Australia Cracks 1992 US Lottery
15 February 1992, the lottery in Virginia, USA, stood at $27 million. Many hopefuls bought their tickets, but little did they know that an Australian syndicate was to outwit them all.
Stefan Mandel was a Romanian economist and somewhat of a maths genius. In 1964 he won his first lottery via a complex math formula which had taken him several years to work out. He then escaped communist Romania and ended up in Israel where he spent several more years watching the lottery and learning as much as he could. Eventually he entered again and won, this time moving on to Australia, which is where our story really begins.
Once in Melbourne, Australia, Mandel continued to outsmart the lottery game using his mathematical formula. He came across an international betting syndicate which enabled him to raise enough money from it’s investors to buy out large blocks of lottery tickets. He kept an eye on international lotteries, looking out for those with jackpots that were more than three times the cost of buying all the combinations. In 1992 he came across the Virginia lottery with a rolled over jackpot of $27 million.
By this stage he had 13 lottery wins under his belt and knew that the Virginia lottery was a safe bet for two reasons – the jackpot was high enough to ensure it was a good investment that would make highly profitable returns, and the fact that the Virginia lottery was a 6 number lottery with numbers from 1 – 44 making it far easier to cover all combinations than other states such as Florida with a 49 number lotto or New York with a 54 number lotto. Mandel worked out that that there were 7 059 052 possible combinations and, at $1 a ticket, knew that buying all the combinations would cost a fraction of the total jackpot.
Stefan Mandel gathered around 2 500 investors, most from Australia, but also some from the United States, Europe and New Zealand. In total he raised around $7.5 million and started his plan to buy out 7 million tickets by wiring the money to a Virginia bank which then issued cashier’s checks.
Now, buying 7 million tickets is no small feat! Outlets could be open 19 hours a day, but each lotto card had to be manually filled out and printed off, a large task even for such a syndicate. The group used as many as eight grocery and convenient store chains with a total of 125 outlets in the Norfolk and Richmond areas. As they began buying up large blocks of lottery tickets, the state and federal tax and law enforcement officials were notified but investigation proved that no apparent violations had occurred, and much to the public’s dismay, the syndicate continued to buy out massive numbers of tickets. They bought a total of 5 million of the possible 7 million, with only time preventing them from buying the remaining 2 million combinations. As expected, the syndicate won the jackpot and several smaller prizes, raking in a net profit of $23 million.
The winning lottery ticket however came from a batch that was bought through the headquarters of Farm Fresh Inc. in Norfolk. The syndicate approached the headquarters and paid for a mass block of tickets which were then collected from surrounding stores. This made officials question its validity as regulations require that each lottery ticket be paid for at the terminal that dispenses it. After investigation, it was found that the group had not broken any laws and would be allowed to collect their winnings.
Needless to say, many complaints were raised on the unfairness of bulk buying. The public were unhappy that retailers were allowing such large-scale purchases; that the point was not to play against players who bought all the tickets creating a complete imbalance of the overall odds.
The Virginia governing board discussed limiting block purchases, allowing any one player a maximum of 100 tickets whilst others were in line. They also discussed limiting stores to selling a maximum of 50 000 tickets to any one customer, and chains to 250 000 tickets. In order to enforce this, they would turn off a store’s terminals. George W Grayson, a member of the House of Delegates, said he would introduce a bill that required buyers of 10 000 or more tickets to identify themselves, therefore deterring syndicates from repeating such a large-scale buyout. Unfortunately, the motions fell through, but the Virginia lottery did increase the number batches making it pretty much impossible to buy out all the combinations. There would not be enough time to print off all the tickets and it would probably cost more than the jackpot to buy them.
Stefan Mandel now lives on an island in the South Pacific. The Australian syndicate were the last to pull off such a large-scale buyout and Stefan Mandel had won his 14th, largest, and last lottery all at once.
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