11 ms·

Cracking the Scratch Lottery Code

334 points by karzeem 16y ago

Xk 16y ago
In some states, the lottery accounts for more than 5 percent of education funding. Am I the only one who finds this ironic? Edit: Except, of course, for those who learn to predict 19 of 20 tickets correctly.
- sambeau 16y ago
  Ironic? no; sad? yes.
  - Xk 16y ago
    I find irony in the fact that if the populous were better educated, the state would get less money. While not strictly true (a better educated populous would probably earn more, and give more taxes to the state, among other reasons), I find the idea on this small scale amusing.
    - swolchok 16y ago
      Given the nature of this comment, I feel that I am justified in commenting to inform you that the word you are looking for is "populace."
      - RobertKohr 16y ago
        He probably learned the spelling based upon the old video game. I wouldn't fault him for that.
- Joakal 16y ago
  Hey now! http://www.smbc-comics.com/index.php?db=comics&id=1744#comic http://www.smbc-comics.com/index.php?db=comics&id=1744#c...
- coin 16y ago
  In many cases, that's how the state justifies the lottery.
- nfriedly 16y ago
  To make matters worse, my understanding is that when the state receives money from the lottery for the schools, that money does in fact go to the schools... and then an equivalent amount of money comes out of the school's budget and goes into the state's general budget. So, for example: if the school budget for the year is $5 million, and lottery brings in $1 million for the school, the school doesn't get $6 million the way a lot of people seem to think. The school gets $1 million from the lottery and the state only has to pay $4 million out of the general budget.
  - ajju 16y ago
    Ha! So the lottery is paying for everything but education.
  - chopsueyar 16y ago
    That is how Florida does it.
nagrom 16y ago
My favourite line in the whole article was about the way he alerted the lottery board: "The package was sent at 10 am. Two hours later, he received a call from Zufelt. Srivastava had correctly predicted 19 out of the 20 tickets. The next day, the tic-tac-toe game was pulled from stores." I know that we're supposed to be fascinated by the statistical work done cracking the code, but my real sympathy is for the head of security that received that package. How do you react in such a situation? As an aside, the statistician seems really cool too - it's a very forthright interview and the article's much better than I expected. Both the statistician and the author seem to be very surprised by the lack of concern shown for the apparent evidence of security breaches. This, of course, has a direct analogue with the way large multi-nationals treat computer security. I was only surprised to get to the end of the article and not find that the statistician had been threatened with prosecution or similar.
- VladRussian 16y ago
  >not find that the statistician had been threatened with prosecution or similar may be because he is in Canada. Do they have DMCA alike?
  - daeken 16y ago
    The DMCA only applies to mechanisms which protect copyright.
    - deleted 16y ago
      [deleted]
    - chopsueyar 16y ago
      The winnings could have been used to buy bootleg DVDs.
      - chc 16y ago
        This is sadly not too far off from the rationale behind Sony's DMCA attack against the PS3 hacker.
notyourwork 16y ago
Summary: If you are smart enough to crack the scratch off lottery you already make enough income that cracking the scratch off lottery is not justifiable.
- sethg 16y ago
  ...but you can teach the technique to someone who is not so smart. Or you can use the technique to launder money.
  - qq66 16y ago
    I don't think that this guy has immediate money laundering needs.
  - patio11 16y ago
    Or you could write a Beat The Lottery iPhone app. (OCR plus counting... I somehow think they can make it work.) There are a variety of business models available at that point.
    - bvi 16y ago
      Oh dear. Why do I sense an impending deluge of iPhone apps in this domain?
tgandrews 16y ago
Why do they need a non random code to generate these? If they want to guarantee the number of winners, they can just ensure that they only release so many winners. This would require them "solving" all the tickets they were to release and holding/deleting/regenerating the ticket if they have enough winners already. This may not be the most efficient system but it guarantees it isn't crackable with a couple of caveats: 1. They weren't always releasing a winner at a fixed time - i.e. they had to have x win per week, and they released a winner at regular intervals to guarantee separation. You don't want all the winners for a month produced in the first hour. Although this would be random and should be a possibility. 2. The random number generator was actually random.
- ars 16y ago
  It might work, but you lose some randomness by doing this. You'd need to check the statistics carefully.
Luc 16y ago
I checked my national lottery (Belgium), but sadly none of the 15 scratch card types they sell have 'baited hooks' or other unique numbers, as far as I can see ( http://lotto.be/NL/Spelen_en_Winnen/Krasspelen/default.aspx http://lotto.be/NL/Spelen_en_Winnen/Krasspelen/default.aspx - in Dutch). I would laugh SO hard if we found some exploitable lottery...
rottyguy 16y ago
Even though he knew the formula, at least where I buy lottery tickets, the person behind the counter gives you the ticket. Assuming there are many more losers then winners, without being able to select the tickets yourself, it would seem as though it'd be a losing proposition. Now, if you were the store owner and had access to the tickets yourself, that would be a different story.
- deleted 16y ago
  [deleted]
- epo 16y ago
