10 11 51 52 62 18 : Planet Money If those had been the winning Powerball numbers, this would have been our last show. Instead, the story of the oldest lottery we could find and of the man who outsmarted the odds.

10 11 51 52 62 18

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DAVID KESTENBAUM, BYLINE: All right, we have just 24 hours to put this whole show together. And also, I need to know who's in.


UNIDENTIFIED MAN #1: I'm definitely in.



UNIDENTIFIED WOMAN #1: I don't want to miss out.

ROBERT SMITH, BYLINE: Yeah, you're in. I'm in too. We're both in.


UNIDENTIFIED MAN #5: I'm in. Stacey, you've never bought a ticket before?

VANEK SMITH: Never bought a ticket.


VANEK SMITH: No, I'm super excited. I don't even know how to do it.

KESTENBAUM: Who here has bought a lottery ticket before?

SMITH: I have bought a lottery ticket before. In fact, I have one right here for the drawing this week.

VANEK SMITH: No way, Robert Smith.

SMITH: I have it. Don't look at the numbers.

KESTENBAUM: All right, the two – buy us a ticket.

SMITH: I feel like actually we could win. Like, that is the mind trick at the center of this. I feel like we might win.


UNIDENTIFIED MAN #6: Hello, and welcome to PLANET MONEY. I'm Rich.


SMITH: And I'm Robert Smith. This week, the Powerball lottery is up to $1.5 billion. Perhaps you've heard. So, like everyone else in the country, we are getting no work done. We are spending all of our time dreaming.

VANEK SMITH: We have the story of one of the very first lotteries. The main prize is amazing. You won't believe it.

SMITH: And we have the story of the one time it made absolute economic sense to play the lottery. And we talked to the guy who pulled it off. Oh, but first, Stacey, you and I, we've got to take care of some business.

VANEK SMITH: All right. OK – oh, do we get to pick your numbers?

UNIDENTIFIED MAN #7: Five number here and one number…

SMITH: Five numbers here and one number here. OK, how much do we owe you?

UNIDENTIFIED MAN #7: Two dollars.

SMITH: We took up a collection at work.

UNIDENTIFIED MAN #7: Thank you. Good luck.


UNIDENTIFIED WOMAN #2: Support for this podcast and the following message come from Showtime. January 17, Emmy winners Paul Giamatti and Damien Lewis star in the series premiere of the bold new drama "Billions." U.S. Attorney Chuck Rhoades, a hard-charging prosecutor, is determined to take down the brilliant hedge fund king Bobby Axelrod. Two of New York's most powerful titans are locked in an epic battle of egos, and there's no line both men won't cross to win. "Billions" – series premiere January 17, only on Showtime. Download the app to start your free trial now.

SMITH: So since we have some time to kill before we quit our jobs, we thought we would talk about one of the very first times a lottery existed. And we have David Kestenbaum and Stacey Vanek-Smith here to tell that story.

KESTENBAUM: Can I give you a footnote? This is the first state lottery that we have good records of.

SMITH: Oh, as always.

KESTENBAUM: It was a long time ago. It was 1567.

SMITH: Wait, 1567, really?

KESTENBAUM: Yeah, it was in England. And they have this problem – like, the harbors are falling apart. They need money, but everybody hates taxes. So their finance minister had just been to the Netherlands. He saw they were sort of trying out lotteries there, and it worked well. And he decided, let's do it in England.

VANEK SMITH: But this was brand-new in England, and so they had to try to figure out how to explain what a lottery was to people, how to get people on board and most importantly, how to sell tickets.

SMITH: Like a lottery ad campaign - you may be a winner.

VANEK SMITH: Exactly, and we talked to David Dean. He is a professor at Carleton University in Ottawa. And he told us the lottery in England was something like this. So imagine it is 1567. You walk into the public market on Saturday, and there is a man shouting, buy lottery tickets.

DAVID DEAN: We know that they have a trumpeter. Sometimes they put on a little play about, you know, oh, I'm so poor, I’m so poor, I'm so poor, oh my God, I've won the lottery, yippee (ph), I'm happy ever after. You know?

SMITH: That is basically what lottery ads are to this day. Rich people going, like, I can't believe it. I'm so lucky.

KESTENBAUM: Yeah, like, throwing money in the air. He says they're also – like, in the market you would have seen this big poster that had the official seal of the government saying, you can trust it, this is for real. And in the middle of it, there were these pictures of the prizes – the thing still exists - and he described it to us.

