Years ago, before I had a family and when online poker was fully legal, I used to play quite a bit. I was never exactly a poker savant, but I was able to regularly pay my rent throughout my college years from poker winnings. There were many things I learned along the way that contributed to my success, but perhaps nothing was more vital than bankroll management skills. Anyone who has interest in playing daily fantasy leagues needs to learn these skills if they wish to be a profitable player.
Bankroll management is defined as using the size of one’s bankroll to determine the stakes you are able to play without losing it all.
It does not matter how good you are, when you play a game like poker or a daily fantasy league there will be ups and downs. Even the best players go through down periods where they will lose money over short stretches. The player’s ability to limit losses during those times are as important (perhaps more so) than the ability to rack up wins during the good times.
Yes, you need to play well in order to make money in daily fantasy leagues, but, an average player with strong bankroll management skills will do better over the long run than a great player with poor management skills.
How do I know this? Unfortunately, this knowledge was not magically bestowed upon me. I developed my own system through the school of hard knocks. I have (more than once) frittered away an entire month’s worth of profits in one agonizingly bad session on the poker table. Had I been able to walk away after sustaining relatively small losses early in the night, I would have been okay. Instead, I decided to chase my losses in an effort to get it back, which leads us to rule number 1.
1. Never chase losses
It is human nature to hate losing more than we love winning. Being down, even small amounts can be hard to swallow sometimes, but a successful player must realize that taking a small loss is never going to threaten your bankroll. Let’s look at the following example and assume we are sticking to 50/50 games.
Player A starts with $100 bankroll and loses two consecutive $10 games
Most people would be tempted to put $20 down and try to recoup their losses all at once. Don’t do this! If player A makes this choice and loses, he will be down to 60% of his original bankroll and would be just 2 more “double down” decisions from going bust.
Ironically, most gamblers are willing to put more on the line when they are running poorly, when the rational decision would be to do just the opposite. If you find yourself in player A’s shoes on the wrong end of a losing streak, DO NOT chase. Instead, consider clearing your head by taking a day or two off, and when you do return, do so at lower stakes to preserve your bankroll. While it is important to learn from one’s mistakes, it is also beneficial to have a short memory. It does not matter where your bankroll used to be. Every decision that you make should be based on where it is at the present time.
2. Know your limit
Every player should have a predetermined amount that they are willing to put in play, and it is important to NEVER exceed that amount. This limit does not have to be expressed with a dollar figure (you could do that as well), but rather as a percentage of your total bankroll. An aggressive player might be comfortable risking 20% of their bankroll on a given night. Personally, I think anything higher than 10% exposes you to too much risk.
Let’s go back to our example from before. If we start with $100 and have a 5 day losing streak, look at what happens to our account in each scenario.
Day 1 – start with $100, lose $20, left with $80
Day 2 – start with $80, lose $16, left with $64
Day 3 – start with $64, lose $12, left with $52
Day 4 – start with $52, lose $10, left with $42
Day 5 – start with $42, lose $8, left with $34
B. 10% Limit
Day 1 – start with $100, lose $10, left with $90
Day 2 – start with $90, lose $9, left with $81
Day 3 – start with $81, lose $8. left with $73
Day 4 – start with $73, lose $7, left with $66
Day 5 – start with $66, lose $6, left with $60
C. $20 hard limit
Day 1 – start with $100, lose $20, left with $80
Day 2 – start with $80, lose $20, left with $60
Day 3 – start with $60, lose $20, left with $40
Day 4 – start with $40, lose $20, left with $20
Day 5 – start with $20, lose $20, left with $0
It is true that coming back from a losing streak is a difficult task, but if you stick to your limits and keep less than 10% of your bankroll in play at a time, you will give yourself a chance to stay in the game. You run the risk of going broke if you overextend yourself regardless of how large your bankroll is. If you are broke, it is very difficult to make any money.
3. Adjust your limits for risk
50/50 matchups are the most likely to profit, but they also have the lowest payouts. There are two ways to do these, either with a head’s up match against a single opponent, or in a 50/50 pool where the top half of the entries get paid. In both of these scenarios, the payout at Draft Kings is 80%. This means that you will have to win 55.5% of your 50/50s just to break even.
