The WinFall Lottery Loophole That Paid Out $26 Million

The WinFall lottery loophole was a “rolldown” rule in a Michigan state lottery game, later copied by Massachusetts as Cash WinFall, that pushed jackpot money down to lower prize tiers whenever the top prize went unclaimed past a set threshold. During those rolldown drawings, the expected value of a ticket climbed above its purchase price, so anyone willing to buy in bulk could play with the odds tilted in their favor. A retired Michigan couple, an MIT student group, and a Boston University researcher each worked this out independently and, over roughly nine years, collectively ran about $40 million through the two games and walked away with an estimated $48 million.

What a Rolldown Actually Did

Winfall launched in Michigan in January 2003 as the replacement for an earlier game called Michigan Millions.¹ Tickets cost $1, players picked six numbers from 1 to 49, and the jackpot started at $2 million and grew each week no one matched all six. The twist sat in the rules: once the jackpot passed $5 million without a winner, the accumulated money “rolled down” to players matching five, four, three, or even two numbers.²

On a normal week, three matching numbers paid $5 and four paid $100. On a rolldown week, those same prizes jumped to roughly $50 and $1,000.² That tenfold spike in the lower tiers was the whole opening. During a rolldown drawing, a $1 ticket was worth more than $1 on average, as long as no one hit the six-number jackpot.

The Massachusetts version, Cash WinFall, had an even friendlier design. Tickets cost $2, players picked six from a pool of 46 instead of 49, and the rolldown threshold was a lower $2 million, so rolldowns came around more often.² The chance that no one would hit the jackpot on a given draw sat around 92.8 percent, which made each scheduled rolldown highly predictable.³

How Jerry Selbee Spotted It

Jerry Selbee was 64 and retired when he picked up a Winfall brochure at a convenience store in 2003. He had a bachelor’s degree in mathematics and business and an MBA from Western Michigan University, and had spent decades as a materials analyst at Kellogg’s in Battle Creek before he and his wife, Marge, bought a convenience store in Evart, Michigan.⁴ He read the rules, worked through the math on a rolldown, and saw a game that paid out more than it took in during specific windows.

His first test ran $2,200 through a store in Mesick and came back $50 short. The math said the problem was volume. He tried $3,400 and won $6,300. He tried $8,000 and won $15,700.² Then he told Marge.

Scaling the Operation

In June 2003 the Selbees formed a corporation called GS Investment Strategies LLC and sold $500 shares to family, friends, and neighbors around Evart. The investor list grew to 25 people and included three lawyers, a bank vice president, a state trooper, a parole officer, retired farmers, and Jerry’s accountant.⁵ Jerry tracked everything (membership, shares, wagers, tax filings) in three-ring binders.²

By spring 2005 the group had played 12 rolldown weeks, and profits had climbed from $40,000 to $80,000 to $160,000 per round as they scaled up.² In May 2005, the Michigan Lottery discontinued Winfall, citing declining ticket sales, and replaced it with Classic Lotto 47.⁵

That did not end the operation. Jerry looked for similar games in other states and found Cash WinFall. Starting in August 2005, the Selbees drove roughly 900 miles from Evart to Massachusetts for each rolldown, which came around about seven times a year. They bought tickets at convenience stores, sometimes investing over $600,000 in a single play, and then spent days in motel rooms sorting through hundreds of thousands of tickets by hand.⁵ Their largest single wager was $720,000 for 360,000 tickets.⁶

Two Other Groups Found the Same Edge

The Selbees were not alone in Massachusetts. In 2005, MIT senior James Harvey identified the same rolldown opportunity as an independent study project, and he and classmate Yuran Lu recruited roughly 50 students from their dorm, Random Hall, and incorporated as Random Strategies Investments LLC.⁷ Their first $1,000 investment returned $3,000.² The students chose their own numbers rather than use Quick Picks, which meant filling in hundreds of thousands of paper betting slips by hand because Massachusetts rules prohibited printing slips from personal computers. At peak they bought 300,000 tickets per rolldown, a $600,000 wager, and reliably won back 15 to 20 percent more than they put in.⁸ Over seven years the state inspector general estimated the group wagered $17 million to $18 million and earned about $3.5 million in profit before taxes.⁹

Ying Zhang, a biomedical researcher at Boston University, had originally set out to study the lottery to prove it was exploitative. His analysis turned up the same loophole. He quit his research job in 2006 and formed the Doctor Zhang Lottery Club Limited Partnership, typically wagering between $300,000 and $500,000 per rolldown through a convenience store in Quincy, Massachusetts.⁶²