  He does mention that you need to buy in bulk and scan away from the store (with a means to return the rejects for a refund). A backhander to a store owner would do it.
- ergo98 16y ago
  This is how those sorts of tickets are sold here- http://www.northumberlandtoday.com/ArticleDisplay.aspx?archive=true&e=2724562 http://www.northumberlandtoday.com/ArticleDisplay.aspx?archi... They slide out the little display holding the type you're interested in and you sit and mull over the aura of winnitude of each of them. There would be little tolerance for someone looking at each individual card for a minute, though. The Ontario lottery corporation has come down hard on retailers because, of course, they're the ones who generally ply these scams.
- alcarter 16y ago
  It's not only an issue of rarely having control over which scratch-off card you'd like to pick, there's also the issue of most states having the majority of their games almost entirely hidden. Very few games allow you to see numbers or letters plainly - most require to you to scratch off "your" numbers and then scratch off the "board" as well.
lkozma 16y ago
I find it strange that they don't use some true random source in generating the tickets. I'm also surprised the article finds this obvious. "Of course, it would be really nice if the computer could just spit out random digits. But that’s not possible, since the lottery corporation needs to control the number of winning tickets" Surely the lottery could quantify uncertainties and set up a system where the probability of them losing money would be arbitrarily small. Interesting interview, btw.
- BoppreH 16y ago
  I think that "arbitrarily small" is not enough, especially if you are running a business for decades. Try convincing your boss that the chance of all tickets be winners (which would bring the business down) is "small enough".
  - harryh 16y ago
    > I think that "arbitrarily small" is not enough, especially > if you are running a business for decades. Sure it is. How do you think casinos work?
  - pmjordan 16y ago
    They could eliminate uncertainty by choosing a fixed number of winners from a given block of tickets, using true random numbers.
  - lkozma 16y ago
    Arbitrarily small can be less than the chance that random atoms from your coffee rearrange themselves into a winning lottery ticket.
  - shabda 16y ago
    http://en.wikipedia.org/wiki/Prize_indemnity_insurance http://en.wikipedia.org/wiki/Prize_indemnity_insurance
- apalmblad 16y ago
  It sounds like ticket design is the problem; an algorithm is needed that: - produces a set of bingo cards or tic-tac-toe boards such that only one board per card is a winner - produces cards that contain a number of almost winners Simply randomly assigning numbers wouldn't work, and it seems the method they've developed for building "fun to play" cards contains weaknesses against statistical analysis. Hmm... now I'll be stuck mulling over a good algorithm for this all day...
bobds 16y ago
> "I’d have to travel from store to store and spend 45 seconds cracking each card. I estimated that I could expect to make about $600 a day." Or you could make an app for your smartphone that uses OCR to instantly tell you whether you are looking at a winning ticket.
- VMG 16y ago
  or buy them directly in bulk
  - deleted 16y ago
    [deleted]
  - Rygu 16y ago
    But buying losing tickets means you're losing money, so you'd want to avoid that and only buy winning tickets.
  - bobds 16y ago
    Wouldn't you want that app even more if you were buying them in bulk?
- datac 16y ago
  App might last for few days in the App Store before it gets pulled out. Either way, it will be cool to create one.
- patrickk 16y ago
  Your comment reminds me of the great article that was on here some time ago about the guy who used a PDA and barcode scanner to search book stores for cheap books he could sell on Amazon for a profit: news.ycombinator.com/item?id=1764895 A highly recommended read.
- ashbrahma 16y ago
  Google Goggles can already solve Sudoku using OCR--http://www.newscientist.com/blogs/shortsharpscience/2011/01/google-goggles-app-that-solves.html http://www.newscientist.com/blogs/shortsharpscience/2011/01/... So what you are suggesting isn't that far fetched.
golgo13 16y ago
In Canada, are you able to say, "I don't want this one" until you get a potential winner? Here in Texas, you cannot pick your ticket. When you buy a ticket, you get whatever the cashier gives you or whatever the machine spits out. Or is the guy simply not wasting time scratching off the losers? I still don't see how this could be profitable since most games have 1:5 odds, including break even prizes.
- alokt_ 16y ago
  yes, but if you work at/own a gas station, you can pretty much pick the winners and sell the losing tickets.
  - eftpotrm 16y ago
    Not in the UK lottery; all the tickets get dispensed from clear containers and have to be the next one on the roll (which comes out at the back so you can't see what the next one will be). They've tried educating their customers* about not buying tickets that aren't on the roll. This to me seemed to be the core of the problem; not that the cards were crackable, but that it was possible for a user to select what card to purchase rather than just what game to play. Remove that and the problem largely goes away through simple education about valid play procedures as I suggested. (* I say educated, but there's the infamous 'Winter temperatures' scratchcard which rather undermines that concept - http://menmedia.co.uk/manchestereveningnews/news/s/1022757_cool_cash_card_confusion http://menmedia.co.uk/manchestereveningnews/news/s/1022757_c...)
    - dhyasama 16y ago
