There Was a Texas Lottery Arbitrage
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The amount of time they were putting into their “scheme” sounds brutal. I think a lot of people here could have netted more money per hour by studying up to pass a FAANG interview instead of buying lottery tickets one at a time.
But I suspect it was the 'stick it to the Man' aspect that made him put in the effort. I'm gonna work really hard to get something for 'nothing'.
hides his Diablo2 playtime in shame
Lookup r/churning.
https://www.latimes.com/archives/la-xpm-2009-dec-11-la-fi-br...
Plus, depositing several hundred thousands of dollars of cash with the bank would have triggered all sorts of mandatory reporting of the kind that usually ends up with the DEA getting involved. Kind of weird that nobody mentioned having to deal with a absolute shit ton of extra paperwork to make this "hack" viable.
But the little guy not getting away with the exploit doesn't make for a great story. It's like the infamous Hot Coffee story; people only share part of the story because they want to believe it but reality paints a very different picture. (In the Hot Coffee case, it's generally described as a the reason that tort reform is needed, but the reality is that the plaintiff suffered 3rd degree burns and only asked for $20k to cover her medical damages; McDs was the one that fought back and their own lawyers were responsible for accidentally proving that her damages were significantly higher than the amount she had asked for.)
"In the future, credit card purchases will be recorded as cash advances rather than credit card purchases."
This implies there was some period of time where those purchases weren't considered cash advances.
And given that we never heard about any of these jokers having to file reams of paperwork to get away with this hack or having long discussions with the DEA about money laundering, it's clear that the banks just treated these as cash advances like they clearly were.
My experience of that was that Google asked me to interview, I did, my recruiter congratulated me on passing the interviews and told me to expect a job offer by the end of the hiring cycle, and then at the end of the hiring cycle she informed me that, although I'd passed the interview, my interview performance was too poor to be considered for hiring.
Read the comment again. This is not a story about interview performance. My interview performance didn't change after I completed the interview.
If Google doesn't want to hire you, they won't, and your interview performance is irrelevant enough that they feel free to revise it retroactively. Perhaps they aren't willing to state their actual reasons.
Studying is not a sensible approach to this problem. You would have to address something they actually cared about.
Maybe agreeableness?
There are hundreds of teams and hiring managers in Google, and an almost infinite number of possible reasons why you weren't hired or why the HM changed their mind. Treating any large company like a monolith is not gonna help you get a job there...
Also, not sure what your recruiter was talking about - there's no concept of "passing" an interview at Google - you're rated on a scale from "strong do not hire" to "strong hire", and the folks doing the selection are provided that rating along with a ton of notes about the interviews.
and Gogel is no longer a top employer, not from career perspectives, not from learning, not from a total comp
In what world of hiring would passing an interview be considered a failing interview? If it's too poor for hire then it's a fail.
1. Weeding out the people you surely don't want... that is it answers: does this candidate meet the minimum bar for working here?
2. Providing enough information about a candidate to give them a score... that is it answers: how good is this candidate?
You can "pass" an interview - that is the answer to question 1 is "yes, this person meets our qualifications", but fail in question 2 under conditions where there are more qualified candidates than there are positions. It's really common actually to wait until there are a few qualified candidates before making a hiring decision, rather than just hiring the first person that meets the minimum standards. This bit of hedging allows for making better teams from the available hiring pipeline (on average anyway).
Unironically yes. Although it's arguably a win-win. Google constantly keeps its pipeline of candidates open which means that if you're looking for a job and you clear the resume bar, you'll get an interview. Meanwhile teams are constantly hiring so they'll want a steady stream of candidates.
The alternative would mean that unless your timing for a job search is perfect, you won't even get a foot in the door and teams within Google will also struggle to fill open positions since it would take a while to interview the candidate pool.
People still line up for their purported incentives, despite these stories.
Unfortunately that simple.
The reason why nerds nevertheless apply at MAANG companies is thus the same reason why "ordinary" people buy lottery tickets - nerds are not that different. :-)
Was not offered a job. Mildly disappointing considering the other two interviews went pretty well.
Bro, saying stuff like this is why everyone hates us.
Her Wikipedia article is sadly short [0], but there are a number of other sadly short and poorly sourced articles around the web to augment it.
