Daily Fantasy Sports Strategy: The Basics

All daily fantasy sports share certain commonalities. The basics of strategy for daily fantasy baseball aren't too different from the basics for daily fantasy football, basketball, or hockey. Understanding the differences between contest types is a crucial component of strategy. Bankroll management is another important strategic consideration. Risk management and finding value are the final pieces to the puzzle.

This page covers the basics of strategic thought for all daily fantasy sports. More detailed discussions of certain aspects of the game can be found on other pages—for example, bankroll management is important enough to warrant a detailed page all its own. In those cases, we direct you to any additional information we have to offer.

Here are the basics of daily fantasy sports that you really ought to know.

Understanding the Different Contest Types

Are cash games or tournaments more interesting? Some players prefer to grind out lots of small games with small wins; others prefer seeing fewer wins, more losses, and bigger cash prizes. Plenty of players also play both types of contests.

Cash games consist of the 50/50 and head-to-head contests. Both offer the opportunity to double your money (less the site's commission). In other words, with an entry fee of $10, a contestant is hoping to win $18—double their money less the site's 10% commission. Cash games are the way to go for confident fantasy players who want to make consistent cash over time.

Tournaments, on the other hand, have larger payoffs, but they also require higher scores to win. In 50/50s and head-to-head games, someone could expect to win 50% of the time if he and the other players have the same skill level. But tournaments only pay the top 10% to 30% of the players. This enables the site to offer larger prizes to the winners.

Here are some examples to illustrate each the different contest types.

Example of a 50/50 Contest

$25 buy-in.
100 entrants.
Total of entry fees = $2,500 ($25 x 100)
Prize pool = $2,250 ($2,500 – 10% commission)
The top 50 entrants get paid.
Each winner gets $45 ($2,250 / 50 winners)

Note that each one of the winners gets the same prize regardless of whether they place first in total points or whether they place 49th. Assuming no difference in skill level, contestants in 50/50s expect to almost double their money 50% of the time.

Example of a Tournament

$25 buy-in
100 entrants
Total of entry fees = $2,500 ($25 x 100)
Prize pool = $2,250 ($2,500 - 10% commission)
The top 12 entrants get paid.
The higher a player places, the bigger the prize amount.
Example payouts:

1st place - $675
2nd place - $350
3rd place - $250
10th. 11th & 12th place - $75

Assuming no difference in skill level, one can expect to cash 12% of the time. But contestants who cash get at least triple their buy-ins. They even have a 1% chance of getting a 27 to 1 payoff for first place.

Winning Percentages & Payoffs

The goal, of course, is to be a better than the average player. That means winning 56% of the time or more in the cash games and placing 13% or 14% of the time in the example tournament. Winning percentages in the tournaments vary based on the prize structure for each tournament, too—some tournaments pay a higher percentage of entrants.

Understanding what the break-even percentage for your preferred contest is one of the first steps in learning daily fantasy sports of any type. The 10% commission that the site keeps has a big effect on what's required to profit on a consistent basis. Track your overall winning percentage from the start. With practice, that number should grow.

In the cash games, calculating the break-even percentage is easy. It's just a matter of multiplication and division.

Here's an example.

A head-to-head contest costs $20 to enter.
The prize is $36 (total of buy-ins less commission).
Play in 100 of these contests and win 50% of them, and the net loss is $200.
Winning 55.56% of them is a break-even proposition—no profit, but no net loss.

Every percentage point beyond that 55.56% represents a huge increase in return on investment. Set an initial goal of 50% in the beginning, with an intermediate goal of getting to break-even at 55.56%. After that, try to get as close to a 60% winning percentage as possible.

The break-even percentage for tournaments is a little more complicated, but not much.

The calculation is as follows.

Let's see how that works in an example.

John plays in a tournament with 1,000 people.
Each entrant has paid $1 to play.
The total entry fees are $1,000.
The prize pool is $900 ($1,000 les 10% commission).
The top 20% of entrants win money.

Based on the above, the required calculation is as follows.

($1,000 / $900) X 20%

This gives us 22.22%, which is John's break even percentage.

Another way to track tournament results is to just keep a record of the amount won versus the amount lost. Then calculate your return on investment over time.

Here's how that works.

James plays in 100 $25 tournaments with 100 players.
His total investment is $2,500 (100 x $25)
He wins first place in two of them ($675 each time).
He wins second place in two of them ($375 each time).
He loses in all the rest.
His total return is $2,100 ($675 + $675 + $375 + $375).
His total loss is $400 ($2,500 invested less $2,100 returned).
His return on investment (ROI) is -16%.

James keeps practicing and plays another 100 tournaments with the same entry fee. This time his results are as follows.