      Exactly. Force players to buy the next ticket on the roll (without seeing it) and don't allow unused tickets to be returned. Problem solved. I grew up in Maine and tickets are dispensed this way. Not sure about returning tickets, but knowing Mainers, I'd be surprised if they would take them back. It doesn't pass the straight-face test.
      - BrandonM 16y ago
BoppreH 16y ago
Why the hell didn't he hire people to find tickets for him? If you are worried about people doing this without you, just make an app to calculate the values. Make the calculations server side, and only after checking if the phone is registered. Just don't hire too many people, or the clerks may start to get suspicious.
- daeken 16y ago
  Why not bring the clerks into it? The corner-store I go to near-daily knows me well, and they sell lots of lottery tickets. It'd be trivial for me to go in there and say "listen, I'll give you an X% cut in exchange for your silence and first pick of the tickets." However, if they're knowingly selling losers, could that be construed as fraud? Then again, the lottery does that already...
  - pbhjpbhj 16y ago
    >However, if they're knowingly selling losers, could that be construed as fraud? Yes, it's also clearly immoral.
autarch 16y ago
I wish the article had talked about the legality of doing this. Assuming I'm not doing this to launder money and that I report all my earnings, is this legal?
- sdkmvx 16y ago
  Not a lawyer, but I would be very surprised if the law that creates and regulates the lottery doesn't include a clause to make buying tickets by an algorithm illegal or something like it.
  - ajays 16y ago
    Why? The law says that you can buy tickets, and return unused ones. So just buy a bunch, scratch the winning ones, and return the rest. There's no law which says that "if you can figure out how the lottery works, it is illegal". Their recourse is to only pull the lottery and discontinue it; they can't accuse you of fraud if you somehow figured out how to pick the right tickets.
- JoachimSchipper 16y ago
  I think so. Obviously, the lottery isn't happy if people actually figure out how to break it; but there are quite a few people who think "7 is lucky", and I can't figure out a good way to separate the actual winners from people who only think they are winners. And lotteries make their money from the latter...
Confusion 16y ago
I wouldn't have been surprised if they had known about the 'flaw', but didn't mind it, because, as Srivastava said "it wasn't worth the time to abuse the flaw". In similar vein, I once randomly generated 2 million out of 40 million possible codes. Consumers would buy products, obtain a code and it would allow them to 'buy one, get one free' for some other product. The code being short and without the usual mixup candidates (I, 1, O, 0, etc.) was much more important than people 'cracking' the system. Even at half the price, the other product still sold at a profit and nobody saw room for mass purchase/reselling. Of course, later in the article it appeared that people were abusing cracks in the system and reaping the benefits, so it doesn't apply to this case. I just wanted to note that sometimes business concerns trump all actually interesting parts of a problem :/
- ahlatimer 16y ago
  It wasn't economical for the statistician, since he was making more than he could possibly make doing this. It would likely be economical for many other people, however. He said he could make $600/day doing this. Even if you only do this 5 days a week and give yourself 2 weeks of vacation, you still end up making $150,000/yr ($600/day * 50 weeks/yr * 5 days/week). That's well above the national average for both the US and Canada.
  - ultrasaurus 16y ago
    Another key advantage is tax arbitrage. If you can make $800/day, that's because you have a certain skill set, you can't send a random college student in your place to collect your earnings for one month and pay almost no taxes. You have to pay your taxes on one $150k income. With progressive taxation, if you get 12 students to redeem 1/12th of your winnings (for say 5%), you're paying taxes at the lowest level (likely even 0%) rather than the 35+% you would be if you had to claim 150k on a single tax return.
nowarninglabel 16y ago
Great article, though, I take issue with this tangent: "James “Whitey” Bulger, a notorious South Boston mob boss currently on the FBI’s 10 Most Wanted Fugitives list—he’s thought to be the inspiration for the Frank Costello character in The Departed" The inspiration for that character is the original movie, Infernal Affairs, which The Departed is a remake of. They may have bleneded some features of Bulger into that character, but that doesn't make him the inspiration.
maeon3 16y ago
The lottery system can now confidently continue to extracting money out of idiots who don't know better. Somehow this whole story leaves me feeling that nothing good has happened. The whole story just feels like a good Samaritan helping a schoolyard bully steal change out of the back pockets of unwitting classmates. A happy ending would be the lottery system managers getting thrown out after suffering unexpected sustained losses.
- rtghnyhjm 16y ago
  Nope - remember it's only idiots that play the lottery. This is like helping the nerds carry on taking money from the bullies once they grow up and get dead end jobs
- almost 16y ago
  These are scratch cards, so they already have a set payout for the number they produce. So unless the cards are getting returned to the lotteries and refunded (this might even happen in some cases, I'm not sure) they aren't losing any money. It's just the other people who play the lottery who will have a far lesser chance of winning (as they are sold all the losing tickets rejected by the cheaters)
iamchmod 16y ago
I wish I were smart enough to figure out cool statistical problems like he is.
MichaelApproved 16y ago