1. get access to a lottery ticket terminal
2. get access to a router firmware in the lottery datacenter en route to the database
3. wait for the query to get the winning numbers from the database
4. hold that packet and submit an INSERT into the database with you as the winning number at a predetermined date/time in the past
5. release the packet to query the database
6. hack the terminal to print your winning ticket with the predetermined date/time in the past
7. profit?
It probably doesn't work, but it was fun thinking about when I was younger.
Seems non-trivial given that the database server is likely to be in the same datacenter/rack/physical machine. If you have this much access you might as well plant a backdoor in the server and tamper with the database however you want.
>3. wait for the query to get the winning numbers from the database
Are lottery winners determined immediately after they close? I thought they did a number picking ceremony by picking out literal number balls from a tumbler?
I assume that hour is for all the "picks" to be transmitted up to them for record keeping.
No idea about the computer RNG games though.
I don't know whether it still applies after the transition to proof-of-stake.
(Some people call it "maximal extractable value" now, to keep the initialism and help it make more sense.)
If you have to fake the issue time by five minutes, then 1) the described method is probably infeasible anyway because the connection to the database will time out while the packet is held for multiple minutes, 2) the ticket issue date and audit date on the database event will vary by at least five minutes which makes it obvious that the ticket was improperly issued.
If you have this capability then why not just insert all number combinations into the db well before draw time?
Makes me wonder how money flows from lottery terminals back to the lottery itself. I imagine there's some rigorous bookkeeping involved.
https://en.m.wikipedia.org/wiki/2002_Breeders%27_Cup_betting...
If the terminal is not a dumb gateway to the central service, that would be a massive risk. I'd be extremely surprised if that was possible.
I mean, you could probably still print something, but any validity check would fail.
Buying a whole pizza, then standing in front of the pizza shop shelling the slices for a net profit is arbitrage. but it's risky because you might not be able to sell enough of them (before they get cold, say) to earn back your investment.
when you talk about an arbitrage that is guaranteed profit, that is a riskless arbitrage.
generally people mean by arbitrage that you enter into a transaction having both a seller and a buyer in mind, or you have two liquid markets with different prices.
About the 23andMe and pharma events were specially interesting.
That said, I disagree with Matt interpretation that the computer entry overrode the contract. Arbitrator stipulated compensation based on the contract date, not the computer executed date
When someone has 35 million of options, i would expect both parties have some duty to understand the terms. That said, they also have a duty to not misrepresent the contract after the fact.
[edit] My primary point is that I didnt see much opinion or rant
Matt publishes his newsletter Monday-Thursday, and a podcast on Fridays. It is a roundup of stories with high quality commentary on 2-4 stories, and a list of additional interesting articles at the bottom. He used to be an attorney with Goldman Sachs, giving him a good background for adding context to market corner cases people exploit, incentives of different parties involved in deals, legal perspective, etc.
Two of his main lines is "everything is securities fraud" and "everything might be insider trading", with probably 100+ examples of each over the years.
HN moderation policy is to replace useful or informative user-submitted titles with the title of the page itself in most cases.
All the proceeds for a race are placed in a pool, the operator deducts a percentage of pool as a takeout, and the rest is divided among the winners, or. is carried over into a jackpot.
We had special bulk betting integrations for quantitative bettors, and even offered rebates on the takeout revenue, it's not secret, although it's not widely publicised.[1]
There are stories of traders that have made lots of money betting in parimutuel markets[1]
[0]: https://en.wikipedia.org/wiki/Parimutuel_betting [1]: https://www.sportstradingnetwork.com/article/rebates-global-... [2]: https://www.bloomberg.com/news/features/2018-05-03/the-gambl...
My take is that: the syndicate wins because the odds were swung in their favour. The tote wins because even with the discounted percentage the increased pool size offset the rebate and made them more money. The rest of the mug punters lost since the syndicate was winning a portion of the pool they would have otherwise won. The rebates are a mechanism to reliably transfer additional money from mug punters to the tote via an enabling middleman (the syndicate).
[1] https://www.perthturftalk.com.au/discussion/discussion/11724...
As far as if the regular punter is getting screwed, I'm not so sure. They certainly aren't getting as good of a deal as the professional punters are getting.
