March Madness: How to Legally Win a Billion Dollars from Warren Buffett

When I first heard whispers of Berkshire Hathaway CEO Warren Buffett offering up one billion dollars in exchange for proof of a perfectly filled out NCAA tournament bracket, I was rather skeptical.  For one thing, a billion dollars is a lot of money—even for someone as wealthy as Buffett.  And aside from the seemingly insurmountable odds of someone wholly ignorant of college basketball predicting a perfect bracket, 1 in 9.2 quintillion, the fact remains that not many people filling out brackets are wholly ignorant, and rarely historically do bracket contestants even go for perfect brackets.  The typical formula for winning a March Madness office pool is to make strategic, conservative picks, nail as many final four teams as possible, and correctly identify the eventual champion.  But the logic for picking a perfect bracket is quite different; with the first weekend of the tournament being just as important as the final four, contestants can afford to submit unconventional, upset-laden brackets.  Mammoth probability aside, I would not be surprised to see someone walk away with a billion of Buffett’s dollars.

Despite my skepticism, the Quicken Loans Billion Dollar Bracket Challenge with Yahoo Sports is a reality.  Quicken loans is sponsoring the event as a means of data mining the mortgage information of millions of Americans—incredibly savvy business acumen from the Quicken C-Suite.  Warren Buffett is acting as Quicken’s insurer, effectively being paid a fee by Quicken in exchange for his willingness to hypothetically pay the improbable billion dollar grand prize.  And Yahoo Sports is running the competition interface.

Being an attorney, prior to registering for the Challenge, I just had to read the “Official Rules.”  I figured there would be a catch—some proverbial fine print mitigating a contestant’s chances to win.  This is not legal advice, and I would strongly suggest that everyone take the time to read the rules prior to registering and filling out a bracket, but in the meantime, here are some important highlights from the official rules.

"THE FOLLOWING CHALLENGE IS INTENDED FOR ENTRY IN THE FIFTY UNITED STATES AND THE DISTRICT OF COLUMBIA ONLY (INCLUDING UNITED STATES MILITARY PERSONNEL OR CONTRACTORS ENTERING FROM WITHIN A U.S. MILITARY INSTALLATION) (COLLECTIVELY, THE“ELIGIBILITY AREA”). THE CHALLENGE SHALL ONLY BE CONSTRUED AND EVALUATED ACCORDING TO UNITED STATES LAW. DO NOT ENTER THIS CHALLENGE IF YOU ARE NOT LOCATED IN, AND A LEGAL RESIDENT OF, THE ELIGIBILITY AREA AT THE TIME OF ENTRY."

Right off the bat, the contest features a geographic limitation clause.  Unless you are both located in and a resident of one of the 50 states or the District of Columbia, you will not be eligible for a prize.  Sorry, Guam.

"TO BE ELIGIBLE TO PARTICIPATE, YOU MUST: (A) BE 18 YEARS OF AGE OR OLDER AND A LEGAL RESIDENT OF THE ELIGIBILITY AREA AT THE TIME OF ENTRY; AND (B) BE, AS OF JANUARY 1, 2014, AND CONTINUING THROUGH THE ENTIRE TERM OF THIS CHALLENGE, A MOBILE (OR LANDLINE) TELEPHONE OWNER UNDER A CONTINUING CONTRACT WITH A SERVICE PROVIDER FOR TELEPHONE SERVICE, (C) HAVE HAD INTERNET ACCESS PRIOR TOTHE START OF THE ENTRY WINDOW AND (D) HAVE A VALID EMAIL ADDRESS DURING THE ENTRY WINDOW."

Assuming you live in and are located in the contest’s eligible geographic area, you must also be 18-years-old or older; you must be considered a landline or mobile telephone owner under a continuing contract with a service provider for telephone service as of January 1, 2014 for the entire duration of the contest; you must have Internet access; and you must have a valid email address.  Being 18-years-old is easy enough.  So is having Internet access—possessing the ability to journey to a public library satisfies this criterion.  The same can be said for having a valid email address.  But the curveball is being an owner of a mobile or landline telephone under contract with a service provider.

