Many problems with trying to buy every ticket. Here is the article about the Australian group that did it.
Group Invests $5 Million To Hedge Bets in Lottery
Published: February 25, 1992
There is a dream common among regular lottery players: to wait until the jackpot reaches an astronomical sum and then to buy every possible number, guaranteeing a winner.
Sure, it would cost millions of dollars. But the payoff would be much richer.
In Virginia this month, one investment group came tantalizingly close to cornering the market on all possible combinations of six numbers from 1 to 44. State lottery officials say that the group bought tickets for 5 million of a possible 7 million combinations, at $1 each, in a lottery with a $27 million jackpot. Only a lack of time prevented the group from buying tickets for the remaining 2 million combinations.
While no one has come forward with the one winning ticket in the Feb. 15 lottery, several clues point to the investment group, an Australian syndicate, as the winner. If that is so, the numbers 8, 11, 13, 15, 19 and 20 will yield a prize of $1.3 million a year for 20 years to the group.
Banking officials here say the money for the bulk purchase of Feb. 15 lottery tickets came from Australia. An Australian regulatory official also said a syndicate there had notified its investors that it had won an overseas jackpot. The winner has six months to claim the prize.
Virginia officials are worried enough about a repeat performance that they met today to debate a proposal that would block bulk sales of lottery tickets.
The governing board of the Virginia lottery held a public hearing today and received some criticism. Hans Smetona, a 22-year-old pizza deliveryman here, said, “No one wants to be in line behind anyone who’s there for three or four days.”
After the hearing, the lottery board adopted a recommendation to Gov. L. Douglas Wilder that sales agents be required to take orders from people in line before filling orders from absentee buyers. As a reason for the recommendation, officials cited the example of a store that put an out-of-order sign on its lottery terminal as an employee printed hundreds of tickets for the investors in the Feb. 15 lottery.
Executives of two retail chains that sold tickets in the Feb. 15 lottery to bulk purchasers said representatives of the investment group had visited them in the fall to discuss the logistics of a large lottery purchase. A. C. Miller, president of the Miller Oil Company, which owns one retail chain that sold $600,000 in tickets, the Miller Mart convenience stores, identified one representative as Anithalee Alex Jr. of Teutopolis, Ill.
Mr. Alex’s telephone number there is unlisted. Art L. Kinkelaar, the Sheriff of Effingham C ounty, which includes Teutopolis, said he had no information about Mr. Alex, but added that the day before the drawing he received an inquiry about Mr. Alex’s background from Virginia officials.
The bulk sales of lottery tickets began after Feb. 12 when the Virginia jackpot appeared headed for a record level. The state lottery director said agency computers showed a huge increase in sales beginning the next morning.
The players had until 11:15 P.M. on Feb. 15, five minutes before the drawing, to buy tickets. The lottery director said at least one store was still selling tickets at a brisk pace, 2,400 an hour, at the last minute. Even so, the group seems to have been caught without slips for two million possible combinations. 1 Ticket in 5 Million
“For someone to try to do this ticket-by-ticket is a very chancy proposition,” said Michael E. Julian, chairman of Farm Fresh supermarkets, the second retailer, which got a $3 million order. “That’s what lotto’s all about.”
The lucky ticket, which sold for $1 and is worth $27 million, was issued at a Farm Fresh that sold part of the huge batch bought from the chain.
“Watching them try to find the one winning ticket would be quite a sight,” said Kenneth W. Thorson, the state lottery director.
In Virginia’s six-number lottery, players pick six numbers from 1 to 44. The winning combination is determined by a machine.
Lottery officials speculate that the investors may have chosen Virginia for two reasons. The state had the biggest jackpot in the country that weekend. And the seven million entries required to cover all the combinations in a 44-number lottery is just half the number needed in a 49-number lottery, like Florida’s. California has 51 numbers and New York has 54. Improving the Odds
William S. Bergman, executive director of the North American Association of State and Provincial Lotteries, said that 24 of the nation’s 34 six-number lotteries have longer odds than those for Virginia’s game.
In the Virginia game, there are 7,059,052 possible combinations of numbers. So someone who buys one ticket has odds of 1 in slightly more than 7 million. Having more tickets increases the odds of winning, so that 1 million tickets have odds of 1 in 7. Since each ticket costs $1 it would cost $7,059,052 to cover every combination. Anyone who did that would receive at least a share in the jackpot and many of the second, third and fourth place prizes, that together were worth more than $900,000 on Feb. 15.
The biggest danger to a huge lottery investor would be having to split the prize with other winners who had picked the same numbers. Mr. Thorson said some popular combinations have as many as 1,000 ticket holders.