However, if the punter feels like they have some special insight into the race and the predictive performance of the horses, then they stand to win much more money by having the professionals put money into the pool.
https://www.locance.com/blog/what-are-lottery-courier-servic...
https://www.bostonglobe.com/metro/2011/07/30/lottery-game-wi...
Jackpots higher than the probability of winning happen so the time, but thats not enough information to take the risk
https://www.tagesanzeiger.ch/loterie-romande-serial-players-...
I know that its not something new, because 30 years ago when I was in law school one of the cases studied in my class on transnational taxation was that of an Australian group (if I'm remembering the right country...) that tried to buy every possible ticket in a US lottery.
My recollection is that they only ended up getting something like 90% of the possible numbers but that was enough to get the top prizes and questions arose on how that should be taxed and whether the cost of the tickets was deductible.
[0] http://investpost.org/mutual-funds/group-invests-5-million-t...
What were the questions? What would the case be that cost of tickets shouldn't be deductible?
Looking at the case again, I see that the dispute was on whether tax should be withheld in the US. The tax treaty between the US and Australia said that the US would not tax the winnings. The winners had filed the appropriate form with the IRS to invoke the treaty and be exempt from tax.
The state lottery commission automatically withholds federal and state taxes, and refused to make an exception for the Australians. The Australians sued and a district court issued an injunction to stop the state from withholding those taxes.
The federal and state governments appealed. The appellate court reversed and removed the injunction. It turns out there is a law that prohibits courts from issuing injunctions to stop tax collection (and withholding counts as collection) so the district court overstepped its jurisdiction. What you are supposed to do if you think a tax is improperly applied is pay it and then seek a refund.
Well, as the saying goes, "It takes money to make money."
It's basically a workaround for restrictions on online lottery sales. I'm not sure how states should handle online lottery gambling—there are a lot of considerations around addiction, potential fraud, money laundering, and erosion of retailer lottery revenue and shopper base—but I don't think this is it.
Haven't ever dug into it but the app doesn't require a login to use that function so I'm willing to bet there's an unauthenticated API endpoint that could be sniffed out (they may possibly have it documented somewhere too).
Outside of being a fun itch to scratch, using the app directly is fast enough with very little effort.
I pick up and scan any scratchers I find littered near stores. I've made a few hundred dollars over the years on misprints like that.
For a visual version of the above. Go check out Mr Beast’s video where they scratch off 1,000,000 dollars worth of scratch offs. The ending wasn’t surprising to me but may be to some.
I don’t even play the game on the scratcher sometimes.
Money? :)
https://www.texastribune.org/2025/02/27/texas-senate-lottery...
The link therein has suffered link rot, try: https://en.wikipedia.org/wiki/National_Lottery_%28Ireland%29...
A similar game feature is "roll down", again excess prize money accumulates over several drawings, and when a certain criteria is met, the excess prize money is distributed over some set of tickets (possibly all winners). Again, this sets up the possibility of a positive expected value, and you have to consider other ticket buyers as well.
A trickier one is for scratch off games. Many lotteries share the number of tickets sold and the prizes left. If you assume all (big?) prizes are redeemed shortly after their ticket is sold, you can estimate the expected value of purchasing the remaining tickets. When the game opens, the expected value of a ticket is less than the purchase price, but depending on the observations of tickets sold and prizes redeemed, you might estimate that the expected value of the remainder of tickets has improved.
Ex: if there were 1 million scratchers printed, the cost per scratcher was $1, and there was only one prize $500,000on open the expected value of a $1 ticket would be $0.50. If the winning ticket was redeemed, the expected value of remaining tickets would be $0. If it was reported that 999,999 tickets were sold and the winner had not yet been claimed, it might be reasonable to assume a higher expected value for the last ticket --- although there's no rigorous proof there, someone may have purchased the winning ticket already and not redeemed it for whatever reason.
In most cases, there is, which is part of why a huge percentage of scratchoff prizes are won by workers at the place that sells them. Most players will scratch and redeem their prizes right in front of you, so if you watch a certain number of scratches occur in a roll and you know the prize structure of the particular card, you can calculate how many non-winning scratches you need to see for the odds to be in your favor.
