1 person buys 1x $110 badge and gets 1 chance at the housing lottery.
1 person who's part of a group of 4 buys 1x $110 badge and gets 4 chances at the housing lottery, because (s)he effectively also gets to use every other group member's lottery slot.
Your group is made up of individuals who are paying the same as a single person, but they get multiple chances at the lottery, meaning that groups of 2+ have a vastly increased chance of getting a downtown room.
Yes, this is unfair, it means that an individual is paying the same $110 for an experience which is likely to be impaired.
You're right that it's difficult to prevent this, but I don't think anyone will be feeling bad if your choice to buy 4x individual badges to get free chances at the lottery causes you problems with the new policy, which is clearly designed to let people know this isn't an intended way to get extra lottery slots. (Otherwise, you'd get the same effect when booking together).
Gencon doesn't want you doing this because it means groups have a significant advantage over individuals, and it discourages individuals from attending if you're highly likely to have a worse experience as an individual.