He wins first place in two of them ($675 each time).
He wins second place in two of them ($375 each time).
He wins third place in three of them ($250 each time).
His total return is $2,850.
His total profit is $350 ($2,850 returned less $2,500 invested).
His ROI is +14%

His overall ROI is -2%, but as long as he continues improving, the ROI should continue to improve, too.

The Basics of Bankroll Management

Broke players can't win. Avoid putting too much of your bankroll on the line with any single lineup or any single contest. The more you risk on a single circumstance, the greater the chances of going broke.

We recommend very conservative bankroll management techniques. In cash games, play in contests where you can afford 20 to 40 buy-ins. That means if you have $1,000, stick with contests that cost $25 to $50 to enter. If you're playing in tournaments, be able to afford at least twice that much in buy-ins. So if you like that $25 to $50 buy-in, set aside a bankroll of at least $2,000.

The reason for managing your bankroll in this way is because anyone can have a streak of bad luck in the short run. Limiting the amount of your bankroll risked in a specific situation reduces the odds of going broke.

Further Information

You can read more on this subject on our page dedicated to bankroll management in daily fantasy sports.

How Salary Caps Affect Strategy

Veterans of season-long fantasy sports games might not be familiar with salary cap style tournaments. Traditional leagues usually have a draft at the beginning of the season. When a fantasy manager drafts a player, that player becomes unavailable to everyone acting later in the draft. Making the most of one's pick relative to when they're drafting is the key to strategy in a season long fantasy league.

But in daily fantasy sports, drafts take about 15 minutes. No one has to worry about choosing the same player(s) as their opponents, because there are no rules against it. It's even possible (although unlikely) to have the exact same lineup as an opponent.

What's to prevent a daily fantasy sports team manager from just drafting the #1 or the #1 and the #2 players for each position? The answer is simple.

The sites institute a salary cap

Think of this salary cap as being a budget of fantasy money that can be spent on each player. All contestants each get the same amount of money—usually $35,000 or $50,000, depending on the site and the sport—with which to draft their teams. This money has no relation to the entry fees, which are measured in real money. Players can't buy extra draft dollars or anything like that.

The players all have salaries which are determined by the site's algorithms. These formulas take into account the players' past performance and their projected future performance.

The goal is to get the most points for your money.

That's called "finding value", and it's the most important daily fantasy sports skill of all.

Finding Value

Every player in a daily fantasy sport can earn points for your team in the contests. In football, these points come from activities like gaining yards and scoring touchdowns. In baseball, they come from striking out players, getting on base, and scoring runs.

A player's value is measured by looking at how many points he scores relative to the amount of salary spent on the player. The same measurement can look at an overall lineup.

Here's an example.

You draft a running back for $2,000.
That player earns 20 points in the contest.
You paid $100 in salary for each point. ($2,000 / 20)
Your opponent drafts a running back for the same $2,000 salary.
His running back scores 30 points.
Your opponent has only spent $66.67 per point ($2,000 / 30).

If you keep the amount of money you spend per point lower than your opponent in every position, you'll inevitably win.

But you'll also win if you keep your overall spend per point lower than your opponent's.

Here's another example.

You spend your $50,000 salary cap on a team that earns 250 points.
You spent $200 per point ($50,000 / 250).
Your opponent spends her $50,000 salary cap on a team that only earns 200 points.
She spent $250 per point ($50,000 / 200).

Early on, look at how many points on average win the contests you're planning to play. Use that as a target when selecting the players for your lineup. Your guess about how many points a player is going to score is a projection.

If you have to choose between 2 players who each cost $2,000, choose the one which is projected to score more points. That seems obvious, but it gets trickier when you get into the actual numbers. Players tend to have salaries that look more like $3,200 or $6,400, and their projected scores are more like 15.7 and 20.4.

With those kinds of numbers, it isn't immediately obvious which player is the better value. That's why you break each player's projected performance down into a dollar cost per point. That's simple division. Divide the salary of the player by the projected number of points he's expected to put on the board.

Further Information

We strongly recommend that you learn more about this subject, starting with our article on finding value in daily fantasy sports contests.

Keeping Records & Making Adjustments

Over time, by keeping careful records, you'll figure out what kinds of scores win what kinds of contests. Bigger scores are needed to win tournaments than cash games, because they always pay out the top 10% to 30% instead of just the top 50%. When planning a strategy, be more conservative with cash game teams than tournament teams.

For example, you should be more interested in a player who has a 70% chance of scoring 20 points than a player who has a 20% chance of scoring 70 points. The expected number of points is the same (14), but the difference in performance is significant.

But in a tournament, go for players who score exceptionally well in order to place in the higher percentages. Be more likely to opt for the player who has a chance of putting a really big number on the board, even if that player is less consistent.