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How the Daily Fantasy Sports Industry Turns Fans into Suckers
- laurentoget 11y ago"turns fans into suckers"? I would think spending time and money watching millionaires wearing shiny spandex pants give each other brain trauma in billion dollar stadiums paid with our tax money makes us suckers regardless of the existence of Fantasy Football.
- knowaveragejoe 11y agoI bet you think you're clever with this dismissal of sports and that nobody who actively enjoys sports is aware of the objective nature of what's going on.
- dragandj 11y agoIt seems to me that he is dismissing passive enjoyment of sports (watching games on TV or in arenas), not the active one (participating yourself).
- knowaveragejoe 11y agoDon't read so much into it, it was a trite comment with little substance.
- jfoutz 11y agoI think he means taxpayers are suckers, https://www.stlouisfed.org/Publications/Regional-Economist/April-2001/Should-Cities-Pay-for-Sports-Facilities https://www.stlouisfed.org/Publications/Regional-Economist/A... (older article, but i believe still true today) I used to really hate sports, and make fun of people. It took me a long time to realize i was just an alienating asshole. While not really my thing, i try to put in a tiny bit of effort to be aware of what's going on in sports, and it's improved casual relationships a lot. That said, taxes for stadiums is a pretty bad idea.
- knowaveragejoe 11y agoI agree overall, that said, I feel that is a minor slice of his argument at best.
- Chris2048 11y agoAlienating people by not knowing about sports, or for making fun of them?
- jfoutz 11y agoit's hard to quantify, but just my general attitude has made things smoother. Rather than rolling my eyes and trying to change the subject, i'll try to listen attentively and engage if i have something to contribute. I don't have any interest in listening to someone rattle on for hours, but a minute or two listening to something they're excited about, well, it goes a long way. A reply like "I'm not much of a sports fan, but that sounds amazing" is pretty effective. Just let people bask in the glory of whatever they love for a moment or two, sports, tv shows, how smart their kid is, vacation pictures, whatever. I guess, i wouldn't talk to people if they weren't important or interesting in the moment in some way, taking an interest in what they find interesting makes me feel more connected somehow.
- acconrad 11y agoI always have to preface these opinions with "I used to work in the industry" (I was a developer for a site that got acquired by one of the 2 outfits mentioned), so take this with a grain of salt: This guy was destined to be a sucker. It's not that DFS turned him into a sucker, it's that he has a gambling problem - he says this in the beginning of the article! Why do we need to read further, it's pretty clear from that statement alone he's not going to do well in the long run just knowing the psychology of a gambler like that. And to be frank, he isn't very smart with his money either. He's doing a lot of things that are increasing his risks and destroying his bank account which could be fixed with some simple statistics and discipline (which, for someone with a gambling problem, would be almost impossible). The way to not lose money like the author is employ many of the same tactics you would with investing: * Put in only what you can afford/feel comfortable losing * Stick with the Kelly criterion[1] and never bet more than 10-20% a day * Diversify - instead of 1 $20 H2H game like the author, play 10 $1 H2H games and 10 $1 50-50s. Now instead of flipping a coin once to make $40 all or nothing, you get to flip a coin 20 times, and each win gets you $2, which can mitigate some of your losses. Now to be fair, that last example is a bit inaccurate - because each coin flip is not an independent flip like in a true coin flip, because if you use the same lineup, and that lineup performs poorly, it's like having a weighted coin severely against your favor, but at least with H2H matchups, you know that some people can bomb worse than you, whereas in 50-50s, since you only have to do better than half, in a large sample size, you likely won't win any of your 50-50s since the median score is roughly the same across all of them. My point is two-fold: 1. DFS doesn't turn people into suckers, they already were suckers/gamblers and didn't do their homework and practice discipline, which brings me to my next point... 2. DFS is a game of skill - for an exaggerated example, it takes a basic level of competence to choose Tom Brady over his backup, Jimmy Garoppolo. You can be almost certain he will play, as he's pretty much played every game in his career except for an injury nearly a decade ago. But DFS is also gambling. We know it is, but saying it's legal gambling won't bring on new customers. It takes a lot of work to say "100% Legal" all over your site and still not have people sign up. The US is a funny country. We don't legalize online poker but we legalize in-person poker in casinos all across the country. We legalize DFS but not online poker. Where is the logic in this? For the HN crowd, if you want to try it and you like sports stick with the above advice: don't play if you have a proclivity for compulsive or irresponsible gambling. Don't put a lot in (and only put in funny money, nothing you would otherwise use for say, your mortgage), and exercise a bit of statistics and probability theory so you mitigate some of the risk. If you do that, you won't become a sucker. [1] Kelly criterion - https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion
- cfcef 11y agoSo the problem with this gambling site, which defends itself as being a game of skill, is that some players are far more skilled than others and so win regularly. I see.
