As some of you know I recently started playing “Daily Fantasy Sports”, or DFS. I play on DraftKings, which you’ve probably heard of in at least one advertisement on the radio or TV in the past couple months.
I’m always looking for new ways to make money – especially if it can be done online. Today I want to discuss whether or not DFS is a good way to make money.
You might find it hard to believe, but there are actually professional DFS players. Similar to professional poker players, they make money by being better at the game than others and, therefore, make money over time.
There are also many winning players who treat DFS as a side hustle, something that they do in addition to their full-time job. In this post I’m not talking about taking on DFS as a full-time gig, but instead whether or not DFS is a good way to make money on the side.
What is Daily Fantasy Sports?
Some of you may be wondering what the heck Daily Fantasy Sports is. To provide some background, “regular” fantasy sports involves drafting a team at the beginning of the season. You can trade or add/drop players, but for the most part your lineup is set. If you draft crappy players, tough luck; you have to wait until next season to draft a new team.
With Daily Fantasy Sports, or DFS, you pick a new team every week. You don’t have to go through the long draft process each week or day (which was my initial thought when I heard about DFS), but instead you choose a team based on a salary.
For example, on DraftKings you get $50,000 salary for a team. Each player has a value that is updated each game. Someone like Peyton Manning will be much more expensive than, say, a poor quarterback. You can’t just choose elite players because you will run out of salary cap room.
Websites like DraftKings have a variety of “contests” (or tournaments, as I like to call them) that you can participate in. Currently their biggest one is the $2.2M Sunday contest. First place gets a whopping $1 million. And it only costs $27 to buy-in. $27 for a chance at $1 million. Some of you reading this are already sold on DFS and should scroll to the bottom to sign up for the DraftKings $600 deposit bonus ;)
That’s a high-level explanation of DFS and how it works. Obviously it the salary cap and lineup you have to field will vary by sport, but all the details are available at DraftKings.
What should you consider about DFS?
As someone who personally knows people who made a ton of money during the poker craze a few years back, I naturally have met a few others who are treating DFS as a money-making exercise. The facts don’t lie: there are people who win money consistently at DFS.
I became intrigued by DFS mainly because it seems like one big math problem. If you can create the right data model that tells you what the optimal lineup is, you can overcome variance (more on that in a minute) and win over time. All you have to do is figure out what algorithm will give you the most accurate prediction of who the most “under-priced” players. After all, everyone has the same salary cap and the same players to choose from.
From my initial month-and-a-half of reading and learning about DFS, I have a few things that I’d like to discuss in relation to playing DFS with the goal of making money over time:
- Variance – Variance, by definition is “the fact or quality of being different, divergent, or inconsistent.” As far as DFS is concerned, variance would be a game where a typically solid quarterback like Peyton Manning throws for only 150 yards and 1 touchdown, or when an elite wide receiver gets injured during a game and leaves with zero catches. These will destroy lineups and result in short-term losses even though they were the correct plays.
Because variance is so high in DFS you need to have a large enough bankroll to deal with variance inevitably impacting your results. You also need to be able to determine whether your process for setting lineups is flawed or not, which is a feat in and of itself.
- Payout Structure – In the bigger contests, such as the DraftKings $2.2 Million Sunday contest, the prize structure is extremely top heavy. First place gets $1 million, or nearly 50% of the total prize pool. Even if you play the optimal lineup the odds are stacked against you placing high (again, due to variance).
If you look at the DraftKings $2.2 Million Sunday contest you’ll see that the top 50 finishers – or the top 0.05% – take in more than 60% of the total prize pool:
Of course there are other contests that are more conservative such as 50/50s where half the field wins and half loses, but the big money is in the larger “guaranteed prize pool” (GPP) contests.
- Time Commitment – Probably the most important factor of whether something is a good way to make money is the time commitment. All it takes is some Google searches and web surfing to see that there are a lot of players who spend a lot of time on DFS. The professional players spend all their time on it, while there are many amateur players who spend 10-30 hours a week on it.
I have said in the past that casual players are at a disadvantage. They aren’t spending the same time researching or building models to put together the optimal lineup or lineups, nor are they likely going to commit enough of a bankroll to see themselves through the ups and downs.
If you are going to approach DFS as a side hustle you really need to commit both financially and with your time. There’s really no shortcut to making DFS a sustainable side income unless you are willing to sacrifice.
There are more things to consider when talking about whether or not DFS is a good way to make money or not, but I think I hit on all the big ones.
Is DFS a Good Way to Make Money?
Some of you will hate my answer, but I think it depends on each person as to whether DFS is a good way to make money. Hear me out.
First, I think playing NFL DFS is a bad way to make money. Yes, there are a lot of money in it but let’s face it: with only 16 or so weeks of games, variance is extremely high. You would never have a big enough sample size to tell whether you are winning because you are getting lucky or if you actually have a process of picking teams that will win over time.
Second, I think that there is potential for a profitable data model in Basketball, Hockey, or Baseball because you have a lot more games to spread the risk. Ideally you would be able to take the human judgement out of it and just let a data model pick the lineups. I’ve noticed recently that you can argue for or against almost any player so it’s hard to argue for a “qualitative” analysis strategy of setting lineups.
