Deep Dive
Shownotes Transcript
Our colleague Brad Reagan grew up in Texas. I live in London now, but I'm originally from Texas. My family's still in Texas. All my friends, or not all my friends, but a lot of my friends are in Texas. Brad tracks the news in his home state. And recently, a story caught his eye. A heist story.
Yeah, we love a heist story, especially here at the Journal Podcast. We love it. Heist stories are my favorite stories. That's exactly how we were looking at this from the beginning. And this heist story involved a lottery, the Texas lottery, specifically a drawing that happened in the spring of 2023. Get ready to play the Games of Texas for Saturday, April 22nd. On the night of the drawing, they do it a little bit after 10 o'clock.
and it's kind of looks like almost like a cable access show. Tonight's Lotto Texas jackpot is an estimated $95 million.
There's a woman and she's like standing next to like what is clear ball with basically ping pong balls just bouncing around like a popcorn machine or something. The first number is... And then one of the balls will pop up and so you can see that number. 52. And the drama kind of builds and it's like one number. And the second number is... 32 numbers, three numbers. That third number is...
And then eventually you've got all six numbers there. But for almost two months, the jackpot, almost $100 million, went unclaimed. And then this lawyer out of New Jersey files a claim for the jackpot on behalf of his client.
that is described as Rook TX. And according to Texas lottery rules, the winner has asked to remain anonymous, which is acceptable. And so this lawyer says, here's the winning ticket. My client wants to remain anonymous. Texas lottery says, great, here's your money.
Eventually, the identities of the winners were revealed. And it turns out they were connected to a crew of professional gamblers, a transatlantic syndicate headed by a mastermind in London and a mysterious backer who went by the nickname The Joker. When the scheme was exposed, it caused a Texas-sized uproar. The lieutenant governor of Texas called it something like the biggest theft in the history of Texas, which...
Seems a bit hyperbolic, but I think captures the anger. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, May 16th. Coming up on the show, how the Joker took down the Texas lottery. ♪
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Where does this story start? As best we can understand it, the story starts in London at a shop called White Swan Data, which is an organization that looks for gambling opportunities around the world. White Swan is basically a group of data analysts who sell their betting advice to professional gamblers.
We've heard stories that these guys will hear reports of a roulette wheel that's slightly out of balance in some obscure country, and they will just go there and gamble and gamble and gamble because they're just looking for that slight edge.
These guys like to operate in the shadows. Like, they don't want competition. They don't want casinos and racetracks to know what they're doing because the odds will then shift against them. So they often disguise their activities or they try to stay under the radar. So there's a lot about them that is not known. Behind White Swan is a man named Bernard Marantelli,
He's a numbers guy, someone who makes his calls based on algorithms and odds. He used to work for a big investment bank, did some other things, but he's always been a gambler. His dad was a gambler. He's always been interested in gambling. And one of the things we learned about him is that his father instilled in him at an early age, you only gamble when you have an edge. So he's gambling, but he's also like strategizing.
Exactly. He's not only strategizing, he's crunching the numbers in a very methodical way. It really is more like Wall Street traders' approach buying a stock. It's like they want to know that the asset is underpriced or mispriced in a way that if they buy it, more often than not, they'll come out ahead. Marantelli is looking around for something that gives him an advantage. And one day, something across the pond grabs his attention.
The Texas lottery. No one had won for a while, so the jackpot was ballooning. And not many people had bought tickets. So the odds look good. And this is when Marantelli contacts his partner. His partner is this guy, Zeljko Ranagajic. Maybe because his name's a little bit hard to pronounce, he's often gone by this nickname, The Joker.
The Joker's, to me, the most fascinating part of this story. I mean, he is a legend in the gambling world. Some people over the years have called him the Loch Ness Monster because he's so rarely photographed. Wow. He's one of these characters that people know about. A few people know what he actually looks like. He's from Tasmania originally, which I think adds an extra layer of intrigue.
