Buffett's big bet: Insuring $1 billion prize in NCAA bracket contest
Guessing 67 winners out of 67 
:):)
Good PR
Warren Buffett says $1-billion basketball bet 'will be the most fun'
Even billionaires like Warren Buffett think watching sports is more fun with a little money on the line.
Buffett's Berkshire Hathaway is insuring a Quicken Loans contest that will award $1 billion to anyone who can correctly guess the winners of all 67 games in this spring's NCAA men's basketball tournament.
Buffett said the idea for the contest was his. He said he was talking sports with Quicken Loans founder and Chairman Dan Gilbert in November when he pitched the idea to insure a $1-billion prize for a perfect bracket.
“I said, ‘Here’s a proposition that might be interesting to you,’ ” Buffett said in an interview with The Times. “It heated up three weeks ago. We quoted a price. They worked out the mechanics of it.”
Quicken and Berkshire announced the contest Tuesday. It will be free and will be open to the first 10 million people who sign up online. If one person submits a perfect bracket, he or she will have the option of taking 40 annual payments of $25 million each, or a lump sum of $500 million. Multiple winners would split the money.
“This will be the most fun. Just imagine if there’s one person left [with a perfect bracket] at the last game,” Buffett said. “I will go to that final game with him or her and I’ll have a check in my pocket. ... I think we’ll be rooting for different teams.”
Buffett said one of his insurance companies is writing the $1-billion policy in exchange for a premium, which neither he nor Quicken would disclose.
He said the deal is not that different from many other insurance transactions his companies conduct. He evaluated the potential risk and then set a premium that gives him an edge against the probability of having to make a payout.
“We own Geico. We insure 10% of all the cars in the United States. You evaluate the risk and you charge a premium of what you think is appropriate. Overall, if you’re pricing it right, you should end up with a profit.”
Duke University mathematics professor Ezra Miller estimated that he even a skilled sports handicapper had about a 1 in 1 billion chance of correctly guessing all 67 winners. So if 10 million experts entered the contest, Buffett would need to charge a premium of about $10 million to break even against his expected results.
Why You Won't Win Warren Buffett's Billion-Dollar Bracket
The men's NCAA college basketball tournament starts next week.
In a twist on the familiar March Madness bracket, a mortgage company and a world-famous investor are offering a billion dollars to anyone who picks the winner of all 63 games in the NCAA college basketball tournament.
It's a contest, and it may also be the perfect publicity stunt.
Let's introduce the players. There's Quicken Loans, the mortgage company that's sponsoring the contest. And there's investor Warren Buffett — he's the insurance man here, willing to pay out the $1 billion if someone wins.
Then there's Yahoo — you need one of its accounts to enter. Finally, there's as many as 15 million people who are expected to sign up to play.
Maybe you've heard the odds of picking a perfect bracket? They're not good: one in 9.2 quintillion.
Nine quintillion. That's a nine, followed by 18 zeroes. That's not the kind of number we actually use on this planet. It's a number that a couple of 10-year-olds might invent during a sleepover.
Jeffrey Bergen, a math professor at DePaul University, says don't worry about quintillions. Those odds assume every game in the tournament is a toss-up, but in the early rounds, highly ranked teams usually win. So he's got his own number.
"One in 128 billion, if you know something about college basketball," he says.
Even those odds need some perspective.
"If you have a favorite baseball team, they are more likely to win the next seven consecutive World Series than you are — with knowledge of basketball — to get a perfect bracket," Bergen says.
"If you sat down today and tried to predict the winning party in every presidential election through 2160, getting that correct is more likely than getting a perfect bracket," he says. "If you sat down now with fair coin and flipped it, you're more likely get 37 heads in a row than you are to get a perfect bracket."
He could go on. One in 128 billion won't keep Warren Buffett up at night, which is what makes this such an inspired contest.
"I think it's better than brilliant," says Vin Gupta, founder of InfoFree.com, a company that provides email lists and sales leads to small businesses. "It's unbelievable, and especially when you have Oracle of Omaha Warren Buffett talking about it."
Warren Buffett Made $1 Billion In First 22 Hours Of March Madness
Think Warren Buffett is worried about paying someone $1 billion for a perfect bracket? Think again.
The second-richest man in America had already made $1 billion before the second day of March Madness had even tipped off.
Shares in his investment company Berkshire Hathaway went up 1.7% from yesterday’s opening whistle at 12:15 p.m. to this morning at 9:36 a.m. That slight change was enough to bump Buffett’s net worth up $1.05 billion to $64 billion.
He wasn’t handed $1 billion in cash, but on paper, he had made 10 figures in less than 24 hours.
Don’t expect the Oracle ORCL -2.27% of Omaha to be celebrating. For Buffett and his company, the numbers don’t mean much. Shares of Berkshire edged downward after their 9:36 a.m. peak and were trading 0.43% lower this afternoon, but Buffett wouldn’t have noticed that either. He is famous for long-term investments that look at the fundamentals of companies, not speculation in daily movements of stock prices.
For the rest of us, his billion-dollar gain is an illustration of just how much money Buffett has — and how dramatically slight shifts in the marketplace can affect his fortune.
Since Forbes published its world billionaires list 18 days ago, Buffett’s net worth has already jumped $5.6 billion thanks to huge gains in Berkshire shares after the company posted record profits for 2013.
That rise pushed him up from the world’s fourth-richest man to the world’s third-richest, knocking Spanish retail clothing magnate Amancio Ortega down one spot.
So go ahead, sweat out those buzzer beaters and overtimes hoping you’ll get the perfect bracket. It’s all the same to Buffett.
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Think you can guess the winners of all 67 games in this spring's NCAA men's basketball championship tournament?
Warren Buffett is betting a fortune that you can't.
The Omaha investing guru is insuring a Quicken Loans promotion that will award $1 billion (yes, with a B) to anyone who can correctly guess the winners of every game of this spring's NCAA men's basketball championship tournament.
Detroit-based Quicken, the nation’s fourth-largest mortgage lender, and Buffett's Berkshire Hathaway will pay the prize in 40 annual installments of $25 million. The winner can elect to receive an immediate lump payment of $500 million.
“We’ve seen a lot of contests offering $1 million for putting together a good bracket, which got us thinking, 'What is the perfect bracket worth?' We decided $1 billion seems right for such an impressive feat,” said Jay Farner, Quicken's president and chief marketing officer. “It is our mission to create amazing experiences for our clients. This contest, with the possibility of creating a billionaire, definitely fits that bill.”
Quicken did not say how much it is paying Buffett to insure the top prize. So, what does Quicken get from this? Millions of email addresses to use in future marketing efforts -- and a ton of exposure. The company is limiting the contest to 10 million entrants.
Buffett said he thinks the contest, which is free to enter, is a good deal for basketball fans -- and people who like to dream.
“Millions of people play brackets every March, so why not take a shot at becoming $1 billion richer for doing so?” Buffett said. “While there is no simple path to success, it sure doesn’t get much easier than filling out a bracket online.”
Quicken will also award $100,000 each to the contest’s 20 most accurate imperfect brackets to use toward buying, refinancing or remodeling a home.
Registration for the contest will begin March 3. All participants registering before the tournament selection process will receive their brackets the evening of March 16.
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