Despite assuredly being drafted by the deft pens of a team of lawyers, the “Official Rules” does not define the term “owner” in the telephone context.  Is a 19-year-old college kid living in a dorm without a landline but in possession of an iPhone paid for entirely by her parents an “owner?”  If the name of that hypothetical 19-year-old does not appear on that cell phone contract, I would argue that she is not an owner, and she would be ineligible for a prize.  Whether this is Quicken Loans or Warren Buffett’s interpretation of the word “owner,” let alone the interpretation of a legal arbiter is a completely different story.  I could only imagine the amount of bad press all entities associated with this contest would get if someone on another person’s cell phone service plan crafted a perfect bracket but was denied the prize money.  Regardless, be prepared for the possibility of controversy stemming from this ambiguous condition—possibly added to drastically dwindle the pool of potential contest winners.

"Employees, contractors, directors, and officers, and their immediate family members (parents, children, siblings or spouse, regardless of where they live, or persons living in same household, whether related or not) of the sponsor, Quicken Loans Inc. (“Sponsor”), its subsidiaries, affiliates, suppliers, consultants, legal counsel, accounting firms, public relations, sales representatives, website providers (including but not limited to Yahoo), webmasters, advertising and promotional, and marketing agencies, and any others engaged in the development, production, execution or distribution of this Challenge (collectively, “Challenge Entities”) are not eligible to enter or win. Participants in the 2014 Division I men’s basketball tournament (“Tournament”), including players, coaches, and officials, as well as employees of the National Collegiate Athletic Association (“NCAA”), and all of their immediate family members (parents, children, siblings or spouse regardless of where they live, or persons living in same household, whether related or not), are also not eligible to enter or win."

This one is relatively straightforward.  If you are directly involved in the NCAA tournament or the entities putting on this contest, or if you are an immediate family member of someone that is, you are not eligible to win any of the prizes.  This is a standard conflict of interest/rigged contest prevention provision.

"The Entry Window will close at 1:00 a.m. EDT on Thursday, March 20, 2014. CHALLENGE ENTRY BRACKETS WILL ONLY BE ACCEPTED IN THE CHALLENGE FROM THE FIRST FIFTEEN MILLION (15,000,000) ENTRANTS WHO COMPLETE THE REGISTRATION PROCESS (AS DETERMINED BY YAHOO)."

If you are reading this, what are you waiting for?!  You have until March 20, 2014 at 1:00am Eastern time to register, and you must be one of the first 15 million entrants in order to be eligible for a prize.  In turn, when you submit your picks is also one of the possible tie breakers.  Better get to registering, then.

"Potential Grand Prize Winner: One (1) grand prize will be awarded to an eligible Entrant only if on a single, validly submitted Challenge Entry Bracket, he/she accurately predicts the outcome of all 63 games in the Tournament (“Perfect Bracket”). The Grand Prize (as hereinafter defined) will only be awarded if an eligible Entrant submits a Perfect Bracket (the “Grand Prize Winner”). If more than one (1) eligible Entrant submits a Perfect Bracket and each is confirmed as a Grand Prize Winner, the Grand Prize will be equally divided among the Challenge’s Grand Prize Winners, with each Grand Prize Winner entitled to the Grand Prize Winner’s proportionate share of the Grand Prize regardless of the whether the Grand Prize Winner elects the Annual Payment Option (defined below) or the One-Time Payment Option (defined below). For example, if there are two (2) Grand Prize Winners, each Grand Prize Winner will be entitled to elect either 50% of the Annual Payment Option or 50% of the One-Time Payment Option. IF NO ELIGIBLE ENTRANT SUBMITS A PERFECT BRACKET, THE GRAND PRIZE WILL NOT BE AWARDED.Grand Prize: The grand prize (“Grand Prize”) will consist of one billion dollars ($1,000,000,000) USD, payable over the course of forty (40) years in forty (40) equal annual installments of $25 million (“Annual Payment Option”). The Grand Prize Winner has the option, in the Grand Prize Winner’s sole discretion, to elect to receive a one-time payment of $500 million (“One-Time Payment Option”) instead of the 40 equal annual installments of $25 million. THE GRAND PRIZE WILL NOT BE AWARDED IF NO ELIGIBLE ENTRANT SUBMITS A PERFECT BRACKET."

