Excerpt: Prologue
(note this may not match the final printed exactly because of intermittent edits)
March 30, 2005
It’s the same televised routine twice a week, Wednesdays and Saturdays, at 10:59 p.m. Central Time. And on March 30, 2005, everything was as always. The host introduced the drawing. The white balls rolled out one by one from the air-popped machine: 28, 39, 22, 32, 33. The final ball, red, from another machine, plopped down and slowly rolled to a stop: 42. The six balls took 56 seconds to appear, 56 seconds that sent shocks through the lottery system across the country.
After the drawing, with the cameras turned off, Sue Dooley, a former pre-school teacher, helped roll the two machines back in the vault. Sue was one of the two Powerball staff members who took turns overseeing the drawings. One of the front-line soldiers of the Powerball security, she was hired, in part, because working with children had made her good at bossing people around. She was the one who dropped the balls in the wispy churn of the machines that night, propped up with a milk crate so her 5’2”, she needed a milk crate could reach that high.
Lotteries live and die by their integrity. Fraud and scandal have led to American lotteries being banned in two waves of moralistic prohibition – once before the Civil War and another before the turn of the 20th century. In one case, in a lottery passed by Congress in 1823 to raise money to beautify Washington, the organizers ran away with the money and the winner was never paid. By the late 19th century, Congress had passed a ban on selling lottery tickets across state lines, which hinders the creation of a national lottery to this day.
But states, increasing dependent on lotteries in lieu of raising taxes, found a way around the national ban by the late 1980s. They found they could legally form coalitions of state lotteries to form mega-lotteries, whose larger jackpots would attract greater ticket sales, as long as the states only sold state-branded tickets within their borders. Lotteries were akin to insurance companies – taking in lots of little flows of money that would statistically cover big payouts at some profit to the institution. Mega-lotteries were somewhat analogous to re-insurance firms, where the states could spread the risk of large payouts amongst one another. The mega-lotteries proved to be so popular, raising billions of dollars for education and infrastructure that by 2005, only a handful of states abstained from either Powerball or its rival, Megamillions.
With billions of dollars depending on the security of Powerball, there were numerous precautionary measures in place. At every drawing officials waited until the last minute before they decided which two of four Powerball machines they would use. Copies of the ticket sales data were kept in multiple locations. The vault housing the machines were double padlocked and secured with plastic number seals that could be only used once. Two keys were needed to open the vault, kept separately by the Powerball staff and by an auditor.
Satisfied that everything was secure, Sue put the vault key into her purse and drove the five-mile empty stretch of Des Moines highway from the studio to wait for the results. The Powerball headquarters had been located in the Des Moines area, in part because it was neither the East nor West Coast. “No one cares if it’s located in Iowa. No one’s feelings are hurt,” as one Powerball administrator explained. Iowa is as inoffensive as it is flat.
That night had been a low-key, uneventful drawing and Sue figured she could be in bed by around midnight. The jackpot was only $84 million. Once that figure would have generated some excitement, but Powerball administrators had discovered the phenomenon of jackpot fatigue: players needed ever-larger jackpots to keep buying tickets in large numbers. The threshold for an attention-grabbing mega-jackpot had once been $10 million, but now stood at $100 million. The modest $84 million jackpot had generated only $11 million in ticket sales, on the modest end of a normal lottery. Based on the ticket sales, they expected to get between three and four second-place winners – people who picked the first five of the six numbers correctly – and perhaps one jackpot winner.
Around 11:15 p.m., Sue pulled up to the Powerball headquarters, which was tucked in an anonymous office complex in a stretch of grass off Interstate 35. It was hard to believe that the low-slung bland strip mall contained a 12-person office that oversaw some $3 billion a year in annual sales – enough that if those sales belonged to a publicly traded company, it would be in the Fortune 500. The staff had kept the offices purposely non-descript, with none of the glitzy logos and repetitive lights that often marked state lottery headquarters. In fact, the office originally had no sign whatsoever to indicate that it served as Powerball headquarters, but when senior citizens in search of nearby medical suppliers kept coming in to ask for respirators and medications, the staff stuck four small letters on the front door: “MUSL, the contrived abbreviation for “Multistate Lottery.”
Sue turned on her computer and waited for the results to come in from the various states. Before the prizes could be doled out the next morning, all the numbers had to be checked and rechecked.
This can’t be right, Sue thought as she saw the first tallies come in. Statistically they had expected only 3.7 second-place winners, but the states were coming in with huge numbers, so large that no one had ever seen anything like this in the history of American lotteries.
Arizona: 11
Pennsylvania: 13
South Carolina: 14
Tennessee: 12
Indiana: 10
Even states that normally had almost no second-place winners were coming in with as more than had been predicted for the entire drawing.
Rhode Island: 5
Minnesota: 4
Connecticut: 4
Even Montana, with its paltry 900,000 population, had a winner. Across all the states there were 110 winners. Sue checked to see if they were concentrated in any way, but the tickets had been sold by different vendors across all different computer systems across different states. None of the second-place winning were computer-generated, meaning the players independently chose the numbers themselves.
