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$1 billion Madness contest not justchance BuffettMatthew J Belvedere | Matt_BelvedereFriday 14 Mar 2014 | 931 AM ET

COMMENTS Join the Discussion

I should be institutionalized Warren Buffett joked on CNBC Fridaymdash

talking about how hes feeling about Berkshire Hathaways part in insuring

a contest by Quicken Loans to offer a billion dollars for the perfect March

Madness bracket

Buffett said in a Squawk Box interview that the odds are much better than

just a coin-flip on each gamemdashwhich would yield about a 1 in 9 quintillion

chance in winning

(Read more Buffett Id besurprised if stock prices drop 50 )

Appearing with Buffett Quicken Loans founder Dan Gilbert said When I

heard quintillion I was going to say Warren do we need insurance here

But of course the answer was yes Gilbert added

The odds of winning increase when you look at some of the historical results

in the tournament Buffett explained The No 1 seed team has beaten the

No 16 team over 100 times in a row The No 2 seed almost always beats

the No 15 seed

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If four No 1 teams make it to Final Four Im going into the witness protection

program Buffett joked

Adam Jeffery | CNBC

Dan Gilbert and Warren Buffett

Quicken Loansmdashwhose founder owns the NBAs Cleveland Cavaliersmdashsaid

the billion-dollar prize would be shared by any qualified contest participant

who predicts the winners of every game

Gilbert said Buffett pitched him the idea for the contest after they toured

Detroitmdashlooking at the progress being made in the bankrupt city where

Quicken is based

Asked if the cost of the insurance was $10 million Gilbert said that number

was in the ballparkmdashadding that working with Buffett was really easy No red-

tape no committees

People say how do you price this thing You price it for two things You price

it for one that everyone will get it right and secondly that someone will figure

out a way to beat the game Buffett saidmdashadding he believes hackers will

try

If we get past the first 32 games and there are say 200 people left he

continued Ill print out all their brackets and sleep on them

The billion dollars would be paid in 40 annual installments of $25 million

each The winner (or winners) may also choose to get a lump sum payment of

$500 million (or share in that amount)

Yahoo Sports designed the online bracket experience and its hosting the

destination for the challenge

The first 15 million qualified entrants to complete the registration process will

be eligible to win the billion dollars The window to enter closes at 1 am EDT

on Thursday March 20

In addition to the potential grand prize Quicken said it will award $100000

for each of the 20 most accurate imperfect brackets in the contest to use

toward buying refinancing or remodeling a home

Quicken will also be directly donating $1 million to nonprofit education

organizations in Detroit and Cleveland

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28 Comments CNBC Login

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Join the discussionhellip

bull Reply bull

kd katz bull 3 months ago

Why give your private information in the forlorn hope of winning a billion

The odds arent quite as bad as 2 to the 32nd power-to-1 (some games

are easy to pick the winner) but still impossible odds

bull Reply bull

Min Min Oo bull 3 months ago

1 in 9223372036854775808 might be incorrect I think the odd is 1 in

2 32 + 2 16 + 2 8 +2 4+2 2+2 or 4295033110

2

bull Reply bull

Andy Domonkos bull 3 months ago

Lottery culture smoke and mirrors

bull Reply bull

Tao4mind bull 3 months ago

My little sister needs new shoes

1

bull Reply bull

ANTISOCIAL bull 3 months ago

dont waist your time this is simply an advertisement for Quicken

Loans

bull Reply bull

DAVID LEBLANC bull 3 months ago ANTISOCIAL

warren buffet validates it

2

bull Reply bull

JGRUMBY bull 3 months ago

I just did some fast math I assumed that a smart person could pick a 1-

16 game 99 of the time a 2-15 game 97 of the time a 3-14 game

95 of the time a 4-13 game 90 of the time a 5-12 game 80 of the

time etc down to 8-9 games being 55 For the second round I have

1-8 games at 80 down to 55 for 4-5 games Etc

With that the probability of getting all 63 games correct (I dont think the

4 play-in games are included in the contest) is about 1 in 5 billion

Tweak the s however you would like but if Quicken payed Buffett $10

million to guarantee $1 billion they were ripped off big-time

4

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bull Reply bull

idster bull 3 months ago JGRUMBY

Youre not considering that the events are not independent If a

person makes an accurate prediction on one game its more

likely that his or her prediction on another game is correct

bull Reply bull

JGRUMBY bull 3 months ago idster

Each game IS an independent event One miss and you

are out so only those who get every game right are even

in contention By assigned significant weights to the

likelihood of outcomes Ive already assumed an intelligent

person making picks Someone making random picks

would have odds of 5050 on each game and thus have a

probability of success of 2 63 which is a number in the

trillions

1 in 5 billion is about as good as it gets even if Dick Vitale

were picking the games

bull Reply bull

idster bull 3 months ago JGRUMBY

Each game is an independent event but the

successful prediction of each game is not an

independent event You may be skeptical of this

but there have been NFL playoff seasons in which

Ive been able to ascertain a story line that allows

me to predict the outcome of multiple games--

even when those games finished close those

close finishes were in the cards The year the

Colts beat the Bears in the Super Bowl I predicted

the outcome of all 11 playoff games and many of

those were close finishes andor upsets I dont

have as keen an insight on college basketball but I

would bet the best performers out there do better

than how that model predicts they would do Re

Dick Vitale Ive picked better than Terry

Bradshaw And Ive certainly done better than

David Tuley who handicaps football games on

ESPN

bull Reply bull

JGRUMBY bull 3 months ago idster

There are statistics are there is luck Unless you

are implying that the games are fixed (either by

gamblers aliens or some other higher power)

and that you can tap into that and predict

outcomes with certainty then it is unrealistic to

expect someone to predict with significantly

greater certainty than historical realities

As to your NFL predicting prowess move to

Vegas and cash in dude

bull Reply bull

Amanda bull 3 months ago

This evil guy should go to hell

2

fightingpillow bull 3 months ago

Probably easier to hack a users account than to try beating the system

So make sure your passwords and security questions are pretty good

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692014 $1 billion Madness contest not just chance Buffett

