{"id":7614,"date":"2014-07-03T15:24:16","date_gmt":"2014-07-03T15:24:16","guid":{"rendered":"https:\/\/forumarchives.tmsites.net\/index.php\/2014\/07\/03\/how-lottery-legend-joan-ginther-likely-used-odds-uncle-sam-to-win-millions\/"},"modified":"2014-07-03T15:24:16","modified_gmt":"2014-07-03T15:24:16","slug":"how-lottery-legend-joan-ginther-likely-used-odds-uncle-sam-to-win-millions","status":"publish","type":"post","link":"https:\/\/forumarchives.tmsites.net\/index.php\/2014\/07\/03\/how-lottery-legend-joan-ginther-likely-used-odds-uncle-sam-to-win-millions\/","title":{"rendered":"How lottery legend Joan Ginther likely used odds, Uncle Sam to win millions."},"content":{"rendered":"


\nBasic gambling principles go a long way toward explaining why Joan Ginther bet enormous sums on high-priced scratch-off games.
\n\tRead more at <\/strong><\/p>\n

\tPeter Mucha, Philly.com
\n\tJoan Ginther wasn\u2019t necessarily lottery loco.<\/p>\n

\tMaybe it wasn\u2019t a case of dumb luck, but smart luck.<\/p>\n

\tShe may have purchased at least 80,000 pricey tickets worth $2 million or more, according to expert analysis of 28 instant prizes she won, including three totalling $15 million.<\/p>\n

\tIf she also was the source of two dozen lesser wins by her friend Anna Morales, Ginther might have spurred the purchase of as many as 100,000 tickets worth $3.3 million.<\/p>\n

\tSure sounds crazy<\/strong>.<\/p>\n

\tWhy would Ginther, a math-savvy woman with a Ph.D. from Stanford, leave her home in Las Vegas, a block from three casinos, to devote countless hours to lottery longshots?<\/p>\n

\tNo answers were available from Ginther, who never responded to a series of interview requests, or Morales, who declined to speak. And months of painstaking analysis of Texas Lottery records cast doubt on the most common suspicions. <\/p>\n

\tA simpler theory surfaced: The costs and odds in the games she played weren\u2019t so wild after all.<\/p>\n

\tThat $3.3 million in tickets may have only actually cost about $1 million, thanks in part to Uncle Sam. And her chances were sometimes at least four times better than the published odds, thanks in part to player-friendly websites.<\/p>\n

\tIf she was winning, without damaging her interpersonal relationships, the term for her isn\u2019t \u201cpathological,\u201d it\u2019s \u201cprofessional,\u201d said Tim Fong, co-director of UCLA\u2019s Gambling Studies Program.<\/p>\n

\tAnd win she did, putting together an amazing five-year run.<\/p>\n

\tShe scored $2 million playing Holiday Millionaire in 2006, $3 million in Millions & Millions in 2008 and $10 million in $140,000,000 Extreme Payout in 2010, all on top of apparently lucking out in 1993, when she claimed a $5.4 million share of a Lotto Texas jackpot.<\/p>\n

\tIn rare cases, buying a ton of lottery tickets can be smart. The International Lotto Fund bought five million tickets to win a $27 million Virginia Lotto jackpot in 1980, and four groups regularly bought hundreds of thousands of tickets to reap millions playing Massachusetts\u2019 Cash WinFall from 2005 to 2012.<\/p>\n

\tMaybe she figured out a similar scheme with scratch-off games.<\/p>\n

\t\u201cI think she\u2019s addicted,\u201d said Dawn Nettles, publisher of the Texas-based Lotto Report. \u201cShe\u2019s going to go belly up. … We\u2019ll see in time.\u201d<\/p>\n

\tOr perhaps she moved to Vegas in 2001 because she\u2019s an advantage player, someone who zeroes in on ways to turn a profit gambling, suggested Yuran Lu, co-organizer of the MIT group that beat Cash WinFall.<\/p>\n

\tVegas is a mecca for people seeking to turn gambling into an income stream. Poker pros and card counters just the best-known examples. Some video poker machines favor perfect players. Sometimes progressive slots have such big jackpots, they\u2019re worth relentlessly pursuing. Sports bettors have cashed in on \u201crogue\u201d point spreads. Even craps can supposedly be gamed.<\/p>\n