Jackpots are paid out in 20 equal yearly installments. Winning the jackpot payment of $1.35 million a year for that period is equal to receiving a rate of return of about 16 percent on a $7 million investment. The second, third and fourth place prizes would increase that rate somewhat, as well as increasing the amount received in the first year. Biggest Known Purchase
Lottery experts and gaming administrators said that this was the largest-scale effort to buy tickets they knew of in the United States.
The previous record may have been held by a computer engineer who bought 80,000 tickets in October from a Jacksonville, Fla., bar called Smitty’s Place. The bar owner said the man made a profit but did not win the $94 million jackpot. People in Jacksonville still call him “The Phantom.”
In 1990, a retiree walked into a Sacramento, Calif., hardware store with a diaper bag stuffed with $20 bills. Employees spent all night printing out her 30,000 tickets for what was then a record state jackpot of $69 million.
“Since the notoriety of having the world’s largest losing purchase, she hasn’t come back much,” said the store’s assistant manager, James C. Cortell.
A Huge Undertaking
In Virginia, trying to buy seven million lottery tickets would be a huge undertaking, even though outlets are allowed to be open 19 hours a day. Each game slip has room to select five combinations, so the first step would require filling out 1.4 million slips. Mr. Thorson, the state lottery director, said that he saw photocopies of several of the group’s slips and that they appeared to have been filled out by hand.
The group used as many as eight chains of grocery and convenience stores, with a total of 125 outlets, in the Norfolk and Richmond areas, Mr. Thorson said. He said his agency notified state and Federal tax and law-enforcement officials about the unusual purchases. No apparant violations occurred, the officials said.
One chain, Farm Fresh, said it had sold 2.4 million tickets to a man who apparently managed the purchase for the group. The man went to the grocery chain’s headquarters with cashier’s checks for hundreds of thousands of dollars. The chain sent couriers to 40 stores to pick up the tickets. As identification, the messengers used the man’s business card, with a code word added. The company’s commission was $120,000, even though it returned $600,000 for tickets it did not have time to print.
Samuel W. Valenza Jr., the publisher of Lottery Player’s Magazine in Cherry Hill, N.J., said Virginia officials should not have allowed retailers to help in the bulk purchases.
“It may not be against the rules, but it’s not fair,” Mr. Valenza said. “It’s not the intent of the game to play against a player who has purchased all the tickets.”
At its meeting today the governing board of the Virginia lottery discussed limiting block purchases. A lottery spokeswoman, Paula I. Otto, said the agency had received about six complaints from customers of stores involved in the block buying.
In the next 10 days the board plans to consider a proposal to limit a player to buying 100 lotto tickets when others are waiting in line. Another measure would limit a store to selling 50,000 tickets to a single customer for a drawing and a chain to selling 250,000 tickets. To enforce these measures if they are adopted, the board said it could turn off a store’s terminals.
George W. Grayson, a Democrat who is a member of the House of Delegates, the state’s legislature, said he might introduce a bill in the Legislature to require buyers of 10,000 or more tickets to identify themselves.
“These are hardly casual players and we want to make certain that tainted moneys aren’t funneled into the Virginia lottery,” said Dr. Grayson, who is a government professor at the College of William and Mary.
Mr. Bergman of the lottery association said that if restrictions were adopted, they would be the first in the country.
Lottery managers in several states said they had successfully discouraged players who asked about buying blocks of lottery tickets.
“It’s not like we have a button on our computers that says, ‘One of everything,’ ” said Betsy A. Bishop of the Vermont Lottery Commission.
A dozen lottery administrators said that buying masses of lottery tickers was a risky investment.
“A lottery’s a good deal for a dollar,” said Joanne B. McNabb of the California Lottery. “You can do something better with a million.
“All you have to do is share it with two people and it becomes a questionable investment,” he said. “Share it with three and you’ve lost money.”
An official familiar with the transaction said that Australians had wired $7 million to a Virginia bank, which then issued cashier’s checks to buy the lottery tickets. An Australian regulatory official said today that a Melbourne-based syndicate had raised millions of dollars for investment in overseas lotteries. Timothy G. Phillipps of the Australian Securities Commission said that five days after the Virginia drawing, the syndicate sent its 2,500 investors this message: “Last weekend, one of our target lotteries did jackpot to our required level. We entered and won.”
Mr. Phillipps said a prospectus for the goup had few details about expected returns beyond saying that a substantial cash return was expected and the investment would be in lotteries. “A lot them don’t want to know a lot more than that,” he said.