Networks of Competitors in Daily Fantasy Sports
In recent years there has been an increase in players of online fantasy sports. More recently, a number of people have turned to Daily Fantasy Sports such as DraftKings. In an episode on HBO, John Oliver spent a large fraction of his time discussing these websites and questions their legality. He explains that they are essentially online gambling sites (aspects of which are illegal), though the sites themselves claim to offer an entertaining “game of skill”. Given these facts and others, I’ll examine Daily Fantasy Sports from the perspective of a casual player of these games.
Both sides of the gambling/game of skill debate have convincing arguments. However, if we were to ignore them and analyze the game itself, we would notice that it can be very easily simplified to a general game which has a buy-in and a probabilistic payout for the average casual player. We can motivate this by considering two statistical facts, 85% of Daily Fantasy Sports bettors lose money on the whole and 1.3% account for 91% of the winnings. Within this seemingly lucky 1.3% are players who have sophisticated algorithms running which predict the best team to play based on highly complicated statistical analysis which factors in features such as hourly weather conditions at the field of play. Clearly, such an individual has a decided advantage over a casual player. Assuming a casual player would have a competitive edge over this person with a very small probability, a consistent positive payout for them is rarely possible.
Thus, if we were to attempt to formalize the model of this game, assuming it is symmetric for casual players, it is a decided buy-in and a loss of the buy-in with high probability and high payout with low probability. Given that the best players definitely have a lot of skill, the casual player seems to be playing a game akin to a slot machine with a decided probability of winning big.
Sources:
https://www.casino.org/news/john-oliver-spends-majority-of-his-show-ranting-about-daily-fantasy-sports
https://www.draftkings.com/