Are Large Field Multiple Entry Leagues a Good Value?
Are Large Field Multiple Entry Leagues a Good Value?
Large field, multiple entry leagues have been adopted by many daily fantasy sports sites and are starting to become a standard structure in the industry. The question is, are they a good value to the player? When I say value I am talking in terms of return on investment (ROI) and not entertainment value. There is no doubt that large prizes do make for entertaining fantasy leagues. The ROI value really depends on your daily fantasy skill level. If you are in the top 5% of all daily fantasy sports players, I can say they are a solid value. If you are in the bottom 95%, they appear to be a terrible value. This assumes a standard 90% guaranteed prize payout. Uncapped leagues with lower percentage payouts, can be a horrible value, and should be avoided unless you are certain that the payout percentage will be at least 90%.
To see why this is the case I will again use the online poker industry for guidance. Are multiple entries allowed in large field online poker tournaments? The answer is a resounding no. They have never been allowed. In fact, if someone were to enter the same online tournament twice, that would be considered cheating and grounds for removal from the site. The online poker industry is ‘orders of magnitude’ larger than the daily fantasy sports industry. It has also existed for many more years. If they don’t allow multiple entry poker tournaments, there is a reason for this. Allow me to explain:
There are two main reasons why the poker industry doesn’t allow multiple entries:
- 1) In online poker multiple entries allows for some forms of cheating the game, which is not really an issue in daily fantasy sports.
- 2) Allowing multiple entries benefits a small percentage of entries (less than 10%), while being a huge detriment to the rest of the entries. Since equity (customer account balances) is provided by the bottom 90% who are not profitable and need to add funds to continue playing, and removed by the top 10% who are profitable and cash out, doing anything that benefits the top 10% at the expense of the bottom 90% removes equity from the game as a whole, and tends to dry things up over time.
It’s in a daily fantasy site’s best interest to increase site equity, and tilting a leagues value towards a small percentage of top players does not do this. For these reasons and for fairness/transparency FSL will never run these types of multiple entry leagues. Let me try to explain why this is the case.
Multiple Entry Leagues Are Not Like a Re-buy Poker Tournament
I hear this argument all the time, but it is not close to being accurate. The argument goes that single entry leagues are like a “freeze out” tournament, where you are eliminated if you run out of chips, and multiple entry leagues are like a “Re-buy” tournament where you can buy back in if you run out of chips during the first hour. In a re-buy tournament, at the end of the re-buy period you still have a single entry in the tournament. You will still need to get through the bulk of tournament play with your single entry after the re-buy period ends to get the win. Re-buying 20 times during the re-buy period, can increase your chances of winning, but not by a factor of 20X. It improves your chances, depending on how many chips you end the re-buy period with. It is not at all proportional to the number of times you re-buy. The ROI value in re-buy tournaments actually comes from minimizing how many times you re-buy while competing for the larger re-buy augmented prizes. In Daily Fantasy, when you enter a multiple entry league 20 times you are actually increasing your chances of winning by about 20x. So, in a multiple entry league your chances of winning are directly proportional to the number of entries that you make. The re-buy equivalent in daily fantasy sports would be to allow an extra 5% in cap room if you paid 2x (or 10% for paying 3x) the entry fee or something along those lines. The extra cap room improves your chances, but does not double/triple them.
Most Multiple Entry Leagues Are Not Fully Transparent.
In online poker, you can view all entries to a tournament before you join. For the massive field, multiple entry daily leagues this is not always the case. Worse yet is that you can’t see how many entries each player has made. A fully transparent multiple entry league would list all entrants and the number of entries per entrant in the lobby prior to registering. This kind of transparency would have a detrimental effect on entries, which is my guess on why it is not typically done. I really feel that Daily Fantasy Sports should be fully transparent like online poker, so the entrants have all of the info they need to determine if they can profit from a league they are considering entering. Lack of transparency only benefits the best of the best fantasy players, which again tends to kill site equity.
Why Are They Such a Bad Value for the Bottom 95%?
Let’s look again to the online poker industry for guidance here. In online poker, about 10% of all players can beat the rake long-term. The percentage is even smaller for Daily Fantasy Sports, and probably closer to 5% at a 10% typical rake. One of the reasons we lowered our rake at FSL recently was to move the long-term profitable player percentage closer to 10%. So let’s take a typical $1,000 player online poker tournament. 10% of the field can make money long-term by outperforming the field enough to overcome the rake, and 90% will lose money long-term, by performing below average, or not enough above average to beat the rake.
However, in poker and daily fantasy sports alike, high variance comes with the territory. If anything goes wrong, the players in the top 10% are eliminated allowing the bottom 90% to have a shot at the title. This happens all the time in online poker, where losing players get a big score from being on the right side of variance. You just need to get 10% of the entries out of the way to make room for a bottom 90% player to score.
The Main Event of the World Series of Poker is a perfect example. Even though the field typically has 10% poker pros, ever since Moneymaker won many years ago, a previously unknown player who was not a top pro has won the tournament. Single entries allow the unexpected to happen more often, and that feeds the overall poker industry by giving everyone with a decent amount of skill a realistic shot at a big score. Now, let’s say that unlimited entries were allowed: who would purchase the bulk of unlimited entries? And who would purchase single entries? The multiple entries would typically come from the top 10% who gain value by entering multiple times, and single entries would typically come from the bottom 90% who lose value with every additional entry. Sure, some in the bottom 90% will do a few extra entries, but the ones who can extract the most value by doing so are often those who can afford to do so, and are also those who are already outperforming the field.
So, let’s say for example that 50 people in the top 10% put in 15 entries each in a 1,000 field tournament leaving 250 single entry spots for the bottom 90%. The field has now gone from 10% winning players to 75% winning players making in nearly impossible for a bottom 90% player to cash. Furthermore, this situation makes the field tougher for those in the top 10% who would normally see 90% of the field as weaker than they are. It really starts to become a bad value for everyone. What I would guess actually happens is that the number of entries becomes pretty proportional to skill level. The best players put in the most entries, and the entries drop down towards one as you move towards the bottom 90%. This would tend to even reduce the number of profitable players below 10% by allowing for a much tougher field for the best players as well.
Did Online Poker Need Multiple Entries to Allow Large Guarantees?
Even though online poker never allowed multiple entries in the same tournament, they were still able to offer massive guarantees. $1 Million and higher guarantees are offered every weekend. The way they got to large guarantees was by slowly building them up over time based on single entry demand. They did not rely on multiple entries to hit a guarantee and as a result were able to offer single entry tournaments that are of much higher value, and more sustainable long-term than multiple entry leagues. Daily fantasy sports sites that are offering large field multiple entry fantasy leagues would be better off to scale up the guarantees slowly as was done with online poker, than to offer leagues that only provide value to a handful of their user base.
I understand the P.R. and marketing appeal that large guarantees offer today, but FSL believes you should not sacrifice product quality for marketing. Because of all that I’ve mentioned above, our plan at Fantasy Sports Live is to slowly scale up our guarantees based on demand, and to offer unique new league types that also get around this issue. To support this period of growth, we have decided to roll out Large Field Fridays for the NBA; our first regularly scheduled Large-Field contest. With your help we can get the guarantees up in no time! We believe in fully transparent, single entry, large field fantasy leagues at FSL. Click any of the links above to try out our offerings now!