should know better by now
> but I, personally, much rather this have been some kids from a random town in Kansas or something vs pros from other countries
Well, that's the rub and ultimate downfall of our current implementation of capitalism.
Even if you have a good idea that almost nobody else has yet thought of, you've got to have enough resources to be able to comfortably execute it such that if you fail, your life won't be over. Most of the time, the only people who can do that already have a lot of money. So most innovators and innovation naturally have to come from people that already have money and connections; HOWEVER, there's very little reason to believe only good ideas come from people with money or power.
So little Timmy from Kansas might have even thought this was a nifty idea, but Timmy's dad is going to roll his eyes and get back to work. Nobody on the ground is ever going to be able to execute what is a relatively obvious play. Instead, they lose their time-advantage and big Timoteo from Malta comes in for the prize.
Worse still, big Timoteo has now accumulated more resources that puts him even further ahead of the pack for future such endeavours that should really need have success tied to starting resources.
What happens if there is more than one winning ticket? In the UK they just divide the jackpot up between the winners so you might get less. I guess that is the risk.
It's missing some prior work. When the jackpot gets higher, more people play, and the number of winners expected to split the prize increases. You can do the EV calculation using historical purchase data. https://phaethonprime.wordpress.com/2015/10/24/mega-millions...
> But in most of modern life, the computer is the main thing, and it is somewhat eccentric to suggest that the computer is wrong. What, the piece of paper that I skimmed and signed and stuck in a drawer is the deal, and not the computer screen that I look at every day? Seems implausible. The contract is just a piece of paper; the computer is real life.
What in the world is the author talking about here? Why wouldn't the contract you signed be the contract? And the administrative error is an error in execution of the contract, so of course there's some space for dispute. Without that contract, he wouldn't have shares in the first place.
> If you give your CEO options that expire in August 2024, and you put into the computer that they expire in October 2024, then they expire in October 2024. How was he supposed to know that they expired in August?
Flipping this around, if the CEO signed a contract saying they expired in December then the system said they expired in October, I would still expect the shares to expire in December. By the author's logic, they would expire in October.
They're talking about the world that most people live in, where lawyers are expensive and bureaucracies are run by computers and people looking at computers. They're saying that 90% of the time, the computer is correct, and people will look at you strangely if you say that "No, my contract with the insurance company says that it has to cover this medication, so your pharmacy has to fill it, regardless of what the insurance's computer system says". Everyone knows that the insurance's computer system has a bug, everybody knows that the medication they're trying to give me should be covered, but nobody is able to fix it.
Levine is having a bit of fun. Contracts are an agreement between two parties; in other Money Stuffs he's talked about how the written contract is also secondary to the agreement as understood by both parties. The paperwork makes it easier to enforce in court, but you can (even in 2025) still have enforceable contracts with just a handshake.
It’s not the author’s logic. It’s the court’s logic.
Contracts are messy in the real world. Sorting it out can be tricky. The various doctrines of estoppel are relevant for sorting things out.
Of particular pertinence to this case, “conventional estoppel” means that if both parties consistently behave in a certain way that can become an expectation to be relied upon (over-simplified!)
In this case, if the guy reasonable relied on the convention that he would be notified when they expired, and wasn’t, then he may have an estoppel claim.
There is a large framework around contract law that takes a semester in law school just for the introduction.
> By the author's logic, they would expire in October.
That's... not the logic stated in the article. In both cases you get the expiration date in the contract.†
If you make a false representation to someone, and they rely on that, which is exactly what happened here, you can be liable for the damage to them, which is also exactly what happened here.
If you make a false representation to someone, and nothing bad happens, and they find proof that you made a mistake, then... you adjust what you're saying, and there are no other consequences.
† Kummeth contended that, had he been aware of the options' actual expiration date, he would have exercised them, and this was obviously true. He was awarded an amount based on their value around the time of expiration specified in the contract, not their value at the time he tried to exercise them.
IMO, Matt does a pretty bad job of illustrating that point. It seems like he is construing this ruling as a an example of the computer superseding the contract.
>What, the piece of paper that I skimmed and signed and stuck in a drawer is the deal, and not the computer screen that I look at every day? Seems implausible. The contract is just a piece of paper; the computer is real life.
>The stock administration platform is real life; the contract is just a contract.
Maybe there are 2 levels are sarcasm and he is actually saying the paper contract drives the ruling (which it did), but I dont see it.
> IMO, Matt does a pretty bad job of illustrating that point. It seems like he is construing this ruling as a an example of the computer superseding the contract.
Thank you. That is exactly the point I was trying to make. It wasn't the computer. It was execution of the contract and which side of the contract performed poorly in that execution. It's not as reductive as that's what the computer said.
I had the same takeaway. The court didnt say the September sale price represented in the computer must be honored. It rolled the sale back based on the august date in the contract.
This is the court essentially saying "you both errored in executing the contract as written" and then trying to figure out what would have happened in the hypothetical where each executed it faithfully. Looking at the ticker, and august average sale price was lower than the September transaction date.
