There Was a Texas Lottery Arbitrage
284 comments
·March 5, 2025hinkley
That couple in New England that was doing it probably made more money off of selling their story to Hollywood than they did off the lottery tickets.
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.
thaumasiotes
> people here could have netted more money per hour by studying up to pass a FAANG interview
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.
carabiner
> although I'd passed the interview, my interview performance was too poor to be considered for hiring.
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.
sophacles
Interviews serve 2 functions.
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).
Raidion
I've never this at Google, but at my company, if you pass the technical screen you're offered to hiring managers. If they don't want you on your team because they want more leadership (or less leadership), or if there were 5 senior python roles and you were the 6th person to pass the interviews, you still won't get hired.
anal_reactor
The company changed mind on how many people it wants to hire during the interview process. Of course they wouldn't admit "I just got news from the higher-ups that we're not actually hiring because shit is on fire", so they came up with some lame excuse that puts the blame on the candidate. I solved the interview question for Uber, but then there was news that Uber stops hiring company-wide. I solved the interview questions for Microsoft, but then got feedback that I didn't.
VirusNewbie
You should try again, there's a lot of variation on interview performance. Also, Google is a bit unique in that they put a lot of emphasis on what your thought process is, compared to other FAANGs. If you just code a working solution and didn't ask enough questions, that might only get you a mediocre score.
thaumasiotes
> You should try again, there's a lot of variation on interview performance.
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.
closewith
Damn, bro, sounds a little like a lottery.
exabrial
My 2nd Google interview was a guy that played a lot of chess, and I never played chess, and all of his questions were about it, nothing to do with you know, coding, algorithms, problem solving, etc.
Was not offered a job. Mildly disappointing considering the other two interviews went pretty well.
danielmarkbruce
100%. There are arbs not worth doing all over the place.
hinkley
They were making something like $20+ an hour each if I recall correctly. Better than working retail of course but he’d have been better off keeping his career longer.
danielmarkbruce
I guess he does get a cool story as mentioned... which isn't nothing in life.
anonu
Manufactured spend is a common arb. My favorite was when the US Mint had a free shipping deal and let you buy coins with credit cards. Someone figured out how to buy many $100k coins, wheel them into the bank, payoff his card and get free airline tickets for many years.
Lookup r/churning.
gamblor956
That story was made up. The U.S. Mint charges more than face value for coins purchased through its retail store. It also doesn't accept credit cards for large orders; like most government agencies it requires large payments to be made electronically through the EFTPS system.
Breza
Obligatory Seinfeld reference... https://en.wikipedia.org/wiki/The_Bottle_Deposit
ryanmcbride
>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.
Bro, saying stuff like this is why everyone hates us.
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WorkerBee28474
If you're into this, you may enjoy reading about Joan Ginther, a statistician and multiple lottery winner.
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.
ceejayoz
There's also a film about a similar scenario: https://en.wikipedia.org/wiki/Jerry_%26_Marge_Go_Large (based on https://highline.huffingtonpost.com/articles/en/lotto-winner...)
imajoredinecon
Google turned up this Harper’s feature which is pretty good: https://courses.washington.edu/psy315/pdf/HarpersMagazine_Lu...
jamesfinlayson
Long article but the likeliest scenario in the article is that the has studied the printing sheet location and sales time distribution of winning tickets to work out when they will appear on the market, then buys up all the newly issued scratchies from compliant shop owners.
stavros
This doesn't say anything about how she did it, was it just luck or was there some method?
withinboredom
Huh. Reminds me of my favorite idea to "hack" the lottery:
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.
jcrawfordor
Most lotteries, all of them that I'm familiar with, blackout ticket sales for several minutes around the draw to avoid order sensitivity issues like this. It's funny, lotto vending machines here don't say when the drawings are for each game, but you can tell by reading the fine print for the five minute window where tickets are not sold.
thaumasiotes
Step 6 of this process was to subvert the machine and print a backdated ticket. How does blacking out ticket sales for five minutes around the draw help against that?
cryptonector
Presumably all ticket sales (including their numbers) are synchronously reported to the lottery office by the sales terminals. That would render backdating attacks detectable.
jcrawfordor
The backdating is trivially detectable unless you manage to get the database operations to happen the wrong way around, which is why the whole "holding a packet" thing has to happen. But part of the reason for the blackout period is to account for the possibility of that kind of thing happening anyway.
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.
gruez
>2. get access to a router firmware in the lottery datacenter en route to the database
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?
bombcar
They usually stop sale an hour before the ball-picking, at least around here.
I assume that hour is for all the "picks" to be transmitted up to them for record keeping.
jamesfinlayson
In Australia at least the balls are drawn an hour later.
No idea about the computer RNG games though.
bentcorner
> submit an INSERT into the database with you as the winning number at a predetermined date/time in the past
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.
andy800
Because you'd also have to submit the money it would cost to buy every combination, and also, you likely couldn't fit every ticket (tens of millions of combinations) with a realistic-looking ticket generation time (approx 1-5 seconds between each ticket created). i.e. if 50,000,000 tickets all had the same timestamp (or were off by nanoseconds) it would be a dead giveaway.
immibis
In the Ethereum blockchain, some people do exactly this - for more details, search "miner-extractable value".
