Could lotto be used to launder money?

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Forums › Finance and wealth management › Could lotto be used to launder money?

Rikkitic

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#254312 6-Aug-2019 14:17

An idle question that just popped into my mind while reading about new money laundering laws: Could Lotto be used to successfully launder money? As in, could a small group go around buying up large quantities of Lotto tickets for cash and would the likelihood of winning a significant percentage of the money back, or even - who knows? - a jackpot be enough to make it worthwhile? How many millions would you have to spend to have a reasonable chance of winning a few million back?

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#2290957 6-Aug-2019 14:20

I believe there was a maths professor back in the day who worked out a formula for a specific lotto to indicate when the jackpot value exceeded the value of the number tickets required to achieve a certain likelihood of winning it...and he was very successful!

That said, I am sure that it would be too erratic and complex a method compared to any number of alternatives!

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#2290958 6-Aug-2019 14:22

Stefan Mandel:

https://www.businessinsider.com.au/how-to-win-the-lottery-2018-9?r=US&IR=T

wellygary

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#2290959 6-Aug-2019 14:25

The biggest things against it is that 40% of the ticket price is creamed off to run lotto and provide for their charitable grants....

With only a maximum 60% of what you spend being potentially returned as the starting point, I think its a poor option,

Casinos have a much larger return potential ( even accounting for the house's profit margin)

jonathan18

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#2290966 6-Aug-2019 14:30

The guy you're talking of - a Romanian called Stefan Mandel - achieved it in his home country, in Australia and the US, I think a total of 14 times; I recall they even changed rules/laws(?) in one of these locations to stop it happening again.

I understand it's unlikely to be a feat that can be repeated anyway, even in theory, because changes to lotteries have made the odds that much higher and it not financially viable.

Great Planet Money (audio podcast) on both this guy and what is supposed to have been the first lottery in 1567 (which was a disaster!) - a fantastic and fascinating listen I'd highly recommend:

https://www.npr.org/sections/money/2018/10/23/659818948/episode-676-the-first-lottery-how-to-beat-the-odds

frankv

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#2290972 6-Aug-2019 14:38

Lotto pays about 1/3 of its takings out as prizes. So, unless you landed on a big prize, you would probably lose about 2/3 of your ill-gotten gains to launder it. I think NZ Lotto is limited in the size of the jackpot, but overseas lotteries can sometimes jackpot to the point where the probable winnings of a ticket are greater than the price of the ticket. Which is how Stefan Mandel won... not really rocket science.

A friend told me, years ago, of a friend of his who would buy for cash any large TAB payout cheque for 10% over its value.

Casinos would be a better way, I guess... buy a whole lot of chips for cash, maybe gamble a little for verisimilitude, then cash them in for a cheque. But presumably IRD and casinos are wise to this.

Varkk

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#2290976 6-Aug-2019 14:45

Theoretically yes, any gambling could be used in a money laundering scheme. However Lotto is probably a low payout rate compared to the more traditional avenues.

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wellygary

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#2290978 6-Aug-2019 14:53

frankv:

Casinos would be a better way, I guess... buy a whole lot of chips for cash, maybe gamble a little for verisimilitude, then cash them in for a cheque. But presumably IRD and casinos are wise to this.

Turning up with a "big brown envelope of cash" is gonna get major sideways looks at a Casino in NZ, I think they are required to give you a probing if its more than 10K......

robertsona

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#2290994 6-Aug-2019 15:21

Rikkitic:

Could Lotto be used to successfully launder money?

Asking for a friend?!

surfisup1000

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#2291010 6-Aug-2019 15:54

wellygary:

The biggest things against it is that 40% of the ticket price is creamed off to run lotto and provide for their charitable grants....

With only a maximum 60% of what you spend being potentially returned as the starting point, I think its a poor option,

Casinos have a much larger return potential ( even accounting for the house's profit margin)

60% of legal money is better than 100% of illegal!

MileHighKiwi

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#2291015 6-Aug-2019 15:57

The logistics would be impossible and not worth the hassle. To launder $1M in $30 tickets is 33,333 tickets. To launder it over 12 months you need to buy 641 per week, or 320 per week over two years.

There's 1,400 lotto outlets in NZ, Auckland probably has 300, so two tickets at every store, every week, for a year.

You'd need to win lotto to pay for your gas!

jonathan18

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#2291022 6-Aug-2019 16:04

Listen to the podcast I linked to above as to how Mandel did it in winning one US lottery - I recall he was living in Aus at the time - he developed a program to print out slips for every permutation required; shipped these slips over to the US; and had people take stacks of these into stores to purchase the tickets. Now that's a logistical nightmare!

Surely this could be easier today, given the ability to purchase Lotto tickets (and I assume other lottery tickets) online?

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jpoc

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#2291141 6-Aug-2019 19:07

It has been done many many times and is a well known thing.

Not as you suggest though.

You keep a scan around for anyone in your town who has a decent sized win. Easy enough, just mention to the local dairy owners that you will tip them handsomely if they give you the info.

You approach them.

"Hey, you have a winning lotto ticket there. I'll pay you a dollar and a half for each dollar. Cash."

Have you not noticed the number of reports in the British press about convicted crims suddenly winning big on the lotto?

Have you not wondered why it seems to take some winners quite a while to claim their money? All the wheeling and dealing takes time.

It's not only the lotto and the casinos.

I have been told by an insider that one brothel in Auckland is mostly run as a money laundering operation.

Sally works in the brothel but does not actually see clients. Her BF turns up with a thousand bucks that he has made selling P for his gang.

He hands the cash to the brothel (owned by the gang as a legit business) for an evening with his GF in the brothel. The house hands Sally the money that her BF is due for the drug sales and keeps the rest.

There you go, a thousand bucks of drug money turned into squeaky clean profits for the distributors and dealers. So clean they can even pay tax on it.

jpoc

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#2291151 6-Aug-2019 19:27

Even amazon are in on it.

Have you not noticed that there are self published ebooks on there?

Some of them are random text but they sell for hundreds of bucks.

Buy a pressy card for cash, create an account on amazon, buy a copy of your book and, after amazon gets its cut, you keep the rest all nice and legit (minus tax).

There are pressy card equivalents all over the world.

kiwiharry

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#2291192 6-Aug-2019 20:35

You also run the risk of somebody else also getting the winning numbers, so your Division 1 winning jackpot would be shared equally with the other winners.

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#2291434 7-Aug-2019 10:12

Lotto is not a good way to launder money.

Property however ... https://www.justice.govt.nz/justice-sector-policy/key-initiatives/aml-cft/

https://theweek.com/articles/736313/how-foreign-investors-launder-money-new-york-real-estate

https://www.abc.net.au/news/2019-02-25/money-laundering-laws-chris-bowen-dirty-money/10846552

https://www.wired.co.uk/article/money-laundering-hmrc-tax-update

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