DFBC Math for the Rake-Conscious Player
The Daily Fantasy Baseball Championship is generating a lot of buzz right now, which is great for the industry, but serious players concerned about the rake may soon be asking themselves if it is worth it to join the qualifying events. I wanted to take a moment to break down the simple math involved to help everyone determine their expected value when entering the weekly DFBC qualifying events.
- The DFBC Main Event pays out $69,200 in prizes. There are 20 competitors in the event, so your expected value, or the value of a single entry into this event, is $3460 ($69,200 divided by 20).
- Each of the 17 qualifying events has an added prize pool of $2000 in addition to the value of the entry into the DFBC Main Event. So, each qualifying tournament has a real prize pool of $5460.
- With a $10 buyin, each event should get 546 players for this to be a no rake contest. Fanduel typically shoots for an 11% rake, for example they allow a cap of 444 players in their $4000 prize pool, $10 buy in Wednesday MLB Home Run tournament.
- Applying that 11% rake to the DFBC qualifiers, each qualifier should be capped at
600606 players to maintain an 11% rake. However there will be no player cap in the qualifying events, and that is why the rake conscious player has to be careful.
You could easily get into the 20% or higher rake range with these events, depending on how effective Fanduel’s marketing is. For example, if there are 700 entrants in a qualifying event you would be paying a 27% rake on each team you enter. In a similar promotion FanDuel ran during football season, the FFFC, the effective rake in the qualifiers generally stayed in the 11% range, but skyrocketed during the final qualifying events.
Fanduel could limit that rake by capping the total number of entrants at 600, but that would be a bad idea in a promotion like this. These types of promotional events are all about generating buzz, getting new players to join the community, and getting dormant players to redeposit. The DFBC will bring new players to the site, and it would be a disaster if those new players are unable to participate in the qualifying events because the cap has already been reached.
If you’re new to daily fantasy and saying to yourself “They can easily solve this problem by making this a progressive tournament – the more players that enter the qualifying events, the bigger the prize pool in the main event grows.” Unfortunately, that type of tournament doesn’t fit the legal guidelines for running fantasy sports contests, according to the Unlawful Internet Gambling Enforcement Act of 2006. The fantasy sports exemption in the UIGEA states that the contest must have a set prize pool, stated in advance, that does not change based on number of entrants. It is a severe handicap that this industry has to deal with, but, hey, at least fantasy sports got exempted. It’s because of that law that we are able to use PayPal to cashout and deposit, even though PayPal won’t sniff a poker, casino, or sportsbetting site.
I think that one thing to consider on these very large prize tournaments is the rake taken by Uncle Sam. Any prize winner in the finals will get a 1099 stating they earned the large prize amount. Depending on the abilities of your tax accountant, and there are only a handful that are experienced in these matters, you are going to be paying a decent chunk in taxes as well. If you can get the right accountant to allow you to offset losses during the year, that will also cost $$$.
Cal,
Great article! It really shed some light on this tournament. I thought for the football there was like a cap at 700, but I guess I was wrong. Conceivably, you may have to beat 800-1000 other teams to win one of these weeks. Which means, what you may have to invest to win a week could outweigh what you would make if you were amazingly lucky enough to cash in the final tournament. Am I correct in this assessment?
I do like that they are guaranteeing every finalist “some” money for being top 20 but should guarantee for more the lower spots somehow. I remember that there was a lack of interest in Vegas after the General got the Rodgers to Driver td and he started to pull away. Would of been better if guys were still jockeying for money spots from 1-10. I would hate to know that I beat 700 guys one week, and then came in 20th in the finals only to cash for $500. Just my opinion.
Only 141 entries for tomorrow’s qualifier so far. I’ll be surprised if we get much over 600 (if that) this week. There’s no guarantee that the pattern will hold, but with the FFFC entries were lowest during the first 4-6 weeks, before people began to get desperate.
I see your point Train – in the FFFC you won an experience, even if you didn’t cash in the Main Event. In the DFBC you are winning a shot at $25,000, which is an experience, but nothing like a trip to Vegas.
I think we all lost interest at the FFFC because everyone wanted to win first prize. There was still a race for 2nd and 3rd, but it wasnt as exciting as sweating the win. Whits was one Reggie Wayne drop away from third place and I don’t know if he even realized it at the time.