## From Retired Couple Next Door to Lottery-Hacking Millionaires

Back in 2011, a Boston Globe article came out about how a few folks repeatedly won tens of thousands of dollars on a Massachusetts lottery ticket game due to how the jackpot rolled over if it went unclaimed long enough. Essentially, at certain times the odds showed a expected positive return for everyone, but you’d have to buy a lot of tickets to even out the chances of bad luck. (This is why folks can win in the short-term in Las Vegas casinos, but the house always wins over a large number of bets.)

Mark Kon, a professor of math and statistics at Boston University, calculated that a bettor buying even \$10,000 worth of tickets would run a significant risk of losing more than they won during the July rolldown week. But someone who invested \$100,000 in Cash WinFall tickets had a 72 percent chance of winning. Bettors like the Selbees, who spent at least \$500,000 on the game, had almost no risk of losing money, Kon said.

The Globe article basically made the bettors out to be villains, the “rich” against the “poor”. This Felix Salmon article argues that the game was fine, as technically everyone had the same odds (rich or poor) and the game actually generated a lot of money for the state. Buying that many tickets also took a lot of work:

As a result, while some people did indeed essentially treat Cash WinFall as a full-time job, it wasn’t necessarily a particularly lucrative or easy job for any given individual: it would take one couple ten hours a day, for ten days, to sort through their tickets to find the winners, the proceeds from which would then be shared among 32 consortium members. On top of that, every member of every consortium could reasonably expect to be audited by the state Department of Revenue every year. Which isn’t exactly fun.

A new HuffPost longform article takes a deeper, more personal look at the retired “couple next door” who discovered the edge and eventually made millions off of it. All that it required was “6th grade math”, according to Jerry and Marge Selbee:

The brochure listed the odds of various correct guesses. Jerry saw that you had a 1-in-54 chance to pick three out of the six numbers in a drawing, winning \$5, and a 1-in-1,500 chance to pick four numbers, winning \$100. What he now realized, doing some mental arithmetic, was that a player who waited until the roll-down stood to win more than he lost, on average, as long as no player that week picked all six numbers. With the jackpot spilling over, each winning three-number combination would put \$50 in the player’s pocket instead of \$5, and the four-number winners would pay out \$1,000 in prize money instead of \$100, and all of a sudden, the odds were in your favor. If no one won the jackpot, Jerry realized, a \$1 lottery ticket was worth more than \$1 on a roll-down week—statistically speaking.

“I just multiplied it out,” Jerry recalled, “and then I said, ‘Hell, you got a positive return here.’”

How much did they win?

By 2009 they had grossed more than \$20 million in winning tickets—a net profit of \$5 million after expenses and taxes—but their lifestyle didn’t change. Jerry and Marge remained in the same house, hosting a family gathering each Christmas as they always had. Though she could have chartered a private jet and taken everyone to Ibiza, Marge still ran the kitchen, made her famous toffee candy and washed dishes by hand. It didn’t occur to her to buy a dishwasher.

Would you have done the same thing if you knew about this edge? In my opinion, this is what makes the story fascinating. First, you have to find the inefficiency. Then you have to trust your findings enough to bet on them. You must risk your time and money upfront, throw in some ingenuity, and profit only if you are right. Then you have to bet big enough to make your winnings significant before the edge disappears (and they all eventually do). Putting all those things together is quite difficult. I’d be willing to bet some other people discovered the positive expected return, but still didn’t take the risk.

With Cash WinFall, if you had a knack for math, you could get an edge. If you were willing to spend the money, you could get an edge. If you put in the hours, you could get an edge. And was that so terrible? How was it Jerry’s fault to solve a puzzle that was right there in front of him? How was it Marge’s fault that she was willing to break her back standing at a lottery terminal, printing tickets?

## Sharonview Federal Credit Union: 64-Month CD at 4% APY

Sharonview Federal Credit Union has a limited-time certificate special on their 64-month Share Certificate at 4% APY. NCUA-insured. Found via DepositAccounts. Here are the highlights:

• Minimum new money deposit of \$500 required.
• Regular or IRA option.
• Deposit up to \$100,000 of existing funds.
• Deposit up to \$250,000 of new funds.
• Penalty for early withdrawal is 365 days dividends on the amount withdrawn. The penalty will, if necessary, be taken from the principal amount of the deposit.
• For share certificates, there is a 5 day grace period provided at maturity.
• Hard credit pull with a new membership application (according to various reports)

Membership eligibility. Their eligibility criteria is relatively open. Anyone who lives in North Carolina, South Caroline, Georgia, Tennessee, or Virginia can join if they are a member of the Carolina Consumer Council (CCC). Use promo code SFCU and the dues will even be waived. It has been noted that the CCC falls under the American Consumer Council (ACC), of which some of you may already be a member. It is not completely clear if ACC membership alone is adequate for joining the credit union.

