Lottery guy bets entire BTC fortune and ... loses? :)

[FreeMoney]

bitlotto wins, jer pay up.

[1714038648]

1714038648

[Meni Rosenfeld]

jereflix did not offer a way bitlotto can cheat and thus can't claim the bet.

However, he did implicitly offer a way bitlotto can inflate his apparent trust regarding stealing. Consider again this scenario:

(Really, I believe that you are honest, but for all I know, in the June 1 lottery, you had just 1 Bitcoin worth of real entrants, and ~130 fake entrants that you created.  You won (surprise), and the jackpot looks attractive for the next round of suckers.)

Disregarding fees, bitlotto puts 130 of his own BTC for a chance of 130/131 to get back 131 BTC and 1/131 chance to lose it all (just like anyone else could). However, it could be that his strategy was really as follows: If he wins, pay out to the winning address normally; if he loses, take the money and run. This way he can make himself appear worthy to be trusted with 131 BTC when he actually is not.

[jerfelix]

Wow, 0-3.

I have nothing to pay.  I didn't bet anything.

But I am still awaiting proof that he didn't buy the majority of the tickets in the June 1 lottery.  Until you can prove that to me, I contend that he could have.  And since he could have, that proves that I won.

jereflix did not offer a way bitlotto can cheat and thus can't claim the bet.

However, he did implicitly offer a way bitlotto can inflate his apparent trust regarding stealing. Consider again this scenario:

(Really, I believe that you are honest, but for all I know, in the June 1 lottery, you had just 1 Bitcoin worth of real entrants, and ~130 fake entrants that you created.  You won (surprise), and the jackpot looks attractive for the next round of suckers.)

Disregarding fees, bitlotto puts 130 of his own BTC for a chance of 130/131 to get back 131 BTC and 1/131 chance to lose it all (just like anyone else could). However, it could be that his strategy was really as follows: If he wins, pay out to the winning address normally; if he loses, take the money and run. This way he can make himself appear worthy to be trusted with 131 BTC when he actually is not.

Thank you, that was my point!!

Edit:
Furthermore, in that  hypothetical scenario, he CHEATED the users out of the 1 BTC, because they had NO chance of winning.  zero.  zip.  nada.   130/131 they lose.  1/131 they get no payout because he runs off with the money.  That is a way to cheat.  and that is proof that I won the bet.

[mouse]

I don't know if this is clear to anyone else but me, but when someone writes:
"It's cheat proof. If you can think of a way I can pay myself without everyone noticing I'll give you all the BTC I own!! "
I take it to clearly mean: "I have a lot of faith in my system" and nothing more. He's communicating an idea, not making a formal bet. The language is too informal for to be taken seriously that way (note the multiple !). All language should be taken in the spirit of its meaning, otherwise all communication would be constantly bogged down with mindless details and we'd all talk like lawyers.

I believe the term for this is "pedantic".

Regards

[Meni Rosenfeld]

But I am still awaiting proof that he didn't buy the majority of the tickets in the June 1 lottery.  Until you can prove that to me, I contend that he could have.  And since he could have, that proves that I won.

Nobody can prove that*, he could have, and it doesn't prove you won. The bet was about stealing the money without being detected. He might have an intention to steal at some point and plan with this intention, but the moment he steals he'll be detected.

* Unless buyers of the majority of tickets come and supply proofs of their identities.

Furthermore, in that  hypothetical scenario, he CHEATED the users out of the 1 BTC, because they had NO chance of winning.  zero.  zip.  nada.   130/131 they lose.  1/131 they get no payout because he runs off with the money.  That is a way to cheat.  and that is proof that I won the bet.

I guess there was some scope to clarify the exact terms of the bet in advance. But to me this doesn't seem to qualify because 1) He can materially steal only once, which was clearly known to be true and 2) While he can statistically steal several times, the scope of this cheat is bounded by his capital and thus he can't do a large-scale scam.

[realnowhereman]

I'm with jerfelix.

Forget bitcoin.

