Another, perhaps more cynical explanation, is that he's actually being paid by one or more Fantasy Sports companies to help promote the notion that playing is a skill based activity rather than a gambling activity. Since the latter gets you banned in NYC :-)

John Oliver did a segment on this : https://www.youtube.com/watch?v=Mq785nJ0FXQ

But both skill and luck are at play in DFS.

Sure, but that's also true of, for example, poker. However, many states consider poker to be gambling.

Gambling does not mean that poker is not a game of skill.

As a key issue with DFS is state laws in which "gambling" is legally distinguished from "games of skill", yes, in context, it does.

I'm not from the US, so didn't know that, but it is stupid. Gambling and game of skill are not mutually exclusive. Gambling means that there is some variance, some risk involved. You gamble on the outcome. That doesn't mean you cannot develop a skillset which will make taking the risk profitable, over the long term. Any law that says otherwise is ill-written.

By that definition, every action you undertake is gambling. Driving to the grocery store is gambling. But since regulating driving your car to the shop under "gambling" laws doesn't make sense, "gambling" as a legal concept involves wagering money on games of chance, and "games of chance" is a distinct concept which is separated from "games of skill". This is the line that DFS is trying to walk, because the skill side of the line is the side that lets them operate in places where gambling is more strictly regulated.

Like I said, any law that insists on making a mutual distinction between games of skill and gambling (risking money on a probability of an outcome) is ill-written.

Poker is a game of skill just like backgammon. You can wager money and there is risk (chance) involved, but you can develop skills which will ensure that you are a winner over a less skilled opponent. Just like golf. There is always the chance that you will not make the necessary strikes and a less skilled opponent takes a game from you, but over the long run, you can sufficiently influence the outcome and achieve a positive win rate. This is what makes it a skill-based game. You influence it by your skills. You can place wagers and gamble on the outcome, but that doesn't suddenly make it any less not a game of skill.

I'm not very familiar with fantasy sports, but to the best of my knowledge, the same holds true there too.

A game of chance cannot be distinguished from games of skill. All games involve chance. This problem probably arises from the poor understanding of "chance" and probabilities by the people who wrote the law (presuming Hanlon's razor here). They wanted to ban games where the operator bleeds the players dry, like slots, lottery, etc., and called them "game of chance", but there is more to the story of "chance", like i outlined above.

Actually, I think your argument rests on a poor understanding of the laws you are criticizing, as you presume incorrectly that they rely on definitions of "game of chance" and "game of skill" such that the former must have no element of skill and the latter no element of chance.

The definitions are different in each case, but none of them work that way. In New York, for instance, the outcome depending materially on chance, whether or not skill is also involved, makes it a game of chance.

The outcome of which game, exactly, is not dependent on chance, in some form, or another?

I think you may misunderstand the purpose of the gambling laws here. Do you have a citation for their purpose as a consumer-protection measure?

Given the government's heavy use of lotteries and other gambling as a cash source, the laws appear to be designed by lawmakers with a solid understanding of chance and probability and a desire to ensure that monetary gambling (with gambling defined as "an activity where the influence of chance outweighs the benefits of skill, for most participants") be restricted to the state, not commercial entities.

It might very well be the case. I'm not sure about their motives, I even said so. I don't see how that affects the poorly written definition and the case that poker and fantasy sports are games of skill.

Probably worth checking out https://www.youtube.com/watch?v=Mq785nJ0FXQ

The relevant point being that not everybody believes they're a "game of skill" in the "skill vs. chance" slider which is relevant to the law. While there's no question that like every game, user actions (skill) can impact the outcome, how much it can impact the outcome is what determines whether something is classified as a game of skill or chance. Perhaps it's more clear if we say "a game of primarily skill" or "primarily chance".

If daily fantasy sports is primarily skill-based, they can do it. If it's primarily chance-based, it's illegal in the US. Which is why they're pushing for it to be referred to as "skill-based".

Some laws use a predominance test; New York law, which seems to be the main focus, does not -- it uses material element of chance standard, which can apply even when a game is primarily skill-based.

Beating the point spread wagering on NFL games is also a game of skill then. There are some sports betters who are better at analyzing data than the bookies are who consistently make money.

Very few games that we'd call gambling (e.g. blackjack) are 100% chance though. Maybe dice games? Lotteries? Even in games where the house always has edge, you can lose less by playing optimally.

In sports betting, the odds are dynamically adjusted by the operator, who is also part of the game. Not quite the same as poker.

Losing less does not mean you can win, which is the case in poker. To the best of my knowledge, it is the case in fantasy sports too.

>> "...100% chance..."

Roulette and slot machines.

In general I'd say gambling is seen as "Playing games of chance [with money] for the entertainment/enjoyment value".

Honestly though I reckon it's a fine line between a person day trading their pension, a spread better and a poker player.

At the very least I'd love to see how it's distinguished legally.

But this is also true for playing the stock market.

Indeed, the stock market and fantasy sites are extremely similar, with the same fundamental issue -- a small number of people with a technical and information advantage are essentially skimming the table clean of the entry fees of a lot of people picking randomly or emotionally.

