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Buffett’s $1B March Madness bet

By Jay MacDonald · Bankrate.com
Friday, February 7, 2014
Posted: 6 am ET

Ah, March Madness! The festive season of office-pool meltdowns, embarrassing displays of alumni colors and, occasionally, a wager so outrageous that it prompts the question, "Been to Colorado lately? Or Washington state?"

And while I seriously doubt that a level-headed dude like Warren Buffett has turned marijuana tourist, news that his Berkshire Hathaway will back the $1 billion -- with a "B"! -- prize offered by Quicken Loans to contest entrants who correctly pick every winner in this year's NCAA men's basketball tournament certainly sounds Rocky-Mountain-high.

Billion, schmillion

Buffett, of course, is no newcomer to unusual, high-stakes insurance gambles. His well-diversified Omaha, Neb.-based company, which owns everything from Geico auto insurance to Dairy Queen and Fruit of the Loom, previously prospered by taking premiums in exchange for protection of the 2010 World Cup soccer finale in South Africa. Nor does the B-word frighten Buffett, who previously backed a $1 billion prize offered in a Pepsico-sponsored contest.

If you can't wait to lock in your brackets, here are the details: The 68-team, single-elimination NCAA tournament begins in March. Submissions to the Quicken Loans contest will be limited to one per household and capped at 10 million entrants. The winner will be paid in annual installments of $25 million for 40 years. Multiple winners will split the billion bucks.

What are your odds of joining Buffett in the billionaire's club? Jeff Bergen, a math professor at DePaul University in Chicago, crunched the numbers and puts the odds at less than 1 in 9 quintillion -- that's a 9 with 18 zeroes nudging it forward.

"If you're just guessing, you basically have no chance," Bergen says in a video about the contest.

The fattest of chances

Even a knowledgeable bracket fanatic like President Barack Obama has only a 1 in 128 billion chance of winning, in Bergen's estimation. Oh well, back to the old day job.

Nor is history on your side. Last year, not one of the 8.15 million brackets submitted to ESPN ran the table. Even after the field was cut in half, the best anyone could do was 30 and 2.

Even if a long shot were to come in, a billion-dollar loss would barely warrant a text message for the world's fourth-wealthiest individual, whose company insures against far more likely and costly natural catastrophes on a daily basis. As Buffett reassured stockholders regarding this March Madness bet, Berkshire Hathaway, with stock and bond assets of $170 billion, could withstand a $250 billion loss, or roughly triple the worst natural disaster in history, and still post a "significant profit" for the year.

While Quicken Loans refused to say how much they're paying for Berkshire Hathaway's just-in-case coverage, odds are that the Oracle of Omaha will emerge the only victor in this high-stakes March Madness wager.

Follow me on Twitter: @omnisaurus.

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24 Comments
Tony
February 12, 2014 at 4:59 pm

You Idiot, how about giving that to your employees of your business that you own so many of. They are the ones who made you so rich!

Fields
February 12, 2014 at 3:21 pm

Mr. W. Buffet, Mr. B. Gates, myself and all others born in the good old USA, must realize, "to whom much is given, much is require"! Be good stewards of all you have!

Patsy
February 12, 2014 at 2:44 pm

instead of "begging" Mr. Buffett for a hand-out, read about him, study his strategies for investing, start saving ( if you make a nickel save two and a-half cents, if you make a dime save a nickel, my great-grandfather's advice which i wish i had followed);all i am saying is we cannot all be "mr. buffetts". there is not and cannot be income equality, because there isn't intelligence, education, effort and ethics equality. read: The Essential Buffett by Robert G. Hagstrom.

Edward Paxton
February 12, 2014 at 2:31 pm

Warren Buffett put his children through college; that was all. You need to be suceesful on your own, that way you can appreciate it. Warren Buffett gives his charible dollars to the Gates foundation and their work all over the world. Lastly if you had that kind of money I sincerely doult that you would think of no one but yourselves.

Ronald
February 12, 2014 at 2:14 pm

Hardship due to severe spine injury on my job 2009

To Whom it may concern:My name is Randy Rhine. I had a severe injury that left me disabled not able to return back to work. We are behind in all of our bills.This is hard for me to ask,We need support immediately.God Bless,Thank You'll

linda
February 12, 2014 at 12:51 pm

I would like to know if he would like to help me pay for my hospital bills .

Todd
February 12, 2014 at 12:28 pm

Would Mr Buffett like to help a small struggling business owner get off the ground? Crazy that people with power and money are so bored they have nothing better to do than dangle a carrot in front of us peons.

rOGER
February 12, 2014 at 12:25 pm

if; i HAD THAT KIND OF MONEY--- i WOULD FEED EVERY PERSON IN
THE USA AND HELP THE HOMELESS AND THE DESTITUDE111111111111111

JUAN
February 12, 2014 at 12:13 pm

would like to know if Mr. Buffett would like help
me and my wife buy a house.

Marlene
February 12, 2014 at 9:48 am

would like to no if Mr. Buffett would help open a campgrounds?

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