DEAN: The prizes are really cool because they show jugs and plates, and they're all gold and silver, but they also have monkeys holding bags of coin.

VANEK SMITH: And wait until you hear the grand prize.

DEAN: Whosoever shall win the greatest and most excellent prize shall receive the value of 5,000 pounds sterling. That is to say, 3,000 pounds in ready money - that's cash - 700 pounds' worth of plate gold and white, and the rest in good tapestry, and also a bunch of linen cloth as well.

VANEK SMITH: What is the gold plate? Is that in, like, a bar? What does that mean?

DEAN: No, it would be plates and jugs and chalices.

KESTENBAUM: Oh, plates like to eat off of?

DEAN: Yeah, and you would sell that to melt it down, or you'd treasure it on your mantelpiece.

KESTENBAUM: So that's a pretty good grand prize.

DEAN: I mean, it would be riches beyond everyone's dreams.

KESTENBAUM: He says here's how it would work. You would pay 10 shillings to get one lottery ticket, and you would write a poem.

SMITH: Wait, wait, wait, there was a skill part of this?

KESTENBAUM: Well, it was just something to uniquely identify yourself, you know, in case you won. He has a whole list of these today.

DEAN: God is mighty, may I win. Or, God speed my lot. And there's some very obscure ones like snake's meat with garlic is good to eat.

VANEK SMITH: Why didn't people just leave their name?

DEAN: They don't have the variety of names that we have today. And there would be a lot of confusion. There are a lot of Tom Smiths and…

VANEK SMITH: And Robert Smiths?

DEAN: Robert Smiths and…

VANEK SMITH: Their lottery was so much more literary than ours. I feel like it's so much classier. They had, like, criers and everybody wrote poems. And now we have, like, a guy with a bunch of ping-pong balls and a vacuum machine.

DEAN: Exactly, yeah, on TV.

SMITH: They should absolutely do that today. Like, that is like - I want everyone - you should have to do something in order to get lottery. You should have to do a little play or write a poem, sing a song.

KESTENBAUM: What's your poem?

SMITH: I cannot think of anything funny, but the winners clearly are PLANET MONEY.

VANEK SMITH: Nice, that's pretty good.

SMITH: That's a lame rhyme.

KESTENBAUM: He says it's unclear exactly how this worked, but one possibility is, like, when they pulled out the winning ticket, they would just read, like, the first half. And the person who could complete the poem, that would prove it was them. But he says despite, like, the trumpet and all that stuff, there are not a lot of ticket sales in the early days. The whole idea of a lottery is just new. And people do not trust the government. You know, they're not sure they're going to get their golden plates. And another thing is, the tickets were expensive. They were 10 shillings.

DEAN: For a carpenter, let's say, in the city of London, who's a pretty well-paid person compared to carpenters elsewhere, they're earning five shillings a week. So this would be a fortnight - half your month's salary. For many people, it would have been the equivalent of a month's salary. And if you're a laborer or a plowman or something, you're talking about six months' salary.

VANEK SMITH: So a lot of people ended up going in on a lottery ticket together, exactly like we did. But they also had another idea to further entice people into buying tickets. They agreed to not arrest people when they came in to buy tickets.

KESTENBAUM: And the idea was like, you know, if you lived out in the country or something and maybe you'd done something wrong - like you'd stolen a loaf of bread from somebody – like, don't worry. You can come into town where you might normally be arrested, and we're not going to arrest you. You can buy a ticket.

SMITH: Wow, it's kind of like the amnesty they have on overdue library books. They're like, just for this one day only, give us your money, and we won't arrest you.

KESTENBAUM: It says all ticket holders were promised freedom from arrest for all crimes other than murder, felonies, piracy or treason. That covers a lot.

DEAN: It does. It covers a huge amount. They really, really wanted people to come and buy tickets.

SMITH: So finally, the big moment comes, right? Everyone gathers downtown. It's outside St. Paul's Cathedral. They're going to pick the winner. He says he thinks it was probably all the tickets were in a barrel, and there was one official who pulled out the winner. And you want to know who the winner is?

DEAN: We don't know.


DEAN: That's the trouble. We have no idea.

KESTENBAUM: So there's no media coverage of the winner?

DEAN: No media coverage of the winner at all, no.

SMITH: In the newspapers of the day - nothing?

DEAN: None at all, no.

VANEK SMITH: What he can say is that this lottery was a total failure. They only sold about one-tenth the number of tickets they were supposed to sell. And they actually ended up cutting back the prize…

DEAN: …To one-twelfth of what it had been.


