DFS Postmortem: A Need for Diversity

I had a bad year on FanDuel. An embarrassing year really. For a time, it was going well. But like every foolish gambler, I tried to leverage my winnings by scaling my entries. Predictably, it backfired. I sat down this morning for a bit of a postmortem, and I noticed a few things.

Based on my performances in The Daily Grind Invitational (TDGI) – which I ran as a regular part of my The Daily Grind column – I shouldn’t have done that badly. I spent $76 and I won $70.  Overall, I’m actually down $280 on FanDuel. Aside from early April, I played one site per day – whichever one I used for the TDG contest. I also used only one lineup for all contests or several very similar lineups. With that in mind, my performance in TDGI should theoretically reflect my overall performance. Instead, I lost nearly $200 more than expected.

A few things happened. TDGIs were small – 20 users. Since most of us shared the same general process, it sometimes only required a low score to win money. We also paid the top 30 percent of participants while the GPPs I played generally ranged from the top 19 to 23 percent. My winnings in TDG contests reflected a high volume of small victories rather than a few big ones. So I had winning days in our contests and losing days in the GPPs.

That was a recurring complaint of mine about FanDuel this year – I had an inordinate number of good point totals that didn’t even sniffed the money. Strangely, that was not my experience on DraftKings where I either posted a good total and won money or whiffed horribly. It was highly unusual for my lineup to click and not win money. In fact, I can’t recall a single time this happened, although I’m sure it did.

The real issue is the contests I play. Typically, I entered the Squeeze ($3), Bunt ($1), and Sac Fly ($1) – all three usually had well over 10,000 participants. At my peak, I also played the Rally ($5), Single ($5), and Stolen Base ($2). These also tend to be 5,000 or more participants.

The strategy is simple – spike one day and win big. Well, I didn’t spike. If you have a cold month at that investment level ($17 per day), you lose $510. Toss in a few modest wins and you wind up down, oh I don’t know, $280?

So we have some basic data – I did fine in small contests and terribly in large ones. And, excluding TDG Invitationals, I only played large contests on FanDuel. Elsewhere (i.e. DraftKings), I finished up $80. I regularly played a couple huge contests and a few in the 450 to 2,500 user range. Sometimes, I profited 1.5X in the GPP and 12X in the small game. The downside to small games is that the ceiling is capped. An epic lineup can only take you so far – no dreams of winning big.

Next year, I’ll be taking a similar approach to FanDuel – more diversity of contest types. Remember, a GPP is a skilled lottery. The larger the contest, the harder it is to win. Mixing it up with more small games should help me on those days when my lineup performs well but still finishes outside the money in the huge GPPs.

Overall, I finished 2016 in the red, but I beat the rake. The final math: I lost about $200 on roughly $3,000 in entries. That’s a moral victory if not a financial one. With industry insiders saying only nine percent of DFS players turn a profit, I’ll accept beating the rake. It’s my hope that taking a more diverse approach to contest sizes will lead me to profit in 2017 – even if I fail to spike a GPP.





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Johnston
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Johnston

I have a good friend who is a chaired professor of economics at a Tier One university. He refers to gambling as “the stupidity tax.”