DraftKings and FanDuel are among the leaders in daily fantasy football leagues, and for good reason. They allow players to avoid many of the negatives that come with traditional, year-long fantasy football leagues, such as injuries and poor weekly match-ups. Both of these companies, which are each valued at over $1 billion according to Bloomberg , are expected to bring in $60 million in entry fees during the first week of the NFL season. Is the average player likely to win money over the long term? Bloomberg says no.
If you have watched cable television for more than five minutes in the past month, the odds are likely that you have seen a DraftKings or FanDuel commercial. These commercials are usually upbeat, glamorous, and show short interviews of former winners discussing their earnings. DraftKings has even recently shown celebration footage of some of their players who have won $1 million, right after clinching the big prize. While there is nothing wrong with these advertisements, it is important to remember that the odds of winning a top prize, or even winning consistently to stay profitable, are not great. DraftKings and FanDuel advertisements on Twitter are also tempting and glamorous for players.
The Week 1 NFL Millionaire Maker is only 3 days away! ?? #FantasyFootball http://t.co/tsOhWt5BSI pic.twitter.com/sJTFWzK2EU
— DraftKings (@DraftKings) September 10, 2015
?Win $1M playing #FanDuel ? RT + Tag 3 friends and we’ll pick 4 users to receive FREE entry into the #SundayMillion pic.twitter.com/HBk1t1eVy4
— FanDuel (@FanDuel) September 9, 2015
Like in poker, fantasy football does not always come down to pure luck. While a novice poker player or fantasy football player can occasionally get lucky and win the big jackpot, the experts are going to win over the long run. The New York Times provided an example of how machine learning and statistics could provide huge advantages in selecting a fantasy football lineup. Many of the best players in DraftKings and FanDuel leagues are using such systems. Their advanced spreadsheets, data, and analytics are giving them the edge over other players that are not doing their proper research.
To obtain an even greater advantage, they are entering hundreds, if not thousands, of different contests every single day. According to the Bloomberg article referenced above, one player claims to have a return of 8 percent using that strategy. While many of the lineups that they generate will be duds, the analytics eventually win out, and they have enough strong lineups to have a positive expectation for profit.
In order to level the playing field, DraftKings and FanDuel are limiting the number of entries for an individual player. Since more entries is a critical aspect for an analytics player, this reduces their advantage, and allows for amateur players to have a better chance at winning.
Even with the best analytics and entry strategy, there is still luck involved. Injuries during the game, bad weather that was not expected, and star players having bad games when they should not are factors that can ruin even the best planning. In the end though, the majority of money is still going to a small group of expert players.
Regardless, DraftKings and FanDuel are fun and add drama to NFL games. Even if you do not win, you can still view it as the cost of entertainment.
[Image via Mark Von Holden/Getty Images for SIRIUS XM Radio]