I am a millionaire.  I start a lottery with odds of one million to one to win whatever gets put in the pot.

One person plays my lottery.  The pot is $1.  They have a million to one chance of winning.  If they don't win, it rolls over to next time.

A million people play my lottery.  The pot is $1million.  They each have a million to one chance of winning, but on average, one person will win (assuming a uniform distribution of tickets).

The above two examples are identical if we play an infinite number of lotteries.

Now a million people play my lottery.  But I also play my lottery, buying an entirely even spread of tickets, covering every possibility.  The pot is $2million.  I am guaranteed to be one of the winners; and there is likely to be one other winner.  We each get half the pot.  I get my million back.  Fine -- a million in, a million out.

Now go again, but this time I, as operator, take a cut of the pot (as is normal in lotteries).  For the sake of simplicity we'll say 50%, but it doesn't matter.

The difference now is that for an outside player, guaranteeing a win costs them $1million, and they only get half of it back when they win.  For me to guarantee a win costs me $1million and I get all of it back.  That means I can play every time at zero cost, and guarantee a win.  Other players are guaranteed to lose money; and depending on how many play, I get their money too.  On average, I will come out on top.

Unless the operator percentage is zero; lottery operators shouldn't be allowed to play their own lottery.

I don't know the details of bitlotto; but if there is any percentage taken, then the operator playing manipulates the payout.

I don't think talking about "doing a runner" is relevant, because that can be done whatever the rules are.  I also don't think "I haven't done a runner yet" is proof of trustworthiness.  What if your personal threshold for theft is $1million; well you are trustworthy up to that point then aren't you?  For outsiders to trust, the person who holds the pot should not be able to benefit from the pot.  The means escrow, with release controlled by an independent non-player.

[jerfelix]

But I am still awaiting proof that he didn't buy the majority of the tickets in the June 1 lottery.  Until you can prove that to me, I contend that he could have.  And since he could have, that proves that I won.

Nobody can prove that*, he could have, and it doesn't prove you won. The bet was about stealing the money without being detected. He might have an intention to steal at some point and plan with this intention, but the moment he steals he'll be detected.

* Unless buyers of the majority of tickets come and supply proofs of their identities.

I'm confused.  You say "The bet was about stealing the money without being detected", which I agree.  And I said he very well could have cheated 1 BTC from some poor sap, without being detected in the June 1 lottery, and you agreed that nobody can prove that he didn't*.  So why didn't I win the bet then?

* And even if the majority of ticket holders supply proofs, you cannot tell whether one or all of them are shills.


I'm going to be hard to convince, so this could go on forever, unfortunately.  But as I said, I'm not after the money.  I think it's an interesting discussion (and I hate being wrong!)  

[joan]

His system seems fairly cheat-resilient to me.
Stacking the odds is part of the game. Anyone can do it. The betting address being public, he doesn't have more information than anyone else on what the odds are.

The public address serves as a transparent escrow: anyone can see what goes in, and what goes out. It's actually more transparent than any other escrow we could think of, at the cost of privacy.

edit:
@realnowhereman: you wrote "guaranteeing a win costs them $1million, and they only get half of it back when they win".
If an outsider do what the operator do in your story, buy 1 million tickets evenly spread (in addition to the 1 million people already playing) the total jackpot is now 2 millions, so the outsider also get his million back. A million in, a million out. No ?

[Meni Rosenfeld]

@realnowhereman - I can see how this logic applies when there is a very small number of lottery outcomes, but does it really hold up when there are 2^256? There's no way for the operator to have 0 risk then.

And in either case it doesn't seem relevant. It's great for the operator that he can profit out of it, but what we care about is the participant. And he can know exactly what his expected payout per lottery ticket is, no matter how the operator chooses to enter his own lottery.

Saying that an operator shouldn't have an edge when playing his own lottery is like saying a grocery store owner shouldn't buy groceries at his own store.

