A 5-Minute Introduction To Daily Fantasy Sports Variance
But that’s no reason to dismiss it. Variance has a huge influence on your long-term results, regardless of whether you’re playing daily fantasy football, baseball, basketball, hockey, or golf. If you don’t understand how it works, the inconsistency of your wins and losses can drive you crazy. There’s nothing more frustrating than putting together a roster that dominates the field one week, but gets trounced the next.
You’ll find a quick primer on game variance below. We’ll talk about what it means in the context of daily fantasy sports and how to incorporate it into your strategy.
Since this page is merely an introduction to the subject, we’re not going to get into heavy math. Instead, we’ll just cover the basics. That alone will give you an edge over other players since most of them avoid the topic like the plague.
Let’s start off with a quick definition…
Daily Fantasy Sports Variance: What Does It Mean?
Variance in daily fantasy sports is the extent to which your results differ from your expectations. If you play poker, you’re probably familiar with the term. Here’s an example:
Suppose you’re playing 10 hands of poker. You miraculously start every hand with 2 Aces. Statistics tell you that there’s a high probability of winning each hand. From that you form an expectation.
Now let’s suppose that you somehow manage to lose all 10 hands despite your pocket Aces. Impossible? No. Improbable? Sure.
That’s variance. The outcome of the hands vary from your expectation.
Think about that in the context of daily fantasy football. Suppose you’ve drafted a team that wins every contest you enter during a given week. Tournaments, 50/50s… it doesn’t matter. Your team helps you cash in every game. But let’s say things fall apart the following week. Your roster ends up in the bottom of the field for every contest.
Does your team suddenly stink? Not necessarily. Did your competitors suddenly learn how to draft winning lineups? Probably not. You’ve just become the victim of game variance.
Daily Fantasy Sports Variance Vs. Diversification
A lot of folks confuse variance with diversification. It’s not that they believe the terms mean the same thing. Rather, they hear the word “variance” and assume it can be eliminated by diversifying the types of contests they enter and the competitors against whom they play.
Unfortunately, it’s not that simple. Variance in daily fantasy sports is like old age. You can’t get away from it. You can’t eliminate it. All you can do is factor it into your DFS strategy and make adjustments, a topic we’ll get to in a moment.
Game Variance By Daily Fantasy Contest Format
You may already be thinking that each game type – e.g. tournaments, head-to-head contests, 50/50s, etc. – introduces a different degree of variance. And you’d be right. Each format has a different payout structure. In head-to-heads, one person wins and another person loses. Meanwhile, in large tournaments, only 10% to 15% of the field cash.
Let’s go through the most popular contest formats.
- Of all daily fantasy game types, large-field tournaments pose the greatest level of variance. Only a small percentage of players get paid. In addition, the amount paid to those who end up at the top of the heap far exceeds the amount paid to the other cashing players.
Suppose you draft a lineup that consistently outscores 70% of your competition. In a large-field tournament, that’s not enough to cash. Despite your relative success, you’d still lose since only 10% to 15% of the field gets paid.
That payout structure lends DFS tournaments a high degree of variance. For that reason, it’s a bad idea to enter them assuming you’ll win a certain percentage. Instead, think of tournaments in the same way you think of lottery tickets. If you win, fantastic. Just don’t pin your hopes (or your mortgage payment) on it.
- Head-to-heads are entirely different from a game variance perspective. Technically, half of the field gets paid. That being the case, a lineup that consistently outscores 70% of the competition can be expected to win more often than it loses. If you play thousands of head-to-head contests with that kind of lineup, you should come out ahead over the long run. Compared to tournaments, H2Hs have a very low degree of variance.
- Now we come to 50/50s. Like head-to-head contests, a 50/50 pays out to half the field. Given that fact, a lineup that outscores 70% of the competition should win a greater portion of contests than it loses.
At first, it seems as if 50/50s pose the same degree of variance as head-to-heads. But the variance is actually a bit higher due to the fact that you’re competing against a greater number of participants.
Remember, variance is the extent to which your results differ from your expectations. Consider that your expectations are based largely on your ability to predict how the players in your lineup will perform on a given night. The more competitors you face, the greater variety of matchups you’ll have to contend with. That limits the accuracy of your predictions, thereby increasing – albeit only slightly – the level of variance in the contest.
The Art Of Minimizing Risk In Daily Fantasy Sports
Variance and risk are positively correlated. They go hand-in-hand. More of the former translates into more of the latter. One of the keys to generating a consistent, long-term profit playing daily fantasy sports is to minimize your risk.
There are a lot of ways to do that. Knowing how to manage your bankroll is important. After all, putting too much money at risk on a single night can do far more damage to your long-term prospects than drafting an occasional bad lineup.
Recognizing the types of contests you’re most likely to win is also helpful. That way, you can focus your time on contests that hold the greatest potential for generating a positive return.
Diversification is also useful. While grinding it out in 50/50s is a great way to crank out a positive ROI, winning a single large-field tournament can throw your bankroll into the black for months. Why not play both formats?
Joining a large number of small-stakes contests can also help stabilize your long-term ROI. Rather than joining two or three $25 games per night, enter a dozen $5 games. By doing so, you can test different lineups and collect more data with less money at stake.
Dealing With Variance In Daily Fantasy Sports Contests
The most important thing to remember is that you can’t avoid game variance. There’s no way to predict with complete accuracy how your players will perform on any given evening. Good players have off nights. Bad players sometimes turn in surprisingly good performances. And occasionally, people get injured.
There’s a healthy bit of randomness in all sports. That randomness is what causes your lineup to outscore your competitors one week and fall on its face the next. It’s the reason a winning roster can lose contest after contest.
Diversification helps, but doesn’t get rid of the problem.
Your goal is to find ways to minimize your risk while reaping a positive long-term ROI. It’s not as difficult as it seems. Look through some of the daily fantasy sports strategy guides on this site. Then, if you haven’t yet done so, visit FanDuel and register your account. Join a few low-stakes contests and have fun grinding out a profit!