FantasyDraft Has Changed the Landscape of DFS
If you are one of the people who tried their hand at daily fantasy sports then proceeded to lose some money and gave up on it quickly, you may want to reconsider based on the new announcement from our friends at FantasyDraft. Fam, I love daily fantasy sports. It entertains me nearly every night of the week, making each at-bat and even the crummiest games interesting. It surely multiplies the enjoyment when I can add to my bank account. For many people, however, adding to the bank account isn’t part of the equation. DFS sites have to make money, of course, if they want to continue operating so they, like Vegas, take what is called a rake. You’ll notice that if you enter a 10 person $10 contest, the winnings aren’t the $100 you might expect. Instead, only $90 or even $85 are handed out at the conclusion of the contest. That is a 10 to 15% rake, which is standard in the industry. While that is understandable, of course, it is also a bummer because it means less profit for us. That all changed this summer when FantasyDraft went to a rake-free platform.
This is a game changer, folks. If you win 50% of your cash game contests, you can essentially entertain yourself for free. Until now, if you wanted to play head to head against a friend, rather than just exchanging money, any DFS site would take a portion. So instead of doubling up your money, your return of investment would only be 70%. While still good, I probably don’t need to tell you that 100% is substantially better than 70%. Today, I built a quick simulator to demonstrate just how much it all adds up.
Think about it this way: let’s say you are an industry average player, winning 50% of the multiplier contests you enter. You build one lineup for 100 contests in a season, and enter all at $10 a piece. Each contest is a flip of the coin so let’s flip that coin 100 times.
52 wins. Not bad! You invested $1,000 and came away with…$910. Womp Womp! That’s ok, you were better than average and paid just $90 for 400 hours of entertainment, or 22 cents an hour for your favorite hobby. There are much worse ways to spend money. Now let’s run that simulation 10,000 times.
- >$200 profit (0.01%)
- >$100 profit (0.65%)
- Any profit (6.81%)
- Loss in money (93.20%)
It isn’t until you bump yourself up to a 58% win-rate that you start averaging a profit over a large enough sample size. Now check out how quickly that bell curve adjusts in a rake-free environment.
- >$300 profit (0.71%)
- >$200 profit (6.68%)
- >$100 profit (17.83%)
- Any profit (50.01%)
- Loss in money (49.99%)
Seeing that the best of the best in Vegas win just 60% of their bets, it seems fair to assume DFS rates are similar. That means that the break-even rate is two standard deviations above the median 50% winner. Rake free head-to-head will drop the profit-line an entire two standard deviations! I can’t emphasize enough just how impactful that will be for us all.
By now, you are probably wondering about how it impacts GPP contests, or what you might call tournaments. This is where entry fees can be small but you can still win six-figures in one contest, like FantasyDraft’s $1M Hooters Kickoff. What comes with that, obviously, is that far fewer people win money with the cash line typically sitting around the top 20%. Likewise, if you do win money, it isn’t substantial until you get near the very top. But nearly everyone who plays understands that and deems the risk necessary as the chance of winning a life-changing payday is incentive enough. Now, if you’ve spent some time and invested some money towards winning that big prize, you’ll quickly find out that it can suck the funds from your account, even if you put together strong lineups. Frankly, it takes a magical slate of games for you to come away with a profit, but when you do, you might just be able to pay off that mortgage. So let’s jump over to the RNG simulator to see what
profits losses it spits out this time. We will again go with 100 $10 entries but this time, we will simulate 500,000 samples instead of 10,000.
- >$100,000 (0.0018%)
- >$10,000 (0.01%)
- >$1,000 (0.45%)
- Any profit (1.48%)
- Loss in money (98.52%)
That’s a lot of red numbers. There are also 9 people who are living it up and another 504 who paid off their car. Not bad! It gets better though. And I mean a lot better. Check out the rake free simulations. This assumes that the cut-line would be moved from around 20% to around 25% since there will be an extra 15% winnings floating around in prizes.
- >$100,000 (0.0016%)
- >$10,000 (0.01%)
- >$1,000 (0.49%)
- Any profit (14.38%)
- Loss in money (85.62%)
As you can see, the top three lines hardly budged. That small drop in the 100k was random variance, as the difference was moving from 9 out of 500,000 to 8 out of 500,000. There are more people who pocketed at least $1,000 bucks, but the most noticeable change is that the number of who saw a profit over 100 entries was multiplied. By ten!
The best part about all of this is that when everyone flocks to FantasyDraft to increase their winnings the GPP prize pools will grow substantially. This is going to change the entire industry for your benefit. Cheers to FantasyDraft for taking the leap to make this happen for us!