A retired Michigan couple revealed on “60 Minutes” how they used simple arithmetic to “crack the code” on state lotteries and win over $26 million.
The couple told “60 Minutes” that their winning streak was based on the discovery of a “special feature” that enabled them to win multiple state lottery games over the course of six years.
“Three minutes and you found the loophole in the state lottery?” asked “60 Minutes’” Jon Wertheim, after Jerry Selbee recounted how in 2003 he read a brochure for a brand new lottery called Winfall—and immediately realized it could be gamed.
“Three minutes. I found—I found a special feature,” said Jerry Selbee, who has a mathematics degree from Western Michigan University and said he has always had “a head for math.”
The logic of the game was that if no one won the $5 million jackpot, the money would be spread across those who matched either five, four, or three numbers, in a feature that was called a “roll down.” As the prize money “rolled down” to the lower-tier winners, this boosted the payouts of people who successfully matched fewer than the six winning numbers.
“He’s a math whiz,” said local attorney James White, who along with other friends and family of the Selbees was invited to join in the scheme and benefit from the discovery of the lottery’s unique feature.
“Do you guys remember how much you gave him to invest?” Wertheim asked.
“I had about $8,000 and then I put another six in for the grandkids,” said Loren Gerber, a retired farmer.
“But overall you guys came out way ahead on this?” asked the “60 Minutes” interviewer.
Gerber confirmed, adding “it was a good game.”
A ‘Mental Quick Dirty’
Selbee said when he originally read the lottery brochure, he went through the calculations in his mind—what he called doing a “mental quick dirty”—and concluded the odds were there to beat.“Here’s what I said,” Selbee told Wertheim, “I said if I played $1,100 mathematically I‘d have one 4-number winner, that’s 1,000 bucks. I divided 1,100 by six instead of 57 because I did a mental quick dirty and I come up with 18. So I knew I’d have either 18 or 19 3-number winners and that’s 50 bucks each. At 18 I got $1,000 for a 4-number winner, and I got 18 3-number winners worth $50 each, so that’s 900 bucks. So I got $1,100 invested and I’ve got a $1,900 return.”
The first time Selbee tried his idea, he bought $3,600 of Winfall tickets and won back $6,300. The second time, he bought $8,000 in tickets and almost doubled his money. He then suggested to his wife they start playing big.
“Jerry says, ‘I think I’ve cracked the Michigan State Lottery.’ What do you say to that?” Wertheim asked Marge Selbee.
“It didn’t surprise me,” she said. “Because as long as nobody wins and you win money, you could see the numbers.”
The couple began playing with hundreds of thousands of dollars.
“Here’s one that was pretty successful,” Jerry Selbee told “60 Minutes.” “We played $515,000 and we got back $853,000.”
The Selbees set up a corporation called GS Investment Strategies and invited friends and families to participate. The group grew to 25 members and, for the next six years, they won huge payoffs during the “rolldown weeks.”
The Selbees said that they would sit in a hotel and sort through tickets for 10 hours a day, 10 days in a row, playing over $600,000 per round. They told “60 Minutes” they did this seven times a year.
“It is actually just basic arithmetic. 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,” Jerry Selbee said. “The only thing I found really remarkable is nobody else really seemed to grasp it.”
It was later discovered that a group of math majors from Massachusetts Institute of Technology (MIT) had also figured out how to work the Cash Winfall game for profit. The MIT group had bet over $17 million, earning over $3.5 million in profit.
Eventually, the lottery was shut down and an investigation into the high-volume betting launched. But since it was found that the outcome was not affected by the betting practices, everything was legal.
All told, the Selbees’ corporation earned a total of $26 million and turned a profit of $8 million. They said they used the money to renovate their home and pay for the education of their six children, 14 grandchildren, and 10 great-grandchildren.
They have also sold the rights to their story to film producers for an undisclosed sum of money.
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