It seems that a large part of the problem (aside from flawed algorithm) is that they allow people to pick the tickets they want to purchase. If they required people to buy the tickets in order they're dispensed from the roll it would bring the abuse down dramatically. Even if you were able to crack the code you'd have to wait for others to buy the losers before a winning ticket would show up. The flaw in this would be if the store selling the tickets was be in on the scam. They'd be able to sell a bunch of losers and pull any winners as soon as it was their turn to dispense. But as with most crimes, the more people involved in it, the harder it is to keep quiet about it and pull it off.
- _pra 16y ago
  Actually, the article mentioned that most of the stores would be okay with refunding unused tickets.
- chopsueyar 16y ago
  The only way this could work in the US was if the store was in on it. Returning unused tickets for a refund would not be succesful.
asr 16y ago
I excitedly went to the Virginia lottery website, thinking maybe I could find a game or two possibly vulnerable to something like this and then buy a few tickets for the fun of seeing if this can still be done... But manufacturers appear to have dealt with this by getting rid of "baited hooks"--every number on a card is under a surface that has to be scratched off. I guess they lose the allure of letting people say "I want to buy a card with lots of 7s because that's my lucky number" but it's a simple and effective fix. Oh well, guess I'll have to get rich through hard work :)
Duff 16y ago
I'll open myself up to scorn by admitting that I buy these things often. You don't get to select your tickets in NY, they are ripped off one at a time on a roll that is in a locked container. The most obvious vulnerability here is clerks and convenience store owners who unroll the tickets and hand out the loser tickets to customers. That risk is mitigated by the craziness of lotto addicts, who won't accept a ticket that doesn't come off of the roll.
groaner 16y ago
This story sounded familiar -- it turns out that some of our own HN'ers have done this too: http://news.ycombinator.com/item?id=1823191 http://news.ycombinator.com/item?id=1823191
chalkhed 16y ago
Can someone describe the statistical analysis that would be required to discover something like this? Is it along the lines of guessing different parts of an algorithm till you find something that agrees with the data (IE He'd have to guess that only "singletons" could form winning entries and go from there)? Or, are there some more general approaches here to draw out correlations between the structure of visible numbers and any hidden structure? More generally, other than saying "statistics," what specific fields of math are applicable to a problem like this? I'd guess there's some relation here with cryptographic attacks and attacks against pseudo random generators, but what specifically would one study to understand these types of problems?
- ajays 16y ago
  My guess is the following. Lets say that the numbers in the game are in the range [1..N]. Lets further assume that there are M slots (or squares where numbers are placed). Suppose M is about 3*N. So, on average, you'd expect each number to occur 3 times. If you see that number occur only once in the (visible) column on the right, then you are pretty sure that it'll occur at least once or twice in the (hidden) column on the left. So if you see 3 numbers in a row (or column) that each occur only once in the right hand side, then you can be fairly certain that they'll occur at least once in the left side; so you're pretty sure to win the prize. All you need is some basic knowledge of statistics, uniform distribution, etc. I don't see a need for high-falutin' cryptographic analysis and higher order math. If you're dealing with online stuff, then some knowledge of PRNGs can help. I remember (a long time ago) hearing about some online poker algorithm which was just calling rand(), and had been seeded with unix time. That leaves a really small number of possibilities to try, and you can reconstruct the stream of random numbers it would generate.
  - chalkhed 16y ago
    That makes sense, but theres still the problem that, even if you have 3 in a row that you think have a higher probability of occurring in the hidden part, they can still be X or O, not necessarily winning. Maybe theres a statistical edge in knowing that, but I doubt that would give you an edge of 90%. Also, that seems to indicate the issue is due to the overall structure of the problem of choosing numbers for a game like this, while I got the sense from the article that the problem was more due to the algorithm the company used to control winners and losers (maybe I'm wrong on that). If it is due to how the company controls wins in some way, I could see how observing 3 in a row of singles more often than expected by a random distribution (whatever the distribution is for choice of number and choice of spot on the board) is a giveaway to some nonrandomness introduced by their algorithm. But if you were to approach it by finding divergences from this distribution, wouldn't you need a lot of tickets before you could infer this? In any case - any guess on the expected number of tickets you'd have to have to discover a flaw like this?
joeycfan 16y ago
I live in Ontario and it never even occurred to me to check the scratch tickets for that sort of weakness as I figured they have to have actuaries etc working for them and would never possibly be so stupid as to give information away like that right? RIGHT? I also like the way this guy was in a position to pass on $600 a day...
hoag 16y ago
Haha funny I just tried to post this and got directed here: looks like someone beat me to it! Pretty cool read.

