The url of this article and the titles of other uses the word "scammed" which is unfortunate since they don't seem to have done anything of the sort.
The fact that everyone involved apparently got what they wanted[1] out of the situation makes that posture even more absurd.
[1] viz. per the article, the MIT group got a 15-20% return, the Lottery profited from the tickets the MIT group bought, and the normal lottery winners, presumably got a mildly lower EV, but were never completely deprived of their shot at the jackpot (which is the only thing they apparently care about, since if they were sensitive to EV, they wouldn't be playing the lottery without a strategy like the MIT group's).
BUMP: those downvoting. It's a serious question. The article doesn't explain the student's methods. I really don't know what they did to game the system. Is it well known?
When the jackpot reached a certain point, they'd increase the payout on the lower tier prizes (match 5, 4, 3) from ($4000, $150, $5) to something more significant.
Instead of needing to match all 6 numbers (range 1..46), you could get a good return by only trying to match a smaller set. I guess they worked out a good distribution of tickets to purchase that covered a large percentage of those possibilities. They were purchasing 300k tickets to guarantee their 15-20% ROI.
[0] http://en.wikipedia.org/wiki/Massachusetts_Lottery#Cash_Winf...
"The inspector general’s report claims that lottery officials actually bent rules to allow the group to buy hundreds of thousands of the $2 tickets, because doing so increased revenues and made the lottery even more successful."