BLOG: MIT Student scams lottery, total haul of $8m

The MIT “brainiacs” have been at it again, using their superior math skills to run a scheme that some say violated the public trust.

Ten years ago, a professor and some students from Massachusetts Institute of Technology were able to extort money from Las Vegas casinos by counting cards. Now, a new scam team has emerged again at MIT. A researcher and some students have run a scam on the Massachusetts Lottery.

The researcher and students were not the only ones behind the scam; the Massachusetts Lottery knew and was also cashing in on the scam.

The scam started when the students were working on a school project and two of them realized that buying $100, 000 in tickets guaranteed a win in the Cash WinFall game. When the jackpot went up to $2 million, the members of the group contributed to the seed money and they shared the winnings.

According to the Boston Globe, by 2005,the group’s winnings were close to $8 million. The Globe reports that even after the Massachusetts Lottery officials realized what the MIT students were doing, they allowed them to buy tickets by the hundred of thousands.  But there are some who say that the students weren’t scamming anyone, and were instead utilizing superior mathematical capability to take advantage of a natural arbitrage opportunity.

The scheme basically worked because when the jackpot in a lottery did not produce a winner, the money carried over to the next jackpot drawing which was even more money. If there were no exact matches, the jackpot was redistributed to the ticket buyers in smaller cash prizes.

According to a report by State Inspector General Gregory Sullivan, the plan paid the MIT group of students so well that they stopped working “normal jobs” and invested their time in working the system full time. The students even found investors who gave them money to buy tickets and then shared in the winnings.

As some people found out about what the students were doing, they also played the game with them, but by 2010, the MIT group had created a new system which guaranteed them a win with just one drawing.

The Boston Globe got their hands on an e-mail in which a lottery supervisor asked:”How do I become part of the club when I retire?”

Considering that some of the people who were involved in the plot were employees of Massachusetts Lottery, people who have been playing the lottery in the state may have cause to sue.

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