334 points by karzeem 16y ago

Xk 16y ago

In some states, the lottery accounts for more than 5 percent of education funding. Am I the only one who finds this ironic? Edit: Except, of course, for those who learn to predict 19 of 20 tickets correctly.

sambeau 16y ago
Ironic? no; sad? yes.
- Xk 16y ago
  I find irony in the fact that if the populous were better educated, the state would get less money. While not strictly true (a better educated populous would probably earn more, and give more taxes to the state, among other reasons), I find the idea on this small scale amusing.
  - swolchok 16y ago
    Given the nature of this comment, I feel that I am justified in commenting to inform you that the word you are looking for is "populace."
    - RobertKohr 16y ago
      He probably learned the spelling based upon the old video game. I wouldn't fault him for that.
Joakal 16y ago
Hey now! http://www.smbc-comics.com/index.php?db=comics&id=1744#comic http://www.smbc-comics.com/index.php?db=comics&id=1744#c...
coin 16y ago
In many cases, that's how the state justifies the lottery.
nfriedly 16y ago
To make matters worse, my understanding is that when the state receives money from the lottery for the schools, that money does in fact go to the schools... and then an equivalent amount of money comes out of the school's budget and goes into the state's general budget. So, for example: if the school budget for the year is $5 million, and lottery brings in $1 million for the school, the school doesn't get $6 million the way a lot of people seem to think. The school gets $1 million from the lottery and the state only has to pay $4 million out of the general budget.
- ajju 16y ago
  Ha! So the lottery is paying for everything but education.
- chopsueyar 16y ago
  That is how Florida does it.

nagrom 16y ago

My favourite line in the whole article was about the way he alerted the lottery board: "The package was sent at 10 am. Two hours later, he received a call from Zufelt. Srivastava had correctly predicted 19 out of the 20 tickets. The next day, the tic-tac-toe game was pulled from stores." I know that we're supposed to be fascinated by the statistical work done cracking the code, but my real sympathy is for the head of security that received that package. How do you react in such a situation? As an aside, the statistician seems really cool too - it's a very forthright interview and the article's much better than I expected. Both the statistician and the author seem to be very surprised by the lack of concern shown for the apparent evidence of security breaches. This, of course, has a direct analogue with the way large multi-nationals treat computer security. I was only surprised to get to the end of the article and not find that the statistician had been threatened with prosecution or similar.

VladRussian 16y ago
>not find that the statistician had been threatened with prosecution or similar may be because he is in Canada. Do they have DMCA alike?
- daeken 16y ago
  The DMCA only applies to mechanisms which protect copyright.
  - deleted 16y ago
    [deleted]
  - chopsueyar 16y ago
    The winnings could have been used to buy bootleg DVDs.
    - chc 16y ago
      This is sadly not too far off from the rationale behind Sony's DMCA attack against the PS3 hacker.

notyourwork 16y ago

Summary: If you are smart enough to crack the scratch off lottery you already make enough income that cracking the scratch off lottery is not justifiable.

sethg 16y ago
...but you can teach the technique to someone who is not so smart. Or you can use the technique to launder money.
- qq66 16y ago
  I don't think that this guy has immediate money laundering needs.
- patio11 16y ago
  Or you could write a Beat The Lottery iPhone app. (OCR plus counting... I somehow think they can make it work.) There are a variety of business models available at that point.
  - bvi 16y ago
    Oh dear. Why do I sense an impending deluge of iPhone apps in this domain?

tgandrews 16y ago

Why do they need a non random code to generate these? If they want to guarantee the number of winners, they can just ensure that they only release so many winners. This would require them "solving" all the tickets they were to release and holding/deleting/regenerating the ticket if they have enough winners already. This may not be the most efficient system but it guarantees it isn't crackable with a couple of caveats: 1. They weren't always releasing a winner at a fixed time - i.e. they had to have x win per week, and they released a winner at regular intervals to guarantee separation. You don't want all the winners for a month produced in the first hour. Although this would be random and should be a possibility. 2. The random number generator was actually random.

ars 16y ago
It might work, but you lose some randomness by doing this. You'd need to check the statistics carefully.

