If you can fill-out a perfect NCAA Men's Basketball Tournament bracket, Quicken Loans will give you one billion dollars. Of course, assuming you can beat the odds and actually do it, you won't actually take a billion dollars away from Dan Gilbert. That's not how these contests work.
Warren Buffett's National Indemnity Company will actually make the payout if there is a winner. Quicken basically bought an insurance policy from Buffett for a fraction of the cost of payout. Why? Because Buffett is confident you can't pick a perfect bracket. And with good reason, you probably can't pick a perfect bracket.
Reading how Buffett explains the logic behind insuring this contest to ESPN's Rick Reilly is to understand why Buffett became so wealthy in the first place.
ESPN: Take, for instance, his latest $1 billion bet that you can't pick a perfect NCAA basketball bracket this year.
(Odds of you picking a perfect bracket with zero basketball knowledge: 9.2 quintillion to 1.)
"It could happen," Buffett says. "If I bet you won't roll snake eyes, it will happen, but over the long haul, I'll come out ahead."
Based on Buffett's rational approach to finance and probabilities, you probably don't want to sit across the poker table from the Oracle of Omaha.
Let's say one fan got all the way to the final game unblemished. Would Buffett offer that fan a buyout?
"Well, I'm not sure Quicken would let me do that," he says. "But if it were me, I'd definitely offer a deal. ... Mathematically, it should be half of the $500 million -- $250 million. But it's all relative. If I offered you $100 million to call off the bet, I bet you'd take it. Because $100 million to you is about the same as $250 million. But $100 million versus zero? That sounds a lot worse."
For his part, Gilbert tells Reilly that Quicken hopes to generate 15 million new leads from this marketing effort.
