Massachusetts lottery officials knew that a small group of gambling companies were exploiting a quirk in one of its games to rake in tens of millions of dollars, but did nothing to stop it. Instead, they stretched lottery rules to allow the scheme to work, because it meant more ticket sales for the lottery itself. The result was big jackpots for people in the know, blockbuster profits for the lottery — and a significant breach of trust with the general public. The saga began long before State Treasurer Steven Grossman took office in 2011, but extended onto his watch. He stopped the game and apologized only after the Globe uncovered the scheme; now he has to make sure the lottery has the talent and resources to make sure such a breach never happens again.
For seven years, a handful of math and probability whizzes have known that the rules for Cash WinFall created a scenario that almost guaranteed gamblers would win during a limited number of days every few months. The key to winning, however, was buying up hundreds of thousands of tickets on those particular days. In several instances, gamblers would tie up individual stores’ ticket dispensers for days, a clear violation of the rules.
The lottery’s finance department started noticing irregular ticket sales as early as 2005. But officials continued to approve the sales, even installing second Cash WinFall machines at two stores that allowed the gamblers to process more bets faster. “The record is clear that the Lottery had been aware of but had not disapproved of these vendors’ actions for many years as the money had come rolling in,” stated Inspector General Gregory W. Sullivan in his report on the matter. As a result, the state was sponsoring a game that funneled much of its prize money to a few skilled gamblers, paid for by tickets bought by other people who had no way of knowing their true odds.
Grossman should resist the temptation to conclude that, because state officials did not personally make money off of the scheme, no action should be taken against them. The officials’ responsibility wasn’t just to avoid scamming the public themselves; it was to stop others from gaming the system. In this case, the scammers were highly skilled mathematicians, and the lottery didn’t have the human resources to match, either by skill or integrity. It can’t be allowed to happen again.