I'm confused.  You say "The bet was about stealing the money without being detected", which I agree.  And I said he very well could have cheated 1 BTC from some poor sap, without being detected in the June 1 lottery, and you agreed that nobody can prove that he didn't*.  So why didn't I win the bet then?

bitlotto can cheat him statistically. That is, he can have a plan to make sure the participant doesn't win even when he should. But this is different from material cheating (not sure if this is the right word), which means that the contingency that the participant should win actually happened and he still didn't get the reward. The latter cannot be done undetected.

And I guess there's no real way to be convinced whether the original bet was about material cheating or also limited-scope statistical cheating.

[jerfelix]

bitlotto can cheat him statistically. That is, he can have a plan to make sure the participant doesn't win even when he should. But this is different from material cheating (not sure if this is the right word), which means that the contingency that the participant should win actually happened and he still didn't get the reward. The latter cannot be done undetected.

Well, Bitlotto is set up with a system that you can generally describe as "whomever is closest to the number drawn wins" method.
And by flooding the pool of entries, he can "sneak in front of" the "real winner".  Like if the winning number was 123... and the closest legitimate ticket was 119... but by flooding the entries, the lottery administrator got the number 120..., the legitimate winner would not know he's the legitimate winner, because he could see some other entrant that is closer than he is.

I agree, if he admits that someone won, you can see if he pays out.  That's real cool.

With 130 entrants last month, if 40 were legit, and he bought the other 90 using the plan I outlined, then he had about a 69% chance of winning, and all it takes is about $1800 and some reasonable luck, to get to keep $800.  (And if he lost, he keeps it anyway, but has to shut down.)

That very well could have happened, and I'd say that $800 is materially cheating.

I really think he's running an honest lottery, so don't misinterpret what I am saying.  I'm just trying to figure out how anyone can be 100% sure.

[realnowhereman]

I've obviously not been clear.

The operator being able to buy at half price gives him an advantage.  It's not like the grocer, because when a grocer buys his own banana, he can't then sell that banana, so he has lost his profit.  A lottery operator has close to zero marginal costs to sell himself an additional ticket.  He is not depriving himself of the ability to sell a ticket to a customer.  Lottery tickets are generated from thin air.

Let's think about it in terms of a real lottery.  In the UK the lottery is 14 million to one for the big win.  Therefore if the jackpot is every greater than £14 million; it is a good bet to buy 14 million tickets.  If you did this every time, you would come out on top (we'll assume the behaviour of the other players is unchanged because of the big win, that a roll over is as likely in either case).

Let's say I was a discount seller of lottery tickets, and only you know about me, and can get tickets at 50% off.  You could then make the same good bet for £7 million.

That is the position that the lottery operator is in who buys his own tickets.

[Meni Rosenfeld]

A lottery operator has close to zero marginal costs to sell himself an additional ticket.  He is not depriving himself of the ability to sell a ticket to a customer.  Lottery tickets are generated from thin air.

I think here the particulars of bitlotto may differ from other lotteries. To generate a ticket for himself he actually has to spend in advance a BTC he currently owns. So whatever he has to gain only scales with his own capital, not with the number of participants.

Let's say I was a discount seller of lottery tickets, and only you know about me, and can get tickets at 50% off.  You could then make the same good bet for £7 million.

- And this sounds a lot less impressive if the fee is only 1%, and he can get the good bet for £13.86M.
- You're once again making arguments that make sense for a traditional lottery where there are a limited number of options, and not so much for a lottery where there's virtually infinitely many options and exactly one winner (thus there's always a risk to go along with any expected gain).
- This is exactly like the grocer who can get his own good produce for a discount relative to his customers, and can offer a discount to his acquaintances.
- You're still only showing the operator can gain, not that the participants can lose. Every customer who buys a ticket knows he has a 1/X chance to win 0.99X BTC, where the value of X is not yet known. All of your suggested manipulations don't change that.

[realnowhereman]

- And this sounds a lot less impressive if the fee is only 1%, and he can get the good bet for £13.86M.

Well yes; I just plucked 50% out of the air.  But gain is gain.

- You're once again making arguments that make sense for a traditional lottery where there are a limited number of options, and not so much for a lottery where there's virtually infinitely many options and exactly one winner (thus there's always a risk to go along with any expected gain).

