Seven month earlier, a Massachusetts Institute of Technology student named James Harvey, was trying to get people excited about one of his projects which was a lottery betting pool. He’d also analyzed different state games, including Cash WinFall, and it hadn’t taken him long to spot its flaw: On a roll-down week, a $2 lottery ticket was worth more than $2, mathematically. He could have 50 people as his group. Curiously enough, the MIT students weren’t the only ones playing Cash WinFall for high stakes that day. A biomedical researcher at Boston University, Ying Zhang, had also discovered the flaw. Zhang encouraged friends to play and formed his own betting club, Doctor Zhang Lottery Club Limited Partnership.
The Massachusetts State Lottery was perfectly aware of several anomalies in Cash WinFall ticket-buying, unusual patterns over the months that signaled that something was up. Later, officials discovered that a whopping 23 stores across the state were violating a different rule involving a “free bet” feature of the game.
August 29th was the first time Jerry and Marge played Cash Winfall. They ended up spending $720,000 bet on a single drawing. At first Marge was terrified—it was more than they had ever risked in Michigan—but after a while she got used to it. “You know, you think of this as money,” Marge recalled, “but pretty soon you never really look. It’s just numbers. It’s just numbers on a piece of paper.”
Over five years, Jerry and Marge traveled to Massachusetts six to nine times per year, never deviating from their system: printing tickets, counting them at the Red Roof Inn, redeeming the winners for a giant check, and driving back to Evart with the losers in the trunk.
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“I mean, if I were running a lottery game and somebody spotted a flaw, I would shut it down immediately,” said Jerry. From time to time, players in the group asked Jerry if he had a plan for stopping. For how many more years they want to continue? The group had lost money only three times. “I’m going to milk this cow as long as it’ll stand,” he’d reply.
Little did he know that the MIT students were preparing to attack the game with a new and unprecedented level of aggression. They figured out that their profit margin is decreasing and that is happening for just one reason: competition. The Selbees, MIT students and Zhang needed to split the payouts. When they reached this moment, the MIT students had an idea: Instead of waiting for a roll-down to happen, they decided to force it to happen. But how? By making a surprisingly large bet.
In the week leading up to the Cash WinFall drawing of August 16, 2010, the state had not announced a roll-down, because the jackpot was only $1.6 million; it didn’t seem that it would reach the required $2 million. Harvey and his MIT friends saw their chance right there. They bought 700,000 lottery tickets, costing $1.4 million. Before lottery officials knew what was happening—and before they could announce the roll-down. No one else knew that the money was going to roll down, so the other bettors, including Jerry and Marge, did not buy tickets. The MIT group hoovered up a $700,000 cash profit.
Jerry was enraged. “They took us out of the game,” Jerry said. “Intentionally.” The next time the MIT group tried to force a roll-down, he decided, he was going to be ready.
On Christmas day Jerry hopped in his car. Leaving Marge behind, he drove on to Jerry’s Place (a store), where he spent hours printing 45,000 tickets, long after the sun went down. He was printing the last of them when he heard a knock on the door. He was the only one in the store, so he opened the door a crack to check who is knocking, a polite young man who said his name was Yuran Lu.
“I’m from the other club, and I think it would be mutually beneficial if we knew how much money each of us were playing,” Jerry would later claim Lu told him. Jerry gathered that the MIT kids were proposing to collude; in Jerry’s point of view it was unethical, so he shook his head and closed the door. Lu walked away.
A Globe reporter called Andrea Estes, was suddenly curious about the Massachusetts State Lottery. She put her time to study it and quickly learned everything she could about Cash Winfall. “It was pretty obvious that something was askew,” Estes said. She requested public records from the lottery and discovered that other groups had formed to buy tickets, including one with a bunch of MIT students. When Estes asked officials for comment, they claimed ignorance. “The lottery was really sleazy about the whole thing,” she said. “They were quite aware this was going on, and they acted shocked when I told them about it.”
Although the officials suspended the license of the stores that helped the betting groups, it was too late. Estes wrote a story and it broke on July 31 with the headline: “A game with a windfall for a knowing few,” Jerry, Marge and Lu were named in the article. Estes consulted a statistician considering the math she mentioned in the article. “Cash WinFall isn’t being played as a game of chance,” Estes quoted him as saying. “Some smart people have figured out how to get rich while everyone else funds their winnings.”
Back in Evart, Jerry read the article and couldn’t believe the news. The framing of the story as if he was a great cheater, made him furious. How was buying tickets in bulk, at the right time, cheating? And wasn’t the money he spent on tickets making its way into the budgets of cities and towns all over Massachusetts? He thought, if anyone is cheating and using small people, it’s the lottery itself, which took 40 percent of each ticket people bought.
Jerry thought if Cash Winfall is really scandal, people need to know which part of this play is really scandalous. He decided to call Estes and set up an interview with her. He told her what he knew about the manipulations and about the MIT group forcing the roll-downs. After the interview went public, the officials decided to shut down the play. The inspector general and his staff examined thousands of internal lottery documents and interview officials and players, to determine if there had been any corruption. “We felt this was an important step we needed to take to protect the integrity of the lottery,”
In January 2012, Jerry and Marge played their last Cash Winfall. They had an amazing run: In the nine years of playing, they netted $7.75 million in profit without taxes disturbed among the group members of GS Investment Strategies LLC. They knew it could end someday but they hadn’t expected to be made as criminals. Almost anyone would do exactly what they did and made the same decisions. “If you figured it out and you could do this, would you do it?” Jerry would say later. “I’m just asking. Would you?”
At the age of 79 Jerry still plays the lottery sometimes. Once in a while he goes to a casino with Marge but she doesn’t like to gamble. Jerry will give her $100 to play slot machines and at the end of the night she will give it back to him.
Lu and Harvey started an Internet startup in the tech industry area. But the Selbees used their money on developing a new business: construction financing.
Years are passed but the lottery group members still get together with the Selbees, talking about their adventures.
“The odds are the odds,” Wood said.
“They were just computer picks,” Marge chimed in.
“There’s no magic to a computer pick,” Wood continued. “It was perfectly legal. It’s the American way.”
“I look for tendencies,” Jerry said. “That’s all. Nothing guaranteed.”
Marge, who recently turned 80 admit that without the game, life is a little emptier. “I really do miss it,” she said. “I’m too young to quit working.”
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