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Massachusetts Lottery Players Exploit Game for Profit

Aug 3, 2011
Author: Michael Mancini
Massachusetts Lottery Players Exploit Game for Profit

Most people believe that state lotteries are only for dreamers. Sure, it’s fun to dream of hitting a jackpot, but the odds are clearly against the player, and most of the time, you’ll only lose money by playing. Usually, this assumption is correct.

But not always.

A small number of players found a way to exploit a Massachusetts game known as Cash WinFall, turning nearly guaranteed profits by playing massive numbers of tickets at the right times.

Here’s how it worked. In Cash WinFall, the jackpot amount slowly rises from $500,000 to between $2 million and $2.5 million. Once that target was reached, the jackpot amount would then be distributed among the smaller prizes players received for hitting three, four, or five numbers instead. This greatly inflated the amount of these lesser prizes.

A few individuals and gambling companies caught on to this fact, and soon found a way to exploit the game with virtually zero risk. By purchasing hundreds of thousands of dollars of tickets during these “drawdown” periods, they would be statistically near-certain to win several five-number prizes, along with numerous lesser prizes, thus turning a profit.

One such group, GS Investment Strategies, was run by the husband and wife team of Marjorie and Gerald Selbee, bought over $600,000 in tickets during a recent drawdown period. They’ve won well over $1 million in prizes this year. In total, analysts believe the top five players of the game make between $1 million and $6 million each year from playing Cash WinFall for just a few days.

Initially, the state of Massachusetts didn’t seem concerned about these high volume players; they didn’t cost the state money, as the increased winnings were coming from jackpot money that was guaranteed to be paid out anyway. But Tuesday, State Treasurer Steven Grossman created restrictions that essentially ended the ability of players to take full advantage of the game.

Individual stores are now allowed to sell just $5,000 worth of Cash WinFall tickets in a single day. This should make it difficult for even the largest gambling companies to spend enough in a single day to guarantee winning money on the game, though the game may still remain profitable during drawdown periods.

However, even that opportunity won’t last for long. Grossman also announced that Cash WinFall will be phased out next year. The game has been part of the Massachusetts lottery system since 2004.

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