\tIn all the theorizing about Ginther, analysts have largely overlooked the importance of an assortment of basic gambling principles.<\/p>\n

\tHere\u2019s a rundown of a series of powerful factors she may have worked to her advantage.<\/p>\n

\tFirst, a warning: Play games of chance at your own risk.<\/p>\n

\t\u201cMost of the world is suffering, and shouldn\u2019t be playing at all,\u201d said often-interviewed Richard Lustig, who\u2019s won multiple top prizes and wrote a book for lottery players. His advice: Set a budget, but \u201cdo not spend grocery money, do not spend rent money.\u201d<\/p>\n

\t"Nobody can guarantee you\u2019re going to win a grand prize," he said.<\/p>\n

\tPowerful Factor 1: House money<\/strong><\/p>\n

\tThanks to her 1993 Lotto Texas win, Joan Ginther had $270,000 coming in every July through 2012. Many gamblers reason that winnings are found money, the lottery\u2019s money, house money, so why not risk some, or most? Even if you lose it all, you\u2019re no worse off than when you started. So, Ginther didn\u2019t need a foolproof strategy or some pay-as-you-go ticket-screening process to justify a search for huge prizes. If games were relatively reasonable bets, she could probably afford to risk sizeable sums every year.<\/p>\n

\tFactor 2: Generous Texas<\/p>\n

\tIn mid 2000, $80,000 was the biggest lump-sum instant payout in Texas, for a game called Piece of Cake.<\/p>\n

\tThen Texas started feeding its scratch-off games growth hormones.<\/p>\n

\t2002: first $1 million prize, first $20 tickets. 2003: first $2 million prize. 2004: first $30 ticket (many states still don\u2019t have them), for another $2 million prize.<\/p>\n

\tIn April 2006, Ginther won $2 million playing Holiday Millionaire, a $30 game.<\/p>\n

\tIn 2007, Texas introduced its first $5 million prize with North America\u2019s first $50 game, $130,000,000 Spectacular.<\/p>\n

\tIn 2008, Ginther won $3 million playing Millions & Millions.<\/p>\n

\tIn 2009, Texas launched North America\u2019s first instant game with a $10 million prize, $140,000,000 Extreme Payout, another $50 game.<\/p>\n

\tIn 2010, Ginther won that game\u2019s second $10 million prize.<\/p>\n

\tThere are two ways of looking at this timeline. Texas tempted, Ginther succumbed. Or, maybe, as Texas kept sweetening the formula, Ginther realized some games weren\u2019t such crazy gambles.<\/p>\n

\tFactor 3: Guaranteed prizes<\/strong><\/p>\n

\tTrick question: How much does a thousand $25 lottery tickets cost?<\/p>\n

\tIn a generous scratch-off game, less than than $10,000, thanks to a high rate of prize payback.<\/p>\n

\tThis powerful factor has been overlooked or underappreciated in dozens of accounts about Ginther.<\/p>\n

\tIn winning $2,000 in Run the Table in 2005, Ginther may have bought a thousand $25 tickets, an industry analyst calculated. But that doesn\u2019t mean she coughed up $25,000. The game paid prize money back at a remarkable rate: 66.9 percent, not counting the top three prizes.<\/p>\n

\tGinther could have calculated this rate using the game\u2019s online page.<\/p>\n

\tSuppose she repeatedly redeemed winners for more tickets. On $10,000, she\u2019d win $6,690 back. Reinvesting that would win another $4,470, and she\u2019s already doubled her tickets. Continue the pattern and it works out to roughly buy one, get two free.<\/p>\n

\tTotal out-of-pocket cost for 1,000 tickets: about $8,275.<\/p>\n

\tOther games were far less generous. Lotto Texas\u2019 drawings offered about a 10 percent return in smaller prizes. 10 Times Lucky, a middling instant game back then, had a high payback rate, but its top prize was a puny $2,500.<\/p>\n