I looked into this a few years ago and considered starting one of those stands that sells scratchoffs to do just this, but decided a) it wasn't quite lucrative enough to be worth it, and b) I wasn't sure of the ethics of skewing the odds against your customers like this anyway.
This is interesting because I don’t think anyone would view the store as unethical for continuing to sell tickets from a roll when they know there have already been X winners from that role and therefore customer odds have gone down.
The problem with selling out the roll when winning tickets have already been sold only occurs in tandem with the retailer buying remaining tickets when only non-winners have been sold so far. These aren't separable situations.
Even if you can't buy every ticket, there is well-established math about how to optimize profit from a venture with known risk and reward, and the math does not require you to exhaust the statistical universe.
Stanford statistitian texas scratch loto
They absolutely aren’t trying to buy them all, that would just be a guaranteed loss, since they only return about 40 cents on the dollar.
Net EV=cost to buy in - probability of winning * (jackpot size / number of people you split it with)
If you have a 1% chance of winning $100 your EV is $1. If you pay $1 to play you breakeven. If the pot is $200 then your EV is $2. You would pay $1 all day for that. But again the risk is more people want to play. If 2 people win then your EV drops back to even.
So the lottery makes more the bigger the prize gets. They don't really care who wins or how much they get.
The lottery is always negative-EV for the average ticket-buyer, but it can sometimes be positive-EV for the marginal ticket-buyer.
So the net result in our game is that each hand you play, you win $0.98. A skilled video poker player can get around 1000 hands per hour, so you'd be earning around $980 per hour in the longrun. Casino comps make this even more profitable. Depending on the game/casino casinos will generally comp around ~20% of their expected profit against you, and that excludes jackpots. For our imaginary $1 game with a 2% margin that means you'd also be getting $0.004 per hand back in comps. It becomes quite significant at high stakes.
What am I missing here?
With 54 x 53 x 52 ... you get all of the permutations of all the sequences. It generates 1,2,3..., 2,1,3..., 3,1,2..., etc.
Yeah, I missed that. And each sequence has 6! permutations. Etc.
That must have been tense knowing they didn't purchase that last fraction of a percent.
[1] https://www.statesman.com/story/news/politics/state/2025/02/...
Paywalled, but looks like archive.is has it: https://archive.is/256Hz
> “We were very surprised that the answer was yes,” Potts added. “As a person and a lottery player, I cannot believe they said yes. I was shocked.”
Well Texas bills itself as the most business friendly state in the country. I'm not surprised that extends to some shadowy Maltese concern effectively purchasing the lottery jackpot at 25 cents on the dollar.
[1] http://investpost.org/mutual-funds/group-invests-5-million-t...
Where you are born, what ethnicity you are, how rich your parents are, how healthy, athletic, brainy, beautiful you are, what you eat, how you live, nothing in any part of your life is "fair".
So sure, play the lottery if you like, but don't pretend it's fair. Indeed the unfairness of the winning is entirely the point of it.
Of course if you are playing the lottery and dreaming of a better life, you already know how unfair life really is.
My parents did not teach me that fairness was a virtue. They taught me that "life's not fair". With the unspoken addendum of "deal with it".
I guess I won the lottery in that respect.
it's just that optimum stopped being "zero tickets bought" and instead shifted to "all tickets bought"
If the state wants to encourage this kind of large scale game playing, then they should outline the process for taking part in it clearly and ensure everyone has equal access to the tools that enabled it.
Group buys add a social context that has significant value too.
This is the literal answer to "why." Also bans on various casino hacks.
The same thing happens in sports betting, where retail punters absolutely hate if someone places a bet online during a game exactly after a goal was scored, but before the odds move. So even sports betting exchanges like Betfair forbid this kind of arbitrage and void it. Not because they really care, but because it annoys the other players.
Also, not a risk as such, but it ensures that the jackpot will only ever reach a certain level.
They feel it's "unfair" to allow others to make 100% certain arbitrage bets.
If it becomes super easy to purchase millions of lottery tickets, then any arbitrageur would likely be dissuaded because the risk of someone else doing it (and having to share the winnings) go up by a ton. You could still have collusion, but that should be enforceable by laws against collusion I'd hope.
It this case there were rules to prevent arbitrage that were basically just not enforced by the lottery commission, and that's really the only reason this was possible.