Luc 16y ago

I checked my national lottery (Belgium), but sadly none of the 15 scratch card types they sell have 'baited hooks' or other unique numbers, as far as I can see ( http://lotto.be/NL/Spelen_en_Winnen/Krasspelen/default.aspx http://lotto.be/NL/Spelen_en_Winnen/Krasspelen/default.aspx - in Dutch). I would laugh SO hard if we found some exploitable lottery...

rottyguy 16y ago

Even though he knew the formula, at least where I buy lottery tickets, the person behind the counter gives you the ticket. Assuming there are many more losers then winners, without being able to select the tickets yourself, it would seem as though it'd be a losing proposition. Now, if you were the store owner and had access to the tickets yourself, that would be a different story.

deleted 16y ago
[deleted]
epo 16y ago
He does mention that you need to buy in bulk and scan away from the store (with a means to return the rejects for a refund). A backhander to a store owner would do it.
ergo98 16y ago
This is how those sorts of tickets are sold here- http://www.northumberlandtoday.com/ArticleDisplay.aspx?archive=true&e=2724562 http://www.northumberlandtoday.com/ArticleDisplay.aspx?archi... They slide out the little display holding the type you're interested in and you sit and mull over the aura of winnitude of each of them. There would be little tolerance for someone looking at each individual card for a minute, though. The Ontario lottery corporation has come down hard on retailers because, of course, they're the ones who generally ply these scams.
alcarter 16y ago
It's not only an issue of rarely having control over which scratch-off card you'd like to pick, there's also the issue of most states having the majority of their games almost entirely hidden. Very few games allow you to see numbers or letters plainly - most require to you to scratch off "your" numbers and then scratch off the "board" as well.

lkozma 16y ago

I find it strange that they don't use some true random source in generating the tickets. I'm also surprised the article finds this obvious. "Of course, it would be really nice if the computer could just spit out random digits. But that’s not possible, since the lottery corporation needs to control the number of winning tickets" Surely the lottery could quantify uncertainties and set up a system where the probability of them losing money would be arbitrarily small. Interesting interview, btw.

BoppreH 16y ago
I think that "arbitrarily small" is not enough, especially if you are running a business for decades. Try convincing your boss that the chance of all tickets be winners (which would bring the business down) is "small enough".
- harryh 16y ago
  > I think that "arbitrarily small" is not enough, especially > if you are running a business for decades. Sure it is. How do you think casinos work?
- pmjordan 16y ago
  They could eliminate uncertainty by choosing a fixed number of winners from a given block of tickets, using true random numbers.
- lkozma 16y ago
  Arbitrarily small can be less than the chance that random atoms from your coffee rearrange themselves into a winning lottery ticket.
- shabda 16y ago
  http://en.wikipedia.org/wiki/Prize_indemnity_insurance http://en.wikipedia.org/wiki/Prize_indemnity_insurance
apalmblad 16y ago
It sounds like ticket design is the problem; an algorithm is needed that: - produces a set of bingo cards or tic-tac-toe boards such that only one board per card is a winner - produces cards that contain a number of almost winners Simply randomly assigning numbers wouldn't work, and it seems the method they've developed for building "fun to play" cards contains weaknesses against statistical analysis. Hmm... now I'll be stuck mulling over a good algorithm for this all day...

bobds 16y ago

> "I’d have to travel from store to store and spend 45 seconds cracking each card. I estimated that I could expect to make about $600 a day." Or you could make an app for your smartphone that uses OCR to instantly tell you whether you are looking at a winning ticket.

VMG 16y ago
or buy them directly in bulk
- deleted 16y ago
  [deleted]
- Rygu 16y ago
  But buying losing tickets means you're losing money, so you'd want to avoid that and only buy winning tickets.
- bobds 16y ago
  Wouldn't you want that app even more if you were buying them in bulk?
datac 16y ago
App might last for few days in the App Store before it gets pulled out. Either way, it will be cool to create one.
patrickk 16y ago
Your comment reminds me of the great article that was on here some time ago about the guy who used a PDA and barcode scanner to search book stores for cheap books he could sell on Amazon for a profit: news.ycombinator.com/item?id=1764895 A highly recommended read.
ashbrahma 16y ago
Google Goggles can already solve Sudoku using OCR--http://www.newscientist.com/blogs/shortsharpscience/2011/01/google-goggles-app-that-solves.html http://www.newscientist.com/blogs/shortsharpscience/2011/01/... So what you are suggesting isn't that far fetched.

golgo13 16y ago

In Canada, are you able to say, "I don't want this one" until you get a potential winner? Here in Texas, you cannot pick your ticket. When you buy a ticket, you get whatever the cashier gives you or whatever the machine spits out. Or is the guy simply not wasting time scratching off the losers? I still don't see how this could be profitable since most games have 1:5 odds, including break even prizes.

alokt_ 16y ago
yes, but if you work at/own a gas station, you can pretty much pick the winners and sell the losing tickets.
- eftpotrm 16y ago
  Not in the UK lottery; all the tickets get dispensed from clear containers and have to be the next one on the roll (which comes out at the back so you can't see what the next one will be). They've tried educating their customers* about not buying tickets that aren't on the roll. This to me seemed to be the core of the problem; not that the cards were crackable, but that it was possible for a user to select what card to purchase rather than just what game to play. Remove that and the problem largely goes away through simple education about valid play procedures as I suggested. (* I say educated, but there's the infamous 'Winter temperatures' scratchcard which rather undermines that concept - http://menmedia.co.uk/manchestereveningnews/news/s/1022757_cool_cash_card_confusion http://menmedia.co.uk/manchestereveningnews/news/s/1022757_c...)
  - dhyasama 16y ago
    Exactly. Force players to buy the next ticket on the roll (without seeing it) and don't allow unused tickets to be returned. Problem solved. I grew up in Maine and tickets are dispensed this way. Not sure about returning tickets, but knowing Mainers, I'd be surprised if they would take them back. It doesn't pass the straight-face test.
    - BrandonM 16y ago

