Math, not magic
The MIT students who turned a lottery into a math problem
A dorm project became a seven-year business. The math was simple. Everything around it, from hand-filled slips to tax forms, was hard work for a thin margin.
A class project that started with Powerball
In January 2005, James Harvey was heading into his last semester at MIT and needed a project. He started by comparing Powerball and Mega Millions, then turned to a Massachusetts game called Cash WinFall. Like the Michigan game the Selbees played, it had a roll-down: when the jackpot reached about $2 million and nobody won it, the money was paid out to players who matched fewer numbers.
Within days, working with friends from his dorm, Random Hall, Harvey concluded that on a roll-down drawing a ticket was worth more on average than its $2 price.
A $1,000 test
About 50 people put in $20 each for the roll-down on February 7, 2005. The group bought 500 tickets. One matched four numbers and paid about $2,364, and the pool roughly tripled. Several copycat pools formed on campus that semester. Harvey's was the only one that lasted.
The group kept its winnings in the pool and added money after graduation. At its peak it bought around 300,000 tickets per roll-down. In 2010, Harvey and fellow alumnus Yuran Lu incorporated as Random Strategies Investments LLC, named after the dorm.
Spreading the numbers out didn't change the odds
Harvey wrote a program to spread the group's number choices evenly across the possible outcomes. That sounds like a way to win more often. It isn't. Every combination has exactly the same chance of being drawn, so no arrangement of tickets raises the odds.
What even coverage does is smooth out the results. With 300,000 random tickets, you might get unlucky clusters of duplicate numbers. With evenly spread tickets, the group's total winnings landed closer to the average from one drawing to the next. The edge came entirely from the roll-down rule. The spreading just made the result more predictable.
The key point: covering numbers evenly reduces how much your results swing. It never changes what an average ticket is worth. If a ticket is worth less than it costs, no arrangement of tickets fixes that.
What it actually took
Lottery rules barred computer-printed slips, so members filled out betting slips by hand and reused them. Only a few Boston-area stores could reliably handle orders that large. Every big batch of winnings produced tax forms for every member, which drove some people out of the pool. Harvey described running it as close to a full-time job for seven years, and said his lifestyle barely changed. He bought a used car at a government auction for a few hundred dollars.
The drawing they forced
In August 2010, the jackpot was getting close to the roll-down threshold but wasn't there yet. The MIT group bought about 700,000 tickets, enough sales to push the jackpot over the line and trigger the roll-down themselves. According to the inspector general's later report, the group bought more than 80% of the tickets sold for that drawing and cashed most of the larger winning tickets.
How it ended
The Boston Globe reported on the groups in July 2011. The state treasurer asked the inspector general to look into it, and his 2012 report found that lottery officials had known about the high-volume groups for years and had allowed far more betting than the rules permitted. It found no wrongdoing by the players and said ordinary players' odds were not affected. Massachusetts ended Cash WinFall in 2012.
Harvey said the group wagered $17 million to $18 million over seven years and didn't disclose its profit. The inspector general estimated at least $3.5 million before taxes, assuming a margin of at least 20%. Across all the groups that played, reports put total spending at about $40 million and winnings at about $48 million.
What this means for Powerball and Mega Millions
Harvey started with Powerball and Mega Millions before turning to Cash WinFall. Neither has a roll-down. Their jackpots grow until someone wins, and the average ticket is worth less than it costs on every drawing. Buying more tickets, or spreading them out more cleverly, doesn't change that. It only changes how many tickets you lose on.
See what the current jackpot is really worth