Retired Michigan couple reveal how they won $26m by using ‘basic arithmetic’ to ‘crack the code’ of state lotteries

By using simple arithmetic, a retired couple in Michigan say they “cracked the code” on state lotteries and won over $26m. Now, Hollywood is looking to tell their story.

In the last six years, Jerry and Marge Selbee say they have made millions by winning state lottery games, and have taught others how to beat the system.

Mr Selbee, who earned a mathematics degree from Western Michigan University, was perusing a brochure for a new lottery called Winfall when – within minutes – he discovered a way to beat the lottery: “the roll down”.

A roll down is a special rule in some lottery games that have a limit on the jackpot amount or on the number of rollovers allowed. In a roll down game, if the jackpot or rollovers limit is reached one of the following things happen: The cash that could have made the jackpot bigger is allocated to the next tier of prizes, or if no one won the grand prize, the entire jackpot is given to the next tier. In other words, the roll-down rule would give the second-prize – and perhaps even third prize – winners a lot of money.

In the WinFall lottery, Mr Selbee discovered if nobody won the $5m jackpot, the money would be awarded to people who matched, five, four, or three of the winning numbers. Since lottery bosses often announce when the jackpot limit is reached, Mr Selbee would buy thousands of tickets to ensure he would get several tickets with five, four, and three matches.

In an interview with CBS’s 60 Minutes, Mr Selbee explained if he were in a scenario where he played $1,100 worth of tickets, he’d have about one ticket with four numbers matched, and that’d guarantee him a $1,000 return. He would also have about 18 or 19 tickets with three numbers matched, and each ticket would have about a $50 winning, creating an additional $1,900 return.

The first time he tried to crack the code Mr Selbee bought $3,600 in Winfall tickets and won about $6,300, doubling his money. For the next roll-down game, Mr Selbee put down $8,000 and won double in award winnings again.

After telling his wife about the lottery loophole, the couple began playing the games for hundreds of thousands of dollars. For about seven times a year, the Selbees would spend around 10 hours a day for 10 days straight to look over and organise their lottery tickets, often putting down over $600,000 per play.

The couple kept all their losing tickets, which is estimated to have cost around $18m, in 65 buckets in their barn.

When the Michigan lottery game shutdown due to “lack of sales,” the Selbees started to pick up on a Massachusetts lottery.

Mr Selbee, who once worked at a Kellogg’s plant to design boxes to increase shelf life for freeze-dried products, used his lottery winnings to set up a corporation called GS Investment Strategies where he invited relatives and friends to buy shares for $500 each.

The corporation, comprised of 25 members, monopolised the Cash WinFall lottery game during “rolldown weeks,” which often had prizes increase by five to 10 times the original jackpot amount.

In 2011, the Boston Globe received a tip about Cash Winfall tickets being sold at an enormous volume. In their reporting, the newspaper discovered that Mr Selbee’s group and a handful of MIT math students were dominating the state lottery game. Over a seven-year-period, the MIT group bet between $17m to $18m and profited at least $3.5m.

In light of the Boston Globe report, the Massachusetts state treasurer shut down the lottery game due to suspicions of the players rigging the game, and launched an investigation.

The investigation found that high-volume betting did not affect the odds of winning the lottery.

GS Investment Strategies, Mr Selbee’s corporation, earned about $26m from the games, and the married duo profited approximately $8m before taxes from playing.

Mr Selbee told CBS he didn’t find their ability to win the lottery game “remarkable,” but is rather just the satisfying result of using simple math.

“It is actually just basic arithmetic,” Mr Selbee said. “It gave you the satisfaction of being successful at something that was worthwhile to not only us personally but to our friends and our family. The only thing I found really remarkable is nobody else really seemed to grasp it.”

But that didn’t deter Hollywood producers from being amazed by their story, who bought the rights to the Selbees story to make a film about their lives.

The Michigan couple used the money profited from the lottery games to renovate their homes, and financially assist their six children, and to pay the education for their 14 grandchildren and 10 great-grandchildren.