The Pepsi Billion Dollar Sweepstakes was a contest, announced by soft drink company Pepsi Cola on April 10, 2003, beginning on May 1 and ending on September 14, all of the same year. For the contest, Pepsi printed one billion special codes, which could be redeemed either on the Pepsi website or via postal mail, and of which one million were instant cash winners (eg a $20 instant prize). Of all the codes redeemed, which Pepsi estimated to be 200 million-300 million, 1,000 were chosen in a random drawing to appear in a two-hour live gameshow-style television special.
On the evening of September 14, the final day of the contest, the now-defunct WB network aired the special, entitled Play for a Billion. The 1,000 people who appeared on the show each received $1,000, and several of them were selected to play various games for a chance to win prizes. Each person was assigned a random 6-digit number, and a chimpanzee backstage rolled dice to determine the grand prize number. This number was kept secret; the 10 players whose numbers were closest to it were chosen for the final elimination.
In this game, the players were offered a chance to quit the contest in exchange for a cash payoff, but only one at a time could claim it. If no one accepted a particular offer, the player who was farthest from the grand prize number was automatically eliminated and won nothing more. The offers, and the time delay before the results were revealed, increased in every round until only one player was left. That person won a guaranteed $1 million, which would become $1 billion if he/she exactly matched the grand prize number. This latter prize is the highest ever offered on any US game show, counting specials and lottery shows.
In the 2003 version, hosted by Drew Carey, Richard Bay of West Virginia claimed the $1 million guaranteed prize, but did not win the billion (his number was 2-2-8-2-3-8, the winning number was 1-7-8-2-3-8). The next year, Jon Kenney of Natick, Massachusetts, won the million, but like Richard, did not win the billion. That year's show was hosted by Damon Wayans and Tom Bergeron and aired on ABC.
Pepsi, unable to assume the risk of actually losing $1 billion, had an insurance company owned by Warren Buffett's Berkshire Hathaway, the largest stockholder in cola-rival Coca-Cola, underwrite the contest, reportedly for a seven-figure premium.
The $1 billion prize was an annuity to be paid in 40 annual payments as follows:
Years 1-20: $5 million each (subtotal: $100 million after 20 years)
Years 21-39: $10 million each ($290 million after 39 years)
Year 40: $710 million (balloon payment)
There was a cash option of $250 million if the $1 billion prize were to be won. The guaranteed $1 million was paid in lump sum in both instances.