Understanding Bankroll Management in DFS Games

Knowing which DFS games to play and how to manage a bankroll can make all the difference between a successful season and an ugly one.

It’s DFS Week at SI.com. All week, we and our 4for4 colleagues will help provide you with a foundation for DFS success this season. In this installment, 4for4’s T.J. Hernandez gives you his best practices for making lineup decisions choosing the right DFS contests and managing your bankroll.

The following is an excerpt from the 4for4 Fantasy Football DFS Playbook by Chris Raybon.

No one is going to be a profitable DFS player if they aren’t building lineups correctly, but even the best players will still lose at least a third of the time in cash games, and much more in tournaments, so bankroll management is just as crucial as lineup construction.

There's no one-size-fits-all DFS bankroll strategy, but in the following article I'll go over some general principles to intelligently manage your daily fantasy bankroll.

How Much Money Should You Have in Play?

In a given week, it is not advisable to play more than 20% of your total bankroll. This percentage can be much less, especially if your bankroll is higher.

The important thing to remember with bankroll management is to be consistent with your percentage of money in play, not the dollar amount in play. Otherwise, you run the risk of being a winning player yet not being profitable.

For example, assume you have a $100 bankroll and play 20% ($20), all in double-ups, and win them all. Now your bankroll is up to $120, and with extra confidence, you decide to play 50% ($60) of your bankroll the next week, but you lose all of your games. Now you're left with only $60, so the following week you get scared and go back to playing only 20% ($12) of your bankroll. You double up again, winning $24 to bring your bankroll to $72 after three weeks.

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It's easy to see something's wrong there. You won big two out of three weeks, yet your bankroll is smaller than when you started. Had you stayed consistent and played 20% each week, you would have made a nice profit. You would have only lost $24 the second week if you played 20% of your $120, ending with $96 rather than $60. Your money in play in Week 3 would have been $19.20 (20% of $96), and you would have ended up with $115.20. Despite having the same game results, just by being consistent with your money in play, you would have made a 15% gain on your initial bankroll instead of losing 28% of it.

When deciding on money in play, you also have to take into account how strong of a player you are. Most DFS sites allow you to download your results, so over time you'll get an idea of your baseline winning percentage in different types of games. The better player you are, the more money in play is acceptable. For more on optimizing your wagers, consider the Kelly Criterion.

What Contest Types Should You Play?

Here's where understanding odds is crucial. Even if you play no more than 20% of your bankroll, putting the entire 20 percent in cash games—low-risk contests where your odds of winning are roughly 50%— is a lot different than putting the entire 20% into tournaments—contests with top-heavy payout structures and reduced odds of cashing.

In terms of bankroll growth, the best way to minimize risk while still exposing yourself to upside is to put the majority of your money in play into cash games, and then use your cash game profits to "fund" entries into tournaments, where you have the chance to significantly increase your bankroll with as little as a single great lineup.

The general idea is to allocate money in play to cash games and tournaments in a way that if you win a good amount of your cash games but don't place in any tournaments, you can still profit on the day. An 80-20 or 90-10 cash game-to-tournament split is ideal.

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What Type of Cash Games Should You Enter?

Different cash games have different odds of winning. Head-to-heads have a 50% chance of winning double your entry fee minus the rake, which is the amount of money that a site takes from each contests. For head-to-heads, this number is usually about 10% of the total prize pool. Double-ups, meanwhile, usually have just under a 45% chance of winning twice your entry fee.

The safest strategy for cash games is to enter head-to-heads against a diversified sample of opponents. If you only play one opponent and that opponent has a great week, you could conceivably lose all of your money in play, even with a very good lineup. However, if you play a diverse group of opponents, you will ensure that if you have a good score, your winning percentage will reflect that. For example, if you finish with a score in the 80th percentile among all scores on a site in a given week, you're likely to end up winning roughly 80 percent of your head-to-head matchups. The more opponents that you can face the better, but a general rule of thumb is to try and play at least 30 unique opponents at each buy-in level in order for your opponents scores to approach a normal distribution.

Similar to playing head-to-heads against only one opponent, playing 50/50s and double-ups are riskier than you might think, especially if you're using only one lineup (I'll discuss lineup diversification next). For example, if your lineup has a 49th-percentile score, you could lose all your entry fees if you played only 50/50s, whereas you would have still won roughly 49% of your games if you had played all head-to-heads against a diversified sample of opponents.

How Many Lineups Should You Use?

The number of unique lineups you enter and players you have exposure to depends on whether you're playing in a cash game or a tournament.

Cash Game Lineup Diversification

In cash games, you should generally construct lineups consisting of the optimal values and highest floors of the week. This invariably means scant diversification, especially in head-to-heads. If you're playing many of head-to-heads against a wide sample of opponents, using only one cash game lineup is fine—diversifying risk will be taken care of by the variety of opponents you're playing.

If you have multiple players valued similarly, you can diversify your lineups a bit, but don't do so simply for the sake of diversification. You always want to make the optimal plays in cash games, and being contrarian is not of much importance since payouts are not top-heavy in these formats. You can hurt your odds of profiting if you limit your exposure to a great value play and that play ends up being in the majority of your opponents' cash game lineups.

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Tournament Lineup Diversification

In tournaments, both lineup and player diversification is key, for two main reasons:

1. Your lineup needs to be differentiated from what is usually a large field of opponents in order to place highly in, or win, a tournament.

2. Tournaments dictate the selection of volatile players, who by nature are less predictable, which means you need to account for a greater range of outcomes.

When you play tournaments, it's recommended to enter multiple lineups into the same one, if that's an option (there are some tournaments that are single-entry only, which requires a slightly less risk-seeking approach). Your goal is to create lineups in such a way that they don't contain many (if any) of the same players. This way, you give yourself multiple shots at a huge score, while at the same time not allowing a single player to sink all of your lineups. As your bankroll grows, you can play more lineups with a similar core and greater diversification around it.

What Should Your Buy-in Level Be?

Generally, the lower the buy-in level, the easier the competition. The best way to use this to your advantage is to always enter the lowest buy-in levels you can with your weekly money in play.

If you're playing $50 worth of head-to-heads, your best chances of winning would be by entering 50 contests at $1 each, rather than five contests at $10 each, for example.

Do this within reason, however. If you're not going to be able to manage 50 unique $1 tournament lineups, it's better to enter 25 at $2 each, or 10 at $5 each. It makes the most sense to enter at the lowest buy-in level in head-to-heads and other cash games, because you won't be using many unique lineups.

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How Do You Account for Variance?

It's important to understand variance, which is the naturally occurring, short-term swings inherent in games like fantasy (and real-life) football.

Even the best DFS players experience swings of fortune due to variance, and while those swings tend to even out over the long run, you still have to remain afloat in the long run to benefit. In terms of the amount of games played, the NFL season is extremely short relative to other sports—there will only be 17 weeks with a full slate of games each season (we advise being more cautious with your bankroll during smaller slates such as the playoffs). The brevity of the season increases your odds of being affected by small-sample variance in the form of having results far better or worse than your true skill level.

Some daily fantasy players prefer to seek variance, playing mostly in tournaments with contrarian lineups looking for the thrill of the big score. This is a fine preference, but just know that with large potential rewards come large potential risks. A DFS player primarily playing in large-field tournaments is more likely to lose in the short term than a player playing solely in cash games, especially if those cash games are restricted to head-to-heads against multiple opponents.