It's not really like the stock market since with stocks the majority of players "win" when measured over a sufficiently long time scale. A better analogy would be playing the derivatives market, which is zero sum (minus broker fees).

That is true also for MTG and any game in which you have randomness that does not originate from any of the players.

But the question is ratio between luck/skill

or maybe even more cynically, he'll use data about how his customers use his tools to further optimize his own betting strategies.

Sounds like this is the likely most profitable angle, similar to how DK employees use proprietary DK data to win at FD (and vice versa).

Your comment should be higher up the page.

There was a recent news story about how some fantasy company employee made a fortune using questionable means (possibly abusing such data)

Sounds like online poker all over again ;)

Create a competitive advantage and use it while you can. Then when it's no longer an advantage sell it to the masses and show them the pile of cash you made with it.

Happens all the time, works all the time.

Another explanation might be that he wants to get everyone else playing the set of lineups his algorithm is spitting out. In GPP (guaranteed prize pool) tournaments, there are usually very large fields and the prize structures are heavily weighted toward a tiny pool of top finishers. The key to winning these tournaments isn't necessarily picking the lineup with the most expected fantasy points, but rather having lineups that very few others have, because you are looking for an extreme result that is different from that of your competition. GPPs are won much more through application of game theory than they are through any analysis of the specific games or players.

If he gets a large percentage of the DFS player pool to play his algorithm's lineups and he goes a different direction, he'll crush the GPPs.

I'm not a game theorists or anything but you don't win by having a different team, you win by having a different team that also does well.

If his software is telling people to pick XYZ great lineup, he has to come up with a better lineup otherwise they all share the prize and he gets nothing.

He doesn't need to come up with a better lineup. An inferior lineup with a higher payout could lead to a fighter expected value. For example, if he has a lineup that wins 1/5 the times the best lineup does but pays out 10 times as much he would double his returns.

It matters to some degree which players he picks, but in the case of GPPs it matters much more that the lineup is unique. There are lots of lineups that have nearly the same expectation.

It does seem like one of those real-estate folks selling their "three step system for creating wealth flipping homes" who probably make more selling the system then actually flipping houses. In this case where he'd be giving folks the software they need to beat him and if these software systems do work they'd eventually just flood the market and make the whole point moot.

That being said the whole industry is under siege. He may just be trying to make as much as he can before it officially becomes gambling or automated play becomes illegal.

It's called income diversification. Why make 5 million from one source when you can make 10 million from three sources?

He's also involved in multiple lawsuits stemming from the fact that he has an "unfair advantage" from using his software.

If he makes it available to everyone he will still be making money if the courts don't rule in his favor... Plus fantasy sports are huge right now. I'd say with his track record he has the potential to make a very profitable startup.

He also had to pony up $24k to submit 888 lineups on the day he won $221k, so I'd say he's doing all right.

According to the article, he's coming under legal pressure from various sides who want to stop people from doing this sort of thing. That sounds like an excellent time to shift gears to me.

I have to disagree. I am not too familiar with the world of DFS, but I am with online poker. I understand many heavy hitters from poker transitioned into DFS a few years ago.

There clearly is a need for better information, tools, and software for DFS players to make their decisions. Whether this will hurt his winnings by making his competition smarter is another issue. Can't find fault in him by branching out to another stream of revenue.

He probably does it for the same reason we program and tell the world about it on HackerNews - accolades. People are partly driven by peer approval.

Another thing is that this type of job, relying on gambling for a living, can be prone to huge swings in wins and losses. So people look for ways to soften the blows with stable income.

Reminds me of the guys who sell books on wining at blackjack. If your system is so good, why are you selling books?

Because even if you have an edge at a game of skill and chance, it's not a license to print money. Professional blackjack players have to fly under the radar, and even with the large bankroll needed to survive swings, can only expect to make somewhere in the 5 figures. Plus, you have to spend all your time playing blackjack. Wouldn't you rather sell a book?

Playing blackjack is really, really, really boring (really!). There's a reason professional gamblers call it a 'grind'.

There are mathematical systems to beat blackjack (counting cards, change your bets when the odds are in/out of your favor). Are you doubting this?

The number of people that are going to successfully read the book, count cards, and beat the author are few to zero. The number that will buy the book? Many. Heck, I've read poker books, but don't play poker. It's interesting to learn algorithms, reasoning, and also to consider the psychological elements.

As an aside, blackjack is beatable if you count cards. The books are not bogus (not sure if you are implying that or not).

Daily Fantasy Sports is not like blackjack, because how well your fellow players do directly impacts your chances of winning.

Because it's passive income.

You play against the house in blackjack, you're not playing against other people who read your book so it doesn't hurt his chances at winning.

In addition, with the attention fantasy sports has been getting, his competition is probably stepping it up a bit. It may be easier to beat everyone's uncles than to best teams of people who are also using statistics/machine learning/sports analytics.

There is significantly less risk in selling the information than using the information.