True; I've not looked at bitlotto at all; but I'm fairly experienced in lottery systems.  I wrote software for a lottery company.

- This is exactly like the grocer who can get his own good produce for a discount relative to his customers, and can offer a discount to his acquaintances.

No it's not.  When the grocer purchases his own goods, those goods aren't available for him to sell.  When a lottery operator purchases his own goods, those goods are still available to sell (or at least a perfectly adequate substitute).

- You're still only showing the operator can gain, not that the participants can lose. Every customer who buys a ticket knows he has a 1/X chance to win 0.99X BTC, where the value of X is not yet known. All of your suggested manipulations don't change that.

For the operator to gain, someone has to lose.  In the closed system of a lottery, one mans profit is another's loss.

You're only half correct, the 1/X chance is the same, but the prize changes.  But the big manipulation is that statistically, a million random purchases do not guarantee a win.  A million purposeful purchases (such as the operator can make) do guarantee a win.

If a million people buy 1,2,3,4,5,6 but the operator buys a million different tickets, the chances of him losing out are very small.

Imagine it's a raffle.  If 10 punters buy tickets they have a one in ten chance of winning.  If the operator then buys one hundred million tickets from himself, he is guaranteed to win.

The little bit I've seen of BitLotto makes it look more like a raffle than a lottery to me, so this problem is even more relevant.

[jerfelix]

The little bit I've seen of BitLotto makes it look more like a raffle than a lottery to me, so this problem is even more relevant.

A difference between bitlotto and traditional lotteries is that bitlotto isn't "Progressive" (meaning "growing jackpot" in traditional lotteries, when there are no winners).  In bitlotto, the "closest person wins", so there's always a winner if anyone bet.

I agree with most of what you are saying though (since you seem to be agreeing with me!) 

A lottery site can manipulate the odds by buying tickets from themselves, to the extent that no one else has a reasonable chance of winning (or if they do win, the site runs off with the money).  As Meni Rosenfeld implied, this doesn't scale infinitely, but it most certainly could have been done, and can be done, at the levels that bitlotto is currently running. 

And I believe the best way to plug that loophole is to force the lottery funds to go to a trusted escrow.  This would help to mitigate the possibility that the lottery site can run off with the money, and remove the incentive for the lottery site to buy massive amounts of tickets from themselves.

[Meni Rosenfeld]

- This is exactly like the grocer who can get his own good produce for a discount relative to his customers, and can offer a discount to his acquaintances.

No it's not.  When the grocer purchases his own goods, those goods aren't available for him to sell.  When a lottery operator purchases his own goods, those goods are still available to sell (or at least a perfectly adequate substitute).

Only up to the timescale required to order more supplies, which to me seems like a technicality.

- You're still only showing the operator can gain, not that the participants can lose. Every customer who buys a ticket knows he has a 1/X chance to win 0.99X BTC, where the value of X is not yet known. All of your suggested manipulations don't change that.

For the operator to gain, someone has to lose.  In the closed system of a lottery, one mans profit is another's loss.

I was wrong, but it only strengthens my case. The correct statement is: The customers don't lose, and the operator doesn't gain.

Consider two scenarios:

Scenario A: A million customers each buy a single ticket.
The operator collects a 10K BTC fee.
Each customer paid 1 BTC and has 1/1M chance to win 0.99M, so his expected gain from the bet is -0.01 BTC.

Scenario B: A million customers each buy a single ticket, and the operator buys 1M tickets for himself.
The operator paid 1M. He has 50% chance of winning the entire 2M, and a 50% chance of getting only a 20K fee. Expected gain is 10K BTC, same as before.
Each customer paid 1 BTC and has 1/2M chance to win 1.98M, so his expected gain from the bet is -0.01 BTC.

Because as jerfelix pointed out this lottery is not progressive, there is never an expected gain out of it. Customers pay in expectation to get the rush of high variance. So all the operator can do is get this high variance without paying for it, he cannot gain in expectation.

