Daily Fantasy Sports Strategy: The Basics

All daily fantasy sports share certain commonalities. The
basics of strategy for daily fantasy baseball aren’t too
different from the basics for daily fantasy football,
basketball, or hockey. Understanding the differences between
contest types is a crucial component of strategy. Bankroll
management is another important strategic consideration. Risk
management and finding value are the final pieces to the puzzle.

This page covers the basics of strategic thought for all
daily fantasy sports. More detailed discussions of certain
aspects of the game can be found on other pages—for example,
bankroll management is important enough to warrant a detailed
page all its own. In those cases, we direct you to any
additional information we have to offer.

Here are the basics of daily fantasy sports that you really
ought to know.

Understanding the Different Contest Types

Are cash games or tournaments more interesting? Some players
prefer to grind out lots of small games with small wins; others
prefer seeing fewer wins, more losses, and bigger cash prizes.
Plenty of players also play both types of contests.

Cash games consist of the 50/50 and head-to-head contests.
Both offer the opportunity to double your money (less the site’s
commission). In other words, with an entry fee of $10, a
contestant is hoping to win $18—double their money less the
site’s 10% commission. Cash games are the way to go for
confident fantasy players who want to make consistent cash over
time.

Tournaments, on the other hand, have larger payoffs, but they
also require higher scores to win. In 50/50s and head-to-head
games, someone could expect to win 50% of the time if he and the
other players have the same skill level. But tournaments only
pay the top 10% to 30% of the players. This enables the site to
offer larger prizes to the winners.

Here are some examples to illustrate each the different
contest types.

Example of a 50/50 Contest

$25 buy-in.
100 entrants.
Total of entry fees = $2,500 ($25 x 100)
Prize pool = $2,250 ($2,500 – 10% commission)
The top 50 entrants get paid.
Each winner gets $45 ($2,250 / 50 winners)

Note that each one of the winners gets the same prize
regardless of whether they place first in total points or
whether they place 49th. Assuming no difference in skill level,
contestants in 50/50s expect to almost double their money 50% of
the time.

Example of a Tournament

$25 buy-in
100 entrants
Total of entry fees = $2,500 ($25 x 100)
Prize pool = $2,250 ($2,500 – 10% commission)
The top 12 entrants get paid.
The higher a player places, the bigger the prize amount.
Example payouts:

1st place – $675
2nd place – $350
3rd place – $250
10th. 11th & 12th place – $75

Assuming no difference in skill level, one can
expect to cash 12% of the time. But contestants who cash get at least
triple their buy-ins. They even have a 1% chance of getting a 27 to 1
payoff for first place.

Winning Percentages & Payoffs

The goal, of course, is to be a better than the average
player. That means winning 56% of the time or more in the cash
games and placing 13% or 14% of the time in the example
tournament. Winning percentages in the tournaments vary based on
the prize structure for each tournament, too—some tournaments
pay a higher percentage of entrants.

Understanding what the break-even percentage for your
preferred contest is one of the first steps in learning daily
fantasy sports of any type. The 10% commission that the site
keeps has a big effect on what’s required to profit on a
consistent basis. Track your overall winning percentage from the
start. With practice, that number should grow.

In the cash games, calculating the break-even percentage is
easy. It’s just a matter of multiplication and division.

Here’s an example.

A head-to-head contest costs $20 to enter.
The prize is $36 (total of buy-ins less commission).
Play in 100 of these contests and win 50% of them, and
the net loss is $200.
Winning 55.56% of them is a break-even proposition—no
profit, but no net loss.

Every percentage point beyond that 55.56% represents a huge
increase in return on investment. Set an initial goal of 50% in
the beginning, with an intermediate goal of getting to
break-even at 55.56%. After that, try to get as close to a 60%
winning percentage as possible.

The break-even percentage for tournaments is a little more
complicated, but not much.

The calculation is as follows.

Let’s see how that works in an example.

John plays in a tournament with 1,000 people.
Each entrant has paid $1 to play.
The total entry fees are $1,000.
The prize pool is $900 ($1,000 les 10% commission).
The top 20% of entrants win money.

Based on the above, the required calculation is as follows.

($1,000 / $900) X 20%

This gives us 22.22%, which is John’s break even percentage.

Another way to track tournament results is to just keep a
record of the amount won versus the amount lost. Then calculate
your return on investment over time.

Here’s how that works.

James plays in 100 $25 tournaments with 100 players.
His total investment is $2,500 (100 x $25)
He wins first place in two of them ($675 each time).
He wins second place in two of them ($375 each time).
He loses in all the rest.
His total return is $2,100 ($675 + $675 + $375 + $375).
His total loss is $400 ($2,500 invested less $2,100
returned).
His return on investment (ROI) is -16%.

James keeps practicing and plays another 100 tournaments with
the same entry fee. This time his results are as follows.

