Jerry Selbee, a now-retired mathematician, made millions of dollars by discovering and exploiting flaws in lottery games in the United States. Selbee and his wife Marge formed businesses that allowed them to purchase large quantities of lottery tickets and win prizes through sheer mathematics rather than luck.
Selbee’s Early Life and Education
Jerry Selbee was born in 1949 and grew up in Evart, Michigan. He studied mathematics at Western Michigan University, graduating in 1971. Even as a student, Selbee had an interest in statistics and probability problems.
After college, Selbee worked as a math teacher at Evart High School. He taught algebra, geometry, and trigonometry. Outside of work, he enjoyed solving math puzzles and brain teasers in his spare time.
Discovery of a Flaw in the Winfall Lottery
In 2003, Selbee discovered a statistical quirk in the Winfall lottery game run by the Michigan state lottery. He realized that under certain conditions, the game was profitable to play. Selbee determined that buying large volumes of Winfall tickets when the jackpot exceeded $5 million gave him an edge.
Here’s how the flaw worked: Winfall tickets cost $1 each. Of the $1, 50 cents entered the prize pool. Of that 50 cents, 35 cents was allocated to the jackpot. The remaining 15 cents went into lower-tier prizes. When the jackpot exceeded $5 million, this meant more money than usual was going to the lower-tier prizes rather than the jackpot.
This quirk gave Selbee an advantage. When he bought tens of thousands of tickets at once, he stood a good chance of amassing many lower-tier prize-winning tickets. Even though the $1 tickets cost him more than the value of those prizes, the collective winnings reliably put him in the black when played at a large enough volume.
Selbee’s Preparations
Once Selbee identified the opportunity, he began preparing to play at the necessary scale. He recruited family members to help purchase large volumes of tickets when the Winfall jackpot exceeded $5 million. He formed a corporation, GS Investment Strategies, to facilitate the workflow.
Selbee also needed a lot of cash to fund buying tickets in bulk. He and his wife liquidated their retirement accounts and borrowed money against the equity in their home. At first, Selbee started slow, spending about $3,600 on tickets. But before long, he was spending up to $300,000 on a single Winfall drawing.
Peak Earnings
For a period of time in 2005 and 2006, Selbee’s group ramped up their efforts considerably:
- In May 2005, they spent $521,745 on Winfall tickets across 3,165 stores.
- In November 2005, they spent $720,446 on tickets across 5,000 stores.
- In March 2006, they bought $1.1 million in tickets from nearly 7,000 stores.
Playing at this volume allowed Selbee to net $826,000 in profit in just 3 months across 2005 and 2006. During this peak period, Selbee was spending over $1 million per month on lottery tickets and making a 25-30% return on that investment.
Cumulative Earnings
Precise records of how much money Jerry Selbee ultimately earned gaming state lottery systems do not exist. However, we can piece together estimates based on available information:
- Selbee exploited the Winfall lottery between 2003 and 2012. He was spending significant sums on tickets by 2005.
- At times he was spending over $1 million per month on tickets and netting returns of 25-30% on that spend.
- Assuming average monthly expenditures of $500,000 over an 8 year period, Selbee would have invested around $48 million in tickets.
- At conservative return rates of 20%, this would imply total profits in the range of $9.6 million.
In addition to playing the Winfall game, Selbee also exploited lotteries in other states including Colorado. Factoring in earnings outside of Michigan likely puts his cumulative profits in the $10-20 million range, with some estimates as high as $26 million.
Assumptions in Estimates
To arrive at these earnings estimates, we made several assumptions:
- Selbee played heavily from 2005-2012 based on available reports.
- His average monthly ticket expenditure was $500,000 during this period.
- His average return on investment was 20%. Returns could have been higher or lower.
- The bulk of his earnings came from the Michigan Winfall game.
If Selbee’s active period, monthly spending, or ROI differed significantly from these assumptions, the profit totals would change as well. The estimates also exclude earnings from other state lotteries.
Selbee’s Lottery Play Style
Jerry Selbee’s approach to playing the lottery relied on patience, discipline, organization, and teamwork. Here are some of the notable aspects of how he operated:
- Patience – He waited for opportune conditions (e.g. large jackpots) before heavy play.