Some people may prefer the heads up match, but I would rather stick to the 50/50 pools. They pay out the same, and you eliminate some of the risk. You could conceivably have a great night and still lose if your opponent has a better one in the head’s up matchup. That won’t happen in 50/50 pools.
Tournaments and large leagues have much better payouts for the winners, but keep in mind that they are also a lower percentage investment. Most of the tournaments pay roughly the top 20%, with the top performers receiving the greatest returns. While a top finish could yield a big payday in a tournament, you are also substantially more likely to be shut out completely. Also, keep in mind that the way most tournament payouts are structured, you will have to finish in the top 10% to make more than double your initial investment. Even when you do win, more often than not it will be a nominal amount.
The style of game you prefer should absolutely be considered when setting your limit. If you stick mostly to 50/50 pools, then perhaps risking a little more than 10% would be okay. If you play primarily in tournaments, then your risk of an extended losing streak is substantially greater. I would recommend playing with no more than 5% of your bankroll in this scenario.
4. Diversify your Investments
50/50 pools are the safest way to play, but they don’t offer a ton of upside. Diversification can offer the best of both worlds. If I were playing with the aforementioned $100 bankroll, then perhaps a good strategy would be to wager just under 10% of my bankroll in a 50/50 type game, and to play 1% in a large tournament. This way, I can get the upside of tournament play from a minimal investment, but also still get the security of the 50/50 games to drive the bankroll.
Multiple entries are allowed in some tournaments. This can be a good way to increase your odds of winning, but if you make multiple entries, make sure they are different. This seems like common sense, but in my limited experience playing on Draft Kings, I have seen quite a few people submit the exact same lineup into the same tournament. Also, multiple entries only really make sense in high yield tournament situations. In games like 50/50 pools, multiple entries only increase the odds that you will lose. Remember, if you win one and lose one, you come out behind.
5. Upping the Stakes
As long as you stick to your percentage limits, it is absolutely fine to raise the stakes of your play once you have built the bankroll to do it. Keep in mind though, the higher the stakes, the better the competition you are likely to face. Just because you won 65% of your 50/50 pools when you were playing for $10, does not mean that you will have the same success at $20. Sometimes, playing in smaller money games can be more profitable if you are able to steer clear of the sharks.
6. Cash out your winnings
If you want to be successful over the long run, you need to approach this like a business. Your bankroll is your key asset. If you are successful, over time your bankroll will grow. If you do not cash out, you can continue to ramp things up and play at higher stakes without putting too much of your bankroll at risk.
My suggestion is to pay yourself a little as you build your roll. If you make $500 profit over the course of a month, maybe you cash half out and reinvest the other half. You always want to make sure that you keep enough in your account so that you can withstand a drawdown, but if you never cash out, then you never realize any actual gains. This would be equivalent to a small business owner reinvesting 100% of the company profits and never paying themselves any salary.
7. Play for free
There are plenty of free game set ups on Draft Kings. Beginning players should take advantage of these. Check out some different formats and get a feel for how the games work before you start investing real money.
Back in my poker days, I made my first deposit of $50 and jumped right into the cash ring games with half of my bankroll at the table in front of me. I lost every penny in about 2 hours. Instead of reinvesting, I stuck to the play money tables for a few weeks until I got comfortable and began to win consistently.
When I was ready, I made a second deposit of $100. Because of my experience gained at the free tables, I was much more successful the second time around. Over the years I was able to cash out thousands of dollars and I never had to make another deposit.
You have to bring a different mindset to the daily games than what you are used to in yearly leagues. Over the course of a 162 game season, those proven studs almost always win out. In a daily league, though, a $3,000 scrub with a good matchup can outscore your $5,500 stud. You can set your lineup every day with painstaking detail, but sometimes the lineup you decide to stack is going to come up against a hot pitcher (like when I started 4 Red Sox against Aaron Harang on Wednesday). Your $10,000 ace pitcher can have a bad day at the office and ruin your chances. Good lineups are not always winning lineups.
As long as you have a good plan with regards to managing your money, you should be able to stay in the game for a while. Nobody can win 100% of the time in these games. Long term success is dependent as much on your management skills as it on your lineup skills. If you overextend yourself, you will go broke. It is a certainty. I don’t care how good you are at setting lineups, if you don’t have a good bankroll management plan; you are going to lose it.