Old story, but I had a good laugh today.
Basically, some guys organized a private investment fund, gathered enough money to buy most tickets in a lottery, and won $27 million on the investment of 5 million. When I heard this, I said immediately this lottery must be organized by the state - and of course it was.
I find it ironic that the Virginia state lottery department tried to sue these guys - if anyone had a case, it were the taxpayers of Virginia against this department.
What lottery has a higher jackpot than you pay to buy most of the tickets?
That is absolutely possible. The large jackpots are cumulative, meaning that every time the lottery is drawn and the jackpot is not won, some of the money is added into the jackpot. These companies have had a difficult time making money on the lottery scheme as the jackpot grows in size, more folks are attracted to on the next play. So the probability of splitting the pot gets progressively higher.
Where the lotteries are completely fraudulent is in the money they pay. The lotter pays 1/2 the take out in prises. So like all other gambling the lotter is just a test for the mathematically challenged.
Also the stated jackpot normally paid over some period of 20 to 40 years is also fraudulent. It is the net present value that matters and if you look at the cash values you will see that the amount paid in cash is slightly less than the net present value.