Don't Quit Your Day Job: The Real Winners Of Daily Fantasy SportsPlay
An email arrived in the Only A Game inbox this week from listener John Fry:
Boy is my face red! All this time I thought Draftkings was an on-line bar-tending course. Turns out it's a sure-fire way to make money. I thought maybe it involved taking a chance, but their ads state — plain as day — "not a gambling site". I'm looking at their web site and they list The Boston Globe, the Wall Street Journal and the New York Times.
They don't make any claims, they just have the names sitting there. I'm sure if they were trying to take my money, MLB and NFL wouldn't allow them to advertise. On the off chance something fishy is going on I thought I'd check with you before I cash in my retirement CD and push it all to the center of the table.
If you own a television or a computer you have probably seen the ads Fry is talking about. They go something like this.
Joshua Brustein and Ira Boudway of Bloomberg Business have done the math and they can tell us exactly when we should expect to see those life-changing piles of cash. Brustein and Boudway joined Bill Littlefield.
BL: Ira, what did you find out about these so-called "normal, everyday fans" walking into bars who've won amazing sums playing fantasy sports?
The point isn't to come up with that one perfect lineup that's gonna hit for $15,000 off a $5 bet but to place hundreds of bets and make your eight percent return.Joshua Brustein
BL: Joshua, these players who play hundreds of times a day — and they're using statistical models and spreadsheets and automated systems to generate and manage hundreds and hundreds of entries at a time — what's that like day-to-day?
JB: It sounds a lot like work: you kind of sit down at your computer. The point isn't to come up with that one perfect lineup that's gonna hit for $15,000 off a $5 bet but to place hundreds of bets and make your eight percent return.
BL: There is a little bit of skill involved. This isn't exactly like walking into the convenience store and buying all the lottery tickets available in the store because you figure you'll come out ahead.
IB: Yeah, that's right. You have to know both the sport pretty well and be very up to date on the latest players and injuries and streaks and so on. But you also have to really know the games themselves, the daily fantasy structure, because a lot of it depends on picking players that not everybody else is picking. So a lot of it is experience with daily fantasy; having done this hundreds and hundreds of times, they hone in on systems that work.
BL: Ira, you guys cite a couple of studies that have shown that most players lose money, but there's a little graphic at the bottom of the DraftKings commercial that reads: "The average user's winnings for the last 12 months: $1,263." Are you telling me I can't even believe the fine print?
IB: Well, I mean an average — if I'm in a room with Bill Gates, our average wealth is in the billions, but it doesn't tell you very much. We use data from RotoGrinders which is a community of 20,000 players. It showed that at least the volume of wins is concentrated among the top 10 players winning 873 times a day when they play, the top 100 players winning 330 times [and] the rest of the field of 20,000 winning an average 13 times. So that doesn't tell you how often they're hitting for how many times they play, but it gives you a sense of how it's concentrated. And Sports Business Journal did a look at three months of baseball data and found that only 1.3 percent of players across that three-month span finished in the green.
BL: So it's the same old story: the one percent wins.
BL: Josh, remind me again: why is this not considered gambling?
BL: Ira, I just have one more question. You guys have done your homework obviously on this. What are you doing talking to me? Why aren't you at your computer winning $15,000 for every $5?
IB: I think I would be very bad at it. I play season-long fantasy and do mediocre at that, but this is actually, I think — you look at the people who do it, they frequently come out of consulting or one of the guys I talked to who is a very good player is a certified public accountant. It really pulls for that kind of highly organized, highly systemic thinking that is actually maybe not my strongest suit. So, yeah, I don't think I'd be one of those sharks.
BL: So it's not the guys who have the baseball caps turned backwards, sitting in the brightly lit bars cheering as they watch TV?
IB: It doesn't seem that way.
This segment aired on September 19, 2015.