DFS: The Importance of Overlay in GPPs (Fantasy Basketball)
Entering guaranteed prize pool tournaments (GPPs) is the best way to strike it big when playing DFS. These tournaments offer the biggest payouts, and the prize money is guaranteed no matter how many entrants participate. Most GPPs are allow you to enter multiple lineups, and the competition can be pretty intense. Fortunately, there’s a way to gain an advantage in GPPs and increase your odds of cashing before games even tip off: overlay.
What is it?
Overlay is when a contest with a guaranteed prize pool fails to fill to capacity, and the entry fees are less than the guaranteed payout. For example, in a hypothetical tournament, let’s say the entry fee is $1, the max number of entries is 5,000, and the GPP is $4,500 ($9 to be paid to the top 500 entries). If the contest fills to capacity, the tournament generates $5,000 in entry fees less the cost of the guaranteed prize pool: $5,000 – $4,500 = $500 net gain. The contest generates positive revenue for the site because the entry fees exceed the payout.
But what if that same contest only receives 4,000 entries? That is overlay, because the entry fees collected are now only $4,000, but the payout is guaranteed at $4,500. Now: $4,000 – $4,500 = $500 net loss. The site has lost money on this contest, but you are at an advantage. The top 500 entries are still paid, but there is less competition for the money. Let’s take that contest and give it some practical application.
Every contest you enter has an expected value (EV). The expected value is what you can expect to earn with each entry, and you can calculate it very simply. Assume you enter a $1 contest with 5,000 entrants, and the top 500 entries are paid out $9.
5,000 max entries x $1 entry fee = $5000 entry fees
500 top entries win $9 = $4500 GPP
We can divide the number of winners (500) by the number of total entries (5,000) for a simple probability:
500 winners / 5,000 entries = 10% odds of winning
In this scenario, you have a 10% chance of winning. Now, take your odds of winning (10%) and multiply by the payout to each winner ($9) to get your EV.
Payout to each winner ($9) x odds of winning (10%) = $0.90 EV
Now, let’s see what happens when you have overlay. Let’s say the contest only receives 400 entrants. Now, we can recalculate the odds of winning and EV.
500 winners / 4,000 entries = 12.5% NEW odds of winning
As you can see, the odds of winning have increased. Now, let’s see what our new EV is.
Payout to each winner ($9) x odds of winning (12.5%) = $1.13 NEW EV
The EV ($1.13) has now risen above the the original entry fee ($1), meaning you can expect a net gain for this entry as opposed to the net loss of the original EV ($0.90). That’s certainly advantageous to you as the entrant.
Finally, let’s calculate the overlay. The overlay is simply the new EV ($1.13) minus the old EV ($0.90): $1.13 – $0.90 = $0.23 Overlay
It’s All Relative
Now that we’ve determined the overlay of a fictional contest, let’s take things a step further and compare it to another contest for context.
In this contest, the entry fee is $5, the max entries are 2,000, and the top 100 entries are paid $80. Only 1,500 entries are received.
Using the calculations we did above, we see that our odds of winning at full capacity are:
1oo winners / 2,000 entries = 5% odds of winning
Our EV is the payout to each winner ($80) x odds of winning (5%).
Payout to each winner ($80) x odds of winning (5%) = $4.00 EV
At only 1,500 entries, your odds then become:
100 winners / 1,500 entries = 6.7% NEW odds of winning
Compare that to the payout, and we have a new EV:
Payout to each winner ($80) x odds of winning (6.7%) = $5.33 NEW EV
Again, the EV has now exceeded the original entry fee, and you’re in an advantageous situation. Our overlay is then: $5.33 (New EV) – $4.00 (original EV) = $1.33 overlay
The EV and overlay are understandably higher here because the entry fee was higher. To compare which EV is actually the better bang for your buck, we have to compare the contests as if they had equal entry fees. For a quick comparison, simply divide the entry fee of the first contest ($1) by the entry fee of the second contest ($5) to get: $1 / $5 = 0.20 or 20%. The entry fee of the first contest is 20% of the entry fee of the second contest.
Now, multiply the New EV of the second contest ($5.33) by 0.20 and compare to the New EV of the first contest: $5.33 x 0.20 = $1.07
That number is less than the New EV of the first contest ($1.13), and we see that relative to each contest, the first contest is a actually a better value, and you should invest your money there.
Note: All calculations listed above are purely hypothetical.
Looking for Overlay
To look for overlay, all you’ll need to do is navigate to your DFS site of choice and look for the contests with guaranteed prize pools. For FanDuel, look for a blue circle with a “G” in it, and for DraftKings, look for a green square with a “G” in it. Overlay doesn’t happen with every contest, so you’ll want to spend most of your bankroll (70-80%) upfront and in advance. Then, on the particular day you want to play, start perusing the GPPs section about an hour in advance. These contests can fill up quickly in that span, so have lineups already prepared to import quickly. If you see that a contest looks unlikely to fill in the final minutes, grab some entries and take advantage of that sweet, sweet overlay. If you’re unsuccessful, use the rest of your predetermined bankroll and spend it on other contests or simply save it for another day.
Overlay is an important concept in GPPs, as it gives you an advantage based on raw numbers and probability before any research or decisions have been made in regard to the DFS lineup itself. By using the calculations above, you can determine the EV of any given contest that has overlay and spend your money wisely. A guaranteed increase in odds is a great thing to have when gambling, and it can help offset the many uncertainties that can occur within the basketball games on the slate. Pay attention to contests that are under-filled, run some numbers, and get your lineups in. As always, best of luck!