You're only half correct, the 1/X chance is the same, but the prize changes.  But the big manipulation is that statistically, a million random purchases do not guarantee a win.  A million purposeful purchases (such as the operator can make) do guarantee a win.

If a million people buy 1,2,3,4,5,6 but the operator buys a million different tickets, the chances of him losing out are very small.

The X in "1/X chance" and in "0.99X reward" is the same, making the expectation per ticket a constant -0.01 BTC.

In bitlotto's system two different users can't get the same raffle number. And any single user would be silly to buy two tickets with the same number since this gives him no advantage (and he can make sure each ticket is different). So a million ticket bought by users will have a million numbers, just like a million tickets bought by the operator.

Imagine it's a raffle.  If 10 punters buy tickets they have a one in ten chance of winning.  If the operator then buys one hundred million tickets from himself, he is guaranteed to win.

In bitlotto's system, he needs to actually have 100M BTC and freeze them until the draw to do this. And anyone else with a spare 100M BTC can do it as well, not just the operator.

[coinonymous]

:popcorn-eating emoticon:

[yellowknife]

First of all, bitlotto didn't make a bet. He made a casual statement, which you then took as if it was a binding bet with you, without asking for confirmation and without even making any counter bet. You can't expect him to pay up on something so one-sided as "I'm betting everything against someone who's not betting anything".

Second of all, you didn't win the bet. You keep describing the possibility of the lotto operator buying tickets in the lotto as cheating, when it is nothing of the sort. If someone wants to buy 1 million lotto tickets and stack the odds in their favor, they have every right to do so, even if they are also the operator of the lotto. That's not cheating, that's just aggressive betting. Anyone can do it, whether they run the lotto or not.

Finally you tie together the idea that if he buys 99% of the lotto tickets and then someone in the remaining 1% wins, he could run off with the money. This breaks the very premise of his original statement because it would be very obvious that he was doing so. Everyone would know it, so it would not be undetectable and therefore this method of cheating (simply taking the money and running) doesn't meet the criteria he set forth (that there is no *undetectable* way for him to take money). You are trying to obscure this fact by tying it in with some concept that buying a lot of tickets is cheating, which it is not.

Any bitcoin transactions runs the risk of one party 'taking the money and running'. It's not a weakness of the lotto.

[bitlotto]

Thanks for all your support other people. Note to self: don't engage in debate late at night, exhausted and drunk..

About the escrow: I'd love to do it but I don't know if it's possible? Wouldn't the people who lost effectively have to allow the payment to continue? There could be many sore losers. With it being me, trust will come with time. I'll always pay, and people will see that. If I use clearcoin who gives the ok? And wouldn't the trust still have to be with a website or person?

[bitlotto]

Editing the first post to give the appearance that I'm cheating and dishonest is well... dishonest. Could you please make your posts as they were and let the users read the whole thread and come to their own conclusions? Many will just read what you wrote and move on. I'm honestly trying as hard as I can to be open and transparent and demonstrate that cheating BitLotto is not something I can do! Taking the money and running but not cheating! If I ever stole a jackpot everyone would know and I would welcome the authorities coming after me for I have stolen. Theft is wrong. Simple as that. 

[jerfelix]

Editing the first post to give the appearance that I'm cheating and dishonest is well... dishonest. Could you please make your posts as they were and let the users read the whole thread and come to their own conclusions? Many will just read what you wrote and move on. I'm honestly trying as hard as I can to be open and transparent and demonstrate that cheating BitLotto is not something I can do! Taking the money and running but not cheating! If I ever stole a jackpot everyone would know and I would welcome the authorities coming after me for I have stolen. Theft is wrong. Simple as that. 

Well, hopefully there's no such thing as bad publicity!  I'm really just having fun in debate.  I have confidence that you run a clean lotto, but like the challenge of trying to prove or disprove it.

I'm not after your BTC, but do feel it was risky to offer such a large bounty to find holes in the system..... especially since it seemed to me and others that I had a good point.

But it's all in fun.