- Discipline – He maintained this patient approach for years, sticking to the system he knew mathematically worked.
- Organization – Meticulous planning was required to coordinate ticket purchases across thousands of stores.
- Teamwork – Selbee relied on an extended team of family and friends to buy tickets in stores across the state.
- Math-based – His edge came from mathematical analysis, not luck or guesswork.
This systematic style allowed Selbee to run a massively scaled “business” playing lottery games in a profitable way over an extended period of time.
Patience and Discipline
Selbee demonstrates remarkable patience and discipline throughout the story. He did not impulsively rush out and mass purchase tickets. Instead, he waited for jackpots to rise sufficiently to create better odds. And he stuck to this approach for almost a decade, slowly extracting steady profits from the flawed lottery system.
Organization
Buying hundreds of thousands of lottery tickets across thousands of stores required masterful organization. Selbee planned where to distribute ticket purchases to avoid detection. He coordinated with convenience store owners to ensure they had sufficient ticket inventory. There were also logistics around collecting winning tickets from all those locations.
Teamwork
Selbee relied on an entire team of family members and friends to execute his system. He formed a corporation that allowed them all to contribute funds and share in the winnings. Dozens of people fanned out across the state on carefully planned routes to efficiently purchase lottery tickets from as many venues as possible.
How Selbee’s System Was Disrupted
Eventually, Selbee’s lottery winning system came to an end. Here is a summary of how it unraveled:
- Lottery officials began noticing Selbee’s win patterns as early as 2005.
- They instituted new rules limiting how many tickets could be activated in bulk.
- This disrupted Selbee’s volume requirements for his edge.
- Officials also shortened the amount of time a jackpot had to roll over, reducing the odds advantage.
- The addition of a raffle game also reduced the favorability of the game.
- By late 2011, the game was no longer worth playing for Selbee.
While Selbee was disappointed when the loopholes were closed, he maintained a positive attitude. He recognized that flaws exploited for that long were unusual. When the Winfall game finally ended, Selbee congratulated lottery officials for eventually identifying and fixing the weaknesses.
Notable Dates
Here is a timeline of key events in Selbee’s Winfall lottery system:
- 2003 – Selbee spots statistical flaws in the Winfall game
- 2005 – Lottery officials first notice irregularities
- 2006 – New bulk ticket rules start hampering Selbee
- 2011 – Declining profits make the system unviable
- 2012 – The Winfall lottery game ends in Michigan
So while Selbee enjoyed a nice run for almost a decade, the window eventually closed as the lottery adapted to plug the weaknesses he had identified.
Adaptations by Lottery Officials
Here are some of the notable changes Michigan lottery officials instituted over time tocounteract Selbee’s system:
- Restricted bulk activation of tickets – limited how many tickets could be activated at once
- Reduced rollover thresholds – caused jackpots to increment faster
- Introduced raffle game – diverted more money from prize pool
- accelerated raffle drawings – reduced time at favorable jackpot levels
Each change ate into Selbee’s edge in some way. Eventually it simply became unprofitable for him to continue playing at the scale required.
Other Lottery Games Selbee Targeted
In addition to the Winfall game in Michigan, Jerry Selbee also exploited lottery games in other states. Here are some of the other games and locations:
- Colorado – Selbee spotted flaws in Colorado state games that he played from 2010-2011.
- Massachusetts – Selbee’s analysis detected similar statistical quirks in the Massachusetts Cash WinFall game. He played this game heavily in 2010 and 2011.
- Georgia – Selbee’s group reviewed the Georgia Fantasy 5 game but ultimately decided not to play it.
- Oklahoma – Selbee invested time studying the Oklahoma Hot Lotto but did not pursue playing it either.
The two main games Selbee is known to have profited from outside of Michigan were in Colorado and Massachusetts. Overall these games accounted for significantly smaller profits than Winfall did, but still represented nice additional income during that period.
Colorado Lottery Games
In Colorado, Selbee spotted similar statistical quirks in some games that could be profitable under the right conditions. As in Michigan, he waited patiently for those ideal circumstances before making large wagers. Selbee played Colorado games heavily in 2010 and 2011 before the weaknesses were corrected.
