During a 3-day buying binge starting July 12, Gerald and Marjorie Selbee of Evart, Mich., bought $614,000 worth of the $2 tickets.
SUNDERLAND – Two Franklin County stores’ state lottery licenses have been suspended after accusations they broke the rules to help a Michigan couple take advantage of a potentially lucrative quirk in the Cash WinFall game.
The accused lottery agents are Billy’s Beer and Wine, owned by Paul Mardas, and Jerry’s Place in South Deerfield, co-owned by Jerry Dagrosa.
Gerald and Marjorie Selbee, 73, of Evart, Mich., have traveled to Franklin County once every two months since 2005, said Mardas, who met them through one of his customers. During a three-day buying binge starting July 12, the couple bought $614,000 worth of the $2 tickets, said Gerald Selbee.
The Selbees run a corporation called GS Investment Strategies, LLC. Mardas and Dagrosa are among its approximately 25 members, who also include law enforcement officers, lawyers and finance experts, Gerald Selbee said.
They have picked up on a strategy that potentially allows them to make huge profits: If no one guesses all six numbers to win the jackpot, tickets with fewer matching numbers become more valuable as the jackpot money is redistributed to the lesser winners. The optimal betting periods are called “rolldown weeks” and the lottery announces them in advance.
The jackpot maxes out at $2 million to $2.5 million. By essentially stuffing the game with tickets, it’s possible for a few people to pick up a huge percentage of the winnings. Cash WinFall is the only game in the state that works this way.
The Selbees' scheme, in and of itself, is not against the rules or the law.
“They’re not manipulating the odds in any way,” Lottery spokesperson Beth Bresnahan said. “The more you play, the more likely you are to win ... or lose.”
In the game’s seven-year history, the jackpot has been hit eight times. The odds of winning it are 1 in 9.3 million, Bresnahan said. Gerald Selbee said that’s the group’s goal. If someone else wins the jackpot, the Selbees’ money is lost.
Records show the Selbees so far have claimed $206,649 in prizes from their latest visit.
“I’m holding another $500,000 worth of winning tickets that have not been cashed in yet,” said Gerald Selbee. He said the corporation will pay $63,000 in state and federal taxes.
Depending on how much they invested, the members could make as little as $10 each, he said. In the past, he said, the group has lost money five times, once losing $350,000.
“The operation of the game was not manipulated,” Bresnahan said. “The prizes they won are valid.”
The move got the agents in trouble for tying up the machines and not allowing other players a chance to make their bets. An investigation is underway, but the agents are accused of letting the Selbees bet on behalf of people who weren't present and of opening outside regular business hours for the sole purpose of selling lottery tickets, she said.
After securing contracted part-time jobs at each location, the Selbees made the purchases mostly while on the clock. Only employees of license holders are allowed to operate the terminals, but Bresnahan said the Lottery “discourages” agents from allowing employees to make bets at work.
There is a $5,000 daily cap on lottery sales. The two stores requested increases in the limit. The Lottery agreed and sent “compliance officers” to check out their activity, said Bresnahan. The officers reported the violations.
In an average week, the two stores post $300 to $500 in sales, Bresnahan said, but they will clean up on the scheme. A ticket agent gets 5 percent of sales and 1 percent of winnings, meaning each would earn at least $15,350 from the Selbees' purchases alone. Bresnahan said those profits are valid and payable.
Mardas said he hasn’t done anything wrong. He said the Selbees used the terminal’s “interrupt” button to suspend their transactions so other players could make bets.
He denies that anyone made bets for someone who wasn’t present, but acknowledged that he and the Selbees arrived at the store early and stayed after it closed to continue the transactions. The Selbees performed other work around the store, he said.
“This is very hard on my business,” he said. “It’s trying because the lottery is a profit center for me.”
Dagrosa said the compliance officers watched the operation and knew Jerry’s was open past its usual closing time to sell tickets. They gave Dagrosa their blessing, he said.
“Everything I’ve done has been cleared by the lottery first,” Dagrosa said. “My personal feeling is that we’re getting hung out to dry.”
Gerald Selbee said “the doors were not locked” when they were working outside regular business hours and they served customers.
“In no way did we ever intend to jeopardize the licenses,” he said.