Americans spend over $80 billion playing the lottery. That’s about $250 per citizen. But, as they say, the house always wins. For those us who buy a lotto ticket on a day when we feel lucky, what we’re really doing is just adding to the pile – one that someone else is going to win (the odds of winning are said to be 1 in 176 million).
This is exactly why investigators took note in 2013 when a retired couple from Evart, Michigan made $26 million winning multiple state lottery games: Jerry and Marge Selbee. But this couple from small-town America didn’t con or scam anyone. They simply figured out the lottery odds and beat the system.
Their story was so captivating that it was recently (2022) made into a movie, Jerry and Marge Go Large, starring Bryan Cranston and Anette Benning. Hollywood will do what it wants with the story, but if you want the real deal, keep reading…
A Man With a Knack for Puzzles
Gerald “Jerry” Selbee is one smart cookie. Back in 1956, he broke the code of the American breakfast cereal industry when he worked for Kellogg’s in Battle Creek, Michigan. He was just bored at work one day. He’s also the kind of guy who likes challenges and sees puzzles all around him.
Jerry was a materials analyst who designed cereal boxes to increase shelf life of food like cereal. He was the guy who brought cereal with a foil liner on the inside to the world. It wasn’t the most interesting of jobs, but both his parents were factory workers, and he wasn’t raised to complain.
A Pair of High School Sweethearts
Jerry has always been someone who sees patterns in what other people would consider noise. Ironically, he was dyslexic as a kid, and only discovered his academic gift during a standardized test in 8th grade. He was solving math problems at a college junior level.
But numbers weren’t his only interest. He liked girls, too. Well, one girl in particular: his smart green-eyed classmate, Marjorie. The high school sweethearts ended up marrying, and after graduation Jerry started at Kellogg’s as a factory worker. Throughout his life, he worked as a chemist, a pharmaceutical salesman, a computer operator, a cereal packaging designer and a shift manager.
Numbers, Numbers, Numbers
Jerry and Marge created a family, with six kids in all. But over the years, Jerry got bored. He enrolled in Kellogg Community College (aka “Cornflake U”) for night classes. When his eldest son, Doug, was in high school, the father and son duo spent many evenings going through rolls of coins that Jerry bought from the bank at face value.
They found buffalo nickels and silver Mercury head dimes. They made roughly $6,000 out of it. No matter what hobbies he had or degrees he was earning, Jerry couldn’t stop thinking about numbers. He would buy math textbooks “to keep my skills sharp.”
The Corner Store
In 1984, Jerry opened up his own convenience store called, simply, the Corner Store. Marge, the supportive housewife, joined Jerry at the store. She kept the books and stocked the shelves. Jerry was the one who purchased the liquor and cigarettes.
Before long, everyone in town knew the Selbees. A year into the store venture, Jerry installed a lottery machine – the only one in Evart and one of the county’s very few. Word got around and eventually, he was selling $300,000 in lotto tickets per year, earning about $20,000 in profit. The funny thing is Jerry and Marge were teetotalers.
Cigarettes, Liquor, and Tickets
They didn’t drink and Marge disliked the lottery (it was too much of a risk). Jerry would buy tickets from time to time, but only because of the puzzle of it all. But the lottery machine did them well, it helped pay for all six of their kids’ educations.
“It was like free money,” said Jerry. For over 15 years, Jerry and Marge lived by the drum of their store. Cigarettes, liquor, and tickets were what they dealt with day in, day out. The kids grew up, moved out, and by 2000, Jerry and Marge decided it was time to retire.
The Day He Realized the Loophole in the System
They sold the store and Jerry spent his days drinking coffee and reading The Detroit News. In 2003, at 64, Jerry started thinking about the most alluring of all puzzles: the lottery. So, he picked up a pamphlet for a new state lottery game.
He saw what the odds of winning certain amounts of money by picking specific combinations were. That’s when he noticed a flaw – a strange pattern, like the cereal-box code. What he saw, essentially, was a loophole that would make him and his wife millionaires.
The Lottery Isn’t Just About Luck
It would also lead to an investigation, a political scandal, and the exposure of the truth behind America’s favorite game of legalized gambling. “People have been conditioned to think it is luck,” he later reflected. “They don’t look at the structure of games.”