Massachusetts Cash WinFall Game
Selbee determined that the Massachusetts Cash WinFall game also could be beaten when jackpots exceeded roughly $2 million. He began playing heavily in 2010, once again waiting patiently for the right conditions. As in Michigan, the Massachusetts lottery eventually changed the game’s rules to eliminate Selbee’s advantage.
Selbee’s Motivations and Personality
Jerry Selbee is clearly a master of statistics and probabilities. But he also seems motivated by enjoyments in using math to solve problems and outwit systems. Here are some of the key factors that drove him:
- Intellectual challenge – Selbee enjoyed the thrill of cracking puzzles and games using math.
- Beating the system – Outsmarting the lottery appealed given the overall negative odds.
- Math enthusiast – Numbers, stats, and probabilities were longtime interests and hobbies.
- Not motivated by riches – Selbee didn’t spend lavishly or flaunt his wealth.
Overall, Selbee comes across as an unassuming, polite, gray-haired math geek. Not a flashy high roller motivated by greed or ego.
Intellectual Challenge
The intellectual challenge of identifying flaws and quirks seem to be one of Selbee’s primary motivations. He enjoys hunting for statistical edges others miss. Even after retiring from playing lotteries, he continues deriving satisfaction from poking holes in dice games, raffle systems, and other probability scenarios.
Beating the System
The ability to beat a system stacked overwhelmingly against the player also likely drove Selbee. Given the lottery’s notoriously bad odds, outsmarting them through sheer math must have provided immense satisfaction.
Math Enthusiast
Selbee is clearly a lifelong math enthusiast. Numbers, stats, and probabilities are both his passion and profession. The excitement of applying mathematical analysis and formulas to real-world systems is a central part of who Selbee is.
Not Motivated by Riches
While Selbee earned millions, he maintained a middle-class lifestyle. He continued living in the same modest home rather than buying mansions or yachts. This suggests Selbee was intrinsically driven by the challenge and gratification of outsmarting the lottery rather than a desire to accumulate extreme wealth.
Selbee’s Post-Lottery Life
After retiring from gaming lottery systems, Jerry Selbee maintained a quiet small-town lifestyle. He also continued applying his math skills in recreational ways. Here are some details on Selbee’s life after his lottery exploits ended:
- Remained in the same modest home in Evart, Michigan
- Frequently visited the local coffee shop to chat with friends
- Stayed active in recreational math as a hobby, e.g. reverse engineering dice games
- Excelled at golf, including scoring multiple hole-in-ones over the years
- Donated some lottery profits to local charities in Evart
Even with millions earned from lotteries, Selbee chose not to dramatically change his lifestyle. He enjoys simplicity and has no interest in flashy spending, mansions, exotic cars, etc. Staying grounded in his small hometown and continuing his love of math studies seems to provide happiness.
Stayed in His Small Hometown
Despite easily having the means to relocate to luxury residences anywhere, Selbee opted to remain in the same modest 1,200 square foot home he bought in Evart, Michigan in 1974 for $18,000. He expressed contentment with small town life.
Coffee Shop Banter
Selbee frequently chats with friends at the local Evart coffee shop and bakery. He enjoys low-key conversations about sports, politics, and news events. Selbee remains known for his number skills and is informally consulted on probability scenarios.
Continued Recreational Math
Even after retiring from lottery exploitation, Selbee maintains math and probabilities as a hobby. Friends describe him continuing to reverse engineer dice games, raffles, and other systems that involve an element of chance.
Avid Golfer
Selbee is an avid golfer, regularly playing at courses in northern Michigan. His skills allowed him to achieve the rare feat of multiple lifetime holes-in-one.
Local Charity Donations
Selbee directed some of his lottery earnings to Evart-area charities including the Reed City Crossroads Charter Academy. He seems to take pleasure in giving back quietly to his local community.
Conclusion
In the end, Jerry Selbee successfully exploited flaws in state lottery systems to earn an estimated $10-20 million in profits. This was achieved over almost a decade of disciplined play. Selbee demonstrated skill in mathematical analysis to identify profitable quirks in the games. He also showed determination in playing systems over many years in exactly the method needed to extract steady profits. Even when the lottery adapted rules to eliminate his edges, Selbee spoke positively about officials identifying those statistical weaknesses. In his retirement, Selbee maintained his small town lifestyle and enthusiasm for recreational math puzzles and games.