Are you arguing this is counter to the purpose because the net revenue will be diminished by the certain expense of the payoff?
It's not surprising that a corporation specialised in producing B2B products for lottery and gambling corporations sussed out this opportunity, it's kind of their core competency to figure out such things and make them obvious to their customers in their offerings.
That line? Millions of dollars.
My understanding is that the proliferation of casinos, state lotteries, etc. has been very bad for organized crime's traditional business model.
State lotteries pay out ~60% on average, compared to ~90%+ for casinos. Not apples to apples, but it seems like competition does shrink profit margins, for the benefit of the buyer. It's not clear to me which is better, but I'd be curious to read good analyses, if anyone has a pointer.
In this case, texas voters can demand the changes to prevent some company from buying all the numbers again. A private entity wouldn't be accountable to the public for anything. We have countless examples of private companies screwing over people both in secret or openly no matter how much the public wishes that they would stop.
I myself have never understood the thrill payoff that must exist for lottery ticket buyers, but I cannot call it a tax.
My complaint is about the targeted nature of lotteries and the extremely poor investments they make for individuals who tend to already struggle in this area. This is compounded by the nature of the education system being operated primary by the same government.
I was referring to the ‘numbers game’ racket: https://en.m.wikipedia.org/wiki/Numbers_game
No - the reason they do is because they can and it rakes in tons of money. Period.
If it were legal normal business would do it, see for example weed or booze before and after prohibition.
This isn't really a concept that makes sense. Organized crime is a state. They serve the same functions, care about the same things, and draw legitimacy from the same sources.
The thrill is being able to dream for a week about what you'd do with the winnings.
For the vast majority of "the poor" who buy a ticket, that's what they're buying.
There are also a few who spend all their money they might have on lottery tickets, but those aren't much of the total number of people.
Is there any evidence of that? I can recall reading that alcohol consumption, for example, has a Pareto distribution skewing in favor of so-called "heavy users" (whom most of us would refer to as alcoholics). I'd imagine a lot of vice industries are similar. Is there any evidence to suggest lottery ticket purchases are distributed across a large number of infrequent, low-volume purchasers?
The company (and most lotto companies would be the same I'd guess) had little interest in taking money from problem gamblers too because in most cases their business is a monopoly so they're making good money anyway, and enabling problem gamblers would almost certainly be a breach of their license, so they'd be up for big fines (or in an extremely unlikely scenario, loss of their license). Contrast that with horse and sports betting companies where there's lots of competition and slim margins, so if you want to make money you need to take a bit from the problem gamblers.
That said, it probably is a Pareto distribution, but skewed: maybe 95% low/normal spenders, 4% syndicates/big spenders with means, 1% problem gamblers.
Most of the people who are addicted want a quick hit, and so end up at a casino.
I get the same thrill because I dream of finding the winning ticket on a sidewalk. Much cheaper, and the walk is good for me.
Exactly. and as bad as the odds are, it's still the best chance they have to ever be rich.
I don't get the winning thrill either, but several gambling addicts I used to work with described it as a feeling like none other. When I offered to go with them, as support to get help, they weren't interested in that feeling.
Remember how Pluto stopped being a planet because 'planet' went from just a word to a technical term with a well defined definition? Most words don't have that.
So, tax is any money given to the government. Income tax, sales tax, fees for registering cars, admittance to national parks, etc etc. Anytime the government collects any money that is a tax.
To paraphrase a great statesman---a lottery is just a tax with extra steps.
Maybe it's just fun and exciting. Do people who bet in casinos or on sports have poor judgement skills or is it just exciting?
But clearly the gambling industries are predicated on quite a lot of volume going to negative expected value purchases which sounds depressing rather than exciting.
better than leaving it to the criminal underworld, though.
Not everyone impoverished by state sanctioned gambling would do so in an illegal only world. You can bicker about what the conversion ratio is but the fact of the matter is that it exists. And no, I don't know what it is.
Eventually you'll have no lawbreakers. Either because everyone's dead, or because everyone knows they'll be killed if they break the law.
Either way, you end up with a crimeless society.
Hopefully you can see the problem with "taking things to their logical conclusion."
