Tuesday, December 23, 2008

Why Rake Matters For Fantasy Sports

Rake is something that poker players generally pay a lot more attention to than fantasy sports participants. But if you're serious about making money at fantasy sports, you should give it some consideration.

If you take a look at the payouts for most fantasy sports sites, rake (the difference between the total entry fees for a contest and the total amount paid out in prizes) varies from 10% (or even lower) to as high as 30% or 40%. This makes a moderate difference in how profitable full season fantasy sports events will be, but in general the format and quality of competition are going to be even more important in those events.

However, in daily contest games, the amount of rake is absolutely critical. Think about what will happen to the money of an 'average' player who starts with a bankroll of $100. Let's compare two games...one with 10% rake (like Drafthero) and another with 20% rake (like Snapdraft). Each player uses their full bankroll to enter contests and gets an 'average' return (90% for Drafthero and 80% for Snapdraft). So the first 'round' of bets they each bet $100. Next round the Drafthero player bets $90 and the Snapdraft player bets $80. Next round the numbers are $81 and $64. After 22 rounds, the Snapdraft player has less than the $1 he needs to enter a contest. The Drafthero player doesn't run out until the 44th round. The Snapdraft player will have only bet a total of $495 compared to the Drafthero player's $990.

Obviously, the impact is even greater for a winning player. The same person who is breakeven at Snapdraft is going to have a 10% return on investment at Drafthero, and can make a ton of money.

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