There's a host of mind-boggling numbers attached to the NCAA men's basketball tournament: the $2.5 billion in illegal bets that will be made on the games, the supposedly 1-in-9.2 quintillion chance of picking a perfect bracket, the $134 million in lost productivity from workers glued to TVs and online streaming services.
But the number that concerns many people is the size of the pot in the office betting pool, and how easy it will be for them to win a share. The payout can be pretty hefty, but is it the best use of your money? Here are the breakdowns of the office pool, as well as a few other things you could do with your $5.
The Office Pool
Let's take, for example, a theoretical U.S. News NCAA men's basketball betting pool (theoretical, of course, because gambling is illegal). If 50 coworkers put in $5 each, that's a $250 pot. While it is true that any given person choosing randomly has a 1-in-9 quintillion chance of picking a bracket perfect, the actual odds are closer to around 1-in-10 billion, says Paul Bessire, general manager at sports analysis site, PredictionMachine.com.
That's because someone picking entirely at random has a 1-in-9 quintillion chance, but most people are smarter than that. Bessire says that gamblers who make smart choices, like staying away from too many outrageous upsets and not sending all of the 16 seeds to the Final Four, will have roughly equal chances of winning.
In a 10-person pool, for example, "for the most part if everybody's making reasonably educated guesses...you're at around 1-in-10," he says.
So, assuming that everyone at U.S. News is reasonably intelligent, here is how the risks and rewards break down for one theoretical U.S. News gambler:
Potential Return: -$5, $70 (second place) or $170 (first place)
Odds of winning: 2 in 50 (that is, of winning first or second place), or around 4 percent
As our bracket-player is into gambling, she may want to look at the mother of all jackpots: Powerball. The current jackpot has a $161 million cash value—not bad for a $2 play. According to Powerball's website, a person has a roughly 1-in-175 million chance of winning the jackpot, making the odds of winning near zero. But our gambler finds an extra dollar, has now $6 to burn, and purchases three tickets. That ups her chances of winning to...still virtually near zero.
Potential Return: either -$6 or $161 million (minus $6)
Cost: $2 per ticket
Odds of Winning: 3 in 175,223,510, or around 0.000002 percent
Verdict: Stick with the bracket.
The stock market is booming lately, so our gambler might want to go the legal route put her money into equities. Specifically, she may want to buy one of the most successful stocks in recent years: Apple.
There's no way of knowing exactly how high Apple stock could climb, but in the past, it has seemed that the sky was the limit. Just 10 years ago, Apple stock was around $7 per share. But the iPhone and iPad helped to drive the stock price to its peak of over $700, which it hit last year. The drop since then has been steep, but with the price currently at around $460/share, it's up more than 5,800 percent over 10 years. All of which is to say that if our gambler went in on a share of Apple stock with her $5, she could either stand to lose it or make a few hundred dollars.
Potential Return: Either -$5 or...well, you never know.
Cost: $450 per share (give or take)
Odds of "Winning": Depends on whether Samsung continues to steal market share away from the iPhone, and whether Apple's "iWatch" is everything Apple fanatics hope it will be.
Here, we turn from one of the surest investments in recent years to one of the shakiest. The great thing about government debt, though, is that the shakier it looks, the higher the yield tends to move. Yields on Greek 10-year bonds were at nearly 31 percent at one point last year. Now, it's at a much tamer 11 percent. Compare that to U.S. debt, widely considered one of the most secure investments, which has a yield of around 2 percent.
The only problem is that a government default could mean an investor entirely loses what she paid, or in the case of debt restructuring, that she takes a "haircut" and gets only a partial return.
Cost: Around 52 cents on the dollar/euro. So for a 1,000-euro, 10-year bond, the cost is around 520 euro.
Potential Return: On $5 of 10-year Greek debt, an investor would get around 48 cents back each year, given a coupon rate of around 5 percent, and end up with around $9.62 in 10 years.
Odds of "Winning": That depends on Greek politicians and German Chancellor Angela Merkel, says one expert. "If you invest in buying Greek bonds, you must be comfortable with the risk that if anything happens with Greece that Germany will be willing and able to step in as a lender of last resort. That's basically the risk you're taking," says Putri Pascualy, Credit Strategist for PAAMCO, an investment firm based in Irvine, Calif.
Verdict: Given the tiny return and long time-frame, the brackets seem like a better bet.
Keeping the $5
Potential Return: $0 and slowly falling. Not to mention, our gambler is missing out on the beers that the winner of the office pool might buy everyone.
Odds of "Winning": Very low. Unless there's massive deflation (which the Fed isn't going to let happen), the $5 going to slowly lose value.
Verdict: Bracket, definitely.