The Man Who Beat the Lottery (and Still Lost)

Earlier this month, someone in Florida became very wealthy overnight — and without doing a lot of work to get there. Across most of the United States, anyone can go into almost any gas station or convenience store and buy themselves a Mega Millions lottery ticket. And on or around August 8, 2023, someone walked into Publix — a grocery store — in Neptune Beach, Florida, handed over $2, and walked away with a lottery ticket worth $1.58 billion (less if you take the lump sum prize, which you should, and even less when you account for taxes). 

And while that’s a crazy amount of money, there’s a reasonable chance that the victor will, eventually, go broke. While the vast majority of lottery winners manage to hold on to most of their wealth, the odds of declaring bankruptcy in the future go up if you’re a big winner. As CNBC reported in 2017, “Lottery winners are more likely to declare bankruptcy within three to five years than the average American.” The reasons are numerous — some see the wealth as bottomless when it isn’t, others fall victim to scammers and crime, and of course, it’s hard to say no to friends and family who come asking for financial support. 

But that’s now how Stafan Mandel lost it all. He lost it all, because the lottery boards sued him for cheating. Even though he hadn’t.

Here’s a little bit of math, but don’t worry, it’s easy. Let’s say that the odds of winning the lottery were one in 7,059,052 — which, not so coincidentally, is the odds of winning if you had to match six out of six numbers selected from a pool of 44. If each lottery ticket cost you $2, you could buy every single combination for about $14 million, and you’d be guaranteed to win a share of the grand prize and, for that matter, every other prize. Assuming there are no other winners — and yes, that’s a bad assumption — if the total prize pool is more than $14 million, you’d walk away a winner, guaranteed.

There are two huge problems with that gambit, though, putting aside the multiple winners problem. First, you need $14 million, which few of us have available to us. And second, filling out seven million lottery bubble-in sheets, like the one seen above (via NPR), would take forever. But there are ways around this — or were. All you need is a lot of automation and even more friends, or perhaps, investors.

In the 1960s, Mandel won the lottery in his home country of Romania the regular way — with a little bit of luck. Well, that and some math. The Hustle explains

If a player picked 6 numbers in a 49-ball lottery, his odds of winning were 1 in 13,983,816. If he selected 15 numbers (which required purchasing 5,005 games — one for each possible combination), his odds of winning increased to 1 in 2,794. Mandel claimed that his algorithm could reduce these 5,005 combinations to just 569.

If the 6 winning numbers fell among his 15 picks, he’d be guaranteed to win at least a 2nd prize and hundreds of smaller prizes — and he’d have a 1 in 10 chance of winning the grand prize.

Mandel enlisted four friends who pooled their resources and their time and collectively bought 1,140 tickets for each lottery offered. Because of the secondary prizes, they were able to do so without going broke immediately, and ultimately, their little syndicate won the grand prize. Mandel used the money to flee Romania, which was under Soviet control at the time and ended up in Australia after briefly living in Israel. And when in Australia, he realized that the lottery there was even easier to beat than the Romanian one. The Australian lottery required a winner to correctly match all six numbers out of a pool of 40; the odds of winning the grand prize was only (“only)” about one in 3.8 million.

And at about the same time, new technology emerged that made buying all of those tickets easier: computers. He brought on more than 2,000 investors to help fund his escapade and got to work. As the New York Post reported, “he designed the system to allow printers and computers to automatically apply the algorithm to fill out tickets with every number combination. The automatic method gave Mandel and his group 12 lottery wins and thousands of smaller prizes across the UK and Australia.” The authorities investigated him but found that he wasn’t breaking any rules, and Mandel seemed to have a way to win indefinitely.

That’s bad for the lottery, so the officials changed the rules. Both jurisdictions banned automated entry forms, and instead required players to fill out their entry forms by hand (like in the image above). Mandel wasn’t too concerned, though. In the United States, the Virginia lottery was a 6-of-44 system (again, about one in 7 million odds to win), and Mandel connected with people there to run the same scheme. And again, it worked.

And again, the legal system tried to intervene. As the Post reports, “Mandel was brought into a four-year-long legal battle, and he was eventually cleared of any wrongdoing.” But even though he won that fight, he lost overall. The legal bills piled up, and the only way Mandel could fund his defense was by using the money his investors had given him to buy lottery tickets. Ultimately, the legal fees ate up all of his profits and then some, and the U.S. changed its lottery laws to prevent the use of computer-generated entry forms. Without the cash to pay back his investors, and without a way to win the lottery going forward, Mandel ended up losing money in the end. He declared bankruptcy in 1995.

Bonus fact: There are five states in which you can’t buy a lottery ticket: — Alabama, Alaska, Hawaii, Nevada, and Utah. Four of the five states have that law primarily because gambling is often seen as taboo, but Nevada — home to gambling mecca Las Vegas — is clearly not in that category. So why doesn’t Nevada have a state-run lottery? Taxes. The Nevada Resort Association, in a statement to the Las Vegas Review-Journal, asserted that “compared with other types of gaming, lotteries do not pay property taxes or require investment in infrastructure. Nor do they create high-paying jobs with benefits or have the direct and indirect economic impacts of resort casinos.” And the state legislature seems to agree — the state would have to amend its constitution to allow for a state lottery and per the Review-Journal, “every effort to amend Nevada’s constitution to allow a lottery floated in the Legislature over the past 30 years has failed.”

From the Archives: The Man Who Beat the Scratch Lottery: The last sentence is the worst part of the story.