- gk1 11y agoA game of skill is not the opposite of gambling. See card counting.
- hnal943 11y agoHis point is that currently in the US "games of skill" are legal where "games of chance" are not. Fantasy is legal because it is classified as a game of skill where black jack is not.
- theseatoms 11y agoIn reality, success in most games comes from a combination of luck and skill. Part of "skill" is dealing with and capitalizing on the randomness of "luck". In practice, who typically ends up drawing this distinction? Appellate judges?
- fleitz 11y agoThe skill you point out is also generally luck, the only time skill comes into play is when you're doing something that the casino will kick you out / stop offering those terms
- mod 11y agoNot true in the case of poker. It's also misleading since in, for instance, blackjack, even when you play at the highest (casino-allowed) skill, you will lose. That's not true of poker or DFS. There's still plenty of nuance (luck prevails in the short term while skill prevails in the long term).
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- coldcode 11y agoIf you can submit multiple lineups via scripts, how can they not detect this? Do they use multiple accounts? Or is it just a desire to look the other way by the companies?
- pavel_lishin 11y ago> Or is it just a desire to look the other way by the companies? That's certainly what the article is implying: > D.F.S. high rollers similarly come with demands, and because there’s no powerful regulatory body involved, DraftKings and FanDuel have been mostly free to set the parameters of play, which, as it turns out, is near anarchy, especially for the D.F.S. elite. High rollers want to be able to use third-party computer scripts that will allow them to enter thousands of lineups at once, something that your average player cannot do. High rollers can gain access into D.F.S.’s inner circle, in which they get to be on first-name, texting basis with executives and employees at DraftKings and FanDuel. They can operate under the cover of plausible deniability — if other players complain that the high roller has been using tools that destroy competitive balance, he might expect the sites to stick up for him.
- mattmaroon 11y agoIt'd be a game of cat and mouse. They would simply start multiple accounts, start using proxies, different computers, etc. Poker had this problem online. It was a bigger problem for poker though because in DFS, there's no real edge from multi-accounting. You don't get extra information like you do in poker. It's just that a sucker in DFS is getting raked that much more. It does threaten the long-term viability of the game though. Newbies are going to come in, get fleeced, and quit. We need actual legal sports gambling.
- omni 11y agoHow do you keep getting paid in a system like this though? It seems to me like it'd be a lot easier to come up with 100 FanDuel accounts than 100 bank accounts, mailing addresses, credit card numbers, etc. to get paid with.
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- pavel_lishin 11y ago> The difference between the D.F.S. high roller and the blackjack whale, of course, is that the whale is trying to take millions from a multinational casino corporation and not from the honeymooners from Fresno who are betting away at the $5 tables. I don't understand this bit. What's the difference? The casino is taking money from those honeymooners; and it's paying it out to the whale. The whale negotiates rules that are different than those that apply to the honeymooners. How is this different than the DFS whales? Is the only difference that FanDuel/DraftKings allow players to engage in one-on-one challenges, vs. playing against the house?
- mattmaroon 11y agoIt's not paying it out to the whale. It's also beating the whale. They won't adjust the rules to where the whale has an edge, generally.
- MrApathy 11y agoGenerally, but not always. An article in The Atlantic a few years back explained how one whale took a trio of casinos for $15M: Johnson did not miss the math. For example, at the Trop, he was willing to play with a 20 percent discount after his losses hit $500,000, but only if the casino structured the rules of the game to shave away some of the house advantage. Johnson could calculate exactly how much of an advantage he would gain with each small adjustment in the rules of play. He won’t say what all the adjustments were in the final e-mailed agreement with the Trop, but they included playing with a hand-shuffled six-deck shoe; the right to split and double down on up to four hands at once; and a “soft 17” (the player can draw another card on a hand totaling six plus an ace, counting the ace as either a one or an 11, while the dealer must stand, counting the ace as an 11). When Johnson and the Trop finally agreed, he had whittled the house edge down to one-fourth of 1 percent, by his figuring. In effect, he was playing a 50-50 game against the house, and with the discount, he was risking only 80 cents of every dollar he played. He had to pony up $1 million of his own money to start, but, as he would say later: “You’d never lose the million. If you got to [$500,000 in losses], you would stop and take your 20 percent discount. You’d owe them only $400,000.” http://www.theatlantic.com/magazine/archive/2012/04/the-man-who-broke-atlantic-city/308900/?single_page=true http://www.theatlantic.com/magazine/archive/2012/04/the-man-...
