True Bankroll in DFS
Your bankroll is the amount of money with which you’re willing to play daily fantasy sports. It’s so important to your success because everything you do should be a reflection of it. If you have too much money in play from night to night, you’re eventually going to go bankrupt. If you have too little, you’ll leave profits on the table. As much as daily fantasy sports is about accurately projecting players, you absolutely must have a sound understanding of how to utilize your bankroll in order to stay in the game.
True Bankroll
Your “true” bankroll is the total amount of money with which you feel comfortable playing daily fantasy sports. It’s not necessarily the total amount you have in your accounts, for two reasons. First, if you have, say, $1,000 in an account but plan to remove the funds if you reach $400, your true bankroll is really $600. If you’re entering leagues as though it’s $1,000, you’re taking on too much risk.
On the flip side, if you plan to reload money into your accounts for any reason, your true bankroll is higher than $1,000. In that case, entering leagues as though you have only $1,000 to play would be too conservative; a more risk-seeking strategy would result in superior long-term profitability.
Dependent Events:
One aspect of daily fantasy sports that’s crucial to understand is that many of the events that transpire—and thus many of your lineups—aren’t independent of one another. When a sports bettor places money on two NFL games, the results of each occur independently of each other.
That allows sports bettors to approach their wagers in a different way than daily fantasy players. If you have the same group of three or four players in all of your daily lineups, for example, the results of your leagues will be connected to one another, and thus more volatile.
That’s not necessarily a bad thing—volatility can be your friend if you properly exploit it—but you need to adjust accordingly in regards to your bankroll. Whereas a sports bettor can comfortably wager four percent of his bankroll on five games (20 percent total), you can’t put four percent of your bankroll on five different lineups if those lineups consist of mainly the same players. If those players flop, which is going to happen if you play daily fantasy long enough, you could easily lose every league.
Meanwhile, if a sports bettor has a 60 percent chance to win a given bet, the odds of him losing five in a row would be just 1.04 percent. That doesn’t make it impossible, but it allows him to take on more risk.
Total Player Exposure
Instead of tracking how much money you have on a given lineup, I advocate worrying more about total player exposure: the total amount of money you have on each individual player. If you have two optimal lineups and neither one resembles the other, for example, you can place a higher percentage of your bankroll on each one than if you used four or five of the same players in each lineup.
However, don’t think that diversifying your lineups is better just because it’s safer. Lineup diversification might work as a hedge, but it also reduces your overall expected winning percentage because you need to use sub-optimal players to make it work. If you expand your player pool to include almost anyone, it might be “safe” in that you won’t immediately go bankrupt, but you’ll be guaranteed to just slowly lose your money.
Total Cash in Play
Speaking with CSURAM88, Notorious, and other daily fantasy experts, it seems like they never put themselves in a position to lose more than 10 percent of their bankroll in a given night or weekend. Most experts wager even less—typically around five percent—to ensure they stay in the game. So if you have a $1,000 bankroll and you’re taking a conservative approach to daily fantasy basketball, you’d want to have no more than $100 in play in a given night, depending how you structure your lineups.
Adjusting Based on Leagues
The total cash you can have in play is a fluid situation, dependent on things like the player pool from which you’ve chosen and the types of leagues you enter. Certain leagues (tournaments, 5x multipliers, etc) are inherently more risky than others (head-to-heads, 50/50s, etc). Alsmizzle recently noted that you should never play more than one percent of your bankroll in tournaments, for example, because they’re just too volatile to lead to sustainable long-term success if you’re putting down much more.
The key to determining how much of your bankroll is acceptable to place into each lineup (or each individual player) is examining the payout structure. For the most part, the higher the percentage of entrants who are paid, the safer the league and the more you can put down. A tournament that pays out the top 20 percent is much safer than one that pays out only the top five percent, for example.
As a simple rule-of-thumb, never have more than 10 percent of your bankroll on any player in a given night, and never more than two percent on him in any league type that pays out fewer than half of entrants.