Link: Fantasy Sports Fantasy Story in the Wall Street Journal

Eric Bedard Fishing
Guppy or Shark?

The Wall Street Journal ran a profile last month of a super sophisticated graduate student at Notre Dame who has supposedly made $200,000 in the last year playing daily fantasy games.

Cory Albertson has, according to the story, put together an algorithm that helps him put together many daily fantasy lineups on any given day, which allows him to enter many fantasy contests and overall make him money. Not every day, the story says a couple of times, but overall. He expects to make $1,000,000 this year, he says.

He makes so much money, according to the story, that he went out and test drove a Tesla!

Yes, that’s my snark. There are a few red flags in this story that challenge the writer’s competence or veracity. For one thing, Albertson didn’t buy an expensive car, he test drove one. And he broke the speed limit!

For another, Brad Regan, the writer, blithely reports that Albertson got into the game because a friend started a Daily Sports Fantasy Game last year and waived the fees so that Albertson would help populate the board, making it look like his contests were more popular than they were.

The biggest impediment to winning any gambling game, from daily fantasy basketball to trading stocks as a day trader to online poker to horse racing, is the takeout. That is, you and the other players may put in $100 in money into the pot, but the service rakes some of that for itself, before they pay out some lesser percentage to the winners. That’s how they make money. It should be needless to say, that if your bets are not raked you have a much better chance of winning than if they are.

Regan doesn’t pursue the question of whether Albertson is now subject to the house fees. He doesn’t discuss how much the house usually takes out of a daily fantasy pot when Albertson isn’t playing. He leaves out the single most important piece of the way the business works, while pitching us that Albertson is some new breed of non-gambler who uses data to drive his decisions.

I say Non-gambler because Albertson tries to make the case that betting on Daily Fantasy Sports isn’t a gamble, because he uses his algorithm, which apparently takes all the subjectivity out of it. You can be the judge of that judgment, intellectual and ethical. I say, no wonder Albertson’s religious parents remain concerned about him.

The other interesting bit comes when Andrew Wiggins, who started DraftDay, a daily fantasy game service, talks about the need to get casual players to play. The idea is that the small fish, who might put up a $10 or $20 bid on a daily fantasy team, will drive the growth of the game. That’s what Wiggins wants, because he gets a cut out of every bet made.

But Regan quotes Albertson deftly crushing Wiggins’ dream: The smart guys, Albertson says, will feast on the casual player. This, as Wiggins surely knows (he and I played in a fantasy baseball league that was populated with some professional poker players who feasted on online poker guppies, back in the day before that business collapsed for legal reasons, as well as this inconvenient fact), is surely what will happen.

That imbalance, when heavy advertising is drawing in fresh blood, is one reason that a shark like Albertson and his algorithm might legitimately be doing well. Seasoned players with good data will crush the haphazard random player, the way a card sharp will crush a county fair card game if you give him enough time (but watch out for the rake, it’s going to charity).

Right now daily fantasy sports are a young and growing business. They have appeal to skilled and less-skilled players because of the short results horizon. I can see the appeal, but any smart story about the game should really talk about the way it works, and not pitch some fairy tale get rich quick by working hard line that reads more like a slow pitch PR piece for the industry than the human interest story is is dressed up as.

I don’t know that Cory Albertson didn’t make $200,000 playing daily fantasy sports, and if he did I don’t know for sure that he won because he didn’t have to pay the fees that normal fantasy players would usually have to pay. I do know that this story and its failure to accurately describe the way the games work casts doubt on every part of the story that can’t be fact checked.