How To Identify Large-Field Daily Fantasy Sports Overlays
Recently, I mentioned overlays in large-field daily fantasy tournaments as a great way to build your bankroll. That topic deserves more attention.
I’d estimate that fewer than 10% of daily fantasy sports players are aware of overlays. Fewer still know how to find and leverage them. My goal on this page is to give you the tools you need to consistently find and use overlays to your advantage. I’ll show you how to objectively determine whether participating in them is a good idea.
Fair warning: we’re going to do some basic math below. But don’t worry. Most of it is very simple.
What Are Overlays In Daily Fantasy Sports Contests?
Before we dig into overlays, we need to come up with a definition…
An overlay is a situation in which the amount of prize money at stake in a contest exceeds the total amount of entry fees generated by it.
They’re found among guaranteed prize pool (GPP) tournaments. Daily fantasy sites like DraftKings and FanDuel host contests in which they guarantee that a large sum of cash will be divided amongst the winners. Hundreds – and sometimes thousands -of people can join the contests. The daily fantasy sites hope to attract enough entrants that the cumulative entry fees not only match the pot, but also bring in extra revenue.
For example, at the time of writing, DraftKings is hosting a GPP tournament for which the prize pool is set at $9,000. The entry fee is $12 and 855 people are allowed to join. If the contest fills to capacity – that is, 855 people enter it – DraftKings will generate $10,260. That’s more than enough to match the guaranteed pot. The excess is the site’s profit (i.e. rake).
Let’s say only 500 people enter the GPP. The cumulative entry fees will total only $6,000, well below the guaranteed pot.
That’s an overlay.
Why You Should Pay Attention To Overlays
Ideally, you would assign a value to each contest you join. That value should reflect the expected outcome and by extension, the return you expect to receive on your investment (ROI). In daily fantasy sports circles, that value is referred to as “EV” (expected value).
The EV of a typical, filled-to-capacity GPP tournament is pretty low compared to 50/50s and head-to-heads. You don’t enter GPPs thinking that you’re going to strike it rich. The reality is that you’re facing a ton of competition.
When you discover an overlay, the expected value of joining the tournament is higher than would be the case had the tournament filled to capacity. The reason? There are fewer people vying for the same guaranteed pot. Your odds of generating a positive ROI increase.
Think of it this way…
Suppose you flip a coin 100 times. Each time heads appear, you win a dollar. Tails, you lose a dollar. Your EV for participating would be zero. But let’s suppose that you win $2 each time heads appears while still only losing $1 for tails.
Your EV would rise. Your expected ROI is greater. It’s the same with overlays in daily fantasy GPPs.
Basics Of Finding Daily Fantasy GPP Overlays To Join
Identifying overlay situations is incredibly simple. It’s a matter of visiting your favorite daily fantasy site and scanning the upcoming contests. You’ll want to note the following items:
– the number of entrants allowed
– the number of entrants who have joined
– the entry fee
– the guaranteed prize pool
[Note: If you’re playing at DraftKings, click the tab labeled “Guaranteed” in the lobby so that only the GPPs are displayed. If you’re playing at FanDuel, click the button labeled “Tournaments” on the left side of the screen (you’ll find it located under the heading “All contest types”).]
When it comes to GPP overlays, size matters. The bigger, the better. Here’s the basic formula for calculating size in terms of dollars:
Prize pool – (number of entrants x entry fee)
For example, suppose a pending tournament has a guaranteed $50,000 pot and $55 entry fee. Further suppose that it has attracted 475 entrants. Let’s plug those numbers into the formula:
$50,000 – (475 x $55) = $23,875
The $23,875 figure is the overlay. It doesn’t tell us whether we should join the GPP. But it gives us a place to start as we compare overlays against each other.
Remember, each contest you join affects your long-term ROI. Given that your bankroll is limited, each entry comes with an opportunity cost. That’s why we need to compare numbers. We’re trying to find the most promising opportunities.
