The game, as the ads say, is straightforward: A bettor pays an entry fee (between 25 cents and about $5,000), joins one of the site's many contests and then starts crafting a fantasy team, by choosing professional athletes (each with a price; the team can't go over a "salary cap") and then getting scored on how well they play on the real-life field.
DraftKings and FanDuel's betting ranks have exploded: Even after a week of controversy, the two sites' guaranteed-prize games just pulled in more than $45 million in entry fees, their biggest Sunday of this National Football League season, according to industry tracker SuperLobby. But beyond its simple concept, daily-fantasy gameplay is loaded with quirks, risks and hidden pitfalls that critics say can stack the deck for veterans and lead casual players to lose out.
"I've thought from day one that this game was sort of broken from a game-design perspective, and I still think so," said Ed Miller, a poker author and game consultant. "These are fundamental game-design flaws, and the problems are built into it in a way that is not easy to fix."
First, let's get a few basics out of the way: Daily-fantasy sports is betting, full stop. If bettors don't want to lose money, there are plenty of places they can keep it nice and cozy somewhere else. Lots of people win, and lots of people lose but still have fun anyway.
But the game's structure and fairness isn't just a cause of concern for new players. It also presents a potential minefield for the billion-dollar sites' corporate leaders and investors, whose success depends on persuading players to keep coming back to play.
As New York Attorney General Eric Schneiderman, who launched an inquiry into the sites following a big data leak, told CBS This Morning on Thursday: "No one’s going to place bets if they think it’s a rigged casino."
1. The "sharks."
When you go to Las Vegas, you're probably not sidling up to the poker table with the best players in the casino. The all-stars generally choose the top tables and biggest buy-ins on which to make their cash.
But in daily fantasy sports, any player of any skill level can play any game — and, often, the best bettors play in bulk, betting on hundreds of matches at the same time. If you're a newbie, there's a very high chance you'll play against the best on the site, and that they may wipe you out.
The industry's top-ranked player, a 26-year-old Amherst College graduate named Saahil Sud who plays full-time as "maxdalury," enters almost every game, every day, from thousand-dollar buy-ins to chump-change games.
Look at his numbers for last Monday on RotoGrinders, a player stats site, when he anted up for almost 600 games on DraftKings — and won a ton of them. He loves new players! Last week, he retweeted another player saying "Someone come play with me and @maxdalury #itseasy."
The top high-volume "sharks" pay gobs of entry fees, enter tons of games, push out lots of lineups with differing choices — and pull in lots of profits.
Miller and Dan Singer, a senior partner with consulting giant McKinsey & Co.’s global sports and gaming practice, looked at a sample of bettors for the first half of the Major League Baseball season this year.
The top 1 percent of players, they found, paid 40 percent of the entry fees but reaped 91 percent of the profits. Meanwhile, the "minnows" in the bottom 80 percent paid an average of $49 in entry fees and lost half that cash.
That might be one of the most worrying elements for casual fans: The sites are heavily dependent on fantasy junkies who bet and play a lot. About 5 percent of the players, the "big fish," accounted for a third of the entry fees — and lost a third of their money.
"The entire DFS economy depends on about 5 percent of the players," Singer said. "Those sharks will go away if they can't make a profit."
DraftKings chief executive Jason Robins says the sharks-and-minnows problem is "a fundamental issue when it comes to long-term enjoyment" of daily fantasy sports, and says the company is pushing for new features to keep new players engaged.
The site has set up entry caps for low-cost $1 or $2 entry games, the penny slots of daily-fantasy play, and limited players to only 500 entries for the biggest prize games. They also allow bettors to block users they don't want to play. In the future, Robins said, he'd like to add different skill levels for beginners and expert players.
"A very small fraction make all the money in golf, but that doesn't mean you or I can't enter a local amateur tournament," Robins said. "There are definitely core principles that will allow us to continue to grow in size and keep people of all skill levels happy."
FanDuel and DraftKings have already started offering newbie-only games, but access to those only lasts about 50 games or so. After that, the beginners go straight back into the big leagues. A survey of 1,200 bettors by Eilers Research, which watches the industry, found that about 70 percent of players had, totaling their games over the last year, broken even or lost their money.
Asked about the sharks-and-minnows dynamic, a FanDuel representative said more than 70 percent of users had won on the site but would not elaborate.
“We don’t make any apologies that it’s a game of skill, and you might go up against the best in the industry,” Nigel Eccles, the chief executive of FanDuel, told Bloomberg. “Some of the people are really good.”
2. The software.
Fantasy sites and fans have spent the last several months arguing over what amounts to their own performance-enhancing-drugs scandal: How acceptable is it for players to use automated scripts to find favorable matches, set lots of lineups or better their odds.
There are publicly shared programming scripts that make it easy to enter hundreds of games or change hundreds of rosters. There are algorithms that can, say, watch for injuries or weather surprises and help bettors change their player corps accordingly.
There are hand-coded, hyper-sophisticated statistical models that can vacuum up data on hundreds of games, players, contests and spit out thoughts on how to bet. There are even "fish finders" and browser extensions that highlight newbies most easily separated from their cash.
The sites have cracked down on some of these scripts, but many remain fair game. Traditionalists (yes, they exist, even for a game that's only half a decade old) say they spoil the fun, but the sites have specifically permitted some scripts: They're a big reason why sharks can play so many games at once — which, of course, nets the sites more entry fees.
3. The strategy.
Doing well in a workplace fantasy-football league will net you kudos around the office. Doing good in daily fantasy sports gets you diddly squat. To get money, players need to win or get as close to the top as possible. And to do so, players need all the help they can get.
Picking your favorite players may get you some points, but the athletic stars have lots going against them: They typically eat up a lot of your fantasy team's salary cap, and everyone else will probably be choosing them for their rosters, too. The best point-makers in the game are undervalued, little-known and play not just great, but surprisingly great.
That's why critics say the scandal that's engulfing the industry has so undermined player trust: A DraftKings employee accidentally published early data for the site's Millionaire Maker contest showing how often National Football League players had been chosen for lineups — highly valuable intelligence for a game based on scouting out passed-over talent.
That employee ended up winning $350,000 off a $25-entry contest at FanDuel the same week, though DraftKings said he had locked in his lineup before receiving the data. The sites have now banned employees from playing and launched their own investigations to help build back players' trust.
But the scandal has highlighted an ugly truth facing this game (and few others). The nature of the data-heavy online play means there are employees (and potentially others) with lucrative inside information that could help them win — or at least beat you.
Maybe it doesn't matter if people win, as Eilers Research managing director Adam Krejcik said: "The main reason people play these sites isn’t to make money. ... The overriding reason is for the entertainment value: that added thrill and excitement that it provides the player who’s already watching sports.”
But if the sites hope to stick around as an established game — and convert players that they're spending millions of dollars to attract into long-time paying customers — they must address these issues before players get turned off for good.
"I don't feel there's any sort of moral imperative one way or another. This is a game on the Internet. Any person who has ever played any game on the Internet should know there's going to be a zillion people better than you," said Miller, the poker writer.
"Having said that, they're building a business on this strategy game. This is a game where enormous edges can be made by being a shark player over a recreational player. Is it a smart business move to permit unfettered access between the best players and the new players? I can't help but say no."