A:

The NCAA Men’s Basketball tournament is well known for creating madness among college sports fans. Each year millions tune in to watch the games, with many fans participating in bracket challenges. Bracket challenges have become incredibly popular, with everyone from employers to major sports networks creating their own to see who can pick the tournament champion.

In 2014 Warren Buffett, the billionaire investor, decided to get in on the action by announcing his own bracket challenge. The payout: correctly guess the winner of each of the tournament’s 63 games and win $1 billion. News of the contest dominated media outlets for weeks and thousands of bracket entries poured in, but Buffett had almost nothing to fear because he had statistics on his side.

How likely is it that someone could pick a perfect bracket? Not very. During the 2013 tournament, no one who created a bracket on either Yahoo! or CBS picked more than 50 games correctly, and many seemingly perfect brackets turn sour after the second day of the tournament.

The 2014 tournament involved 68 teams, but brackets only contain 64 teams due to play-in games. To get a perfect bracket a participant would have to pick 63 games correctly (every team that doesn’t win the championship loses one game). Each game has two possible incomes: either Team A wins and Team B loses, or Team B wins and Team A loses. To calculate the total number of ways to fill out a bracket take the total number of possible outcomes for each game (2) and multiply it out 63 times: 2 x 2 x 2….x 2, or 2^63. The odds come in at one in over nine quintillion - odds that don’t seem very promising.

Basketball games are harder to predict than simply flipping a coin, though. Teams in the tournament are assigned a seed, with seeds ranging from 1 to 16. The best teams are given the 1 seed, and the worst teams a 16 seed. The opening games pit seeds against their opposite: a 1 seed plays a 16, a 2 seed plays a 15, etc. History has shown that top seeds don’t lose to bottom seeds often, meaning that the odds of picking one game correctly are actually different than 50/50. This makes calculating the odds of a seeded tournament nearly impossible to figure out, with estimates ranging from 1-in-5 billion to 1-in-128 billion.

Are you filling out a March Madness bracket this year? Better check out Betting On March Madness? Watch Out For The Tax Man.

RELATED FAQS
  1. Are tax brackets adjusted for inflation?

    Learn about U.S. tax brackets and how the U.S. Internal Revenue Service (IRS) makes annual inflation-based adjustments for ... Read Answer >>
  2. How can I find out which income tax bracket I am in?

    Find out how to determine your federal income tax bracket and calculate how much you will owe in federal taxes with online ... Read Answer >>
  3. How do I find out what my tax bracket is?

    Learn the information you need to determine what your tax bracket is. Read Answer >>
  4. Are 401(k) contributions tax deductible?

    Learn what the tax advantages of a 401(k) retirement plan are, what tax brackets gets the most benefit and why deferred taxation ... Read Answer >>
  5. A man opened a Uniform Transfers to Minors Account for his grandson several years ...

    The correct answer is c. Income in UGMA/UTMA accounts is always taxable, the question is at whose bracket. The general rule ... Read Answer >>
  6. How do I calculate my effective tax rate using Excel?

    Find out how to calculate your effective tax rate using Microsoft Excel, what income tax rates to apply to your earned income ... Read Answer >>
Related Articles
  1. Investing News

    What Does the NCAA Really Net from March Madness?

    The NCAA rakes in a lot of money from the popular tournament known as March Madness, but it doesn’t go to the players. Who gets it?
  2. Term

    What Is Seed Capital?

    Seed capital is the money used to start a business.
  3. Taxes

    Why Your Tax Bracket Is Not the Tax Rate You Pay

    Understanding how federal and state tax brackets work is important for tax planning – and for making sense of the political conversation around tax reform.
  4. Personal Finance

    Basketball

    For a sports fan, attending the Olympics can be a dream come true, but it doesn't come without its fair share of costs. Aside from travel, many tickets for high-profile events cost a pretty penny.
  5. Investing

    How To Game The Video Game Industry

    Investopedia explores the business, current developments, future trends of video games industry and how the overall industry makes money.
  6. Investing

    How The Video Game Industry Is Changing

    Video game creation has become increasingly complex, and the cost of creating a game to run on one of the major consoles has risen with this greater complexity.
  7. Investing

    You Love Video Games, But Do You Know How The Industry Works?

    Traditionally, the video game industry was limited to consoles, such as Microsoft’s (MSFT) Xbox and Sony’s (SNE) PlayStation, but it now includes PC games, mobile games and, in the near future, ...
  8. Taxes

    Personal Income Tax Guide: Basic Concepts

    By Ken ClarkOne of the most important but misunderstood concepts in tax planning is the mechanics of the United States' progressive tax system. When asked how this system functions, most people ...
  9. Entrepreneurship

    How To Raise Seed Capital and Grow Your Startup

    To get a business off the ground, entrepreneurs need a clear understanding of how to strategically position themselves for VC firms and angel investors.
  10. Investing Basics

    Can Games Make You A Better Investor?

    As investing is a great example of an activity that draws on a wide range of mental and emotional skills, it is worth exploring how to improve this skill set.
RELATED TERMS
  1. Seed Stock

    An investment security that is based on shares of a publicly ...
  2. Tax Bracket

    The rate at which an individual is taxed. Tax brackets are set ...
  3. Bracket Creep

    A situation where inflation pushes income into higher tax brackets. ...
  4. Hole-In-One Insurance

    A product that offers financial protection to golf tournament ...
  5. Seed Capital

    The initial capital used to start a business. Seed capital often ...
  6. Mustard Seed

    In finance, this is an allusion to economic events that will ...

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center