It’s worth noting that you should only pay attention to GPPs that are scheduled to start that evening. Tracking those that are scheduled to start tomorrow – or worse, later in the week – is a waste of time. An overlay can vanish in hours as people join the contest in droves.
How To Calculate The Value In A DFS Overlay
This is where the rubber meets the road. Remember from earlier when I mentioned that you should assign an expected value (EV) to every contest you join? Here’s where doing so comes in handy. It allows you to compare overlay opportunities and pick the ones that present the best chances of making a profit.
I’m going to create a hypothetical tournament to show you how to calculate EV for a large-field GPP. Let’s assume the following details:
– Number of entrants allowed: 1,000
– Guaranteed prize pot: $50,000
– Entry fee: $55
– Number of entrants who win a cash prize: 50
– Cash prize for each winner: $1,000
If the contest attracts 1,000 entrants – that is, it fills to capacity – you’ll stand a 0.05 chance of winning. You can work out that probability by dividing the number of winners (50) by the number of entrants (1,000).
Next, calculate the expected value of a single entry in the contest. So do by multiplying the cash prize for each winner by your probability of winning:
$1,000 x 0.05 = $50
Now, let’s assume that only 700 people show up to compete. Your probability of winning rises to 0.07 (50 winners divided by 700 entrants instead of 1,000 entrants). Your EV also rises, this time to $70 ($1,000 x 0.07).
Go through the above steps to calculate the expected value of any daily fantasy GPP tournament you’re interested in joining. Once you’ve done so, you’ll be able to pick those that hold the greatest ROI potential. I’ll explain how in the next section.
How To Determine Whether You Should Leverage An Overlay
One of the most important things to remember when playing daily fantasy sports is that every decision you make carries an opportunity cost. If you invest $10 to join one GPP, that’s $10 you won’t have to join a different GPP.
That’s why it’s critical that you make the most of your opportunities (assuming you want to make a long-term profit).
The best strategy for increasing your chances of earning a positive return in large-field GPPs is to identify the highest-value overlays. I showed you how to calculate the EV for a contest in the previous section. Your job is to use that approach for several high-potential tournaments and compare their respective EVs.
Only then will you be able to figure out which ones to join.
Let’s run through an example. Suppose you’re trying to decide between joining the hypothetical contest from above or another large-field GPP with the following details:
– Number of entrants allowed: 5,175
– Number of entrants who have joined: 3,500 (OVERLAY!)
– Guaranteed prize pot: $100,000
– Entry fee: $20
– Number of entrants who win a cash prize: 200
– Cash prize for each winner: $500
Let’s go through the numbers:
First, your probability of winning = 200 divided by 3,500 = 0.057
Second, your expected value (EV) of joining the contest = $500 multiplied by 0.057 = $28.50
Recall that the EV for our first hypothetical contest was $70. That’s obviously higher than the $28.50 for this contest. You might be ready to enter it based on those numbers alone.
But wait a second. Recall that the entry fee was higher for the first contest ($55 versus $20). That being the case, the only way to know which tournament you should join is to adjust the first contest’s EV for that difference.
First, figure out the percentage difference between the two entry fees. Divide $20 by $55. The result is 36.4%.
Second, multiply the first contest’s EV – i.e. $70 – by 36.4%. The result is $25.48.
Given that adjustment, you can now see that the second contest actually offers a higher value than the first one.
The Bottom Line With Daily Fantasy GPP Overlays
At this point, you may be thinking that going through the above process takes too much time and effort. The truth is, a basic spreadsheet will automate most of the math. All you have to do is plug in the numbers.
The takeaway is that this process will help you to uncover overlays in daily fantasy GPP contests. Pick the right ones and you’ll stand a good chance of building your bankroll. In fact, you can use variations of the above process to figure out which contests to join regardless of the field size, prize pool, and entry fee.
If you want to consistently make money in daily fantasy sports, the information we’ve covered above is a step in the right direction.