VANEK SMITH: Grand prize got cut by that much?

DEAN: Yeah.

VANEK SMITH: Oh my gosh, that's – I mean, no wonder that's - that doesn't seem fair.

DEAN: And of course, that just reinforced everybody's sense that OK, this is a failure, and it's not working. And we will never try it again.

KESTENBAUM: But they did try it again.

DEAN: Well, they did over 100 years later. Yeah.

SMITH: So were people smarter back then? I mean, did even back then people went, I have no chance of winning.

KESTENBAUM: I asked. I said, was it that, you know, they're like, this is a stupid investment. Why did I do this? He said, no, no, it was just they didn't trust the government, and it was very, very expensive.

VANEK SMITH: I wonder if they, like, cut the plates in half or something. Or you would get a twelfth of a golden plate.

SMITH: There's somebody eating off those plates right now, OK?

KESTENBAUM: But that's basically how it started you know. You know, the trend has been towards bigger and bigger piles of money. You know, first we had the state lotteries. And then someone's like, oh, we can have a much bigger pot with lower odds if we do a national lottery. And that's what we have today. That's the 1.5 billion – does not include gold plates.

SMITH: Thank you, David.

KESTENBAUM: You're welcome.

SMITH: And Stacey, stick around because we've got to do some math.

VANEK SMITH: OK, my favorite subject.

SMITH: OK, because we're economics reporters, we have to sort of do the numbers here and show you that this is a terrible, terrible, terrible financial investment. No matter how excited we are about it, the numbers do not work in your favor. Very quickly, back-of-the-envelope, the odds of winning – 1 in 292 million. It costs two dollars for every ticket, so if you wanted to buy every possible combination, that would be $600 million, is what it would take.

VANEK SMITH: So if the pot's over 600 million, then it starts to be worth it?

SMITH: Yeah, you know, that's not true. So it's like 1.5 billion is what you would get over many years. So if you took the lump sum, they figure it would be about $930 million, OK? Still pretty good. But then you have to take away taxes. You have to pay the highest tax rate on your lottery winnings. So that would mean you would be left with about $561 million dollars after you take away federal taxes. But of course, you and I and the PLANET MONEY team live in New York, so we would have to pay a city tax and a state tax. So basically, it would whittle down to about $500 million would be our lottery winning.

VANEK SMITH: Well plus, we have to split that eight ways.

SMITH: Yeah, or more, because the big danger for anyone who thinks they can game the system and play the odds is for the lottery is that you have no control over who else buys your numbers. We could win with our numbers, and somebody else out there could get the exact same numbers.

VANEK SMITH: But what are the chances of someone picking exactly the same numbers in exactly the same order?

SMITH: Well, you know, in order to show this as an economic lesson, I did do something after you left the corner store that you did not hear. So let's play that tape.

OK, Stacey's left, so I would like to buy the exact same number again. But this one's me personally. I just want to get the same number again.

UNIDENTIFIED MAN #7: Same number?

SMITH: Same number.

UNIDENTIFIED MAN #7: Same time, same number coming? Do you know more paying the tax?

SMITH: All right, so one of these is mine, and one of these is the rest of the team's.


SMITH: (Laughter).


SMITH: So let's just say that…


SMITH: …If our numbers hit, PLANET MONEY, of which I'm a member, has to split it with Robert Smith, the individual.


SMITH: (Laughter).

VANEK SMITH: That's like - you just stole millions of dollars from us.

SMITH: The odds are not good this is going to happen.

VANEK SMITH: Well, fictional millions, but still. That makes it worse.

SMITH: (Laughter) I'm trying to demonstrate how difficult it is to consider the lottery a sane financial investment. But when we were doing our research for the show, we discovered that there was one guy - there was one guy who managed to figure out how to game this entire system. And with that story is PLANET MONEY's senior producer, Alex Goldmark. Hey, Alex.

ALEX GOLDMARK, BYLINE: Hi, Robert. So it's 1992.


GOLDMARK: In Virginia. And there is a big lottery jackpot for the time, $27 million. They pull the numbers, a winner. And at first, there's nobody who comes forward. But there are reports that there was something that was maybe going on before the lottery drawing.

SMITH: Something suspicious.

GOLDMARK: It starts to dawn on them that something is up. Something is different about this lottery drawing. Right, so first of all there's these reports from around town. People had been going into different grocery stores, buying 50,000 tickets at a time in different combinations. And they put it all together, and they realized that someone or some people have pulled off what is the dream of all lottery players. They took the luck out of lottery. They bought every single combination of numbers possible and guaranteed themselves a win. And this is totally perplexing to the people who run the lottery system, like Ken Thorson, head of the Virginia lottery. This is him on TV shortly after.


