Investing News

What Is an NCAA Bracket Challenge?

Every year, the National Collegiate Athletic Association (NCAA) men’s basketball tournament whips fans into a frenzy, earning the event the nickname “March Madness.” Much of the interest stems from the ever-popular bracket challenge, where groups of individuals pay into a pool and attempt to pick the most winners. The most accurate prognosticators stand to pocket significant cash.

Approximately 36.7 million people in the United States filled out some type of pool bracket in 2021, even though correctly predicting the winners of all 63 individual contests is extraordinarily unlikely.

Key Takeaways

  • Every year, sports fans participate in bracket challenges, where they attempt to outguess their peers in predicting the winning teams in the NCAA men’s basketball tournament.
  • In 2014, investment guru Warren Buffett initiated a bracket challenge for the employees of his investment firm, Berkshire Hathaway.
  • Although correctly choosing the winners of all 63 games is nearly statistically impossible, in 2018, eight of Berkshire Hathaway’s most accurate guessers divvied up a $100,000 consolation prize.

Warren Buffett’s Bracket Challenge

In 2014, legendary value investment guru Warren Buffett got in on the action when his investment company, Berkshire Hathaway, instituted its own bracket challenge, dangling the prospect of paying perfect-scoring employees $1 million, every year, for life. The challenge promised smaller payouts for participants who came close.

In 2018, Berkshire Hathaway’s March Madness contest resulted in eight high-but-not-perfect scorers, who divided a $100,000 consolation prize, to each pocket $12,500. Berkshire Hathaway offered the challenge again in 2021.

All teams in the Sweet 16 round of the NCAA tournament are assigned a seed number, ranging from one to 16, where the best team is given the first seed and the worst team receives the 16th seed. The opening games pit seeds against their numerical opposites. For example, the first-seeded team plays the 16th seed; the second seed plays the 15th seed; and so forth.

Odds of Winning Buffett’s Bracket Challenge

Correctly picking all 63 winners is statistically overwhelmingly unlikely. Consider the following mathematical facts:

  • Each game has two possible incomes: either Team A wins, and Team B loses, or vice versa.
  • To calculate the total number of ways that a player may fill out a bracket, simply take the total number of possible outcomes for each game (two) and multiply it out 63 times: (2 × 2 × 2…× 2, or 2^63)
  • The odds of projecting all 63 winners is one in more than nine quintillion.

Given how aggressively the odds are stacked against bettors, most bracket challenge participants don’t realistically expect to achieve 100% correctness. But many believe that they have a viable chance of predicting the teams that become known as the Sweet 16, which refers to the clubs that linger long enough to participate in the regional semifinal round. But this expectation is also fanciful, because the odds of correctly calling the Sweet 16 teams are a highly implausible one in 282 trillion, according to a Sep. 2021 article from Action Network.

What is Warren Buffett’s bracket challenge?

For several years, Warren Buffett’s Berkshire Hathaway has offered to pay anyone who correctly calls the entire March Madness tournament $1 million a year for life.

What are the odds of having a perfect March Madness bracket?

The odds are roughly one in more than nine quintillion. It is overwhelmingly unlikely that anyone will create a perfect bracket.

What are the odds of correctly guessing the Sweet 16?

While this is more likely than creating a perfect bracket overall, it’s still very unlikely. The odds of correctly guessing all of the Sweet 16 teams are roughly one in 282 trillion.

The Bottom Line

For millions of ardent sports fans, filling out NCAA March Madness bracket challenge forms is an annual tradition. Although achieving a perfect score is nearly impossible from a statistical standpoint, players can still collect winnings by besting their friends or office mates in their respective betting pools. This tantalizing prospect of collecting prize money elevates the suspense of watching games, bringing excitement to sports fans, year in and year out.