Back in the 80s, the Joker dropped out of college and started gambling full-time. He pooled money to play the horses, slots, and keno. And today, the Joker and his business partners bet an estimated $10 billion a year. What is the relationship between Marantelli and the Joker? One fairly simplistic way to say it is, Marantelli looks for the opportunities, the Joker is the money man. ♪
So I'm thinking like Ocean's Eleven here. So would Marantelli sort of be the Danny Ocean, George Clooney character and Joker's like Ruben with the robe and the money in the background? I think that's a pretty good comparison. By the spring of 2023, the dynamic duo seemed ready to take on the Texas lottery. Marantelli had figured out the method. The Joker had the money to front the operation. And their plan was actually really simple. What gives you the best odds to win the lottery?
Buy as many tickets as you can. And for this lottery, that actually seemed possible.
So sometimes people are rushing to the convenience stores. There's lines around the block. Everybody's buying lottery tickets. In this case, they realized that wasn't happening. And the reason that's important is because to maintain their profit margins, they want to be the only people that win. Right. They don't want to split the pot with anybody else. They don't want to split the jackpot.
There were 25.8 million number combinations for the drawing. So to tip the scales in their favor, Marantelli and the Joker planned to buy almost all the tickets at a dollar a pop. So around $25 million worth. But the timing was key. Marantelli and the Joker needed to wait until the jackpot was big enough for their gamble to pay off. Jackpot draws in the Texas lottery are three times a week. Mondays, Wednesdays, and Saturdays.
And on Wednesday, April 19th, no one had the winning numbers. So the cash rolled over into the next drawing on Saturday. At that point, what was the jackpot? The total prize was getting close to $90 million. That's when the crew knew they needed to spring into action. They wanted to do it as quickly as they could because there's obviously the risk that someone could win if they waited until the next draw. There was also the talk that...
We've heard that other big pro gambling outfits were circling and had seen this lottery. They're not the only ones out there who were kind of watching the jackpot creep higher and running the numbers. And so I think they felt like there was a little bit of competition. And if they don't strike now, someone else could get to it first. It was go time. That's after the break.
The following story about the Texas lottery is based on interviews with people who were directly involved in the Texas operation or in contact with those who were. The Wall Street Journal also reviewed photos and video of the operation, emails and messages, and documentation of subsequent hearings in the Texas Senate. In order to collect a prize from the Texas lottery, Marantelli's team needed to have a winning ticket that was printed. They had to get from London to Texas and...
execute this plan to buy and print all of these lottery tickets before the drawing. To get all those tickets printed in time, Marantelli and the Joker needed help. So Marantelli's team made a key connection on the ground in Texas with a startup called Lottery.com. It's a ticket purchasing company, one that was on the ropes.
Lottery.com was having a lot of problems in its own business. And the lottery.com executives saw this as a huge business opportunity. These Europeans were going to come in and spend $25 million buying tickets. They saw that as a business opportunity because they get 5% of the sales. There's a little bit of an air of desperation in some of the emails.
Lottery.com contacted the Texas Lottery Commission and requested access to official ticket printing terminals. And apparently, the commission said yes. Other lottery retailers pitched in as well. They were able to get dozens of these ticket printing machines. They set them up in four locations around the state.
One was a former dentist's office. One was a warehouse. So these were not glamorous locations, but they brought in rolls and rolls of paper because they have to print all these tickets. Based on the journal's calculations, all those terminals combined were spitting out about 100 tickets a second. So the question I feel like, after talking about this strategy of getting dozens of terminals, is, is that legal?
As best we can tell, it's 100% legal. Wow. These guys sought permission ahead of time and they got approval and they came in and did it. How long did it take them to print out all those tickets? I mean, it was definitely an around-the-clock operation and they were bringing in more people as soon as they could find them. Our understanding is some of them brought in their children to help with the printing and the filing.