BoppreH 16y ago

Why the hell didn't he hire people to find tickets for him? If you are worried about people doing this without you, just make an app to calculate the values. Make the calculations server side, and only after checking if the phone is registered. Just don't hire too many people, or the clerks may start to get suspicious.

daeken 16y ago
Why not bring the clerks into it? The corner-store I go to near-daily knows me well, and they sell lots of lottery tickets. It'd be trivial for me to go in there and say "listen, I'll give you an X% cut in exchange for your silence and first pick of the tickets." However, if they're knowingly selling losers, could that be construed as fraud? Then again, the lottery does that already...
- pbhjpbhj 16y ago
  >However, if they're knowingly selling losers, could that be construed as fraud? Yes, it's also clearly immoral.

autarch 16y ago

I wish the article had talked about the legality of doing this. Assuming I'm not doing this to launder money and that I report all my earnings, is this legal?

sdkmvx 16y ago
Not a lawyer, but I would be very surprised if the law that creates and regulates the lottery doesn't include a clause to make buying tickets by an algorithm illegal or something like it.
- ajays 16y ago
  Why? The law says that you can buy tickets, and return unused ones. So just buy a bunch, scratch the winning ones, and return the rest. There's no law which says that "if you can figure out how the lottery works, it is illegal". Their recourse is to only pull the lottery and discontinue it; they can't accuse you of fraud if you somehow figured out how to pick the right tickets.
JoachimSchipper 16y ago
I think so. Obviously, the lottery isn't happy if people actually figure out how to break it; but there are quite a few people who think "7 is lucky", and I can't figure out a good way to separate the actual winners from people who only think they are winners. And lotteries make their money from the latter...

Confusion 16y ago

I wouldn't have been surprised if they had known about the 'flaw', but didn't mind it, because, as Srivastava said "it wasn't worth the time to abuse the flaw". In similar vein, I once randomly generated 2 million out of 40 million possible codes. Consumers would buy products, obtain a code and it would allow them to 'buy one, get one free' for some other product. The code being short and without the usual mixup candidates (I, 1, O, 0, etc.) was much more important than people 'cracking' the system. Even at half the price, the other product still sold at a profit and nobody saw room for mass purchase/reselling. Of course, later in the article it appeared that people were abusing cracks in the system and reaping the benefits, so it doesn't apply to this case. I just wanted to note that sometimes business concerns trump all actually interesting parts of a problem :/

ahlatimer 16y ago
It wasn't economical for the statistician, since he was making more than he could possibly make doing this. It would likely be economical for many other people, however. He said he could make $600/day doing this. Even if you only do this 5 days a week and give yourself 2 weeks of vacation, you still end up making $150,000/yr ($600/day * 50 weeks/yr * 5 days/week). That's well above the national average for both the US and Canada.
- ultrasaurus 16y ago
  Another key advantage is tax arbitrage. If you can make $800/day, that's because you have a certain skill set, you can't send a random college student in your place to collect your earnings for one month and pay almost no taxes. You have to pay your taxes on one $150k income. With progressive taxation, if you get 12 students to redeem 1/12th of your winnings (for say 5%), you're paying taxes at the lowest level (likely even 0%) rather than the 35+% you would be if you had to claim 150k on a single tax return.

nowarninglabel 16y ago

Great article, though, I take issue with this tangent: "James “Whitey” Bulger, a notorious South Boston mob boss currently on the FBI’s 10 Most Wanted Fugitives list—he’s thought to be the inspiration for the Frank Costello character in The Departed" The inspiration for that character is the original movie, Infernal Affairs, which The Departed is a remake of. They may have bleneded some features of Bulger into that character, but that doesn't make him the inspiration.

maeon3 16y ago

The lottery system can now confidently continue to extracting money out of idiots who don't know better. Somehow this whole story leaves me feeling that nothing good has happened. The whole story just feels like a good Samaritan helping a schoolyard bully steal change out of the back pockets of unwitting classmates. A happy ending would be the lottery system managers getting thrown out after suffering unexpected sustained losses.

rtghnyhjm 16y ago
Nope - remember it's only idiots that play the lottery. This is like helping the nerds carry on taking money from the bullies once they grow up and get dead end jobs
almost 16y ago
These are scratch cards, so they already have a set payout for the number they produce. So unless the cards are getting returned to the lotteries and refunded (this might even happen in some cases, I'm not sure) they aren't losing any money. It's just the other people who play the lottery who will have a far lesser chance of winning (as they are sold all the losing tickets rejected by the cheaters)

iamchmod 16y ago

I wish I were smart enough to figure out cool statistical problems like he is.

