How much skill is involved in daily fantasy sports has been making headlines across the internet for a number of reasons. The DFS industry likes to invoke the skillfulness of its contests as a reason for its legality. Others are concerned that in its current form, DFS may be too skillful, and therefore an unsustainable business model that requires tinkering.
Any time there is an element of uncertainty, judging the skillfulness of a game can become a bit subjective. Which is why if you ask 50 people about the skillfulness of DFS contests, you’re likely to get dozens of different answers. Which brings me to a recent article at CNBC.com where the skillfulness of DFS contests were compared to poker.
The salary cap is the great equalizer
Considering DFS and poker require a long-term approach for skill to overcome short-term variance, it seems like a pretty apt comparison to make. But the takeaway from the CNBC story was that online poker is far and away the more skillful game. This conclusion can best be summed up by two-time World Poker Tour champion Andy Frankenberger who told CNBC, “A daily fantasy pro’s competitive edge over a beginner is nothing compared to the edge of a poker pro versus a first-time poker player. Your decisions in daily fantasy can’t be that bad when players’ prices are efficiently set by the sites.”
I tend to agree with Frankenberger here. Absolute novices will be slaughtered in short order by top online poker players, whereas novice DFS players are given a very useful crutch, the salary cap. The salary cap prevents egregious mistakes, and no such internal mechanism exists in the world of online poker. There isn’t a built in game feature that tells someone about to call an all-in bet with 3-8 offsuit that it’s a bad idea, and this is precisely what the salary cap provides DFS players.
DFS doesn’t require a player to determine the approximate worth of each player when assembling their lineup; therefore, so long as a person spends to the cap, they will probably be fielding a lineup with some amount of ROI.
However, where the CNBC and Frankenberger argument loses steam is when we go from theory to reality, and look at the entire landscape of online poker and DFS, beyond the skill gap between a novice and a pro.
Who do pros play against?
This novice vs. pro scenario outlined by Frankenberger only covers one aspect of the skillfulness factor, and doesn’t really give us an accurate depiction of what is happening on the ground in the online poker and DFS ecosystems. There are a lot of points on the axis between being a novice and a pro, not to mention how often, and to what extent, these disparate groups interact within their own ecosystem.
For instance, does a break-even online poker player have a greater edge over a novice than a break-even DFS player? What kind of edge does a DFS pro have over a slight winner compared to two online poker players with the same skill gap?
Furthermore, how often will a DFS pro and a novice compete against one another compared to an online poker pro and an online poker novice?
In my opinion, it’s disingenuous to say online poker is a more skillful pursuit when you’re only looking at the pro vs. novice element, and based on the research done by Ed Miller and Daniel Singer on Major League Baseabll DFS contests (also cited in the CNBC article), it appears that DFS is every bit as skillful as online poker, and likely offers top players a far greater edge over their competition than online poker.
The research by Miller and Singer indicates that 1.3% of DFS players win 91% of the prize money, and as the duo notes, this 1.3% can be found in contests ranging from $1 buy-ins to contests costing tens of thousands of dollars to enter, as they account for 40% of all entry fees. you read that right, 1% of DFS players account for 40% of all entry fees.
What this means is DFS novices, playing in contests that cost just a couple dollars to enter, are likely competing against the best players, whereas the top online poker players are not going to be participating in many $1 games. So, even though online poker pros have a greater edge over novices than DFS pros, they are far less likely to encounter one another, whereas DFS pros are constantly playing against novices.
The skill gap between the best and worst online poker players may be far greater than the skill gap between the best and worst DFS players, but this doesn’t mean the game is more skillful or there is more profit to be made beyond this theoretical scenario.
In DFS contests, the entrants run the gamut in terms of skill. On the other hand, at online poker tables there is more correlation between skill and game stakes. DFS pros are the proverbial foxes that have gotten into the hen house, while online poker presents a more natural food chain, where top predators only go after large prey, leaving the rodents for smaller predators.
I’m not really sure which game is more skillful, or which game presents pros with the greater chance to profit. It probably depends on the individual scenario you create. However, I’m quite certain both games are highly skillful and can be beaten (in the long run) by top players.