It was really an around-the-clock operation. I mean, they really wanted this thing to work. Was there any chance that they weren't going to win this? I don't think they actually bought every single combination. Right. And one reason for that is because there are some numbers that you don't want to buy because they're so common. Huh. For example...
1, 2, 3, 4, 5, 6. Too many people guessed that number. And so if you buy that lottery ticket, you would almost certainly share it with other people. The printing spanned three full days. By the time the drawing rolled around, Marantelli's group had managed to buy 99.3% of all the tickets. In other words, the odds were overwhelmingly in their favor.
Once again, those lotto Texas numbers are 52, 30, 5, 18, 29. Marantelli and the Joker had the sole winning ticket and cashed in the jackpot. Before taxes, their haul was almost $60 million. It seemed like the duo was destined to saunter off into the sunset, their pockets full. But some of the people who tracked the lottery in Texas were suspicious of this mysterious group who'd walked away with such a big prize.
Eventually, journalists and state officials started doing some digging. And when it became clear that professional gamblers were involved, it set off a firestorm. It really wasn't until, you know, late 2024, early this year, that people started talking about this. The state's lottery commission has come under fire over what's called...
It just gathered momentum. Texas Attorney General Ken Paxton announced this morning an investigation into... People started getting more and more upset and lawmakers would pile in and then the governor of Texas jumped on and asked the Texas Rangers to investigate. The longer this goes on, the more questions come up and...
There are now multiple ongoing investigations into what happened around the drawing on April 22nd, 2023. There have been lawsuits and hearings in the state Senate, and the head of the Texas Lottery Commission recently stepped down.
I think Barantelli and the Joker, as best we understand it, are trying to lay low. They gave us a statement through their lawyer saying that all rules and regulations had been followed. And as best we could tell, that is true. But, you know, as the scrutiny continues and as the political fallout plays out,
It will be interesting to see if anyone tries to come after their jackpot and also whether this becomes a fatal blow for the Texas lottery. But, like, they got permission to use the printing terminals, right? So what's the issue?
I think the issue is just that to some people it doesn't feel fair. And we've talked to some people. There's a lottery watchdog down in Texas, and her position is like this is supposed to be for the people of Texas. It's not for outsiders to come in and steal our jackpots and take it to London or Tasmania. So I...
I understand that anger. It does seem perhaps a little bit misplaced because these guys took advantage of the rules that were on the books. While the Texas Lottery Commission had approved the use of the official printing terminals, the way the Joker's crew had printed and scanned lottery tickets is in a bit of a legal gray area.
The commission said that the crew's mass ticket buying had compromised public perception about fairness. It also said the request for ticket terminals complied with policy, though it had been approved by a junior employee. On Thursday, the Texas State Senate unanimously voted to abolish the Texas Lottery Commission. The Texas Lottery itself would still exist, but oversight would shift to a different regulatory body. The bill is set to go to the state House of Representatives.
The Texas Lottery Commission said that it respects the legislative process and is committed to ensuring a smooth transition. What does this story reveal, Brad? What does it show us? Well, one of the things that we thought from the outset was it's the core story for The Wall Street Journal because one of the things we do a lot is write about how smart people solve problems. And these guys just figured out how to rig this thing.
And they figured out how to beat the system. And people on Wall Street do it all the time. You know, that's why these bankers get paid the big bucks. And these guys are in a slightly different market, but they're kind of doing the same thing. I know the phrase that Wall Street's just a casino gets thrown around, and I don't mean to be glib like that, but...
These guys are looking to find mispriced opportunities or opportunities in the market that can be exploited. That's all this is. That's all for today, Friday, May 16th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Joe Wallace and Catherine Sayre.
With help from Trina Menino.
Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Peter Leonard, Bobby Lord, Emma Munger, So Wiley, and Blue Dot Sessions. Fact-checking by Mary Mathis and Kate Gallagher. Thanks for listening. See you on Monday.