If one properly eligible person submits a perfect bracket, that person wins either one billion US dollars payable in annual installments of $25 million for 40 years [$25mil x 40 = $1 billion], OR a one-time payment of $500 million.  This is a classic time value of money dilemma; which would you pick?

If more than one properly eligible person submits a perfect bracket, then those people will split the billion dollars per capita (e.g. three perfect brackets; three different folks get 40-year installments of $333.3 million).

"Twenty (20) First Prize Winners: Twenty (20) first prizes will be awarded to the twenty (20) eligible Entrants who scored the most total Points in the Challenge based upon the Scoring System (the “First Prize Winners”). All eligible Entries, other than a Grand Prize Winner, submitted during the Entry Window are eligible to win a First Prize. In the event of ties, the ties will be broken (as necessary) in the following order:Tie-Breaker For First Prize Winners:One:The first tie-breaker will be based upon the following: The Entrant’s Predicted Final Score for both participating teams in the National Championship combined that is closest to the actual total points scored by both teams in the National Championship, without exceeding the actual number of total points scored, is the winner.Two:If the first tie-breaker does not break the tie, the second tie breaker is as follows: The Entrant’s Predicted Final Score for both participating teams in the National Championship combined that is closest to the actual total points scored by both teams in the National Championship, regardless of whether the Entrant’s total Predicted Final Score exceeded the actual total of points scored, is the winner.Three:If the second tie-breaker does not break the tie, the last tie-breaker is as follows: Earliest date/time of final completion of the potentially winning Challenge Entry Bracket. The date/time determination is based upon the date/time that the potentially winning Challenge Entry Bracket was last saved by Entrant.First Prize: The twenty (20) First Prize Winners will each receive one hundred thousand dollars ($100,000) (“First Prize”). The First Prize will be delivered to the First Prize Winners in the form of a check."

Remember how I said that filling out a bracket with the intent that it be perfect is a lot different than filling out a bracket with the intent that it be the best point-wise?  Well, given the rules of the Quicken Loans Billion Dollar Bracket Challenge, it might be more logical to not get distracted by the allure of a billion dollars and instead go for 1 of 20 $100,000 first prizes awarded to the twenty people who score the most bracket points.  In typical fashion, bracket points are tallied as follows:

One final point of interest to touch on from the Official Rules is the odds of winning section.

"Odds of Winning. The odds of winning the Grand Prize depend on the outcome of each of the Tournament games and the skill of each Entrant. Mathematical odds of winning the Grand Prize are 1:9,223,372,036,854,775,808, which may vary depending upon the knowledge and skill of the Entrant, and the odds of winning a First Prize depend upon the outcome of each of the Tournament games, number of eligible Entries received during the Entry Window and the skill of each Entrant."

Quicken effectively claims that, assuming absolute ignorance, the odds of winning a billion dollars are 1:9,223,372,036,854,775,808.  Those who remember what they should have learned in pre algebra know that this is an incredibly simple calculation: two to the sixty-third power—or 2^63 on your TI-83 calculator, or “=POWER(2,63)” for the Microsoft Excel aficionado.  This calculation is just taking the value “2” teams to X power representing the number of games being played.  While there are technically 67 NCAA tournament games including the play-in games, those games are not counted for the contest—hence the number 63 being chosen.  But if you’re going for the billion dollars, and you’ve already successfully picked every game up to the championship game, the result of the championship game becomes largely irrelevant.

If you are the only person to successfully go 62/62, then the proper course of action is to take out a loan for, say, $100 million—or however much the various international sports books will allow you to diversify and bet on the championship game—and then hedge your Quicken bracket challenge pick by betting that loaned amount on either the Money Line of the favorite you did not choose or the spread of the underdog that you did not choose in your Quicken bracket.  If the team you picked in the Quicken bracket wins, you simply pay off the loan provider.  If the team you picked in the Quicken bracket loses, however, you simply pay off the loan provider with your gambling winnings and pocket the remainder as taxable income for 2014.  So in effect under this strategy, the proper odds are only 2 to the 62 power, or 9.22337204×10^18.  Still next to impossible odds, but better than 1 in 9.2 quintillion!

Good luck, and in the words of Effie Trinket from The Hunger Games, “May the odds be ever in your favor.”