The key reason Buffett was confident of winning was that he was betting the S&P 500 against a group of several fund of funds and therefore many dozens of  hedge funds. This meant he was not risking a bet against one or a few hedge funds that might beat the index. A group of funds of funds would mean he was betting against basically the average hedge fund. Math was on his side. He was betting average with low costs could beat average with high costs. There was risk because the average hedge fund was not restricted to the S&P 500. But he probably knew that the average hedge fund has a good exposure to the S&P 500 and in any case he had that huge cost advantage on his side.

 "the S&P 500 will outperform a portfolio of funds of hedge funds"