Cigar Aficionado

Since 1964, the lottery has been the biggest and most prominent form of legal gambling in the United States. And it is impossible to miss. Winners of Powerball, Lotto, Mega Millions and other lotteries typically go public as a condition of getting paid. They celebrate with oversized checks, express caviar dreams and become multimillionaires overnight.

The payouts can be the very stuff of dreams. On 11 occasions, the grand prize has exceeded $1 billion. On November 7, 2022, Edwin Castro of Altadena, California won the largest lottery jackpot in American history, $2.04 billion. (His lump-sum payout was $997 million.) He treated his friends to a Fiji vacation, and invested in some pricey California real estate, including a $47 million mansion in Bel Air.

But the payouts are incredible longshots. Powerball has odds of roughly one in 292 million, Mega Millions one in 302.6 million. The only consistent winners are the 48 U.S. jurisdictions doing the selling, to the tune of some $100 billion annual ticket sales, paying out only around $64 billion. Percentage wise, that’s a paltry 64 percent. Consider that slot machines in Las Vegas routinely cough up more than 90 percent of the dollars wagered. Even the most sucker-attracting games in the casino are better for players. One of the worst bets you can make at the craps table, wagering on any seven, for example, pays off some 83 percent of the time.

“Nearly all state lottery offerings have house edges so high that those games would be illegal in local casinos,” says one professional gambler who’s figured out how to game certain iterations of the lottery. Not surprisingly, he won’t say how he did it or have his name attached to such exploits.

At its core, the lottery is no damned good. At least, for most of us. Clearly, however, Joan R. Ginther is not like most of us.

While living in Texas, Ginther managed to win four jackpots via the state’s Extreme Payout scratch-off game, for a total of $20.4 million. The odds of that happening are one in 18 septillion (that’s a number with 24 zeros). It would be easy to characterize her as the luckiest woman on Earth. Lone Star media has done it repeatedly. But that would miss the point and maybe not recognize that Ginther has since relocated to Nevada, home of the world’s most astute advantage playing gamblers and a place without state income tax. Most likely, she fits right in.

“You might think she’s really lucky,” says Richard Munchkin, an advantage player in his own right, who co-hosts the “Gambling with an Edge” podcast. “Then you find out that she has a math degree from Stanford with a concentration in statistics.”

Clearly, the former math professor does not fit the profile of standard-issue lottery players who line up to purchase tickets with lucky numbers. Some people believe that there was a method to her apparent lottery madness. One clue, reported in Harpers magazine about the low-profile Ginther, is that when the big-win tickets dropped, she bought as many of them as she possibly could from a particular retailer in town. The rest remains mysterious.

Such is the world of the lottery, which includes the billion-dollar-sized Powerball and Mega Millions, state lotteries with smaller prizes and the seemingly lowly scratch-offs, which are often dismissed as the province of low-rollers. “Scratch-off tickets are to the lottery what crack is to cocaine,” a democratic state senator from Texas once stated. But they also might be the form of lottery best exploited by canny gamblers.

Mohan Srivastava is a mathematician from Toronto who works as a geo-statistician. He figured out something unusual about Canada’s scratch-offs, particularly a game known as TicTacToe.

Each ticket contained eight tic-tac-toe boards, each with three rows of three numbers, for a total of 72, all of them exposed. Players scratched off a latex film to reveal 39 numbers, hoping for three that would match numerals in one of the rows. Prize money was based on where the numbers lined up.

Srivastava was given a ticket by a friend, almost as a gag. He bought a few more, then he began thinking about the game, taking particular note of how its architect had only 39 numbers with which to work. He realized that the most efficient way to do this would be to have numbers repeating across different games. Then he figured out that if there were three singletons (numbers that did not appear elsewhere on the ticket) in a single row, that row was likely a winner. Quickly, Srivastava recognized that this was an accurate predictor 90 percent of the time.

Instead of snapping up all of the winning tickets, Srivastava reported his findings. “He wrote to the lottery commission and told them that they had a problem with their game,” says Munchkin, sounding amazed. “Initially, they blew him off.” The lottery, he explains, is like horse racing. “It’s pari-mutuel. So, they don’t care who wins. They just want to sell more tickets.”

You don’t need eagle eyes or a mathematician’s prowess to exploit scratch-offs. Sometimes you just need to know a little bit about how lotteries work, understand rudimentary math and realize where to look. Additionally, having a hefty bankroll comes in handy.

To begin with, scratch-off lotteries are closed systems, with a set number of tickets printed for each game and an established prize pool that gets made public. It’s also made clear how many winners there are at any given moment in the life cycle of a game.

Jared James, formerly a A with PricewaterhouseCoopers and currently the founder of a website called cigaraficionado.casinowinning.net, gives an example based on the system in North Carolina. “Overall payout is the lottery commission picking what percentage of money goes back to the players,” he says. “Knowing how many tickets were printed and how many have been sold”—extrapolated from publicly available information—“we know what each ticket is worth.”

James brings up a real-world scratch-off game going on at the time of the interview as an example. He knows that 80 percent of the projected revenue is slated to go to winners, so at the very beginning each $25 ticket had a net worth of only $20, or 80 percent of $25. But after many tickets had been sold and two $500,000 prizes remained unclaimed, the remaining tickets had a much higher value. “The current payoff is 108 percent of the value of the un-purchased tickets,” he says. “We calculate that they are now worth $27 each. As soon as one of those $500,000 tickets becomes a winner, the value of each available ticket plummets.”