The game he was reading about was called Winfall. A ticket cost one buck and you had to pick six numbers (1 to 49). The Michigan Lottery drew six numbers. With six correct guesses, you won the jackpot of at least $2 million…
It’s Called a Roll-Down
Five, four, three, or two correct numbers meant you won lesser amounts. The game also had something called a roll-down, which intrigued Jerry. If nobody won the jackpot, it climbed above $5 million, leading to a roll-down…
On the next drawing, if there was no six-number winner, the jackpot went down to the lesser tiers of winners. A Winfall roll-down happened about every six weeks, and players increased their bets on these roll-down weeks, hoping to get a piece of the jackpot. Jerry understood the odds…
The Odds of the Game
There was a 1-in-54 chance to get three out of the six numbers, winning $5, and a 1-in-1500 chance to get four numbers, winning $100. But waiting until the roll-down would mean winning more than you lost.
Then, each winning three-number combo won you $50, not $5. The four-number combo would get you $1,000 instead $100. Now, the odds made sense. “I just multiplied it out,” Jerry explained, “and then I said, ‘Hell, you got a positive return here.’” But Jerry wasn’t thinking about that at his kitchen table…
Hiding His New Hobby From Marge
He was thinking about how he was going to hide his lottery playing from Marge. She was the pragmatic one of the two – the one liked safety and the familiar. When the Winfall jackpot rose above $5 million and a roll-down was coming, Jerry drove to a convenience store 47 miles out of Evart.
There, no one would ask him questions. He stood at the lottery machine and spent $2,200, letting the computer pick all the numbers. A few days later, the lottery drew the six winning number.
First Try: A $50 Loss
Jerry sorted through his 2,200 tickets ($1 per ticket) and circled every two-, three- and four-number matches. He earned $2,150, a $50 loss. Not bad. For Jerry, it was merely bad luck. After all, odds are odds – they’re not guarantees.
He decided he would need to increase his odds next time by buying more tickets. He wasn’t a gambler, but he was too curious to stop now. At the next roll-down, Jerry returned to the same corner store and made a larger bet. This time, he bought $3,400 in tickets.
Second Try: A $6,300 Win
It took him hours to sort through, but it was worth it. He won $6,300, a 46 percent profit margin. He then went for a third round on the next roll-down, spending $8,000, and winning $15,700, making a 49 percent margin. Jerry was on a roll!
He took the family on a vacation – a camping trip in Alabama. At the campfire, Jerry let Marge in on his little secret. At first, Marge didn’t react. But then a smile appeared. Her husband was cracking puzzles again, and what’s wrong with having an extra $15,700 in the bank?
Cracking Puzzles and Making Money
“Oh, I knew it would work,” Marge later said. “I knew it would work.” From then on, Jerry would buy hundreds of thousands of tickets on each roll-down week. The way Jerry saw it, he was playing the game as it was meant to be played.
He was simply buying more tickets than the average lotto player. What it meant, though, was that he and Marge had some work to do. Getting rich off the lottery loophole was no easy task. Lottery machines in convenience stores were only able to print 10 slips of paper at a time.
Purchase, Print, Repeat
So, if you wanted to bet $100,000, you had to wait at the machine for hours and hours. You also had to code in the purchase, press “Print,” and wait a minute for 10 slips to emerge at a time. And then do it again and again and again.
But Jerry and Marge knew all the corner store owners in town, so nobody gave them a hard time when they came to print thousands of tickets literally all day. The couple stacked their lotto tickets in piles of $5,000, secured by rubber bands and bundled.
They Must Have Had a Big Coffee Table
When the drawing came, they sat in their living room in front of the TV and sorted through tens – even hundreds – of thousands of tickets. After counting all the tickets, they counted again to make sure they didn’t miss anything.
In the background was the History Channel or HGTV, depending on who had the remote. “It looked extremely tedious and boring, but they didn’t view it that way,” their daughter Dawn recalled. “They trained their minds. Literally, they’d pick one up, look at it, put it down.”
They Had the Time
Whenever Dawn tried to help, she couldn’t keep up the pace. Her parents were doing 10 tickets at the rate she was checking one. “I thought he was crazy,” Dawn said. But mom and dad insisted that they were enjoying themselves. Plus, they had the time.
They put the losing numbers in large bins that they stored in a barn (a paper trail for the IRS, if needed). In the summer of 2003, six months after Jerry’s first ticket, the couple asked their six kids if they wanted in the lottery pool.
The Selbee Kids Join In
Unsurprisingly, the kids joined in, adding different amounts for Jerry to bet on. On their first family bet, the Selbees spent $18,000 and lost most of it, but it was only because another player hit the six-number jackpot. Jerry told them it was just bad luck, and they believed him.
When they let him risk their money on round two and three, they were back on track. Soon enough, Jerry created a corporation to manage his new group. He named it GS Investment Strategies LLC, and sold shares, at $500 apiece to the kids and then to friends and colleagues in town.
