This Retired Mathematician Received $26 Million From State Lotteries … Legally

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This Retired Mathematician Won $26 Million From State Lotteries ... Legally

Know your math like Jerry Selbee and you can beat the system.

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December
18, 2020

4 min read

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Several years ago, Jerry Selbee found out how to legally win lotteries in Michigan. As? It was all about rolling down.

What is a rolldown? In Michigan's WinFall lottery, a jackpot limit was reached when there was no grand prize winner matching all six numbers from a field of 49 on a ticket. Instead of letting the jackpot grow, the lottery was "rolled down" to give the next tier a chance to win. Instead of having to match all the numbers on a ticket, a winner would only have to match five, four, or even three numbers to be a winner.

Any mathematician will tell you that this increases your chances of winning. Retired Selbee graduated from Western Michigan University with a degree in mathematics and loved numbers. He loved to win too.

Selbee knew that the more the chance of winning increased, the easier it was to calculate a game. He used his math skills to calculate these odds. He was able to find out that if a certain number of tickets were purchased, there was a high probability that he would hit a match.

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As he explained in a 60-minute interview, he could buy tickets worth $ 1,100 and have a good chance of having at least one ticket that matched four numbers, which made him $ 1,000. But in the same batch, he also had a good chance of having about 18 or 19 tickets with three matching numbers, and each of those tickets would win $ 50, earning him another $ 1,900. His $ 1,100 investment earned him a profit of $ 1,800.

Do the same now with hundreds of thousands of dollars spread across dozens of stores selling multi-state lottery tickets that offer similar games so as not to arouse suspicion. Do this over several years, seven times a year, spending up to $ 600,000 each time. Over time, Selbee posted profits of $ 26 million and net income of $ 8 million before taxes. Not a bad attitude. If you really want to dig into statistics, here is a great article from the Journal of American Science that breaks it all down.

Spoiler alert: as soon as state officials found the bug in their system, they shut it down. But in the end, Selbee didn't break any laws – he just used math.

"It's actually just basic arithmetic," said Selbee 60 minutes. "The only thing I found really remarkable is that no one else really seemed to understand."

And that's the thing: what seems easy to Jerry Selbee is not so easy for everyone else. For most of us this is not a "basic arithmetic". It's black magic. Dark science. Voodoo.

Selbee benefited from his math skills. Here's another spoiler alert: My best clients also benefit from their math skills. This is not a coincidence.

Do you want to be successful in business? Know your numbers. Know your margins. Know your costs. Know how to calculate profit percentages for individual sales. Know what effects a cost increase has on your business. Know your break-even point. Know your sales. Are you familiar enough with running numbers in your head to determine whether or not a deal makes sense during a negotiation? You should be better. If you don't, you'd better hire someone for who it is.

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Sure, you need to have passion, perseverance, and a hard work ethic to be successful in business. But let's be honest, it's all about the money. You won't be in business long if your earnings don't exceed your expenses. In the end, running a business – even a legal lottery system – is about buying something for $ 3, selling it for $ 5, and knowing that after other expenses you are still making a profit of $ 1 -Dollars.