KEN THORSON: I really never would have imagined that anybody would have ever wanted to try to buy it out. It never happened in the United States, but the very idea of spending over $7 million to buy all the shares in the lottery just seems preposterous.

SMITH: Because think of what it would take. I mean, you need investment of $7 million, and then you actually have to actually go and buy that many lottery tickets. You're going to be buying tickets 24 hours a day.

GOLDMARK: You need to fill out each different ticket. You need to keep track of where each ticket went so when you win, you can find the winning ticket.

SMITH: And yet somebody pulled it off.

GOLDMARK: Yes. His name is Stefan Mandel. And I did a little research, poked around, and I found him living on a tropical island in the South Pacific.

SMITH: Of course he is.

GOLDMARK: In Vanuatu.

SMITH: Of course.

GOLDMARK: I made a phone call, I got his cell phone, and I rang him up.




GOLDMARK: Hi, is this Stefan Mandel?


GOLDMARK: I told him I'm a reporter and that I'm doing a story about lotteries.

Are you willing to talk to me about it for the radio?

MANDEL: (Laughter) That story died a long time ago.

GOLDMARK: As soon as I started asking him questions, he just could not stop. He lit up because he's proud that he pulled this off. And he says listen, Alex, that Virginia thing? It took him decades and decades to perfect his system to get to that level. The story starts in Romania.

SMITH: In Romania?

GOLDMARK: Yeah. In the late 1950s, Stefan Mandel is working at some job he doesn't really like, at an industrial mining company. And he's got a young wife, young kids. And he just desperately wants out of the country. He needs money to do it, and he starts looking at the lottery.

MANDEL: Well, that was the only way I could get some serious money quickly. I mean, you know, I was earning at the time, something like 360 leu a month, which was the equivalent of a good pair of shoes (laughter). You know?

GOLDMARK: But he doesn't just go out and buy random tickets. He's a pretty natural math wiz. He goes to the library, and he starts reading math paper after math paper after math paper, and he comes up with a formula for buying blocks of tickets that he thinks should guarantee him a prize.

SMITH: Because he doesn't have enough money to buy every number.

GOLDMARK: Not yet, OK? He pulls in three friends. They take their money together. They still don't have enough money to buy every combination, but they figure they can guarantee themselves second prize.

MANDEL: We won 72,783 leu, which was equivalent of about 18 years of salary.

GOLDMARK: All right, big score. That was on your first try?


GOLDMARK: Be honest, was that luck? Was that luck?

MANDEL: It was luck.


MANDEL: Well, a bit - quite a bit of luck.

GOLDMARK: Because he was playing for second prize, but he happened to win first prize.

SMITH: Nice.

GOLDMARK: Right? So he takes the money and he leaves Romania finally, brings his family. And they end up in Australia. And this is where he takes his lottery plan to the next level, OK? He finds more investors, he raises more money, and he - this is where he solves what is really the obstacle to this whole crazy scheme, right? Normally, when you want to pick out your own numbers for the lottery, you go to the corner and you ask for that little form with the numbers on it, and you fill out each form.

SMITH: Yeah, with a pencil it takes forever.

GOLDMARK: It takes a while.

SMITH: Yeah.

GOLDMARK: But he says no, I am not going to get caught up in that. I'm going to automate it. So he sets up a room filled with printers and a computer program that is going to spit out those forms already filled out with every possible combination.

SMITH: It's going to fill out the forms for him.

GOLDMARK: At high speed.

MANDEL: So we actually - we took the paper, analyzed the chemicals composition of the paper, the ink, and all that other stuff, and we printed out the slips ready with the combinations on them.

SMITH: Wait, so was this legal? To have a computer fill out your slips for you?

GOLDMARK: It was legal when he did it. And he turned lottery winning into a business for a while.

MANDEL: In Australia, I won 12 times.

GOLDMARK: (Laughter).

MANDEL: I kind of got caught up (unintelligible). So they held that they had to do something about it, which was ridiculous.

GOLDMARK: They changed the laws. First, they passed a law that said no one person can buy every combination of lottery tickets (laughter).

SMITH: That's wise, yeah.

GOLDMARK: It's just a, literally, do not do that again law. And so then he broke it up into fifty different people who each bought one-fiftieth of the numbers. And so he keeps winning, and eventually they make enough sufficient laws that prevent him from doing it again.