In any case, it appears that anyone nationwide can join Sharonview FCU by joining the Hobby Farmers of America with a one-time \$20 fee.

Good deal? If you have a lot of cash that you want to park safely for 5 years, this is a top rate by a full percentage point or so. A 5-year Treasury bond currently yields about 2.6%. The hard credit pull and possible \$20 entry fee make it better for high balances to make it worth the trouble. Note that the 365-day early withdrawal penalty is relatively stiff, as for example you would have to keep it in there for at least two years just to get 2% APY. If you withdraw within the first year, you’ll actually lose money.

I think the deal is good enough to worry if this deal will last until next week. This credit union is not tiny, but it isn’t huge either. It is quite possible that there will be enough new applications to overwhelm their staff (and deposit needs). You might pony up \$20, start the application process, take the credit pull hit, and have the deal fall apart before you can fund the certificate. I’m not saying this will happen, but it is possible. (I suppose it is also possible that this is only the start of multiple places offering 4% APY CDs). Basically, if you’re interested, I would act immediately.

## CIT Bank Review: 11-Month No Penalty CD 1.85% APY

Update: 11-Month No Penalty CD now at 1.85% APY. CIT Bank (not to be confused with Citi Bank) has become one of the larger online-only banks with a multi-year history of competitive rates. They don't offer a checking account, so their products … [Read the rest]

## Best Interest Rates on Cash – March 2018

We just helped an older relative renew a 12-month CD at her local bank branch for 0.30% APY. She had no need nor desire to move it elsewhere for a higher interest rate. I suppose this partially explains the piddly rates that many traditional … [Read the rest]

## Citi ThankYou Premier Card Review – 50,000 Bonus Points

The Citi ThankYou® Premier Card has re-launched from our partner Citi, with an 50,000 point sign-up bonus (worth \$625 in airfare towards any airline) plus a waived annual fee for the first year. Here are the rest of the highlights: Earn 50,000 … [Read the rest]

## NYT Financial Tuneup Day 4: Retirement

Day 4 of the NY Times 7-Day Financial Tuneup is about retirement. (Sign up for your own personalized tune-up here.) This assumes you are eligible for a 401(k) or similar retirement plan. The key action point is bumping up your retirement … [Read the rest]

## Berkshire Hathaway 2017 Annual Letter by Warren Buffett

Berkshire Hathaway (BRK) has released its 2017 Letter to Shareholders. Instead of reading various media coverage about one aspect, I recommend reading the entire thing straight from the source. It's only 17 pages long and (as always) written in a … [Read the rest]

## H&R Block Desktop Tax Software 2017: Fed + State \$20 (Flash Sale)

Deal of the Day again 2/26/18. The benefit of "old-school" desktop tax software is that it doesn't require your Social Security Number and financial details to be stored in the cloud. Here's a limited-time deal on H&R Block Tax Software 2017 (PC/Mac … [Read the rest]

## Ikigai – Finding Your “Reason For Being”

I stumbled across the concept of ikigai in Japanese culture - loosely translated as "reason for being" - in this Medium post. The Venn diagram above appears to be taken from this Toronto Star article (which is based on another work, and so on...). … [Read the rest]

## NYT Financial Tuneup Day 3: Apply For a Better Credit Card

Day 3 of my NY Times 7-Day Financial Tuneup is called Find the Best Credit Card for You. (Sign up for your own personalized tune-up for full details.) The key again is to actually apply for a better card, not just think about it and then keep your … [Read the rest]

## NYT Financial Tuneup Day 2: Trim Your Budget

Day 2 of my NY Times 7-Day Financial Tuneup is called Trim Your Budget. The key here is to take action, not just do research and then put it off again. (If you just want to daydream, Day 1 was Optimize Your Thinking.) Again, the NYT doesn't … [Read the rest]

## Google Express: 20% Off Coupon Code (Both New and Existing Customers)

New code for existing users. Google Express has a couple of coupon codes that may be of interest: 5RTC4Q545 - \$10 credit towards your first order (i.e. \$10 off \$10). This is my referral code and I will get a \$10 credit. After joining, you … [Read the rest]