MichaelApproved 16y ago

It seems that a large part of the problem (aside from flawed algorithm) is that they allow people to pick the tickets they want to purchase. If they required people to buy the tickets in order they're dispensed from the roll it would bring the abuse down dramatically. Even if you were able to crack the code you'd have to wait for others to buy the losers before a winning ticket would show up. The flaw in this would be if the store selling the tickets was be in on the scam. They'd be able to sell a bunch of losers and pull any winners as soon as it was their turn to dispense. But as with most crimes, the more people involved in it, the harder it is to keep quiet about it and pull it off.

_pra 16y ago
Actually, the article mentioned that most of the stores would be okay with refunding unused tickets.
chopsueyar 16y ago
The only way this could work in the US was if the store was in on it. Returning unused tickets for a refund would not be succesful.

asr 16y ago

I excitedly went to the Virginia lottery website, thinking maybe I could find a game or two possibly vulnerable to something like this and then buy a few tickets for the fun of seeing if this can still be done... But manufacturers appear to have dealt with this by getting rid of "baited hooks"--every number on a card is under a surface that has to be scratched off. I guess they lose the allure of letting people say "I want to buy a card with lots of 7s because that's my lucky number" but it's a simple and effective fix. Oh well, guess I'll have to get rich through hard work :)

Duff 16y ago

I'll open myself up to scorn by admitting that I buy these things often. You don't get to select your tickets in NY, they are ripped off one at a time on a roll that is in a locked container. The most obvious vulnerability here is clerks and convenience store owners who unroll the tickets and hand out the loser tickets to customers. That risk is mitigated by the craziness of lotto addicts, who won't accept a ticket that doesn't come off of the roll.

groaner 16y ago

This story sounded familiar -- it turns out that some of our own HN'ers have done this too: http://news.ycombinator.com/item?id=1823191 http://news.ycombinator.com/item?id=1823191

chalkhed 16y ago

Can someone describe the statistical analysis that would be required to discover something like this? Is it along the lines of guessing different parts of an algorithm till you find something that agrees with the data (IE He'd have to guess that only "singletons" could form winning entries and go from there)? Or, are there some more general approaches here to draw out correlations between the structure of visible numbers and any hidden structure? More generally, other than saying "statistics," what specific fields of math are applicable to a problem like this? I'd guess there's some relation here with cryptographic attacks and attacks against pseudo random generators, but what specifically would one study to understand these types of problems?

ajays 16y ago
My guess is the following. Lets say that the numbers in the game are in the range [1..N]. Lets further assume that there are M slots (or squares where numbers are placed). Suppose M is about 3*N. So, on average, you'd expect each number to occur 3 times. If you see that number occur only once in the (visible) column on the right, then you are pretty sure that it'll occur at least once or twice in the (hidden) column on the left. So if you see 3 numbers in a row (or column) that each occur only once in the right hand side, then you can be fairly certain that they'll occur at least once in the left side; so you're pretty sure to win the prize. All you need is some basic knowledge of statistics, uniform distribution, etc. I don't see a need for high-falutin' cryptographic analysis and higher order math. If you're dealing with online stuff, then some knowledge of PRNGs can help. I remember (a long time ago) hearing about some online poker algorithm which was just calling rand(), and had been seeded with unix time. That leaves a really small number of possibilities to try, and you can reconstruct the stream of random numbers it would generate.
- chalkhed 16y ago
  That makes sense, but theres still the problem that, even if you have 3 in a row that you think have a higher probability of occurring in the hidden part, they can still be X or O, not necessarily winning. Maybe theres a statistical edge in knowing that, but I doubt that would give you an edge of 90%. Also, that seems to indicate the issue is due to the overall structure of the problem of choosing numbers for a game like this, while I got the sense from the article that the problem was more due to the algorithm the company used to control winners and losers (maybe I'm wrong on that). If it is due to how the company controls wins in some way, I could see how observing 3 in a row of singles more often than expected by a random distribution (whatever the distribution is for choice of number and choice of spot on the board) is a giveaway to some nonrandomness introduced by their algorithm. But if you were to approach it by finding divergences from this distribution, wouldn't you need a lot of tickets before you could infer this? In any case - any guess on the expected number of tickets you'd have to have to discover a flaw like this?

joeycfan 16y ago

I live in Ontario and it never even occurred to me to check the scratch tickets for that sort of weakness as I figured they have to have actuaries etc working for them and would never possibly be so stupid as to give information away like that right? RIGHT? I also like the way this guy was in a position to pass on $600 a day...

hoag 16y ago

Haha funny I just tried to post this and got directed here: looks like someone beat me to it! Pretty cool read.