A Lottery is a Taxation, Upon all the Fools in Creation;
And Heav’n be prais’d, It is easily rais’d,
Credulity’s always in Fashion; For, Folly’s a Fund,
Will never lose Ground; While Fools are so rife in the Nation
Henry Fielding 1732
I despise state lotteries.
They are one of the most insidious and parasitical activities in which government participates. They encourage the poor to spend their hard earned money chasing “scratch off” dreams that often end in financial ruin or gambling addictions.
Just like our disastrous monetary policy, they incentivize spending and consumption over savings and investment.
And they are the worst sort of crony capitalism: A perverse partnership between the state and gaming industry to pickpocket citizens in order to pay for even more profligate government spending.
For what it’s worth, I have no problem with private lotteries. But not surprisingly, they don’t really exist. That’s because when state governments removed lottery prohibitions from their constitutions, they only applied to state run lotteries, guaranteeing the state a monopoly source of revenue.
But there’s a great story today about a Michigan man who gamed the lottery for years by exploiting loopholes in lottery games, winning more than $8 million in the process. As Mike Krieger explains, “every now and again one of us serfs scores a victory against the parasitic elite.”
Business Insider has the scoop:
“On Friday, [Gary] Selbee and a host of others were named — but absolved of any wrongdoing — in a report from the Massachusetts Inspector General’s office on how large-volume betters cracked that state’s game.
One day in 2003, while buying a soda at a convenience store, he picked up a brochure advertising Michigan’s newest lotto game, a pick-5 called Winfall.
The game was structured so that if the jackpot hit $5 million but was not claimed, the money would “roll-down” to those who’d picked five, four and three numbers correctly.
While Selbee was not a frequent lottery player, he had earned a Bachelor’s in mathematics and had started Master’s degree in the subject.
So it took him “about 4 minutes,” he told us from his home in Evart, Mich. to realize that if you bought enough tickets, the odds of taking home money became overwhelming.”
Selbee eventually recruited friends to start a company called GS Investment Strategies, LLC, and for nine years gamed the lottery system. While Michigan eventually shut down the lottery game, he moved on to Massachusetts, which had a similar game. There, along with an MIT senior and two biomedical researchers who had their own “syndicates” to crack the flaw in the lottery game, Selbee ended up collecting millions more.
And what did Goolsbee do with his winnings? He bought gold…
“Two of my grand kids graduated debt-free from the University of Michigan,” he said. And for his personal satisfaction? He bought gold.
“I think devaluation of the dollar is a certainty,” he said.
For you math whizzes out there, it might be really interesting (and lucrative) to start analyzing other states’ lottery games for similar loopholes.