- mschuster91 11y agoThe usual problem with gambling: regulate it too much and people will flock to somewhere else, quite often somewhere where the odds are lower towards the gambler than before. Like with drugs, booze and smoking: banning is not a solution, especially not in our hyper-globalized world.
- steve-howard 11y agoBut on the other hand, gambling can bring serious social ills. Gambling isn't banned in most places because we don't want you to risk $5 to win $10, it's banned because of addiction, associations with crime, heavier impact on the poor, etc. I don't have a stance on the issue per se, but I do think there are strong arguments against unrestricted gambling. Unlike the drug war, at least, the people in hot water are the people making money, not their customers.
- mod 11y agoThose same strong arguments might apply to alcohol, as well. I don't agree with people being told they can't use their money irresponsibly. It's theirs to spend how they please. Every poker site & casino I've played at allows self-bans, and we have treatment programs for problem gamblers just like we do for problem-everything-elsers.
- gozur88 11y ago>I don't have a stance on the issue per se, but I do think there are strong arguments against unrestricted gambling. There are strong arguments against unrestricted anything. I think it's a shame so many people see little value in the ability of people to do what they want and accept the consequences.
- Grishnakh 11y agoI don't get it. Weren't sports fans already suckers long before this?
- trequartista 11y agoHere's John Oliver's take on the daily fantasy sports industry - https://www.youtube.com/watch?v=Mq785nJ0FXQ https://www.youtube.com/watch?v=Mq785nJ0FXQ (probably some NSFW language)
- 36bydesignBL 11y agoI lose confidence in guys like Oliver and Jon Stewart, because the few times they talk about a subject I actually know very well, they make misinformed points that betray their lack of research/experience in that field.
- fleitz 11y agoI've never understood why it's ok for people to waste their money on HBO but not fantasy sports.
- random28345 11y ago> I've never understood why it's ok for people to waste their money on HBO but not fantasy sports I've never understood why it's okay for people to waste money on fantasy sports but not on Ponzi schemes.
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- morgante 11y agoIf it's gambling, people shouldn't be able to consistently and skillfully win at it. Fantasy sports is much closer to the stock market than casinos. There's a lot of luck and speculation involved, but you can carve out an edge through skills.
- Balgair 11y agoI mean, yes, but poker is without any doubts the poster child of gambling. Poker defines gambling. Gambling is more than poker, but all that poker is as a game is also gambling. But we still have gamblers that can play poker skillfully and do so as a career. They can win over and over. Therefore just because something is gambling does not mean that you cannot be skilled at it and win over and over. Gambling does not preclude getting an edge through skill. The honeymooners at the 5$ tables are like peewee footballers while the whales are like professionals. There are levels of skill in gambling.
- meric 11y agoPoker defines gambling, except in China where Mahjong defines gambling.
- FussyZeus 11y agoGambling is stupid tax, end of discussion. Anything bigger than poker night with the fellas and you're going to get screwed, one way or another. The real suckers are people who still think easy money exists when you aren't a billionaire.
- kenjackson 11y agoIt actually seems rational to me in many cases. If your very poor, but not so poor that a dollar per week makes a huge difference, then buying a lottery ticket makes sense. While the expected value of the ticket is less than a $1 -- given you only live once -- you're betting on the fact that there is a slight chance in this one life you might hit it big. That seems completely rational to me. Especially if the odds of improving your lot substantially via other means is also low -- and not contingent on the accumulated $1 you spend on lottery.
- vinceguidry 11y agoThere's also the fact that expected payout is not the only value a lottery ticket offers. There's the entertainment value as well. If you think about it, entertainment is the biggest factor involved in the decision about whether to partake in gambling or not. I do not generally enjoy any sort of gambling, that's why I don't do it. But I will happily pony up a few bucks to play Keno with a cute girl at the bar. If gambling wasn't fun, nobody would do it.
- aidenn0 11y agoAnd so is debt-financing of non-necessities by the poor; most of the poor in the US are already likely to be bankrupted at some point in the next 10 years (even living fairly frugally they don't get paid enough to cover expenses for a likely period of unemployment, or a large bill due to unexpected health problems), so they might as well have fun before that happens.
- bittercynic 11y agoIf you choose to employ this strategy, be sure to use a type of debt that can be discharged through bankruptsy.