\tFigure in an average 60 percent return rate for all her games, and the real cost of $3 million worth of tickets works out to about $1.2 million. Over eight years, that\u2019s $150,000 a year, leaving a lot of her annuity and all of her savings untouched.
\n\t
\n\tFactor 4: Tax break<\/strong><\/p>\n

\tUncle Sam\u2019s generous, too. Gambling losses can be written off against gambling winnings on federal income-tax returns, and with her annuity, Ginther easily met that test.<\/p>\n

\tFrom 2005 to 2012, when Ginther won 28 scratch-off prizes of $1,000 or more, the top tax rate was 35 percent.<\/p>\n

\tIf she lost $150,000 in a given year, she could have saved $52,500 on her taxes, making the real risk less than $100,000.<\/p>\n

\tIn effect, with prize paybacks and tax breaks, she could have bought about $375,000 worth of tickets a year for $97,500.<\/p>\n

\tSome gamblers can legally boost their tax break further by declaring themselves professionals. That would have allowed her to deduct expenses such as trips to Texas or even a home office in her condo, though pros also have to pay self-employment tax, according to New York tax attorney Brad Polizzano. (There were no state-tax implications, since neither Texas nor Nevada has a state income tax.)<\/p>\n

\tFactor 5: Expected value<\/strong><\/p>\n

\tCost is just one side of the ledger. There\u2019s also the payday side.<\/p>\n

\tEach ticket has a dollar value just for its chances of winning, according to statisticians.<\/p>\n

\tA 1-in-a-million chance to win $5 million is statistically worth $5, for example. If the ticket costs less than $5, it\u2019s said to have \u201cpositive expected value,\u201d making the purchase a rational bet.<\/p>\n

\tIn such situations, the more the player can afford to bet, the more likely he or she will come out ahead in the long run.<\/p>\n

\tIf Ginther thought she found such situations in Texas scratch-offs with gigantic prizes, her wild buying becomes more understandable.<\/p>\n

\tIt\u2019s not clear she did, however. In $140,000,000 Extreme Payout, for instance, the payoff side fell well short of her discounted cost.<\/p>\n

\tBut that\u2019s not the final answer. Scratch-off players can do better than the published odds.<\/p>\n

\tFactor 6: Info = better odds<\/strong><\/p>\n

\tCasinos don\u2019t tell blackjack players how many face cards and aces are left.<\/p>\n

\tYet lottery websites in many states tell scratch-off players how many top prizes are left.<\/p>\n

\tIn January 2006, Texas became one of the first states to do so, a few months before Ginther won her first top scratch-off prize. And Nettles\u2019 Lotto Report, a newsletter for Texas players, had already been providing that information for years.<\/p>\n

\tSuch information is a huge edge.<\/p>\n

\tIt lets players exploit a simple process of elimination \u2013 other players scratching tons of tickets without finding a winner.<\/p>\n

\tWatch how quickly longshots can get shorter.<\/p>\n

\tWhen $140,000,000 Extreme Payout began in 2009, three top prizes of $10 million were scattered among 3.6 million tickets.<\/p>\n

\tApparent odds of winning a top prize: 1 in 1.2 million.<\/p>\n

\tIn June 2010, when Ginther won $10 million, it was one of two top prizes still left, even though more than half of the tickets were sold.<\/p>\n

\tApparent odds: 1 in 800,000.<\/strong><\/p>\n

\tActually, the odds were better than that. Scratch-off prizes are not randomly distributed. Lotteries use a system of \u201cpools\u201d to create a fairly even distribution of prizes, as described in Indiana and Massachusetts reports.<\/p>\n

\t\u201cMost lotteries want prizes to be evenly spread throughout the game and not back-to-back, and our job is to securely and as randomly as possible accomplish this for the lotteries,\u201d said Joe Bennett, vice president of game development for Scientific Games, which prints scratch-offs for every state lottery but Michigan\u2019s.<\/p>\n

\tStrictly speaking, \u201cevenly spread\u201d and \u201crandomly as possible\u201d are contradictory. So lotteries, in a way, divide the game into sections, then randomize each section. It\u2019s like shuffling three decks of cards separately, instead of shuffling them together.<\/p>\n

\tScratch-offs do seem to work like that, as confirmed by an analysis of data for a few dozen games with top prizes of $1 million or more.<\/p>\n

