Well I think the point is that it's not a sustainable system. If everybody were exploiting this loophole, it wouldn't be effective as a loophole anymore, meaning that people would stop buying tickets.

Of course, not everybody can exploit the loophole, only people with at least $100k to invest in the endeavor. So this means that the government is giving an unfair advantage, in a game that is supposed to be random chance, to the wealthy. As soon as those who can't take advantage of the lottery figure this out, they stop playing. This means the loophole stops being effective and the rich drop out too.

From what I understand about the system, the article is incorrect. You don't NEED to invest $100k to get a return. Investing $1,000, for instance, will also have the same probability of providing you proportionately equivalent return.

Spending lesser amounts means a higher volatility of returns. The expected return on a $1000 bet might be the same, but your chances of actually equalling (or bettering) that ROI are much lower than if you bet $100k, especially if the the prize money is concentrated at the top end.

The Boston Globe article implies that the MIT syndicates bought so many tickets they actually affected the distribution of the prizes in their favour http://www.boston.com/news/local/massachusetts/articles/2012...

Not to mention that having even just $1000 of free cash to "invest" in a positive sum gamble already puts you in a higher income/wealth bracket than most lotteries' most loyal players.

Actually, I think this issue was brought up in the book "How Not to be Wrong" by Jordan Ellenberg, and the MIT students eliminated risk by taking advantage of a Steiner system. So I suppose it favors the intelligent, not necessarily the rich.

Well there must be some minimum, otherwise we would have seen everybody who played on the right day win, right?

The sort of people who stop playing the lottery because the odds are bad were never playing the lottery in the first place.

lotteries primarily unfairly advantage the numerate.

The problem is the same as that for insider trading on the stock market: it undercuts trust in the market causing a drop in the number of participants which leads to less liquidity and a less efficient market.

Anyone who knew there was a way to garner the profits from the lottery, but didn't know the way, would be a fool to play.

> The problem is the same as that for insider trading on the stock market:

Nope, not at all. These people are playing by the rules. The lottery officials are aware of their play; and yet don't consider it illegal. There is nothing wrong with using your superior skillset legally to make some money.

The question was why should the lottery have a problem with that, not what the law is. If you design a game--whether it's a lottery or a market--that allows some an advantage others don't have or reasonably expect to get, then that's a bad design.

It's a lottery. The masses aren't playing it because they think it's equitable, the masses are playing it because they lack critical thinking skills.

As long as people think they can get rich quick, it's a good design.

IMO it's not the students that are in the wrong, it's the officials. The fact that they knew about this loophole and didn't nothing to close it is tantamount to bribery if you ask me.

Isn't this the same argument that gets you thrown out of casinos for counting cards?

If the game has a bug that only a few players know about, it isn't fair, by definition.

But a casino does not consider counting cards legal. Hence the boot.

Consider, for example, one of those "how many marbles are in this jar?" games. If I use my knowledge of math and physics to derive a pretty accurate estimate, it's not wrong, is it?

Your odds are stated on the back of the card; if you're playing at all, you are already a fool (or don't care)

Or you're too poor to envision any other way to get rich and the lottery is the one way you can fantasize. In my case, I play with my 4 best friends, mostly because it's fun and a way for us to get together on something (we all live in different cities now). It's a tiny amount of money very well spent for me.

I'm guessing, if the MIT group could reliably beat the game, that the odds were not stated on the back of the card.

The card doesn't state the odds for that particular card conditional on the date of its purchase; it is presumably an average across all card purchases.

Gamblers tend to believe they have "a system" of one kind or another, often based on misunderstandings of probability. I'm sure there's a proportion of the market who'd see this as evidence that "systems can really work" and be encouraged to play even more.

Then again, lottery organizers are known to give out more winnings to show people that You Can Win Too! The problem only happens when the public finds out that one person is consistently receiving the proceeds, and they feel that it's somehow unfair. But it's not really, since they're paying a much larger amount to buy all these tickets, not to mention the cost of processing the winnings, filling out tax forms, etc.

I don't assume that, just as I don't assume it with the stock market. The problem does not really lie with the actual unfairness of the game, it lies with the perception of unfairness. The stock market is always entirely unfair to retail investors, in comparison to professionals, for several reasons. But in times that retail investors view the market as unfair, the market suffers.