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. 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 >>
  2. 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. Insights

    The March Madness Effect

    Colleges experience an uptick in giving when their teams compete well, and increased ticket, apparel and memorabilia sales boost the bottom line.
  2. Small Business

    5 Ways March Madness Makes Money

    With the popularity of the college basketball tournament, there's a lot of cash changing hands.
  3. Small Business

    What Is Seed Capital?

    Seed capital is the money used to start a business.
  4. 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.
  5. Investing

    MGM Resorts Debuts Smartphone Gaming Tournaments

    With the launch of its easyPLAY Mobile Tournaments, MGM Resorts International (NYSE: MGM) has become the first regulated casino to host an interactive digital gaming platform. Guests staying ...
  6. Investing

    Sony Bringing Tournaments to the PS4 System

    In what looks like a naked bid to profit from the enthusiasm for e-sports, Sony (NYSE: SNE) last week unveiled a "Tournaments" feature for the PS4 console. Players also need an ESL account and ...
  7. 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.
  8. Taxes

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  9. Small Business

    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. Insights

    Are Big Budget Video Games Dead?

    More people seem to be gaming on tablets and smartphones over consoles, which means this could be the end of big budget console games.
RELATED TERMS
  1. Marginal Tax Rate

    The amount of tax paid on an additional dollar of income. The ...
  2. Hole-In-One Insurance

    A product that offers financial protection to golf tournament ...
  3. Bracket Creep

    A situation where inflation pushes income into higher tax brackets. ...
  4. Gaming Industry ETF

    A sector exchange-traded fund that invests solely in gaming companies, ...
  5. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s ...
  6. Incremental Tax

    A tax that increases in increments based on income levels. Incremental ...
Hot Definitions
  1. Quadruple Witching

    The expiration date of various stock index futures, stock index options, stock options and single stock futures. All stock ...
  2. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  3. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  6. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
Trading Center