A Company With One Purpose
Jerry’s company expanded to 25 members, including a bank vice president, three lawyers, a state trooper, a parole officer, and his personal accountant, Steve Wood. The company existed only on paper. It sold nothing, produced nothing, and had no payroll.
There was only one purpose: to play the lottery. By the spring of 2005, after 12 different roll-down weeks, they were making bank. They started with $40,000, then $80,000, and then $160,000 in profits. Marge added to her savings account while Jerry bought a new Ford F350 and a camping trailer.
Suddenly, the Tap Shuts
Then, all of a sudden in May 2005, the Michigan Lottery shut Winfall down with no warning. They replaced it with a new lottery called Classic Lotto 47. Reportedly, Winfall tickets were decreasing. Jerry was upset; he didn’t want to stop.
“You gotta realize, I was 68 years old. So, it just — it gave me a sense of purpose.” Everyone else in the “company” was just as disappointed, including Marge. A month later, they got news of a new Winfall game in Massachusetts called Cash WinFall.
Then Cash Winfall Was Introduced
There were some differences between the new and the old Winfall, though. The new Winfall cost $2 instead (not $1), you had to pick six numbers between 1 and 46 (not 49), and the jackpot rolled down at $2 million (not $5 million).
The only thing was the closest part of Massachusetts was over 700 miles from Evart. Also, Jerry and Marge had no connections to convenience store owners in Massachusetts. Who was going to let them stand by the machine for hours printing tickets?
There’s a Guy Named Paul
There was a guy – a friend of a company member named Paul – who owned Billy’s Beverages, in Sunderland, 50 miles from the border of Massachusetts. Jerry drove his gray Ford-500 in August 2005 for 12 hours to meet the guy.
Jerry gave Paul an offer: let him print tickets in bulk and he’ll get a stake in GS Investment Strategies LLC. Paul agreed and Jerry came back a few weeks later with Marge. Soon enough, the Selbees developed a routine. A week before the roll-down, they drove to Sunderland.
A Sound Routine
They would book a room at a Red Roof Inn, and at 5:30 a.m., they hit two stores (both owners were to get shares in the company). Jerry went to a store called Jerry’s Place, while Marge went to Billy’s Beverages. They would print tickets until 6 p.m. and place the stacks in duffel bags.
At the Red Roof Inn, the elderly couple searched for winning numbers. Counting $70,000 in printed tickets took a whole 10 days, and they worked 10 hours a day. They only left the room to eat lunch.
Part of the Family
After claiming their winning tickets, they drove the 12 hours back. At their first Cash WinFall game, on August 29, the Selbees spent $120,000 on 60,000 tickets. They went as high as 360,000 tickets, which cost them $720,000. At first, Marge was terrified by the sums.
“You know, you think of this as money,” she recalled, “but pretty soon you never really look. It’s just numbers. It’s just numbers on a piece of paper.” Paul came to see Marge and Jerry as part of his family.
Sticking to the Routine
“They’re salt-of-the-earth kind of people… Genuine.” By 2008, Jerry heard that he and his company weren’t the only ones using his system. There were other large lottery groups playing Cash WinFall using the same kind of strategy.
In five years, Jerry and Marge drove to Massachusetts six to nine times a year, sticking to their tried-and-true system. A lottery compliance officer came to check in on them as they printed tickets at Billy’s Beverages and Jerry’s Place in April 2010. The officer reported “nothing out of the ordinary.”
The Selbees’ Club
That officer wrote an email to his superiors: “I spent some time observing the wagering routine. Everything is very organized and runs smoothly.” One lottery employee said: “How do I become a member of the [Selbees’] club when I retire?”
By 2009, the retirees had grossed over $20 million in winning tickets. That’s a net profit of $5 million after expenses and taxes. Still, their lifestyle was as modest and conservative as it always was. They stayed in the same house, they still hosted Christmas dinner every year, and Marge still made her famous toffee candy and washed the dishes by hand.
Milking the Cow
The Selbee kids saved the winnings for their own kids’ educations. Some of the group’s players paid off debts. Wood, Jerry’s accountant, took four cruises and redid his house, and Paul filed for divorce. Meeting the Selbees changed his life.
“I fell in love again, and remarried, and I’ve got three step kids that I never thought I would have.” Every once in a while, players in the group asked Jerry if he was going to stop at some point. “I’m going to milk this cow as long as it’ll stand,” was his reply.
Then Comes the Competition
The group lost money only three times. Their biggest loss—$360,000 in a 2007 drawing–wasn’t even a showstopper since they made the money back. Jerry thought that as long as they were playing conservatively, they wouldn’t attract any unwanted attention. So why not keep going?
Well, one reason might be because another betting group is crowding you out. A group of MIT students were involved in their own group betting system playing Cash WinFall. They were on a mission to freeze out other groups that were doing the same thing.