What was going on? She grabbed the phone.
Chuck Strutt, the Powerball director, was a mild-mannered man who wrote poetry in his spare time. But sometimes he lost momentum. His last book of published poetry included a number of blank pages, in jest.
Chuck was sitting at home when his phone rang and he felt a shiver when he heard what was happening. Occasionally, Powerball would get four or five times the number of expected second-place winners, and once they even had seven times the expected number. But their accountants and statisticians calculated the odds and found this was just the fluke of chance; distributions could sometimes put you in those ranges. But nearly 30 times the number of expected winners was outside the chance of random stastical probability.
Not only that, but 104 of the 110 winners had picked the same sixth number – 40, instead of the Powerball number of 42. It would have been better had the winners all matched the final Powerball number of 42. In that case, under the lottery’s fine print rules, the jackpot would simply have been split among the 100 or so people.
But Powerball’s second prize and under were all fixed amounts – meaning their liability was theoretically unlimited: the more winners, the more Powerball had to pay out. Foreseeing this, Powerball had legally protected itself in scenarios that could generate an outlandish number of winners. For example, the most popular sequence played in Powerball was 1, 2, 3, 4, 5, 6, followed by 5, 10, 15, 20, 25, 30. If the winning numbers resembled either of those, there would be thousands upon thousands of lower-place winners, as happened in Massachusetts once when the numbers, 1, 2, 3, 4, 6 and 10 were drawn. There would also have been thousands of winners if 9-1-1 had come up on any of the pick-3 lotteries in the days after September 11. So on the back of a Powerball ticket, written in small print are the words, “In unusual circumstances, the set prize amount may be paid on a pari-mutuel basis, which will be lower than the published prize amounts.”
Powerball also kept a reserve fund of $25 million, of which $20 million would be drained by the unexpectedly high number of $100,000 and $500,000 winners in that night’s drawing.
Chuck and Sue brainstormed about possible causes. There was an episode of Lost, the hit ABC television show, which featured a lottery number that simultaneously had brought jackpots and misfortune to its winners. Sue, a life-long fan of the Young and the Restless, recalled that a recent plotline involved a $1 million Powerball ticket dispute between Kevin and Michael. Perhaps one of the widely syndicated lottery columnists that suggested those numbers.
Chuck barely sleep. What if this were fraud? He wondered, Had someone managed to game the system?
Some 700 miles away in Nashville the next morning, Rebecca Paul came to work puzzled by the unusual spike in Powerball winners. Rebecca had headed four state lotteries, including her current position as the head of Tennessee’s. She was intrigued by the number of winners in Tennessee alone: not only had they had the jackpot winner, but they also had 12 second-place winners.
With more than 20 years of experience under her belt, Rebecca was one of the most respected veterans and one of the first women in the insular, tight-knit community of state lottery officials. Her office wall featured a collection of different Gaming magazine issues through the years – all with her photo on the cover.
She had started down the path of state lotteries as a beauty pageant queen when, as Miss Indiana, she had placed in the top five in the Miss America pageant with a gymnastics tumbling routine. It led to a job as a part-time weather girl on a local television station, which in turn became a business-side job in sales and marketing.
In 1985, she got a call from the Illinois governor, James Thompson, who wanted her to start the state lottery. She had no experience with lotteries, he told her he wanted her anyway. She knew how to sell things, and lotteries were in essence about marketing – selling people their dreams. Even as a lottery official, one prominent vestige of her beauty pageant days was her hair, which could be best described by the word “bouffant.”
Rebecca sat down at her desk with a Powerball form and colored in the winning numbers with a purple felt tip pen to see if any patterns emerged – a cross, or a diagonal or a diamond – but they didn’t. She contacted the head of security of the Tennessee Lottery to start looking for any evidence of fraud.
But at 8:30 a.m., Tennessee already had a winner waiting for the prize office to open its doors, a great-grandfather named James Currie who worked the night shift as a system operator at Pinnacle Foods, the parent company of the Duncan Hines and Aunt Jemima brands. He had driven two hours that morning from Jackson, Tennessee with his sister, Sherion, with the prize ticket in hand. He dreamed of buying a Cadillac with his money.
The staff, as was customary, asked how he had selected his winning numbers.
“From a fortune cookie,” he replied. He had always used birthday and anniversary dates but they weren’t getting him anywhere. So he switched to a fortune cookie number he had obtained from a take-out Chinese restaurant called Dragon 2000 near his home a few months earlier. He had a good feeling about those numbers and had been playing them for three months.
At Idaho at 11:18 a.m. another winner reported using a fortune cookie number. Same with Minnesota at 12:06 p.m. and Wisconsin at 12:09 p.m. One winner even kept the original fortune: “All the preparation you have done will finally be paying off.” On the bottom, were the numbers that so many Americans had taken an inexplicable faith in: 22, 28 32 33, 39, 40.
The ritual of Chinese food in America had sent the 29-state Powerball on a collision course with fortune cookies. The fortune cookies prevailed.