Investing in lottery tickets

[turar]

I thought this was a very interesting story. In 1992 Virginia lottery had a jackpot of $27 million. To win the jackpot you had to pick correctly 6 numbers ranging from 1 to 44. And the probability of that was 1 in roughly 7 million. The kicker was that one lottery ticket sold for $1.

 

What happened next is described here: http://books.google.com/books?id=ZhWciYyPt-kC&lpg=PA86&ots=mlnmUv7D7a&dq=lottery%20%2B7059052&hl=en&pg=PA86#v=onepage&q&f=false

And also a bit here: http://www.nytimes.com/1992/02/28/us/lottery-investors-unsure-if-jackpot-was-virginia-s.html

 

Makes me wonder if holes like that still exist in lotteries.

 

P.S. Seems there are more stories and a Youtube video if you search for "Stefan Mandel" on Google: http://www.google.com/search?hl=en&rlz=1G1GGLQ_ENCA374&q=Stefan+Mandel&aq=f&aqi=g3g-v7&aql=&oq=

 

Youtube video:

[StubbleJumper]

Yeah, that was a neat situation where it was theoretically rational to buy all possible combinations with a view to making a profit.

 

At the time I wondered to myself what they would do if they bought all 7 million combination and then they discovered to their horror that they would have to share their jackpot with 4 or 5 other winning tickets (it does happen from time to time that there's more than one winning ticket).  Would one-fifth of the jackpot plus the subsidiary prizes have been adequate to offset the purchase of all those tickets?

 

Thanks for the walk down memory lane!

 

SJ

[nodnub]

the rest of the story (via http://www.betasia.com/features/how-to-win/business-life/88/syndicate-betting.html )

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There the luck pretty much ran out. The taxman stated that a 30% tax on gambling winnings should be imposed, as it was a professionally-orchestrated operation rather than winnings by chance. The CIA, FBI and Internal Revenue Service in the United States, and the Australian Securities Commission, National Crime Authority and the Victoria Police gaming squad all became involved, although no wrongdoing was proved. The members of the syndicate fell out, Mandel fled to his native Romania and in August 1995 was declared bankrupt, with debts in excess of A$500,000.

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obviously, I can't know all the details, but it seems like a lot of work only to end up bankrupt a couple years later.  I hope Mandel managed to escape to Romania with a few gold bars stashed away in his luggage.

[turar]

Yes, I've read about that too. Actually, they went to court against State of Virginia over withholding of the 30% tax on the grounds that they were a foreign entity, and initially the court ruled in their favor and awarded them an injunction requiring Virginia to pay out the 30%. However, the higher court overruled the ruling, BUT not on the grounds that it was a professionally-orchestrated operation, but simply because the lower court didn't have jurisdiction over tax assessment based on Anti-Injunction Act. As someone not very familiar with the judicial system, I found that whole case pretty weird. Details here: http://openjurist.org/20/f3d/589/international-lotto-fund-v-virginia-state-lottery-department

 

Also, searching for Stefan Mandel on LinkedIn shows a person with that name in London, in "Investment Management" industry: http://www.linkedin.com/pub/stefan-mandel/2/662/3a5 :)

[Myth465]

the rest of the story (via http://www.betasia.com/features/how-to-win/business-life/88/syndicate-betting.html )

---------

There the luck pretty much ran out. The taxman stated that a 30% tax on gambling winnings should be imposed, as it was a professionally-orchestrated operation rather than winnings by chance. The CIA, FBI and Internal Revenue Service in the United States, and the Australian Securities Commission, National Crime Authority and the Victoria Police gaming squad all became involved, although no wrongdoing was proved. The members of the syndicate fell out, Mandel fled to his native Romania and in August 1995 was declared bankrupt, with debts in excess of A$500,000.

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obviously, I can't know all the details, but it seems like a lot of work only to end up bankrupt a couple years later.  I hope Mandel managed to escape to Romania with a few gold bars stashed away in his luggage.

 

Damn what a crappy ending. You would think he would have put away a bit of cash.