Jerry vs. MIT
In August 2010, the MIT group bought 700,000 lottery tickets, costing them a total of $1.4 million. It was insane. They made a $700,000 cash profit by triggering a roll-down. Jerry wasn’t a happy camper. It was one thing to place big bets, like they had been doing, but it was another ballgame altogether to manipulate the mechanics of the game and crowd out other players.
“They took us out of the game intentionally,” Jerry stated. The next time MIT was going to force a roll-down, Jerry was going to be ready. Christmas time was going to be their next strike.
Jerry asked Paul to notify him if stores were reporting a spike in lottery sales. When it indeed happened, Jerry hopped in his truck. On Christmas Day, he drove to Jerry’s Place and spent hours printing 45,000 tickets. When he was about to finish printing the tickets, a man knocked on the store window (the store was closed).
His name was Yuran Lu and he told Jerry, “I’m from the other club, and I think it would be mutually beneficial if we knew how much money each of us were playing.” Jerry wasn’t interested in a collusion, so he sent Lu away.
Ring the Alarm
There was indeed a roll-down and Jerry’s group made a $200,000 in profit. He had no idea how much the MIT guys made. Meanwhile, an investigative reporter with the Boston Globe named Andrea Estes got a tip that something weird was happening with the lottery.
She was told to find a copy of the 20/20, a record of players who, over the last year, won at least 20 times and $20,000. The tipster noticed that people were buying massive quantities of tickets in Sunderland, for whatever reason, and that the players were from out of state. Estes saw that GS Investment Strategies LLC was buying in bulk at Billy’s Beverages.
Don’t Ask, Don’t Tell
In July 2011, she drove to Billy’s Beverages right before the next roll-down. She found Paul and Marge behind the counter, printing lottery tickets. “It was really bizarre,” Estes recalled. She introduced herself as a Globe reporter, and Marge got all flustered and didn’t answer any questions.
So, Estes drove to Jerry’s Place and found Jerry. He didn’t talk either. “It was pretty obvious that something was askew,” Estes said. When she tried to talk to lottery officials, they claimed ignorance. “The lottery was really sleazy about the whole thing.”
The Cat’s Out of the Bag
Eventually, Steven Grossman, the new state treasurer, found out and he instructed the lottery’s executive director to get things straight. Within days, officials were cracking down on all the big betting groups. They started by suspending the licenses of seven stores that serviced the groups, including Billy’s Beverages and Jerry’s Place.
Estes’ story broke on July 31, 2011. Jerry, Marge, and even Lu were named in the article. Estes reported that casual lottery players were unknowingly funding the fortunes of the big betting groups by purchasing fewer tickets at less opportune moments.
The Beginning of the End
The story was a sensation. Within days, it was announced that Cash WinFall was to be phased out within a year. Until then, stores were limited to selling $5,000 in ticket sales a day. Jerry couldn’t believe his ears. He was framed as a cheater – for screwing over the little guy.
It was ridiculous to him. If anyone was the “big guy,” it was the lottery, which took 40 percent of every ticket. He and Marge played for as long as Cash Winfall was available. He also called Estes to give her the interview she wanted and to set the record straight on who the real manipulators in the game were.
Every Story Has Its Villain
Jerry and Marge played Cash Winfall for the last time in January 2012. Their final tally, in profits, was $7.75 million before taxes, distributed among the company players. They knew it was a matter of time until it all ended, but they were still sad and frustrated.
They never expected to be made out as villains. In the end, Jerry and Marge shattered the lotto illusion, showing its true colors as a flawed, messy structure of capitalism like so many other institutions.
A Night at the Casino
Today, at 82, Jerry still plays the lottery, but it’s usually the multistate Powerball jackpot. Once in a while, he heads out to the casino to play Texas Hold ’Em. Marge is with him, but she doesn’t gamble. If Jerry gives her $100 to play the slots, she’ll give him back $100 by the end of the night.
While some of the MIT guys went on to create an Internet startup in the tech industry, the Selbees developed a new business venture in construction financing. Jerry lends money to home builders who provide housing for war veterans, among others.
Chats Over Breakfast
The Selbees still get together with their lottery group, reminiscing over their past adventures and defending themselves. One morning, a few of them had breakfast at a diner in Evart. “The odds are the odds,” Wood, the accountant, said.
“They were just computer picks,” Marge added. “It was perfectly legal. It’s the American way,” Wood noted. “I look for tendencies,” Jerry chimed in. “That’s all. Nothing guaranteed.” Life was emptier for Marge without the lotto chase. “I really do miss it,” she said. “I’m too young to quit working.”