James tells the story of a lawn trimmer who became intrigued with these possibilities. “There was a $5 million top prize, a $1 million second prize and not many tickets left,” he explains. “This guy went to the western part of North Carolina and bought every ticket he could get. He didn’t buy all of them, so there was risk. But he bought enough to give himself an edge—and he hit the $5 million prize.” James acknowledges that the lawn guy got lucky, and he has a “don’t try this at home” vibe to his statements.

Alluring as seven figures may be, you don’t need to win it, at least not immediately, for this kind of information to lead to theoretically profitable outcomes. Serious lottery players wait for overlays, when the odds are higher than they should be, and then plow in money.  It’s not unlike a card counter putting up maximum bets exclusively when the count goes through the roof. He’s not guaranteed to win, but the odds favor him.

As with card counting at blackjack, advantageous lottery playing comes with variance, but when the strategy is mathematically sound, the variance should be ironed out over time, just as it is with every gambling opportunity that gets played with a clear mathematical edge.

State lotteries evolved as legal iterations of illicit numbers rackets controlled by the Mob. In New York City, the winning number derived from that day’s total handle at an area racetrack, thus making such operations appear unlikely to be rigged. They were never intended to be something that sharp gamblers would be able to outwit.

While references to lotteries go back to the Bible and the first known public lottery took place around AD 1 in Rome (Augustus Caesar needed cash for road repairs) the version that we know began in 1964 in New Hampshire. New York followed suit three years later. Today, various lotteries exist in 45 states.

In the world of the lottery, there are two kings in of payout: Powerball and Mega Millions. Five of the billion-dollar-plus jackpots in U.S. history have come from Powerball, while the other six have come from Mega Millions. No other game comes close in of potential reward. The first Powerball drawing was in April 1992, and it was the first lottery to hit a $1 billion jackpot in 2016; three winners split that prize. Now available in all but five states, the game also holds the record for largest national lottery jackpot, $2.04 billion.

Mega Millions is younger, born in 1996 as The Big Game, when it was available in six states. In 2002 the name was changed to Mega Millions, and its largest jackpot was $1.6 billion.

The games are not without critics, who—logically—state that lotteries prey on the poor. Then there is Ginther, who is not saying how she won. It could have been via some mathematical strategizing or the unlikely instance of sheer luck. If the former, she is not alone. There are other sharp gamblers who have benefited from gaming the lottery.

A lottery specialist operating under the moniker of Mr. Doppy, who appeared on Munchkin’s podcast, had a strategy to beat the lottery, and he believed enough in his plan to literally go all in, spending nearly every dime he had to buy tickets. “I told my girlfriend that I needed to put all of our money into buying lottery tickets,” he said. “We put in $40,000 and had $84 left.” They worked up to 18 hour-days to buy even more. “My house was tubs and tubs of lottery tickets. They faded in sunlight and I was trying to turn them over as quickly as possible,” he told the Risk of Ruin podcast. “But there was no cash-out infrastructure. Grocery stores have $500 [in available cash] and that does not help you if you have thousands of tickets. Basically, you need skills to understand the entire system and how it operates. Without that, I don’t know if the games are beatable.”

Doppy won’t reveal his strategy, though he does allow that it tied into a specific circumstance of a game that was not always available and was not a scratch-off. He has become increasingly circumspect about the media, and turned down an interview request from Cigar Aficionado.

For ordinary gamblers who can’t stop themselves from taking a shot at lotteries, where players can pick their numbers, one tight-lipped professional gambler offered this tip on large, progressive games such as Powerball where jackpots build over time. “Play numbers that exclude one to 31,” he says. “Many people play birthday numbers. So, if you exclude that sample, you don’t increase the odds of winning. But you do increase the expected value of a ticket by improving the odds of winning alone.”

The reluctance of lottery gamblers to discuss their winning ways makes sense. Notifying the public not only fosters increased competition, it might catch the attention of someone who might make it more difficult to continue exploiting soft spots and loopholes. Such was the case when a group of brainy students at Massachusetts Institute of Technology noticed an advantage play in the local state lottery.

Supposedly, their move began as a class project and ended as a multi-million-dollar bonanza. Students recognized that in a game called Cash WinFall, the lottery commission became impatient to wrap up the game and start fresh. So, when a jackpot reached $2 million, a feature called “roll down” was instituted. It increased the amount of money to be won by hitting five out of six numbers. It went from the standard $4,000 to an inflated $40,000. Running numbers, the students realized that if they purchased $600,000 worth of tickets, they had a high probability of hitting roll-down prizes to the point that they should realize a return on investment of 15 to 20 percent. Over a seven-year period, the group kept their eyes out for such opportunities, wagered some $18 million all told and raked in $3.5 million worth of profits. Beating the lottery is not only for the elite. While the MIT kids were raking it in big-time, a group of retirees in Michigan took advantage of a similar roll-down feature in their state’s lottery. It was uncovered by a guy who had owned a local convenience store. He put together a money-making posse of oldsters who used the lottery loophole to more than supplement their social security checks.

Though those specific situations may be closed off right now, opportunities surely remain. But, as is the case with a lot of lucrative gambles, those tied into the lottery are harder to pull off and more fraught with risk than outsiders would believe. Doppy talked about the difficulty of cashing in so many winning tickets. His girlfriend’s parent fretted about the risks of the young couple being robbed as they left stores with wads of cash.

And it’s not just thieves that lottery advantage players have to worry about. A story circulates through the advantage play world about the member of a team who got pulled over while driving and happened to have six figures worth of cash in his car. The police officer had questions. Other headaches that come with strategically chasing lottery fortunes include malfunctioning ticket-printing machines and expiring tickets.

Munchkin sighs. “The money is never just laying on the ground for you to pick up,” he says. “There’s always work involved. That’s the problem with gambling. It’s never easy.”