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Evidence of Skill and Strategy in Daily Fantasy Basketball

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Abstract

Using hand-collected data from DraftKings.com, a major daily fantasy sports website, we analyze draft selections of thousands of participants in daily fantasy basketball (DFB). In our study, the first thorough examination of DFB, we show that DFB is a game in which skill is necessary for success. Using econometric analysis, we find that winning participants utilize different strategies than losing participants; for example, winning participants more frequently select NBA rookies and international players. We also find that participants paying to enter more lineups in a given contest earn profits far more often than those entering few lineups, indicating that the number of lineups entered can serve as a proxy for skill. Additionally, we provide a thorough discussion of industry characteristics, prior literature, and gameplay, which should help readers familiarize themselves with this burgeoning fantasy sports variant. This study should further the literature on the contentious activity, which has been outlawed in many U.S. states and continues to elicit controversy.

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Notes

  1. eSports refers to video game competitions in which DFS participants select different e-gamers and points are given based on the performance of the selected gamers. At the time of this writing, DraftKings offered eSports DFS for one video game, League of Legends. In addition to the sports listed, both DraftKings and FanDuel once offered gaming for college football and college basketball, but decided to voluntarily stop these offerings in March 2016.

  2. In some cases, the legality of DFS remains in question. As a result, some smaller firms have chosen to continue serving these states. Likewise, there are some instances where DFS companies have chosen not to operate in a state that has not passed any laws indicating an explicit ban of DFS.

  3. For a thorough analyses on the legality of DFS, see Rose (2015) and Sanchez (2016).

  4. After a period of legal limbo, DFS was fully legalized in New York in August 2016.

  5. The official statement made by the organization in regard to the controversy can be found here: https://playbook.draftkings.com/uncategorized/draftkings-statement-10515/.

  6. Just five months prior, the two firms entered into a $250 million advertising agreement that would have made DraftKings the exclusive advertiser of DFS on all of ESPN’s platforms (Van Natta 2016).

  7. Players can also earn additional points for attaining double-doubles (1.5 PTs) or triple-doubles (3 PTs). A double-double refers to attaining at least 10 units in at least two statistical categories: points, rebounds, assists, blocks or steals. A triple-double is completed if a player manages this feat for three of these statistics. An athlete can only earn a maximum of one double-double and one-triple-double. For example, a player with 10 points, 10 rebounds, 10 steals, and 10 blocks would receive 1.5 PTs for a double-double and 3 PTs for a triple double; he would not receive multiple double-double awards.

  8. The authors do not make a distinction between DFS and TFS in their data collection and analyses. However, prior research by Billings et al. (2016) showed that the majority of real money wagers in fantasy sports were conducted in DFS contests rather than TFS.

  9. One of the authors provided the funds for these contests. The author did not fare well in these contests, only finishing “in the money” in five of his 20 entrees, losing $50 in total.

  10. The majority of winners received $5. However, because of ties, some winners earned less than this. WIN is defined as earning any profit in a contest.

  11. The state of New York reversed its decision to outlaw DFS in August, 2017.

  12. We define “winning” as earning a positive return for a given entry. In the event of a tie, payouts were divided among the tied entries. For this reason, not everyone that “won” earned a full $5. Likewise, not everyone that “lost” were losing a full $5 entry. For example, a player identified as “winning” may have only won $0.50 as a result of ties.

  13. These large-scale losers are sometimes referred to as “whales”.

  14. For example, as the number of entrees increases from 1 to 3, the odds of winning increase substantially, while a two-unit increase in entrees from 90 to 92 is probably not a great indicator of whether a player is likely to win.

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Authors and Affiliations

  1. Department of Economics and Finance, Georgia College & State University, 402 Atkinson Hall, Milledgeville, GA, 31061, USA

    Brent A. Evans & Justin Roush

  2. Department of Exercise Science and Sport Management, Kennesaw State University, 1000 Chastain Road, MD 4104, Kennesaw, GA, 30144, USA

    Joshua D. Pitts

  3. Idaho State University, 905 S. 5th St., #3, Pocatello, ID, 83201, USA

    Adam Hornby

Authors
  1. Brent A. Evans
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  2. Justin Roush
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  3. Joshua D. Pitts
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  4. Adam Hornby
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Corresponding author

Correspondence to Brent A. Evans.

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The authors declare that they have no conflict of interest.

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This article does not contain any studies with human participants or animals performed by any of the authors.

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Evans, B.A., Roush, J., Pitts, J.D. et al. Evidence of Skill and Strategy in Daily Fantasy Basketball. J Gambl Stud 34, 757–771 (2018). https://doi.org/10.1007/s10899-018-9766-y

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  • DOI: https://doi.org/10.1007/s10899-018-9766-y

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