Third, I think it’s important to compare DFS with other side hustle ideas. If DFS doesn’t pan out for you or you are unable to find a profitable strategy long-term, you could easily end up losing hundreds or thousands of dollars with nothing to show for it. I think there are better side hustle ideas out there if you are looking for guaranteed money. It may not be as fun as setting fantasy sports lineups, but it’s much lower risk than pursuing DFS.
With that being said, since I started playing DFS I’ve had a lot more fun watching the NFL games on the weekend. Yes, there are times when I’m yelling at my TV – or more specifically, the players in my lineup, but overall DFS makes games have more meaning than they otherwise would. It can be a fun thing to play casually, but as far as a long-term side hustle I think there are better options out there.
Final Note: DFS could be a great side hustle for some people. I think there are people out there who would see the hours and hours of research, testing strategies, tracking the Vegas betting line, following the injury reports, etc. as a fun activity. It could be very profitable for these players. Assuming these people would otherwise not have a side hustle, I have to say it’s better than nothing.
What are your thoughts on Daily Fantasy Sports? Is it better to play for entertainment or as a way to make money (side hustle)? OR do you think it’s best to avoid it?
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All this talk about making money with fantasy sports makes me want to try it. I do the money leagues, but it’s not much…usually $20 to $50 to enter. It’s fun though. I have friends that do the daily thing, but they aren’t too serious about the money part.
It is a form of gambling, but the NFL, MLB, NHL etc are backing sites like this because you are not concerned on the outcome of the game, but rather the performance of he players in them. Kind of a loop hole. Since it’s based on pure luck, things outside of your control I would not think this is a good way to make money.
Do you have to buy in? I wouldn’t consider it a side hustle…more entertainment with the possibility of making money. Back when I was in my 20s and really into fantasy sports I would have tried it but I don’t know about nowadays. As for building models to find the optimal lineup…don’t many websites with fantasy football have something similar where they recommend which player you should start/bench. I guess it’s a different model when you have to fit a team in a salary cap.
MoneyMiniBlog All the friends I have that do DFS are very serious about it and treat it as a side hustle. Interesting to hear that your friends aren’t serious about the money part. It’s really tempting to play because you can win so much if you get lucky and set the right lineup.
DebtDiscipline I know a lot of people who would disagree with you, especially those with long-term (i.e. 3+ year) winning track records. A lot of people I know view it the same way they view poker. Any given “hand” or “contest” or “tournament” you can lose even if you play optimally. Long-term, though, if you play at +EV you will win over time.
Andrew LivingRichCheaply You don’t have to, but I think most people naturally move from the free to the paid games. There are many sites that talk about who to start and sit, but I’ve seen that in the name of getting more and more content out there you can find someone making a case for almost any player to start!
DC @ Young Adult Money DebtDiscipline I’d love to see the numbers.
DebtDiscipline DC @ Young Adult Money For poker or DFS?
DebtDiscipline DC @ Young Adult Money Here’s one article. There are a number out there on the more well-known professionals. An article in the WSJ about one of the pros was what got me initially interested. http://www.businessinsider.com/how-pros-play-fantasy-sports-2013-11
I’ve been playing fantasy football for years on ESPN and NFL.com. I love it. I literally just signed up for Draft Kings after reading this article. Wish me luck.
Jason @ The Butler Journal Good luck! Don’t get too addicted! Haha I only say that because it really can be addicting.
Interesting, there’s a lot of money on the table however as we both know it isn’t always the easiest way to side hustle.. A great excuse to watch sports though right :) haha
mycareercrusade The main issue for me is that you are likely to be either REALLY successful by winning some of the bigger GPP tournaments or you could very easily lose for an extended period of time. I think it’s a fun thing to try out, though, and if you like it then you should stick with it long-term.
Yeah good points, probably not bank on retiring on it but if you enjoy it, why not? I’ll put the term YOLO out there, you can keep off the blog if you’d like for using that horrible term haha :)
mycareercrusade Haha no sir, I like the use of YOLO in this situation!
I bet there are very few who make consistent money with fantasy sports, probably like the card counters. If you know how to work the formulas, you could do really well, but the average person would be clueless. My sister and law did win a few thousand in a fantasy football league a few years ago, but I think it was mostly luck as she hasn’t been able to repeat.
Eyesonthedollar In this post I’m talking about Daily Fantasy Sports, which is a different thing than the traditional season-long leagues. I think it’s different than card counting too because you are playing against other players who either have higher or lower skill than you, not against the house. I’d be surprised if there were still people making money card counting because of how developed the casino’s security technology is these days.
I’m always looking for ways to make more money as well DC, but I would really have to consider the time investment as much as the monetary investment.
I would also have to weigh the odds of winning more than I lose. It’s something I’ll have to look into. It’s intriguing, I’ll admit that.
John Green I agree, the time commitment is a big one. I’ve noticed that if I spend just a little time reading articles and trying out different lineup combos the time commitment is less than I imagined it would be.