State lotteries don't represent "state-run crime" but rather transform existing underground markets into legal, regulated alternatives. Illegal gambling operations have long existed, typically run by criminal organizations offering no consumer protections or public benefits. State lotteries provide transparency and channel revenue toward public services instead of organized crime.
Following your reasoning would suggest that legalizing and regulating alcohol or cannabis equates to "state burglary" or "state fraud" — clearly an absurd comparison. The objective isn't to convert crimes into government enterprises, but to acknowledge when prohibition is ineffective and provide a safer, regulated alternative.
I’ve not seen it applied to the lottery specifically but you might even be able to use the Kelly Criterion to determine how much you can lose.
I get HN isn’t sympathetic to this kind of stuff (ovarian lottery and all that jazz), but I, personally, much rather this have been some kids from a random town in Kansas or something vs pros from other countries
Edit: I think you are all confused and acting as if I didn’t understand why this happened or how, I was just making a sentimental lament, but I should know better by now
Well, that's the rub and ultimate downfall of our current implementation of capitalism.
Even if you have a good idea that almost nobody else has yet thought of, you've got to have enough resources to be able to comfortably execute it such that if you fail, your life won't be over. Most of the time, the only people who can do that already have a lot of money. So most innovators and innovation naturally have to come from people that already have money and connections; HOWEVER, there's very little reason to believe only good ideas come from people with money or power.
So little Timmy from Kansas might have even thought this was a nifty idea, but Timmy's dad is going to roll his eyes and get back to work. Nobody on the ground is ever going to be able to execute what is a relatively obvious play. Instead, they lose their time-advantage and big Timoteo from Malta comes in for the prize.
Worse still, big Timoteo has now accumulated more resources that puts him even further ahead of the pack for future such endeavours that should really need have success tied to starting resources.
[1]: https://www.justice.gov/usao-ks/pr/victims-cryptocurrency-sc...
What happens if there is more than one winning ticket? In the UK they just divide the jackpot up between the winners so you might get less. I guess that is the risk.
What in the world is the author talking about here? Why wouldn't the contract you signed be the contract? And the administrative error is an error in execution of the contract, so of course there's some space for dispute. Without that contract, he wouldn't have shares in the first place.
> If you give your CEO options that expire in August 2024, and you put into the computer that they expire in October 2024, then they expire in October 2024. How was he supposed to know that they expired in August?
Flipping this around, if the CEO signed a contract saying they expired in December then the system said they expired in October, I would still expect the shares to expire in December. By the author's logic, they would expire in October.
Contracts are messy in the real world. Sorting it out can be tricky. The various doctrines of estoppel are relevant for sorting things out.
Of particular pertinence to this case, “conventional estoppel” means that if both parties consistently behave in a certain way that can become an expectation to be relied upon (over-simplified!)
In this case, if the guy reasonable relied on the convention that he would be notified when they expired, and wasn’t, then he may have an estoppel claim.
There is a large framework around contract law that takes a semester in law school just for the introduction.
That's... not the logic stated in the article. In both cases you get the expiration date in the contract.†
If you make a false representation to someone, and they rely on that, which is exactly what happened here, you can be liable for the damage to them, which is also exactly what happened here.
If you make a false representation to someone, and nothing bad happens, and they find proof that you made a mistake, then... you adjust what you're saying, and there are no other consequences.
† Kummeth contended that, had he been aware of the options' actual expiration date, he would have exercised them, and this was obviously true. He was awarded an amount based on their value around the time of expiration specified in the contract, not their value at the time he tried to exercise them.
>What, the piece of paper that I skimmed and signed and stuck in a drawer is the deal, and not the computer screen that I look at every day? Seems implausible. The contract is just a piece of paper; the computer is real life.
>The stock administration platform is real life; the contract is just a contract.
Maybe there are 2 levels are sarcasm and he is actually saying the paper contract drives the ruling (which it did), but I dont see it.
Thank you. That is exactly the point I was trying to make. It wasn't the computer. It was execution of the contract and which side of the contract performed poorly in that execution. It's not as reductive as that's what the computer said.
This is the court essentially saying "you both errored in executing the contract as written" and then trying to figure out what would have happened in the hypothetical where each executed it faithfully. Looking at the ticker, and august average sale price was lower than the September transaction date.