How a Secret Syndicate Turned Lottery Betting into a Guaranteed Investment
Tuesday March 26, 2019 08:52 am
The Lottery Lab Staff
This audacious incident took place on May 30, 1992, when a dedicated band of gamblers planned and executed a scheme to literally “buy” the Saturday night Lotto jackpot worth a cash prize £1,706,046 along with ancillary prizes in the UK. It was a holiday weekend with nothing special about it when this small group of gamblers formed a plan which was destined to make headlines worldwide.
Stefan Klincewicz, the mastermind behind the 21-member syndicate of investors planned the scheme months in advance and decided that conditions were perfect for their plan for the drawing held at 8:00 PM on May 30, 1992.
The major conditions that Klincewicz used to select this drawing were a jackpot which had rolled over for two weeks and had an estimated jackpot estimated at a healthy amount of £1.7 m for the jackpot winner. Moreover, the National Lottery announced an additional £100 special cash prize to players holding 4 matching numbers (this was later described as a “blunder” by lottery officials).
Stefan Klincewicz was a Cork-born accountant of Polish descent. He worked day-night, three days prior to the drawings to supervise the filling out of 243,474 lottery tickets and also assembled the £973,896 in cash needed to “buy” every possible combination to win the lotto. This strategy not only guaranteed that the syndicate would win the jackpot but will also guarantee the Match 3, 4 and 5 prizes as well, bringing hundreds of thousands of extra pounds to their account.
When the syndicate started purchasing thousands of tickets from different lottery retailers on the Wednesday before the drawing, they caught the attention of lottery officials. Their behavior alarmed the lottery association which issued a news statement saying: “The National Lottery: Change in conditions of Lotto Contract under Section 32. Credit limit = 200% of an agent’s 10-week average Lotto sales.”
This piece of legal jargon was an effective countermeasure that prevented retailers from selling more tickets than they normally did. Not only that, some lottery retailers suddenly closed their doors to the public in order to sell only to syndicate members. Syndicate members worked around the clock inside the closed shops, buying lotto tickets in order to print every possible combination.
This incident expanded to an increasingly serious cat-and-mouse game between the national lottery and the syndicate members. The National Lottery began shutting down retail machines to prevent the syndicate from purchasing tickets. Part of the reason that the National Lottery so quick to respond was because they were aware of Stefan Klincewicz from a 1990 jackpot worth £2,439,760 that he had won in partnership with Paddy Mulligan, the gambling- mad owner of Scruffy Murphy’s bar.
By 1992, Stefan Klincewicz was ready for another lotto jackpot win with his 21-member syndicate. He didn’t simply believe that he could just do what he did before. Instead, he had made some serious improvements to guarantee his income.
The main component behind their plan was a logical combination of “brute force” and mathematics to purchase lotto tickets in bulk. By the time of the drawing, they had successfully purchased an estimated £820,000 worth of tickets, representing about 80 percent of the combinations. Now that the work was done, the syndicate members were glued to their TVs. On Saturday night, May 30, 1992, the broadcast of the Pat Kenny Show on RTE television brought their scheme crashing down around them.
When the lottery announced the results of the drawing, the syndicate had a winning ticket, but there were 2 other winning tickets which meant that the prize money would have to be shared. With three winning tickets, each winner would only get £568,682. This left the syndicate with a loss of roughly £400,000.
The host of the show also said that what they had done was legal, but not in the spirit of the game. Any lottery game is designed for people to invest a little and win a lot. The lottery is not meant to be treated as a “guaranteed investment”. Therefore, when the results were announced, the lottery commission also stated that syndicate members should be investigated by the Revenue Commissioners.
Stefan Klincewicz later stated that after receiving the Match 4 and Match 5 prizes, their total winnings are now rounded up to £1,166,000, leaving them with a profit of approximately £310,000 before costs and expenses. Additionally, some syndicate members had hedged their bets outside their 21-member syndicate.
When Stefan Klincewicz and Paddy Kehoe turned up on Tuesday, June 5, to claim their winnings, the conflict between the National Lottery and the syndicates increased. National Lottery officials summoned them to a private room and asked them to get all 21-members of syndicates to sign a letter of immunity to National Lottery, claiming that they were the part of the syndicate before any kind of payment is made. By signing this immunity letter, if there is any legal complication, the syndicate would assume responsible instead of the National Lottery.
In the end, the syndicate got its winnings. No one is sure whether they made a profit or not. After the incident, the National Lottery increased the pool of numbers and introduced a mid-week draw in order to make it much more expensive to form such a syndicate and difficult to purchase the necessary number of tickets.
This incident wasn’t unique. At about the same time, there were other people who applied the same strategy to “guarantee” lotto jackpots. One story is about lotto legend Stefan Mandel, who not only won but also managed to receive his payment after a 4-year long legal fight.
“To read the details of Stefan Mandel’s case, read: Rise of Lottery Man: Stefan Mandel”
When Mandel’s story made headlines, the lottery association took serious steps to prevent recurrence. They banned mechanically printed P