MIT maths geniuses netted $8million from state lottery after discovering loophole



Gamblers virtually took over Massachusetts Cash WinFall lottery, officials admit



Statisticians, including biomedical researcher and MIT students, calculated a system to guarantee wins

Group waited until unclaimed jackpot reached $2m - then snapped up hundreds of thousands of tickets





What a gamble: Statisticians calculated a system to virtually guarantee a win

A group of science and mathematical experts won almost $8million on a state lottery after discovering a fool-proof way of winning.



The group, which included a biomedical researcher and MIT undergraduates who were 'looking for an interesting school project', bought more than $40million of tickets over seven years but won approximately $48million - an $8million profit.

Statisticians calculated that, during brief periods when the unclaimed jackpot of the Massachusetts Cash WinFall game total reached $2million, players buying $100,000 worth of tickets would almost certainly win.

And their gamble paid off. Using these small windows of opportunity, the group bought as many tickets as they could, using a loophole in which lottery officials failed to limit the amount that could be sold in one day.

During these high payout intervals, the gambling syndicates won most of the lottery's prizes.

Officials at the Massachusetts state lottery knew one of their games had essentially been taken over by the group of highly-intelligent gamblers but did nothing because their syndicate generated $16million.

The gambling group included graduates from the Massachusetts Institute of Technology (pictured) who were looking for an interesting school project

HOW THEY DID IT

The MIT researchers capitalised on the way the Cash WinFall game worked.

Unlike most lotteries, the jackpot was limited to $2m, and once this was surpassed the excess redistributed to smaller prizes – known as a ‘roll-down’ week.

The smaller jackpots won by matching five of six numbers became five to ten times bigger on roll-down weeks – with the typical $4,000 win becoming up to $40,000.

The group calculated if they bought $600,000 of tickets on rollover weeks, they would most likely make a 10-15 per cent profit.

As the success of the scheme became clear they began buying enough tickets to force a roll-down week themselves.



Their system became an almost full-time business as the sophisticated gamblers snapped up hundreds of thousands of lottery tickets at $2 each.

By 2005 they had essentially monopolised the game.

The group's scheme came to light in a recently-published report by the state's inspector general, the Boston Globe reports.

It is thought lottery officials found out about the loophole in 2010 - or maybe earlier - but did not act because it was bringing in so much money, the report added.

However, when journalists began looking into the loophole last summer, lottery chiefs introduced a $5,000 limit on the number of tickets retailers were allowed to sell every day.

The Cash WinFall game was finally halted by Massachusetts state treasurer Steven Grossman earlier this year.

Grossman told the Boston Globe : 'I feel it is important to essentially apologise to the public because a game was created that allowed syndicates to gain special opportunities that others did not have - using machines themselves, partnership with lottery agents, using them after hours. We’re sorry some gained unfair advantage.

'Revenues were tremendous and the lottery benefited, but there were practices that were not appropriate and things done that were not right.'

The report into the Massachusetts syndicate concluded that, while it had been a financial success for the lottery, no officials personally benefited financially from it.

Officials were simply guilty of failing to manage the game and enforcing the rules.

Massachusetts is not the only state to be targeted by gambling networks. The same loophole was used and exploited in a similar lottery in Michigan.