In
the spring of 2023, a London banker-turned-bookmaker reached out to a
few contacts with an audacious request: Can you help me take down the
Texas lottery?
Bernard
Marantelli had a plan in mind. He and his partners would buy nearly
every possible number in a coming drawing. There were 25.8 million
potential number combinations. The tickets were $1 apiece. The jackpot
was heading to $95 million. If nobody else also picked the winning
numbers, the profit would be nearly $60 million.
Marantelli
flew to the U.S. with a few trusted lieutenants. They set up shop in a
defunct dentist’s office, a warehouse and two other spots in Texas. The
crew worked out a way to get official ticket-printing terminals. Trucks
hauled in dozens of them and reams of paper.
Over
three days, the machines—manned by a disparate bunch of associates and
some of their children—screeched away nearly around the clock, spitting
out 100 or more tickets every second. Texas politicians later likened
the operation to a sweatshop.
Trying
to pull off the gambit required deep pockets and a knack for staying
under the radar—both hallmarks of the secretive Tasmanian gambler who
bankrolled the operation. Born Zeljko Ranogajec, he was nicknamed “the
Joker” for his ability to pull off capers at far-flung casinos and
racetracks. Adding to his mystique, he changed his name to John Wilson
several decades ago. Among some associates, though, he still goes by
Zeljko, or Z.
Over
the years, Ranogajec and his partners have won hundreds of millions of
dollars by applying Wall Street-style analytics to betting opportunities
around the world. Like card counters at a blackjack table, they use
data and math to hunt for situations ripe for flipping the house edge in
their favor. Then they throw piles of money at it, betting an estimated
$10 billion annually.
The
Texas lottery play, one of their most ambitious operations ever, paid
off spectacularly with a $57.8 million jackpot win. That, in turn,
spilled their activities into public view and sparked a Texas-size
uproar about whether other lotto players—and indeed the entire state—had
been hoodwinked.
Early this month, the state’s lieutenant governor, Dan Patrick, called the crew’s win “the biggest theft from the people of Texas in the history of Texas.”
In
response to written questions addressed to Marantelli and Ranogajec,
Glenn Gelband, a New Jersey lawyer who represents the limited
partnership that claimed the Texas prize, said “all applicable laws, rules and regulations were followed.”
This
account of what happened is based on interviews with people who were
directly involved in the Texas operation or in contact with those who
were. The Wall Street Journal also reviewed photos and video of the
operation, emails and messages sent by participants and bank records
showing how some of the money moved. Subsequent hearings in the Texas
Senate revealed additional details.
Math problems
Lottery
hunters and other pro gamblers have good reason not to court the
limelight. Publicity can draw the attention of tax authorities,
encourage bookies and lotteries to tighten rules, or worst of all,
inspire copycats who might make a run at the next big jackpot and split
the prize.
A
group of Princeton University graduates, incorporated under the name
Black Swan Capital, has won millions in recent years playing scratch-off
tickets and other lottery games in various states. Lottery officials
and others who have tracked their tactics say they appear to calculate
when the math is most in their favor, using publicly available
information such as how many prizes are in a game and how many remain
unclaimed. When the odds are right, they swoop in, hoping to win back
more money than they spend.
One
Black Swan team member collected a $5 million win in Missouri in 2019;
another won $10 million in North Carolina in 2022. In Maryland, a Black
Swan team used lottery machines in four liquor stores for four days to
win a $2.6 million prize.
Black
Swanners used to appear in lottery marketing promotions, smiling and
holding ceremonial checks, but in recent years they have mostly stayed
quiet. They didn’t respond to requests for comment.
With
competition in the air and the Texas jackpot nearing the level that
could make mass purchases highly profitable, Marantelli and Ranogajec
moved fast.
In
Texas, as in many states, most people who play the lottery go to a
store with a machine, choose numbers, then walk away with a ticket. Back
in 2023, Texas also allowed online lottery-ticket vendors to set up
shops to print tickets for their customers.
Marantelli’s
team recruited one such seller, struggling startup Lottery.com, to help
with the logistics of buying and printing the millions of tickets. Like
all lotto retailers, it would collect a 5% sales commission. The Texas
Lottery Commission allowed dozens of the terminals that print tickets to
be delivered to the four workshops set up by the team.
That
April 19, the commission announced that there had been no winner in
that day’s drawing. The next drawing, with an even larger pot, would be
three days later, on a Saturday. The group sprang into action.
The
printing operation ran day and night. The team had converted each
number combination into a QR code. Crew members scanned the codes into
the terminals using their phones, then scrambled to organize all the
tickets in boxes such that they could easily locate the winning
numbers.
The
game called for picking six numbers from 1 to 54. For a pro gambler,
some sets of numbers—such as 1,2,3,4,5,6—aren’t worth picking because so
many other players choose them, which would split the pot. Marantelli’s
operation bought 99.3% of the possibilities.
Money
moved to Lottery.com from Ranogajec’s accounts—held under the name John
Wilson—in the Isle of Man, a tax haven off the U.K. coast, taking a
circuitous route via an escrow account at a Detroit law firm, according
to people familiar with the transfers and bank statements reviewed by
the Journal.
The crew hit the jackpot that Saturday. One of their tickets was the sole winner.
About
two months later, the lottery commission revealed that the prize had
been claimed by a limited partnership called Rook TX. The winner had
elected to remain anonymous, the commission said, as allowed under state
law....