SMITH: But this did not put Stefan out of business?

GOLDMARK: No, he started looking even bigger. He starts looking to the U.S. And he looks to a couple different states, he starts doing the calculations again.

SMITH: Because you have to find a place where the jackpot is big enough to justify all this printing and all this effort.

GOLDMARK: Right. So he finds Virginia. And in Virginia, there are 7.1 million combinations of lottery tickets. And he has to wait until the jackpot is - he figures 25 million or above, just to make sure he turns a profit if there is a split pot. And then he waits. He sets up his whole operation for when the time is right.

MANDEL: Yeah, that's something that you can't do in one day. It took us around two months or something. Three months.

GOLDMARK: To print out the numbers?

MANDEL: Yeah, of course.

GOLDMARK: They printed out all 7.1 million tickets in Australia, paid $60,000 to ship them to the U.S., negotiated bulk buys with grocery stores all around Virginia about how they could send cashier's checks to buy tens of thousands of lottery tickets. I mean, it's like a bank heist how complicated this was.

SMITH: And I imagine on the night of the Virginia lottery, he did not have the same feeling that all of us have right now awaiting the numbers to come out for the big Powerball. I mean, this guy knew he had it in the bag.

GOLDMARK: Yeah. But I asked him - were you scared? Were you worried? Are you excited? He was just like no, I have all the tickets.

MANDEL: I knew that I would win one first prize, six second prizes, 132 third prizes, and thousands minor prizes.

GOLDMARK: Twenty-seven million plus all those minor prizes...

SMITH: …Wow...

GOLDMARK: …Thrown in.

SMITH: (Laughter) So did he have advice for anyone who was thinking of doing this on the scale of Powerball? These giant, like, billion-dollar prizes that are coming out now?

GOLDMARK: It cannot be done anymore. He says you cannot do it. The number of combinations have grown too much. You wouldn't be able to print the tickets. You wouldn't be able to buy them in time, and you probably couldn't even do the math right to figure it out without making a mistake.

SMITH: So he might be the last guy who was able to corner the market in the lottery.

GOLDMARK: The great lottery corner of 1992 will remain the great lottery corner.

SMITH: All right, Alex, see you on the beach of Vanuatu.

GOLDMARK: If our numbers come up. Thanks, Robert.

SMITH: So there is one last thing that we wanted to do. Stacy and I called one man, one man who was almost certain to profit off of this Powerball fever.

So is this thelotterylawyer.com?


SMITH: What's your actual name?

KURLAND: Jason Kurland. K-U-R-L-A-N-D.

VANEK SMITH: And how much did it cost to buy your URL?

KURLAND: I don't remember. It wasn't much. It wasn't much.

SMITH: (Laughter).

VANEK SMITH: Have people found you through that website?

KURLAND: Oh yeah.

SMITH: It sounds like this is a much more wise investment, buying lotterylawyer.com, than buying a lottery ticket.

KURLAND: (Laughter) Almost any investment is a better investment than buying a lottery ticket.

SMITH: He's right. All this fun we’ve had aside, you really should not buy a lottery ticket. It's a terrible investment.

VANEK SMITH: Yeah, especially since we don't want to split the pot any more than we already have to.


SMITH: Do not buy 10, 11, 51, 52, 62, 18.

VANEK SMITH: We always love to hear what you think of the show. Send us an e-mail, planetmoney@npr.org. Or you can tweet us, @planetmoney.

SMITH: And now that you're done listening to this fine program, may we suggest another from NPR? Alt. Latino. Alt. Latino gives a roundup of great music from all around Latin America. And bonus - one of the hosts, Jasmine Garsd, she did a fantastic episode for us last week called, "The Cost Of Crossing." If you haven't heard it, you should definitely go back and listen to it.

VANEK SMITH: Our show today was produced very quickly by Jess Jiang and Nick Fountain.

SMITH: I'm Robert Smith.

VANEK SMITH: And I'm Stacy Vanek Smith. Thanks for listening.


SMITH: We'd have to shut down PLANET MONEY, you know that.

VANEK SMITH: No, we could take it huge. We could have, like, PLANET MONEY in space.

SMITH: Who's going to listen to us?

VANEK SMITH: PLANET MONEY in the ocean. PLANET MONEY goes to the Caribbean.

GOLDMARK: This week on PLANET MONEY, we count all our money again.


GOLDMARK: How big is too big for a yacht?



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