Setting Your Bankroll Parameters
Before I get deep into the discussion of bankroll, I want to give a quick thank you to Jonathan Bales for allowing me to contribute a series on this topic. I feel like it’s one of the most important aspects of the daily fantasy game, yet it often gets overlooked by major daily fantasy outlets. I also want to thank you, the readers, for checking out this piece and taking the time to digest it. I hope you find the content informative and helpful as you proceed along your daily fantasy journey. Whether you are an established player or one who is just starting out, this material should be valuable to you.
In case you don’t know much about me, there are reasons why bankroll management is such an important topic to me. I have been interested in numbers for years, but not in the traditional sense of statistics or mathematics. From a very young age, I was interested in finance. I was fascinated when I got my first dollar. By the time I got to college, I decided to major in accounting. Six years later, I obtained a Master’s Degree and a CPA license.
Throughout my younger years, I also loved sports. Though my short physical stature and complete lack of athleticism often prevented me from partaking in activities, I enjoyed talking sports and game theory. For a while, yes, I was one of those people who “scored baseball games at home.” I kept a running log and probably have 250-300 old scorecards hanging out somewhere, hand-written, from the late 1990’s. Baseball was my passion, but like most Americans, I also took an interest in football. The NFL became wildly popular, and after the baseball strike of 1994, there was no doubt where the sports world was going. It was all football, all the time.
Then came the world of fantasy football. In a sudden boom, everyone was playing fantasy football leagues on Yahoo or ESPN or CBS. Fantasy football results started to become discussed more than individual teams. That wasn’t enough to satisfy the most hardcore fantasy players among us, especially those (like myself) who had an interest in business/accounting/finance or equivalent AND sports. The launch of daily fantasy games became a match made in heaven for me. However, I was quickly knocked to reality when I lost my first $100 deposit. What had I done wrong? I know everything about sports! How could I lose? Should I keep playing? Who do I turn to? These were all thoughts that were running through my head on that February day back in 2011. Daily fantasy was relatively new back then, so I was getting in fairly close to the ground floor. I hadn’t even heard of sites like RotoGrinders yet, and other daily fantasy platforms hadn’t even launched. Heck, the $100 I lost was on a site that doesn’t even exist today, Daily Joust.
After a brief period away, I decided to try another $200 deposit with the caveat that it would be my last. Thankfully, I was able to find some success with that, and my bankroll has taken off from there. This is by no means meant as a brag or anything, but context is important when it comes to daily fantasy bankroll. The first question we all have to answer is: what defines a bankroll?
There is no set definition of what a bankroll is, but there are definitely things that a bankroll is not. Let’s dispel some of the untrue definitions of bankroll here:
- Bankroll Definition No. 1 — Your bankroll is equal to the current balances you have on daily fantasy sites.
- Response: This is simplistic and by no means true. If you have extra money saved up that you would immediately be willing to deposit should your balance drop to $0, those funds should be included in your bankroll. Conversely, if you have money you need to withdraw in order to use personally (for whatever reason), you should exclude that from your bankroll.
- Bankroll Definition No. 2 — Your bankroll is equal to the current balances you have on daily fantasy sites plus amounts you would be willing to deposit should those funds be lost.
- Response: I don’t have a major issue with defining bankroll this way, but I think it encourages people to chase losses. We’ll discuss that concept later on in another lesson, but for now I would encourage you to be careful with using that definition.
- Bankroll Definition No. 3 — Your bankroll is equal to the current balances you have on daily fantasy sites plus discretionary funds you have set aside for personal use.
- Response: This is a dangerous definition that will often lead people to over-deposit. If I have, say $5,000, sitting around in a bank account that I don’t need for near-term expenses, I could very easily just deposit that and be on my way. A more concrete definition needs to be used.
All right, you get the picture. It’s hard to define exactly what a bankroll is. Therefore, it’s best to take an approach that would make you most conservative with your money and define your bankroll like this:
Your bankroll represents how much money you would be “comfortable” losing over the near-term.
Now, this isn’t exactly a precise definition, either. How do you define “comfortable”? How do you define “near-term”? These need to be individualized answers. In fact, I would argue that some people have bankrolls that are actually less than their current balances on daily fantasy sites, and this could be for a multitude of reasons. Perhaps they have gone into debt to deposit and play (not recommended). Perhaps they have won a million dollars and haven’t withdrawn any of it yet (they are going to be paying a lot of taxes!). If you had a DraftKings or FanDuel balance of $1,250,000, would you consider that your bankroll? One of the things most people take for granted is that your bankroll is AT LEAST equal to your account balances, and that’s not true, especially if a large tax bill is coming your way at the end of the year. On the same foot, if your balance is $1 but you could easily re-deposit, your bankroll is not $1. That’s why it’s easiest to define by a potential loss amount. I can’t define comfortable for you, because everyone is different. Some people are more risk-averse than others.
Defining the near-term aspect of bankroll is a little more concrete, but it’s still not definitive. I like to set a time window of three months to re-evaluate things. Whether you do it in January, April, July, and September or at other times, I think three months is a nice window. It allows you to see where you stand as far as gains and losses and figure out if you can be a little more aggressive with your play or if you have to dial back a little bit.
Whatever the case may be, the key takeaway from this lesson is that you have to set parameters for your bankroll definition. If you “play it by ear,” or “just deposit when you need to,” this is a potentially dangerous game. Nobody likes to admit it, but in the end, there are more losers than winners. Failing to set limits for your bankroll is one way to prevent big losses. It’s not fun to think about or do, but it is a real benefit in the long run. Whether your bankroll is $5, $100, $7,000, or $400,000, this is a lesson you can take with you as long as daily fantasy exists.
So here’s the Lesson No. 1 homework: figure out what your bankroll is for the next three months. What would you feel comfortable losing should everything go south? Do that, and we’ll see you on the other side for Lesson No. 2 on incorporating game selection into bankroll strategy.