\tThe point is, the second prize was likely to show up in the middle \u201cdeck\u201d of 1.2 million scratch cards. But only about 400,000 tickets were left in that group. <\/p>\n

\tApparent odds: 1 in 400,000.<\/strong><\/p>\n

\tThis improvement means Ginther\u2019s play was actually a logical gamble at times, though at other times that clearly wasn\u2019t the case.<\/p>\n

\tMaybe after she won big, she felt free to take more chances \u2013 knowing she was going to lose a lot of winnings anyway to Uncle Sam.<\/p>\n

\tFactor 6: Sustained strategy = better odds?<\/p>\n

\tThere are still more key ways Ginther could have bettered her odds.<\/p>\n

\tA player might try getting a retailer to hold tickets as long as possible. As sales continue, and the winner isn\u2019t found, the more likely it\u2019s in that stack. Records show, however, that Ginther didn\u2019t try that trick with $140,000,000 Extreme Payout. The top-prize ticket arrived a week before she claimed it.<\/p>\n

\tGinther could also have bet more heavily as the odds improved, and sometimes she clearly did.<\/p>\n

\tPerhaps most important of all, she might have justified her commitment to buy and buy on the fact that odds can steadily improve.<\/p>\n

\tSay a game will become a rational bet with 400,000 tickets left. Why not buy earlier, reasoning that the slightly longer odds will be balanced by even better ones later?<\/p>\n

\tWhether such a strategy is sound is complex, according to mathematician Skip Garibaldi, who holds positions at Emory University and UCLA.<\/p>\n

\t\u201cExpected value in this sense is additive,\u201d he said. \u201c\u2026 The formulas say she would improve her expected value if she bought more.\u201d<\/p>\n

\tAssessing her strategy<\/p>\n

\tWe still can\u2019t say the mystery\u2019s solved.<\/p>\n

\tAlthough buying a ton of tickets would have improved her odds dramatically, winning millions was never guaranteed.<\/p>\n

\tEven with 104,000 tickets, while the odds of hitting a single top prize were better than 1 in 10, the chances of her winning three top scratch-off prizes was about 1 in 1,300 — and that\u2019s assuming her average odds were at least double the published values, according to a lottery industry analyst.<\/p>\n

\tShe could easily have been a major loser, and probably was in 2011 and 2012, while failing to find instant millions in a game called Ultimate Casino Jackpot.<\/p>\n

\tSo, until Ginther shares her secrets, people will continue to wonder.<\/p>\n

\tWas it all persistence and luck — or did she have some secret edge?<\/p>\n

\t\u201cWe’re having a lot of trouble coming up with a plausible explanation for how Ginther wins,\u201d said James Harvey, co-organizer of the MIT group that mined Massachusetts\u2019 CashWinfall.<\/p>\n

\t\u201cEven with her odds of winning the big prize being doubled, I’m still skeptical that she was simply lucky and that her ability to win the big prizes was due simply to playing way more than anyone ever realized,\u201d said Mohan Srivastava, the Toronto statistician who \u201ccracked the scratch lottery code.\u201d<\/p>\n

\tThen again, maybe luck has its own logic. Winning early gave her the confidence — and cash — to keep playing long enough to keep getting lucky and make headlines around the world.<\/p>\n

\tShe could resolve the mystery by cashing in again — by telling all in a book or selling her story to Hollywood.<\/p>\n

\n\tRead more at http:\/\/www.philly.com\/philly\/news\/natio … qPQrMCm.99<\/a><\/p>\n

\n

Replies:<\/h3>\n
\n

Posted by:<\/strong> getagrip on July 3, 2014, 3:43 pm<\/p>\n

Loved this one and found it very interesting but I still won’t be buying any scratch tickets in the near future!<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Basic gambling principles go a long way toward explaining why Joan Ginther bet enormous sums on high-priced scratch-off games. Read more at Peter Mucha, Philly.com Joan Ginther wasn\u2019t necessarily lottery loco. Maybe it wasn\u2019t a case of dumb luck, but…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-7614","post","type-post","status-publish","format-standard","hentry","category-other-games"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7614","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=7614"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/7614\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=7614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=7614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=7614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}