- zw123456 11y agoI don't think there is all that much difference between fantasy sports and wall street. In both cases there is an element of skill (however small that might be) and luck. In both cases there are people with more skill and resources that are profiting off less skilled or knowledgeable insiders. Really it is the same thing almost. Maybe that is what is making NY nervous? They have a new competitor to wall street /s
- roldie 11y agoDaily fantasy sports are like poker. There is an element of skill in each, and you'll see the same skilled players win consistently. However, based on my anecdotal evidence of being a fantasy football player (but not DFS, admittedly) and having formerly spent lots of time in online poker rooms, poker involves more skill than DFS. In poker you "play the player, not the hand." But in DFS, there is no equivalent. So I would argue poker, a game classified as gambling, involves more skill than DFS. -- There is also this article about games of skill. While not completely related, I find it interesting that casinos are trying to find games that people think they are more skilled at than the average joe, and can therefore think they can win. http://www.npr.org/2015/04/29/403094845/casinos-switch-out-slot-machines-for-games-of-skill http://www.npr.org/2015/04/29/403094845/casinos-switch-out-s...
- 36bydesignBL 11y agoFrom my own experience, poker and DFS involve about the same level of skill and study to be consistently profitable. DFS just scales more easily. You said, "In poker you play the player, not the hand. But in DFS, there is no equivalent." There actually is an equivalent. If you study DFS, you'll find that there's a cottage industry in figuring out what players will be most popularly owned in a given slate and then using that information to increase your own EV (e.g. in a tournament, if you projected Aaron Rodgers and Cam Newton to score the same number of points but 80% of people would play Rodgers then you would want to play Cam Newton because if he does go off big time then you now ahead of 80% of your competitors).
- fleitz 11y agoSo it's kinda like betting against New York when playing a small market team?
- txttran 11y agoI disagree on this. Casual poker players will just play his hand as he's not that experienced with reading people. While you are right that there is no DFS analogy to 'playing the player,' advanced DFS players build complex models, hedge their bets, and write (or hire people to write) scripts that update their bets as their beliefs about that day's games changes. Different kinds of skills than poker, but not less skill.
- cladari 11y agoThe exemption exists purely from the lobby efforts of the NFL and MLB. The original bill contained no such exemption. The loop hole was added in committee.
- swanson 11y agoFunny enough, the automation/optimization/scripting/algorithm aspects of DFS are a big part of what makes it interesting to me. I have domain knowledge about sports, so DFS is a better testbed for me to learn and explore these areas than, say, automated stock trading. It's a great place to practice linear algebra, machine learning, forecasting and projection models, web scrapping, data cleaning/normalization, and API wrangling. And all without needing a brokerage account, minimum account balance, or transaction fees!
- acconrad 11y agoI never thought about it this way, and while you don't have to worry about brokerage accounts and minimum fees, you have to pay for accurate stats. Using a place like ProFootballFocus or StatsInc is going to cost you a pretty penny if you want to scrape an API with up-to-the-second accurate information.
- bcruddy 11y agoYou don't need "up to the minute" information though. Data can be days old and still be viable as long as you're using twitter's streaming API to get injury updates from one of each 32 teams beat writers as they occur. If I'm setting an NFL lineup on Friday I know the stats haven't had an opportunity to change in 6 days.
- brianwawok 11y agoMonday night football! So not quite 6.
- micwawa 11y agoInjury reports are serious wrinkles. Often time players will be scratched within a few hours before the game. If you are optimizing, you need to account for this because it sends the backups value much higher than his salary. For example, last night Rajon Rondo was scratched. His backup Darren Collison, was in over 80% of the lineups in a FanDuel 50/50 tournament. I didn't have him, and I lost $2.
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- Animats 11y agoThe beauty of fantasy sports is that it converts sports fans, a subculture noted for excessive enthusiasm, into suckers. That's a feature, not a bug. Think of it as monetization of the sports sucker demographic. From the industry perspective, they don't care who wins. They're a pari-mutual operator; the players bet against each other and the house takes a cut, like horse racing. This is different than casino gambling, where the players play against the house and the house can lose. That's why casinos don't permit blackjack card counting. FanDuel doesn't care how you plan your bets. "91 percent of the prize money was won by a mere 1.3 percent of the players." Right. There's a sucker born every minute.
- rconti 11y agoThrow in a few mentions of DFS=D&D, plus a few mentions of HandEgg and Superb Owl, and you'd have the perfect stereotypical nerds vs jocks rant. I'm not sure if you read the (excellent) article, but what's going on here is they lure in rich, sophisticated to make huge, scripted bets across many, many accounts, giving them privileges 'normal' users don't have, in order to create huge jackpots and a much larger cut for the DFS site operator. They then use that take to invest in ads to lure more and more suckers.
- GeorgeMatthews 11y agoWoh! I didn't believe that, Seriously!
- vincentleeuwen 11y agoInteresting read. I don't think its too different from your average financial market though. Lesson 101 in finance is that money flows from private to institutional investors. It seems this is the case with DFS too.
- radikalus 11y ago"Listen, here's the thing. If you can't spot the sucker in your first half hour at the table, then you ARE the sucker."