Daily Fantasy Sports vs. Online Poker

[RR] “What do you guys think of DFS?” Roderick the Rock polled.

[LL] “I assume you aren’t talking about Distributed File Systems?” Leroy the Lion joked.

[RR] “Daily Fantasy Sports, of course.”

[FF] “It’s just like online poker,” Figaro the Fish opined. “I keep losing all my money there, too.”

[YY] “It’s just like online poker,” Yuri the Young Gun agreed. “I keep making a nice little profit off people like Figaro, who treat the game more like a lottery than an exercise in analysis.”

[RR] “Have you stopped playing online poker then?”

[YY] “Pretty much. I missed the early days of online poker because I was too young, but I got in early enough this time.”

[LL] “Early enough to make some money before government regulation kills it?”

[YY] “And early enough that most people have no idea how to play well. Although there are too many sharks for me to make a lot of money, at least I can get my money safely in and out when I want to.”

[RR] “More than a few of those sharks are former poker pros, like Aaron Jones, Andy Frankenberger, Assani Fisher, Dan Smith, Matt Smith, Max Steinberg, Mike Leah, Ray Coburn, Steven Silverman, Tom Crowley, and Tony Dunst.”

[LL] “Dan Bilzerian and Jason Somerville advertise for DraftKings, and Jonathan Aguiar works there.”

[RR] “Brett Richey and Eric Liu created BlitzPick to sell fantasy data to mobile DFS players.”

[LL] “And even Phil Ivey is throwing his hat into the ring. PhilIveyDFS is supposed to launch next month.”

[YY] “Not surprising at all. The similarities between online poker and DFS are all over the place:

  • You play against other players, not the house, which happily collects its rake.
  • Large player pools turn relatively small buyins into big prizes.1
  • The buyins range from freerolls to entry fees of thousands of dollars.
  • The variety of events is very similar, including big tournaments, sit and gos, 50/50 games, head-to-head contests,2 and qualifiers.3
  • Guaranteed prize pools in some events can backfire, causing an overlay if not enough people enter.4
  • A large luck component means that anyone can win any given tournament.
  • A large skill component means the best players will win the most in the long run, and most players will be losers.
  • Knowing the odds is very important even if many players just go with their gut feel.
  • Both industries boomed with the help of amateurs winning big prizes.
  • Both survived scandals,5 at least for a while.
  • Both were unregulated at first, but once they became big enough, the government jumped in.”6

[LL] “And there are two dominant companies in the U.S.; New York-based FanDuel and Boston-based DraftKings are like PokerStars and Full Tilt Poker. On the other hand,

  • In DFS, you do all your work before an event begins; once lineups are locked, all you can do is root for your athletes to do well. In poker, you have to select your table properly, but every hand presents new challenges for you to solve. A tournament continues for you as long as you still have chips.
  • Poker has a large social component. Even online poker has chat boxes to communicate with other players. Of course, it makes more sense to talk to players while you can still affect a game.
  • It helps to know your opponents, but in very different ways. In poker, if you can figure out how your opponents are playing, you can adjust on the fly to take advantage. In DFS, you score big by picking the undervalued players that others haven’t found (at least, you need more of them in your lineup than anyone else).
  • In online poker, better players and worse players generally don’t play in the same tournaments (separated by buyin amount). In DFS, the pros might enter every contest they can.7
  • At a U.S. federal level, fantasy sports is defined and exempted by the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which ultimately doomed online poker.8

[RR] “I’d still say they’re more similar than different, at least in terms of how the government should deal with them.”

[YY] “I’d rather play online poker than DFS, but I’d also rather have just DFS than neither!”

[LL] “It’s time for someone to create a poker DFS site. ESPN has, or at least had, a Fantasy WSOP Draft since 2006. There’s no reason it can’t be done on a weekly basis.”

[RR] “Just because it can be, doesn’t mean it should. Let’s just bring online poker back legally!”

Footnotes:

  1. A $1 million first prize was briefly the Holy Grail, but Aaron Jones just won $5 million in the DraftKings Fantasy Football World Championship.
  2. 50/50 and heads-up events are the grind-it-out-cash-games of DFS.
  3. The prizes in qualifiers are entries into a higher buyin tournament.
  4. Ed Miller analyzed some DFS baseball and found that 1.3% of the players won 91% of the prizes, while 85+% of players lost money.
  5. A DraftKings employee, Ethan Haskell, prematurely released percentage-used statistics the day he won $350,000 in a FanDuel contest.
  6. Black Friday shut down the three biggest internet poker sites in the U.S. on April 15, 2011, while states began banning DFS in 2015 (Nevada on October 15, New York on November 10 [granted a stay on appeal though], Illinois on December 23, and Texas on January 20, 2016).
  7. Both DraftKings and FanDuel have begun to create separate tournaments for beginners only, but so far there haven’t been any beginner-only tournaments with big prizes.
  8. Andy Frankenberger summed up the irony, “It’s a joke that between online poker and daily fantasy, poker is the one that’s widely prohibited in this country. Anyone who thinks poker is not a game of skill probably hasn’t played much poker.”
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