According to the North American Association of State and Provincial Lotteries, Americans spent over $113 billion on state lotteries in 2023, which averages about $437 per adult. That's more than what people spent on concerts, sporting events, and movie tickets.
However, occasionally, there’s a fascinating story of someone exploiting the lottery system. One such story is about Jerry and Marge Selbee, a retired couple from Michigan, who won an incredible $26 million by finding a lottery loophole in just a few minutes.
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In an interview, Jerry Selbee told 60 Minutes that he always had a “head for math.” With a bachelor's degree in the subject, he quickly spotted something interesting in a new lottery game called Winfall. Unlike other lottery games where the jackpot grows until someone wins big, this one had a special roll-down feature. If the jackpot hit $5 million and no one won, the money would roll down to smaller prize winners, making their payouts much bigger.
Jerry realized that he could almost guarantee a win by buying a certain amount of tickets. He did some quick calculations and figured out that for every $1,100 he spent, he'd get back about $1,900. This was all basic math to Jerry, and he couldn't believe no one else had caught on.
Starting small, Jerry bought $3,600 worth of tickets and won $6,300. He then invested $8,000 and nearly doubled his money again. At this point, he shared his strategy with his wife, Marge, and together they decided to go all in. They formed a corporation, GS Investment Strategies, and invited family and friends to join in, selling shares for $500 each.
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The couple played the Winfall game 12 times in Michigan, winning millions. When Michigan shutdown the game, they moved on to Massachusetts, where a similar game called Cash Winfall was available. For six years, they drove 900 miles to Massachusetts every time there was a roll-down, buying hundreds of thousands of tickets and sorting them for hours in a modest hotel room.
Their strategy was simple but effective. They invested over $600,000 per play seven times a year, totaling $4.2 million annually. Despite the long drives and hours of work, Jerry and Marge found it fun and satisfying. They enjoyed the challenge and the success it brought them and their investors, saying, “It’s fun doing it. You got a high on it, and it gave you the satisfaction of being successful at something worthwhile not only to us personally but to our friends and our family.”
In case they had a physical federal audit, the couple kept $18 million worth of losing tickets in more than 60 plastic tubs in their barn.
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In 2011, the Boston Globe got a tip and investigated the high volume of ticket sales in Massachusetts. The state shutdown the game, but an investigation found no wrongdoing. The Selbees had legally exploited a loophole, benefiting themselves and the state, making $120 million from the game.
Their corporation grossed over $26 million, with nearly $8 million in profit before taxes. They used their winnings to renovate their home and support the education of their six children, 14 grandkids, and 10 great-grandchildren.
Today, they enjoy a quieter life, reminiscing about their remarkable journey and playing small-stakes poker with friends. However, their peace was disturbed when a movie titled “Jerry & Marge Go Large,” starring Bryan Cranston, Annette Benning, and Rainn Wilson, came out in 2022.
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But Selbees weren’t the only ones who figured out this loophole. Scott Allen from The Globe said, “Smart people had figured out if I buy enough of these tickets I’ll always be a winner. I’ll get back more than I spent.”
While Jerry and Marge Selbee were making millions with their lottery strategy, a group of students from the Massachusetts Institute of Technology (MIT) discovered the same loophole and formed a syndicate to exploit it. The syndicate was started by a student who discovered the Massachusetts Cash Winfall game's roll-down feature during an independent study project.
He started pooling his money with some of his colleagues and began purchasing tickets in bulk, just like the Selbees. Over seven years, the MIT group bet between $17 and $18 million on Cash Winfall, earning at least $3.5 million in profits. As with the Selbees, no wrongdoing was ever found by the authorities.
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