Most of us know that the lottery is a game you can’t win. The chances of winning a jackpot are so outlandish that you’re four times more likely to be struck by lightning than to become wealthy.
And yet millions of optimists wait in line each week with tickets in hand and muttering to themselves, “This time it will happen”. But while most people played for luck, one man played for certainty.
Stefan Mandel was a Romanian-born math whiz and economist who didn’t depend on superstitions, “lucky numbers,” or the Lord’s favor. He depended on hard mathematics. And between the 1980s and the 1990s, he successfully beat the lottery fourteen times.
What he discovered was so bold and so effective that it drew the attention of the FBI, the CIA, and lottery authorities across multiple countries and ultimately forced governments to rewrite the rules of the game.
From Communist Struggles to Calculated Escape
In the 1960s, Stefan Mandel lived in communist Romania, earning a meager $88 a month as an economist. It was barely enough to support his family, and even less enough to escape the country’s suffocating regime.
Left with no choice, he began studying lottery theory in the hopes of converting mathematics into freedom. His plan wasn’t to be rich. It was to win exactly enough money to bribe men in positions of authority and flee the country.
After months of calculations, Mandel found a small lottery he could realistically manipulate. He won not once, but twice. The winnings were modest, but enough to fund his escape. He fled Romania with his family, first landing in Israel and later settling in Australia.
There, in a freer and more open society, Mandel refined his system, turning what began as a survival strategy into one of the most extraordinary mathematical operations in gambling history.
The Simple Math That Made the Impossible Possible
Math involved in the lottery is just basic probability, the same that the rest of us learned in school and immediately forgot. Take the example of the lottery in which six out of 1 to 40 numbers are selected by the player. There are 3,838,380 combinations.
To you, that means if you buy one ticket, your chances are one in 3.8 million. Ten tickets and your chances are hardly better. Statistically, it’s hopeless.
But Mandel noticed something others did not. If you could, in some way, obtain a ticket for every possible combination, then you’d be taking away the aspect of chance entirely. Your chance wouldn’t be one in 3.8 million; it’d be 3.8 million in 3.8 million.
Of course, buying millions of tickets makes no sense at all, and in the majority of instances, it doesn’t. But Mandel discovered that if the jackpots carried over for weeks, the prize at times approached three or four times the total cost of buying all combinations.
So if you had $3 million to spend to buy out all possible tickets for the $10 million jackpot game, the risk would be eliminated. It stopped being gambling; it became arbitrage, the term used in finance for exploiting differential prices in order to reap profit.
The Birth of “Combinatorial Condensation”
Mandel referred to his technique as combinatorial condensation, which is quite a fancy name for a quite simple method. There were six steps:
- Determine the number of all the probable combinations in the lottery.
- Find out the jackpots that increased at least three times the size of the overall cost.
- Create funds by persuading investors to pool their money collectively.
- Print out millions of tickets with all permutations.
- Turn over the tickets to authorized sellers prior to the draw.
- Collect the payouts and distribute the profit to investors.
Some lotteries at the time even issued their own print-your-own tickets, which soon proved to be his golden ticket.
From Equations to Execution: Investors and Logistics
Making this plan a reality costs money, lots of it. So Mandel became the salesman for his own mathematics. During the course of several years, he sold thousands of small investors on the proposition that he could convert a game of chance into a near-sure thing.
He also formalized the whole scheme with the setting up of a company called Pacific Financial Resources and a trust called the International Lotto Fund (ILF) to oversee the investments.
His syndicate investors staked modest sums in hopes of sharing mathematically assured winnings. One of his original syndicates won $19,000, a modest pot, but evidence that his system could translate to the practical world.
The Virginia Lottery: Mandel’s Greatest Heist (Not That It Was Illegal)
After some modest victories in Australia, the attention of Mandel then shifted to the United States. He then finally focused his attention on the Virginia Lottery with its comparatively modest pool of numbers 1 to 44, i.e., “only” 7,059,052 possibilities.
When the jackpot grew to $15.5 million, Mandel knew he had his perfect target.
He assembled 2,524 investors and collected millions in funding for the operation. When his jackpot reached his target size, he activated a network of buyers across Virginia.
A handful backed out at the eleventh hour, but Mandel’s syndicate did procure 6.4 million of the 7 million combinations, quite well enough to effectively ensure victory. After the draw of the winning numbers, the ticket was in the possession of Mandel’s syndicate.
The syndicate won the $27-million jackpot, and overnight, the Australian cattle farmer became the one who outwitted the lottery at its own game.
When the FBI and the CIA Came Knocking
Just weeks after the Virginia win, the FBI, the CIA, and even foreign organizations began to investigate the activities of Mandel. The authorities suspected all forms of wrongdoing: money laundering, fraud, and organized crime.
They investigated his businesses, his investors, his ticket-buying methods, thinking something illicit must be at work. But after a tenacious search, the Feds found nothing criminal. Mandel hadn’t bribed anyone in authority, hacked any databases, or rigged any pools.
The ensuing years of courtroom struggles depleted the former government functionary economically and psychologically. Although exonerated of any wrongdoing, he found himself overwhelmed by attorney fees.
From $27 Million to Bankruptcy
You would expect a man who won 14 lottery games to spend the rest of his days in comfort. But Mandel’s tale was the material of which bad fables are made.
Though his syndicates won millions in prize money, the takings did not all go into his pocket. He also had to pay out investors in proportion to their share, and how much he kept for himself was left at a modest level.
From one $1.3 million jackpot prize, for example, Mandel’s share personally seemed to be all of $97,000 after taxes and payouts. Add astronomical lawyers’ fees, costs of business, and the upkeep of having an overseas lottery syndicate, and he became ruined.
By 1995, only three years after Stefan Mandel won his $27-million jackpot, he had become bankrupt.
How He Forever Altered Lottery Laws
Mandel’s wins may have concluded in financial disaster, but the effect had been earth-shattering. His antics revealed large flaws in the design and regulation of lotteries.
Not long after his operations, lottery commissions globally started to tighten their systems.
New legislation prohibited the buying of bulk tickets, prohibited home-printed lottery tickets, and mandated that all tickets be purchased in the presence of an official terminal.
A Quiet Retirement in Paradise
Now Stefan Mandel enjoys a tranquil retirement in the South Pacific paradise of Vanuatu, beyond the sight of the riots he once coordinated. He’s said to be living well, not wealthy, but free among beaches, volcanoes, and peace you cannot buy.
His account is one of the most compelling in contemporary gambling history: the story of mathematics, nerves, and timing that temporarily transformed chance into certainties.
The Lesson in Mandel’s Math
Despite all his brains, Mandel’s tale concludes with the reminder of a tough lesson: though you may outwit the system, you can’t always win.
Despite fourteen jackpots and millions in winnings, the math whiz wound up in bankruptcy court, showing that it’s not just the numbers you choose that count on the lottery, but what you do after the jackpot hits. Experts continue to hold out Mandel’s example as an alarm.
Commenting on the importance of lottery winners planning carefully, certified financial planner Robert Pagliarini states,
“Assemble a ‘financial triad’ to help plan for their financial future. This includes an attorney, a tax person, and a financial adviser. This financial dream team can help you make smart financial decisions and help you plan for the future.”
The lottery remains a glistening mirage that promises life-changing wealth but rarely provides it. And even though the rest of us can only fantasize once about winning it, Stefan Mandel managed at least for a brief period to prove even fortune can be outsmarted.
Credit featured image:
Tony Webster from Minneapolis, Minnesota, United States, CC BY 2.0, via Wikimedia Commons
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