Home Runs or Small Ball? Part 1 – Let’s Call Babe Ruth

Many NFL teams face the same question.  Should we nickel and dime our way down the field or should we go for the deep ball?  In football, the correct strategy depends on time remaining and the scoreboard.  In daily fantasy, it depends on what game you’re entering.

Daily fantasy breaks out into two types of games: tournaments or head-to-head games (also known as cash games).  When entering each type you have to take different approaches to be successful.  Let’s dig a bit deeper into tournaments.

• Tournaments – Tournaments are usually multi-entry, meaning each person can enter as many teams as he wants, and pay out to 10-20% of the field.  The payout structure is top heavy; the winner and top >.05% receive the lion’s share of the winnings, while the rest of the winners get 2-3x their entry fee.  Given this structure, what should be thinking about?

• You’re looking for home runs – Because the payout structure is top heavy, you’re looking to win versus trying to get 2-3x your money.  Placing in the top >.05% is where the long term profits will come from and will make up for all the times you don’t cash. 

• For example in the $250,000 Guarantee NASCAR Pedal to the Metal Tournament this weekend (https://www.draftkings.com/contest-lobby), first place gets 40% of the prize pool ($100,000).

• You won’t cash most of the time – 10-20% of the field cashes, that means 80-90% of the field doesn’t.  Don’t expect to win every day.  You won’t.  You’d rather cash less often and occasionally place in the top >1% than to consistently get 2-3x your entrance fee back.

• Let’s take an example from the $250,000 Guarantee NASCAR tournament this weekend.  Entry fee is $3 and it has a prize pool of $250,000 – Maximum tournament size 95,800 entries.
• If you placed 501^st in the tournament, we’d win $10 – just over 3 times our buy-in.  That’s a top 0.5% finish and we only get back 3.3 times our buy-in!
• If you placed 51^st in the tournament, we’d win $150 – 50 times our buy-in.  That’s a top 0.05% finish and we get back 50 times our buy-in. 
• We did 10 times better and got 15 times more reward. 

• Budget – Bankroll management (a topic we will discuss over and over again) is a huge factor in how to approach tournament play.  Having more entries/money at your disposal changes the way you pick your lineups.  It allows you to play more combinations of players, increasing your chances of being successful.  Don’t enter tournaments you can’t afford to be in and don’t go over-budget by entering too many lineups in the same tournaments.  Since the optimal strategy requires you to play in multiple successive tournaments, you must always live to fight another day. 

• Differentiate Yourself – There is lottery theory that advocates picking numbers which are “not popular.” The idea is that if you win, you are more likely to take the entire jackpot rather than have to split the winnings with others who picked the same numbers.  How does this concept come into play here? Let’s say you are drafting an NBA lineup on a night when Lebron James is coming off of another 40 point, triple double performance (like much of the 2014-15 season).  We love Lebron, but so does everybody else.  We can’t differentiate ourselves from the field by picking Lebron.  The opposite is also true.  If we don’t pick Lebron, we differentiate ourselves right away.  Obviously, that approach won’t work if Lebron has another big night, but if he doesn’t, we’re a big winner relative to the crowd.  A big concept in daily fantasy sports is that it’s not about how well you do in absolute terms, but how well you do relative to your competitors.  If everyone has a bad night, but your night is less bad, you still win. Remember, we’re not going to cash most of the time, we’re looking for home runs when we do. One less obvious way to hit a home run is to not pick obvious favorites when favorites have off games.

These are just a couple tips on how to play daily fantasy tournaments.  Tune in tomorrow for Part 2 – Small Ball.

If you have any other tournament strategy suggestions, post them below or tweet me @rkalwaro on Twitter.  If you’d like to play some tournaments on DraftKings – use https://www.draftkings.com/r/TheConductor44 to sign up!

Always Be Innovating,

Rob