I don't know whether it still applies after the transition to proof-of-stake.
tczMUFlmoNk
MEV still applies with proof-of-stake. Whoever proposes the blocks can make those arbs. It used to be the miners; now it's the block proposers as selected by the beacon chain.
(Some people call it "maximal extractable value" now, to keep the initialism and help it make more sense.)
andy800
Tldr- about 20 years ago, when off-track betting systems were less sophisticated, an insider past-posted horse racing jackpot winners by waiting until the first 4 races of the Pick-6 were final before creating the ticket. They got busted and served time in federal prison because they had multiple winning tickets for the Breeders Cup Pick-6, basically the Super Bowl of horse racing, where scrutiny was extremely high.
https://en.m.wikipedia.org/wiki/2002_Breeders%27_Cup_betting...
viraptor
> hack the terminal to print your winning ticket with the predetermined date/time in the past
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.
fsckboy
the term they meant is texas lottery "riskless arbitrage".
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.
rightbyte
How can lottery tickets be riskless? I mean you need to draw winning tickets too. Even if the EV is over 1 you can end up under 1 in practice?
baobabKoodaa
This is not that
sincerely
Really? Doesn’t that describe every kind of store where you don’t create the product yourself as an arbitrage? You’re just buying items from a supplier and reselling to make a profit
felizuno
For sure. Buying wholesale and selling retail is one of the most common/accessible windows of arbitrage you can find.
solatic
Buying wholesale and selling retail isn't arbitrage. Wholesale pricing is cheaper precisely because it is a bulk price. There is an overhead to selling individual units. A retail operator adds value by introducing individual unit liquidity, with the price premium of the individual unit offsetting the risks involved in paying the fixed costs of retail (rent etc.), not selling all the inventory, and having enough left over for a profit.
fsckboy
probably best to understand the way people use the term as a risk spectrum, from riskless arbitrage where there is no window for losing money, through say a real estate deal where you find a seller at a good price, and you find a buyer at the market price, and you insert yourself in the middle (a perfect houseflip) even though you don't have the capital to suffer the loss if things get screwed up, to an antique shop that buys on speculation and sells to reliable clients. A pawn shop is arbitrage too.
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.
danielmarkbruce
There are a lot of arbs in the world. Same principle - they take a lot of work to get done. Physical commodities, real estate, etc
charlieyu1
I guess I’ll never understand why there are so many restrictions in buying lottery tickets, because in Hong Kong all you need do to buy all the numbers is a single transaction and paying enough money. And it is never a profitable strategy, big jackpots always attract a huge crowd and most of the time it is split at least 4 way
Panzer04
This feels like a decent answer. A bit like allowing inssder trading, although that has many more problems XD
s1artibartfast
It's article is filed under Bloomberg opinion, but I failed to find a common thread or observation has I read to the end. Is this just a weekly Roundup of financial events?
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
bryanlarsen
You're one of today's lucky 10,000 by discovering Matt Levine's Money Stuff column. It's a daily column that is almost always as interesting as this one was. https://www.bloomberg.com/account/newsletters/money-stuff?so...
buybackoff
It's not only a column but a daily email. Of 20 unread emails in my inbox 17 are these ones. It's too good to archive without at least skimming through. But it's a longish read and accumulates fast.
bryanlarsen
Yes, I should have mentioned that -- the link I posted is a link to subscribe to the email.
s1artibartfast
I have read a lot of Matt Lavine, but just remembered it having more editorial analysis. Maybe that is the difference between the daily and other articles?
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DavidPeiffer
>Is this just a weekly Roundup of financial events?
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.
tekp2
He was an m&a lawyer with Wachtell and then a derivatives structurer at Goldman. But your point stands - a background in both the legal/deal making and trading sides of high finance gave him a terrific context. Then his insight, writing style and sheer unbelievable volume of throughput made him essential reading.
lmm
It's one person's column, having it filed under opinion probably gives him a bit more freedom to say what he wants even if he doesn't always exercise it. (It's always amusing when Michael Lewis is in the news to watch Levine finds ways to make it clear he thinks he's an idiot without ever directly badmouthing his colleague).
HN moderation policy is to replace useful or informative user-submitted titles with the title of the page itself in most cases.
Arcuru
The submission is a link to the daily Matt Levine column where he typically rants his opinions on Finance.
WatchDog
I used to work for the Australian parimutuel(aka tote or pool)[0] betting operator.
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...
femto
One of the standouts being the syndicate run by David Walsh (of MONA fame) and Zeljko Ranogajec. They made money because the rebates swung the odds in their favour [1].
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...
WatchDog
I mostly agree with your take, the linked article itself seems a little missleading, claiming that you could make money by placing losing bets.
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.
spelunker
As a side note, my home state also allows online purchasing of lotto tickets through "couriers", which turns out to be a strange workaround that let companies like Lotto.com or Jackpocket operate in some states:
https://www.locance.com/blog/what-are-lottery-courier-servic...
waynenilsen
A similar case in 2011
https://www.bostonglobe.com/metro/2011/07/30/lottery-game-wi...
paulsutter
The key here is that only 1 million tickets per week are sold, which is the reason the company could estimate a probability that others buy the winning ticket forcing a split
Jackpots higher than the probability of winning happen so the time, but thats not enough information to take the risk
https://archive.ph/DOCG0