In August 2010 the MIT group escalated. Random Strategies bought enough tickets to push the jackpot past the $2 million cap on its own, forcing a rolldown without waiting for one to occur. The group stockpiled roughly 700,000 tickets for that drawing, accounting for more than 80 percent of all tickets sold, and cashed 860 of the 983 winning tickets worth $600 or more. Lottery officials knew the group was preparing to force the drawing but did not publicize it the way they ordinarily publicized upcoming rolldowns.⁶

The Math That Made It Work

None of this was luck. During the May 9, 2011 Cash WinFall rolldown, matching five numbers paid $24,821, four paid $824, and three paid $26. With odds of roughly 1 in 39,028, 1 in 801, and 1 in 47 for those tiers, the expected value of a $2 ticket worked out to about $2.21.¹⁰ A thin edge per ticket, but across hundreds of thousands of tickets the law of large numbers pulled actual results toward that expectation. The Selbees reported average returns of 28 to 32 percent on their Massachusetts plays.³

Volume did the work. A single ticket still lost most of the time. Tens of thousands of tickets, bought during a drawing where the math favored the buyer, compressed the variance until the statistical expectation looked like a return on investment.

How It Ended

The syndicates ran quietly for years. In the summer of 2011, Boston Globe reporters Andrea Estes and Scott Allen published an investigation describing how a handful of sophisticated bettors had turned Cash WinFall into what Secretary of State William Galvin called “a private lottery for skilled people.” During the May 2012 rolldown, three groups claimed 1,105 of the 1,605 winning tickets statewide. Statistician Mohan Srivastava told the Globe that top players were earning $1 million to $6 million a year from roughly 12 days of play, funded by the losses of ordinary ticket buyers.¹¹

State Treasurer Steven Grossman imposed a $5,000 daily cap on Cash WinFall ticket sales at any single store, suspended the licenses of seven high-volume retailers, and announced the game would be phased out.¹² The last Cash WinFall drawing took place on January 23, 2012, and the game was replaced by Lucky for Life.¹³

On July 31, 2012, Inspector General Gregory Sullivan released his findings. The report concluded that lottery officials had known about the syndicate activity since as early as 2005 and had bent rules to accommodate the high-volume buyers, including placing extra lottery machines at the stores they frequented, because the ticket sales were profitable for the state.⁸ Over seven years, the syndicates together spent about $40 million on tickets and won an estimated $48 million.¹⁴ Sullivan found no evidence of criminal activity, corruption, or personal benefit to any lottery official, said the game had been “a financial success for the lottery,” and recommended no further action. The state itself had earned $120 million from Cash WinFall over the game’s lifespan.¹⁵

What the Selbees Walked Away With

Over nine years across both games, GS Investment Strategies grossed more than $26 million and netted close to $8 million in profit before taxes. The Selbees kept roughly 18 million losing tickets in 60 to 65 tubs in case of a federal audit.¹⁵ No criminal charges were filed against any of the three syndicates. Jerry maintained throughout that his tickets carried the same odds as anyone else’s and that he was playing the game the way the state had designed it.² The couple used the winnings to renovate their house in Evart, buy a truck and a camper for touring national parks, and help with college for their 14 grandchildren and 10 great-grandchildren. Their story was dramatized in the 2022 Paramount+ film Jerry & Marge Go Large, with Bryan Cranston and Annette Bening in the lead roles.¹⁶

1
Michigan Bureau of State Lottery. 2003 Annual Report
2
Huffington Post. The Lotto Hackers
3
New York Post. Retirees Made Millions Gaming the Lottery
4
Western Michigan University. Jerry Selbee Feature
5
CBS News. How a Retired Couple Won Millions Using a Lottery Loophole
6
The Tech. Cash WinFall Inspector General Report
7
The Tech. Cash WinFall and the MIT Group
8
Boston Globe. Inspector General Says Lottery Allowed Gambling Syndicates to Take Over WinFall Game
9
MIT Alumni Association. A Calculated Approach to Winning the Lottery
10
Hacker News. Cash WinFall Expected Value Calculation
11
Boston Globe. A Lottery Game With a Windfall for a Knowing Few
12
The Tech. Cash WinFall Retailer Suspensions
13
WCVB. Lottery Quietly Ends Twice-Weekly Game
14
WBUR. Lottery Cash WinFall Report
15
CBS News. How a Retired Couple Won Millions Using a Lottery Loophole
16
Los Angeles Times. Jerry and Marge Go Large True Story