Research Shows that DFS Contests Require Skill

Daily Fantasy Sports Word Cloud Concept in black and white with terms such as games, lineups, win, money and more.

We have written a lot about Daily Fantasy Sports (DFS) recently. In case you are still unsure of what that means, DFS contests are quicker versions of the “Dream Team” competitions that used to last for a season.

Whether it’s called “Dream Team,” “Fantasy Football,” or a myriad of other names, the principle is the same. You have a certain amount of money to spend, you pick your team in the chosen sport, and you watch how your players perform throughout the season. At the end of the season, the winners pick up the prizes and the rest of us, well…we mostly lose interest halfway through the season, when we realize we have no chance of winning.

Daily Fantasy Sports contests address that key problem. They take place over a day or a weekend and you’re involved all the time. For that reason, they are booming in popularity. Major US player DraftKings has announced plans to expand into Australia, and now the Chinese tech giant TenCent is courting Indian DFS provider Dream 11 with a $100m (£73m) offer. And last month, Canada’s Global Daily Fantasy Sports secured a license from the Malta Gaming Authority.

Want to make money from sports? The answer is simple: Forget about studying the form and betting; just start a daily fantasy sports business.

Is it skill or luck?

The key question remains: Is success at daily fantasy sports skill? Or is it just someone getting lucky that day or having a winning streak that lasts all weekend? After all, success over the season is one thing – “luck evens itself out,” as the old sporting adage has it. But on a given day, anything can happen. After all, the USA once defeated England at soccer.

The question of skill or luck isn’t just one for a discussion over a beer. It is central to the roll-out of DFS in major markets like the USA. If success at DFS is just luck, then taking part in a DFS contest is gambling. But if it can be proven that DFS requires skill, the path to widespread legalization suddenly looks much smoother.

A study done at Kansas State University may have gone a long way to show what DFS fans have always known: Success requires skill.

The study, led by Professor Todd Easton, concludes that winning at DFS is not a simple matter of chance, but requires a lot of skill and that unskilled players cannot consistently win in DFS contests.

Professor Easton’s study, which will be published in the Journal of Sports Science, urges Kansas legislators not to classify DFS as gambling. With other states looking for a definition of what a DFS contest really is, the implications could be widespread.

The study concludes: “Whether or not individuals in a state can participate in DFS has massive economic and societal impact. This paper determines that DFS are not games of chance. Unskilled participants never win at DFS. The probability is extremely high that all DFS winners have skill.”

The math behind it

Stand by for the numbers…

Professor Easton and co-author Sarah Newell reached their conclusion by simulating random DFS teams. In simple terms, they generated random teams (obviously working within the salary cap required by the DFS rules) and then checked the performance of those teams.

The result? None of the 35 random teams won a prize. In American sports terms, it was a 0-35 season.

At first glance, you might be skeptical because 35 does not look like a large enough number to be a reliable sample. Anyone who bets seriously on sports will tell you that you can make a profit in the long run, but very easily have a run of 35 losing bets.

But, according to Professor Easton, his results are significant. As he writes in this report: “The most astonishing result is that not a single [random] team won a pay-out. It is difficult to truly comprehend the extreme rarity of losing at 35 contests. It is less likely than flipping a coin and getting heads 28 times in a row – and three hundred times less likely than being struck by lightning this year.” According to my math, the chances of getting heads 28 times in a row are around 1 in 256 million – but Professor Easton went one step further.

He went on to program a model with a skilled selection strategy and, in every case, the skilled team outperformed the random team. Had it been pure chance, clearly you would have expected a much closer result between the two teams: 35-0 seems a comprehensive victory.

The paper concluded that the results of DFS contests are not reliant on chance and therefore should not be classed as gambling. While the findings were specifically directed toward Kansas legislators, the principle will hold good wherever DFS comes up for consideration. But then, when did politicians ever base their decisions on facts?


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