Why you should care
Because who doesn’t want an edge in drawing up their rosters?
Just four days away from NFL kickoff, fantasy football fervor is at an all-time high. The most common form of fantasy football is what we self-proclaimed experts call “season-long.” These games trace back to the Greater Oakland Professional Pigskin Prognosticators League in 1963 and center around each team operator drafting a roster of players that they control … you guessed it, all season long.
But over the past decade, an anarchist has risen from the doldrums of the internet. Daily fantasy sports (DFS) operate similarly to season-long, save for a few key differences. Managers (yes, you!) draft and control a roster for one single game, then move on. That constant refresh creates opportunities to explore what works and, hopefully, make a more formidable profit than whatever measly penance your co-workers reluctantly cough up come December.
OZY met up with Jonathan Bales, co-founder of Fantasy Labs, a platform providing analytics tools for daily fantasy sports, to talk tricks of the trade. As in any free market, only a slim percentage of participants will truly build a career in DFS, but the opportunity for friendly competition — and maybe a side hustle — exists for us all.
So few people care about assessing payoff potential that there’s a much larger edge there.
Jonathan Bales, Fantasy Labs
OK, so how does it work?
Mastering DFS requires much less knowledge of the sport itself than one would think, according to Bales. A strategic mind is key. So if you enjoy puzzles and trend bucking, DFS could be a great way to engage with America’s most popular sport.
Most DFS sites, like FanDuel and DraftKings, appear a bit daunting at first glance, but navigating the interface quickly becomes straightforward. Newbies looking for like-minded competition can choose beginner contests. There are many types of contests — 50/50 (in which the top half of contestants win a prize), head-to-head and tournaments (the most popular). In any event, entry fees range from free to thousands of dollars per contest and top payouts break seven figures.
No matter the event, the same core principles apply: predicting player production, allocating salary cap and projecting potential payoff.
Step 1: Projecting Performance
Anyone who’s ever played season-long fantasy should be familiar with projecting production. In season-long fantasy, lineups are changed based on events like injuries or if a certain player’s workload is set to change. In DFS, the same concepts apply, but we’re only concerned with the week at hand. Think Carolina’s Christian McCaffrey is going to receive a high number of touches Week 1? At the right price, he could be a steal!
But projecting performance will only get you so far in DFS. Smart analysts could coast to victory a few years back. “People were pretty bad at assessing performance,” Bales says. But that’s no longer the case. “Now, there’s so much knowledge and tools available, it’s not like you can just out-project an entire field of opponents.” Which brings us to …
Step 2: Knowing the Salary Cap
As DFS grows in popularity, understanding player values and salary cap efficiency is more important than ever. This, says Bales, is what comes least naturally to beginners. If the salary cap for filling an entire roster is $50,000, a top receiver who costs $12,000 is not a smart value. Conversely, targeting a little, low-priced running back due for increased workload, or a tight end facing a defense that defends the position poorly, could provide major value and allow you to fill your entire roster with productive players.
Step 3: Payoff Potential = Major Key
An essential aspect of daily fantasy is identifying your potential payoff. You should always zig while the majority zags. For instance, when the Buffalo Bills traded Sammy Watkins to Los Angeles and Anquan Boldin abruptly retired, wide receiver Zay Jones emerged as a major beneficiary. Jones is a fine wide receiver, but as the Bills now-second-best wideout, his usage rate will increase. This means that even his strong performance will have considerably less payoff potential. In DFS tournaments, you’re competing against a field of opponents rather than just one head-to-head matchup. So, if Jones were owned in 100 percent of leagues, any points he scores would be entirely negated.
Assessing payoff potential comes down to understanding human nature. “Predicting how the public will react to certain news is much more important than any amount of football knowledge,” says Bales. “So few people care about assessing payoff potential that there’s a much larger edge there.”
Always Look for an Edge
If you hang around commodity traders or daily fantasy mavens, “edge” is a word you hear often. Really, it’s all about finding a kink in a market that has yet to correct. In daily fantasy, one simple way to get an edge is by exploiting public recency bias. “Probably the biggest edge that’s really simple is choosing players who haven’t had a change in workload, but they’re playing poorly or haven’t had big games recently,” Bales says. “Most people actually do the opposite.”
Passing over a recently unproductive player may seem like an obvious move. But, in fact, those underperforming gems have the same inherent value as a similarly talented player who’s on a hot streak. Over the course of a full season, the peaks and valleys average out, but the weekly neurosis of DFS often impacts players’ usage percentage.
The main thing to keep in mind: If everyone knows something, there is no edge to be had. No matter how good you are at projecting performance or balancing a salary cap, if a strategy is already public knowledge, little value exists.
OZY’s Week 1 DFS Picks to Click
Sam Bradford vs. New Orleans Saints — Bradford is far from a sexy quarterback choice, but he was sneakily productive in 2016, finishing with an average of more than 20 daily fantasy points over his last four games. With a balanced cast surrounding him, Bradford should surprise people against the shoddy Saints defense.
Brian Hoyer vs. Carolina Panthers — If Bradford is slightly unsexy, Hoyer is hideous. But, in four starts for the Bears last season, the Ohio native averaged 330 yards, 1.5 scores and no interceptions. His usage rate will be incredibly low, making him a worthy risk against Carolina’s rebuilding secondary.
Christian McCaffrey (vs. San Francisco) & Lamar Miller (vs. Jacksonville) — At very different stages of their respective careers, both of these tailbacks have the potential to be incredibly productive at fairly moderate costs and usage rates. Miller should carry the load for Houston as they beat up Jacksonville, and McCaffrey will have an impact both rushing and receiving. Carolina wants to keep Cam Newton safer from injury this year — that means getting playmakers like McCaffrey the ball often, especially in season openers against the league’s worst defense.