He wins first place in two of them ($675 each time).
He wins second place in two of them ($375 each time).
He wins third place in three of them ($250 each time).
His total return is $2,850.
His total profit is $350 ($2,850 returned less $2,500
invested).
His ROI is +14%

His overall ROI is -2%, but as long as he continues
improving, the ROI should continue to improve, too.

The Basics of Bankroll Management

Broke players can’t win. Avoid putting too much of your
bankroll on the line with any single lineup or any single
contest. The more you risk on a single circumstance, the greater
the chances of going broke.

We recommend very conservative bankroll management
techniques. In cash games, play in contests where you can afford
20 to 40 buy-ins. That means if you have $1,000, stick with
contests that cost $25 to $50 to enter. If you’re playing in
tournaments, be able to afford at least twice that much in
buy-ins. So if you like that $25 to $50 buy-in, set aside
a bankroll of at least $2,000.

The reason for managing your bankroll in this way is because
anyone can have a streak of bad luck in the short run. Limiting
the amount of your bankroll risked in a specific situation
reduces the odds of going broke.

Further Information

You can read more on this subject on our
page dedicated to bankroll management in daily fantasy sports.

How Salary Caps Affect Strategy

Veterans of season-long fantasy sports games might not be
familiar with salary cap style tournaments. Traditional leagues
usually have a draft at the beginning of the season. When a
fantasy manager drafts a player, that player becomes unavailable
to everyone acting later in the draft. Making the most of one’s
pick relative to when they’re drafting is the key to strategy in
a season long fantasy league.

But in daily fantasy sports, drafts take about 15 minutes. No
one has to worry about choosing the same player(s) as their
opponents, because there are no rules against it. It’s even
possible (although unlikely) to have the exact same lineup as an
opponent.

What’s to prevent a daily fantasy sports team manager from
just drafting the #1 or the #1 and the #2 players for each
position? The answer is simple.

The sites institute a salary cap

Think of this salary cap as being a budget of fantasy money
that can be spent on each player. All contestants each get the
same amount of money—usually $35,000 or $50,000, depending on
the site and the sport—with which to draft their teams. This
money has no relation to the entry fees, which are measured in
real money. Players can’t buy extra draft dollars or anything
like that.

The players all have salaries which are determined by the
site’s algorithms. These formulas take into account the players’
past performance and their projected future performance.

The goal is to get the most points for your money.

That’s called “finding value”, and it’s the most important
daily fantasy sports skill of all.

Finding Value

Every player in a daily fantasy sport can earn points for
your team in the contests. In football, these points come from
activities like gaining yards and scoring touchdowns. In
baseball, they come from striking out players, getting on base,
and scoring runs.

A player’s value is measured by looking at how many points he
scores relative to the amount of salary spent on the player. The
same measurement can look at an overall lineup.

Here’s an example.

You draft a running back for $2,000.
That player earns 20 points in the contest.
You paid $100 in salary for each point. ($2,000 / 20)
Your opponent drafts a running back for the same $2,000
salary.
His running back scores 30 points.
Your opponent has only spent $66.67 per point ($2,000 /
30).

If you keep the amount of money you spend per point lower
than your opponent in every position, you’ll inevitably win.

But you’ll also win if you keep your overall spend per point
lower than your opponent’s.

Here’s another example.

You spend your $50,000 salary cap on a team that earns
250 points.
You spent $200 per point ($50,000 / 250).
Your opponent spends her $50,000 salary cap on a team
that only earns 200 points.
She spent $250 per point ($50,000 / 200).

Early on, look at how many points on average win the contests
you’re planning to play. Use that as a target when selecting the
players for your lineup. Your guess about how many points a
player is going to score is a projection.

If you have to choose between 2 players who each cost $2,000,
choose the one which is projected to score more points. That
seems obvious, but it gets trickier when you get into the actual
numbers. Players tend to have salaries that look more like
$3,200 or $6,400, and their projected scores are more like 15.7
and 20.4.

With those kinds of numbers, it isn’t immediately obvious
which player is the better value. That’s why you break each
player’s projected performance down into a dollar cost per
point. That’s simple division. Divide the salary of the player
by the projected number of points he’s expected to put on the
board.

Further Information

We strongly recommend that you learn
more about this subject, starting with our article on finding
value in daily fantasy sports contests.

Keeping Records & Making Adjustments

Over time, by keeping careful records, you’ll figure out what
kinds of scores win what kinds of contests. Bigger scores are
needed to win tournaments than cash games, because they always
pay out the top 10% to 30% instead of just the top 50%. When
planning a strategy, be more conservative with cash game teams
than tournament teams.

For example, you should be more interested in a player who
has a 70% chance of scoring 20 points than a player who has a
20% chance of scoring 70 points. The expected number of points
is the same (14), but the difference in performance is
significant.

But in a tournament, go for players who score exceptionally
well in order to place in the higher percentages. Be more likely
to opt for the player who has a chance of putting a really big
number on the board, even if that player is less consistent.