Warren Buffett is a smart man. That’s part of how he became the second-wealthiest man in America according to Forbes. One of his latest moves is just another stroke of genius in the business world, and it has put him in the national spotlight.
Buffett has teamed up with Quicken Loans to host the bracket challenge and has offered $1 billion to anyone who can correctly predict the entire men’s NCAA Tournament bracket. If you happen to correctly predict all of the winners, then you have the choice of a $500 million lump sum payment or 40 annual installments of $25 million.
Before you start dreaming of dropping out of school and buying your own Galapagos island, you should consider the harsh reality of the matter: Warren Buffett is the only person that will make money off of his bracket challenge.
The first 15 million people to sign up are eligible and each participant must be at least 18 years old to claim the prize.
In a press release from Quicken Loans, Buffett said that he would be glad to hand out the money if someone was able to fill out a perfect bracket.
Even if he were forced to pay up, Buffett would only have to fork over about 1.7 percent of his total net worth, according to Forbes.
On the surface, it doesn’t seem like Buffett has any way of making money.
After all, the challenge is free to entrants. But it all becomes clear upon looking at the entry form.
After filling out personal information, participants are asked if they currently own a home, if they plan on purchasing a home and what their estimated current mortgage rate is.
This information alone is valuable because companies want to buy it, and if Buffett has this kind of information about 15 million people, then companies will be willing to pay top dollar for it.
After the mortgage question, there are three boxes with offers that users can opt into.
The first is an offer to speak to a home loan expert from Quicken loans, the second offers a free credit report from Quizzle.com and the final box offers a discount on purchasing a Fathead wall decal.
Getting these offers on Buffett’s sign-up sheet isn’t free, so this is just another way Buffett is going to profit.
His tournament challenge is also a very safe venture. Since the NCAA expanded the tournament to 68 teams, there are 63 games to predict correctly. This, however, is no small task.
According to USA Today, the odds of correctly predicting each winner are 1 in 9,233,372,036,854,755,808.
Simply put, 1 in 9.23 quintillion, which is a number that is difficult, possibly even impossible, to fathom.
USA Today sports writer Chris Chase put everyone’s chances of filling our a perfect bracket in perspective when he wrote, “The perfect bracket winner could be you, right? No, no it could not… If everyone on earth filled out 100 brackets, it would theoretically take 13 million years to get a perfect bracket.”
Since there is no time to test the theory, it is best to just accept that every bracket will be flawed.
However, that doesn’t mean you should abandon all hope.
The 20 most accurate brackets will yield $100,000 each to their entrants. Compared to the chances that an entrant will win the $1 billion, this is much more likely.
There is also a charitable aspect to Buffett’s bracket challenge. Quicken Loans has committed $1 million to help educate urban youth in Detroit and Cleveland. Because of this, participants should be glad that they have entered a challenge that helps the community. Hoping to win $1 billion is simply unrealistic.