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bull Reply bull

So make sure your passwords and security questions are pretty good

3

bull Reply bull

Sapir-Whorf bull 3 months ago

For $1B a college basketball game would never ever I repeat never

ever be thrown Mom needs a new house

1

bull Reply bull

Trueth bull 3 months ago

Sounds like Quicken is making a lot of money They must offer high

rates to yield so much cash

1

bull Reply bull

JGRUMBY bull 3 months ago

Jeepers people relax BRK is worth over $150 bil in market cap and

usually has at least $20 bil in cash If Quicken paid $10 million for a

policy to ensure $1 bil they were robbed The odds of someone winning

this even accounting for 16s v 1s etc is still hundreds of millions or

billions to one Quicken should have paid about $500 for their insurance

policy and only that because about $450 would have covered the

overhead

3

bull Reply bull

Adam bull 3 months ago

Ok you morons its an impossible task Warren is wiling to do this

because its mathmatically impossible for anyone to win it can not be

done and so its just a gimmick to get Quicken loans to add 15 Million

people to their marketing database Do you know how Buffet made

majority of his money Insurance businesses Its all mathmatics

3

bull Reply bull

toddbook bull 3 months ago Adam

It is not mathematically impossible The probabilities are

extremely minute but not impossible It would not only take an

extreme amount of skill but much much luck

3

bull Reply bull

Mark Anderson bull 3 months ago Adam

Adam is right These bracket picking contests have been going

on for years and no one has ever picked a perfect bracket Only

15 million people are allowed to compete for the billion so the

chances of a perfect bracket are zero Warren would not be rich

if he did not evaluate the probabilities of every deal he gets

involved with

1

bull Reply bull

MALKIEL bull 3 months ago Adam

If we were talking about chance events like 32 consecutive coin

tosses then the math (the spelling by the way is

mathematically) would be tough but these are a series of

events governed by skill where simply choosing the team in each

pairing with the best record has an excellent chance of winning

all let alone most of the pairings As I said below there could be

DOZENS of winners especially among professional bookies and

sports bettors who have the best information on details

RamblingRunner bull 3 months ago MALKIEL

in case you are curious there are NO perfect brackets

left and we arent even out of the first round

So what was that about dozens of winners

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692014 $1 billion Madness contest not just chance Buffett

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bull Reply bull

So what was that about dozens of winners

bull Reply bull

RamblingRunner bull 3 months ago MALKIEL

Malkiel skill governs TOO SOME EXTENT Once you get

within a couple ranking point it is basically a coin flip (in

fact 9th ranked have beaten 8th ranked 52 of the time

instead of the predicted 50 or less) Yes picking the

team with the best record would yield the most probable

result but even that result has not yet shown up in the

data Another way to look at it how rare are perfect

games in baseball even for the best pitchers Lets stack

the deck and say a hall of famer vs a bad team so relative

on base percentage is around 025 That means the

pitcher has a chance of being right 3 out of every 4 times

clearly skill is involved But being right only 27 times in a

row is less than 1 in a 2 thousand Now you are taking

about not 27 but 63 times in a row That is in the billions

in fact no pitcher has EVER done 2 perfect games in a

row and that is only 54 batters

1

bull Reply bull

MALKIEL bull 3 months ago

Sounds like another example of somebody without the math background

guessing badly at the probabilities When a hundred million people (or

more) take often highly educated guesses on the results of a series of

events governed more by skill than chance there may be dozens of

winners For Warren to insure that is like the god-fearing man who

spends his whole life avoiding the sin of gambling and then loses his life

savings on his only Vegas vacation

1

bull Reply bull

RamblingRunner bull 3 months ago MALKIEL

Malkiel if you actually read the arcile you would see they are

limiting it to 15 million entries In addition the billion is shared

amongst all the winners (if there are any) so that is the maximum

payout no matter who wins In addition to that addition its 25

millionyear for 40 years or 500 million up front If you take the

billion payout it assumes an interest rate of around 39 percent

and Im sure Buffet can beat that investing (heck putting it into

the Vanguard SampP 500 fund can beat that ) so the MAXIMUM

present value amount on the line is 500 million In addition to the

previous addition that was in addition to the first addition -) if you

look at the history of ESPNs brackets NO ONE has gotten a

perfect bracket The closest anyone has ever come is only the

first 2 rounds where most of the easy picks are

bull Reply bull

Sapir-Whorf bull 3 months ago MALKIEL

Once all the brackets are submitted the known path of complete

failure will be easily calculated and easily influenced and

manipulated For a $1B risk this risk will be managed You better

believe it

2

MALKIEL bull 3 months ago Sapir-Whorf

With that many teams and that many players I dont

believe the insurers can reliably manage the risk if by

that you mean bribing players or coaches or officials but I

do believe theres an excellent chance that somebody (or

multiple somebodies) in the home audience will choose

the right permutation It all goes down to the fact that

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bull Reply bull

the right permutation It all goes down to the fact that

assessing skill levels correctly by even rudimental criteria

(best win record tallest players etc) allows a large

number of the pairings to be called correctly outside the

range of chance

bull Reply bull

Mark Anderson bull 3 months ago MALKIEL

You have never bet on sports Even the bookies

are wrong a large percentage of the time even

with their superior information

1

bull Reply bull

Sapir-Whorf bull 3 months ago MALKIEL

All you need is one game thrown

1

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