Why No One Will Win Buffett’s Billion Dollar Basketball Bet
THE big news over the Pond today is that Warren Buffett is offering a billion dollar (yes, really, $1,000,000,000) prize about basketball. And the thing is, yes, this is a pretty big prize, but it’s pretty certain that no one’s going to win it. Indeed, it’s set up almost to make sure that no one will.
The bit you need as background: the college basketball playoffs are coming and there’s a tradition of playing a game called “brackets” with it. Take all the entrants, decide who will win against whom and thus predict the outcome of the whole competition. It’s a bit like trying to predict each and every match in the FA cup at the beginning of the tournament.
So, given the way this is set up the odds, by picking purely at random, of getting each and every result correct are 1 in nine quintillion. Or, roughly speaking, get every person in America to try and predict this from now until the heat death of the universe and no one will get it right.
So, Buffett’s pretty secure in offering a $1 billion prize for whoever does in fact manage to do it: because no one will.
However, that’s not quite what is happening. The offer is actually from Quicken, a firm that makes financial software. And the Buffett involvement is that he is insuring Quicken against having to pay out the prize. And a good estimation of the real value of that insurance contract is about $250,000 at the most. Or perhaps closer to zero. Buffett charges more than that (which he definitely will) and he makes a profit.
There’s only one way that it would be possible (within the bounds of reason that is) for someone to win this competition. And that’s if people can make multiple entries: submit tens of thousands of entries each that is, or millions. And they’ve put a stop to that by only allowing 10 million people to enter once.
This is indeed a great big number and it’s going to get people talking: but that’s all it is about, it’s a piece of advertising.
Posted: 23rd, January 2014 | In: Money, Sports Comment (1) | TrackBack | Permalink
