In the world of gambling MIT is surely best known for the antics of a professor and his students, who found a way (card counting in casinos) to eliminate the house edge in blackjack. This of course led to the best blackjack casino performance seen in years. They raked in millions, but as it turns out this isn’t only time that students at the prestigious Massachusetts Institute of Technology have used their IQ to their financial advantage.
Several years ago a group of industrious MIT students decided to analyse the local lottery game, ‘Massachusetts’ Cash WinFall’ because of how the jackpot was broken down when there wasn’t a main prize winner. The brainboxes discovered that if they bought $100,000 of Cash WinFall tickets on those days it would virtually guarantee success. In fact, buying $600,000 worth of tickets raked in a 15%–20% return.
So successful were the group in implementing this system, that many of them quit their day jobs and they brought in investors to maximise their profits. Others eventually got wind of how to exploit this loophole, but all in all the group benefited to the tune of over $8 million. Over time they fine tuned their approach yet further to further enhance their gains.
It was later revealed that the Massachusetts Lottery actually knew that the students were engaged in this scheme, but as it didn’t impact them directly they did nothing about it for years. In fact the inspector general’s report stated that officials intentionally allowed the group to buy hundreds of thousands of lottery tickets, as it increased revenues and made the lottery more successful. The game was eventually stopped, but no action was taken against anyone. It was fun while it lasted I’m sure!