Observing the Lottery
by CeeJay
I have a friend (I'll call him Rob) who supplements his regular income with money made from the lottery.
He does this in two ways: he publishes a newsletter that contains tips and "hot" numbers, and he is a long-term net winner in playing the lottery himself.
He does this by tracking the winning numbers and coming up with a "hot" list numbers that are coming up more frequently than others. As anyone with any aptitude for math or odds certainly knows, this is bunk, as you cannot predict future random outcomes by looking at past results.
But as anyone with any sense can figure out, ping-pong balls are not manufactured with great precision. There are slight variations in weight and shape, along with minor imperfections. How these differences can lead to predictable patterns is well documented in several books that tell of roulette wheels in Las Vegas that were not manufactured to precise tolerances and the MIT students who made yearly pilgrimages each summer to finance their educations.
I witnessed this firsthand a few years ago when I used to do volunteer work for a local civic organization, working at their nightly bingo games. We had two sets of bingo balls that we would rotate every so often.
One set apparently had a few balls that were markedly different from the other balls and, as a result, would be drawn much less frequently than the other balls. It was noticeable enough that the old ladies who played every night would complain to us after three or four days to switch the balls. They were also allowed to hand pick their own cards, and the more astute ones would search for cards without the "dead" numbers on them, just in case we were using that set of balls that night.
Anyway, around 12 years ago, Rob commissioned me to write a simple tracking program so he could load the winning number history for any lottery and have the program determine not only the "hot" numbers, but hot sets of numbers (for example, if two or more numbers are likely to be drawn together).
The lottery has a huge odds advantage in that the payoff ratio is far lower than the actual odds. This is the "house edge" that allows them to make money.
To give some perspective, most roulette wheels in Vegas have 37 numbers (1 to 35, 0, and 00) and pay off 35 to one on a single number. Thus for every $37 that you bet you can expect to earn back only $35, or about $945 for every $1,000 wagered.
The lottery works a little differently; it is a pari-mutuel pool where a certain amount is set aside for paying off winning numbers and the payout for any particular number depends on how many people selected that number.
Many lottery players try to determine which numbers no one else likes and play those instead of playing their "lucky" numbers.
Regardless, the typical payout for a Pick-3 type lottery is $200 to $300. With three digits there are 1,000 numbers so the odds are 1,000 to 1 against you. For every $1,000 you wager in a Pick-3 lottery, you can expect a return of $200 to $300 back, certainly much worse than Vegas.
With those odds against you, it is easy to see why a little numeric edge in selecting numbers has not allowed Rob to take an early retirement.
But that is not the hack.
The hack was far simpler than that and is how Rob got started writing and selling lottery newsletters.
Rob has been an avid lottery player for a number of years. Rob is also the type of person who is always looking for an edge, an advantage, or some type of information that the average person does not have (who isn't?).
He played his state Pick-6 lottery regularly. Back then, the Pick-6 had you select six numbers from 1 to 36 and paid for four, five, or six correct picks, six of course being the jackpot.
The drawing was televised and always started the same way. The balls were arranged in a rack with the numbers displayed so you could see that they started with all 36 balls. They switched on the machine that started the mixer, released the balls, and one by one the six winning numbers were selected. The rack held six rows of six balls each.
Rob noticed that they were arranged in numerical order in each row but that they would rotate the rows with each drawing in a predictable manner. They would start with balls 1 to 6 in the first row, 7 to 12 in the second, 13 to 18, 19 to 24, 25 to 30, and 31 to 36 in the third, fourth, fifth, and sixth rows respectively.
In the next drawing they would move the first row to the end and slide all the other rows up, so the rows now were 7 to 12, 13 to 18, 19 to 24, 25 to 30, 31 to 36, and 1 to 6.
Each week they would take the front row and move it to the back in the same predictable manner, never deviating from the pattern. Rob made a note of this.
It was also about this time that he started keeping track of the winning numbers to see if there was a pattern. After a while he discovered that the first number in the first row came up quite often almost 50 percent of the time. Because of the way the machine was designed, when they released the balls, this first ball must have fallen directly into the area where the balls were drawn from.
Armed with this information and knowing which ball was sure to be in this spot each week, he started selecting his numbers very differently. He devised a "wheel" system with the one number he knew was likely to come out and "wheeling" the other numbers to play many different combinations containing this number. (This was the basis for his later system of using "hot" numbers.)
Now obviously, being about 50 percent certain of what one number is going to be isn't going to make you rich overnight. But he started hitting four out of six enough that it became pretty profitable, enough to come out a little ahead over time. Then he hit five out of six with a payout of several thousand dollars, which put him way ahead of the game.
He went on like this for several months, then decided there was more money to be made with this information. He decided to share this information with others by selling it.
Readers of 2600, interested in the free exchange of information and ideas, might frown upon his approach to sharing, but Rob had a family to support and two kids approaching college age. Besides, he felt he was providing legitimate information that others could use to make money so why not charge for it?
He took out a small ad in the back of a tabloid, "Lottery Secrets - Revealed send $5 for more information." He figured he could make a few bucks, that's all.
Surprisingly enough, the money came in by the hundreds $5 bills arriving in envelopes each day, courtesy of the USPS.
One day a different type of envelope arrived.
This one was from the State Lottery Commission and instead of a $5 bill it contained a Cease and Desist order. (An interesting note Rob was not profiting at the expense of the Lottery Commission since the payout is a fixed percentage of all money take in. He [and his customers] were profiting at the expense of other lottery players by reducing the winning payout amount.)
A Cease and Desist order was a scary thing to Rob so he showed the letter to his attorney. His attorney assured him that he was doing nothing illegal, simply sharing information based on his observance (and also advised him to make sure he was keeping track of, and paying proper tax on, all income from this information).
The attorney sent a reply back to the Commission telling them in polite legalese to "F*ck Off!"
He received several other threatening letters over the next few months, but nothing ever came of it. Then one day he tuned into the nightly lottery drawing and lo and behold! There was a new lottery machine in place and the balls, while all being displayed as before, were in no predictable order.
The commission had gotten smart and took the path of least resistance. The least they could have done was thank him or perhaps pay him a "consultant" fee for fixing their faulty system.
So watch your local televised lottery drawings carefully. You may not find a "bug" like Rob did, but who knows?
Remember, although the machines themselves have gotten more sophisticated, most of them still use the good old low-tech ping-pong ball.