How To Win At Daily Fantasy Sports Betting: Pricing Algorithms

Daily fantasy sports betting is all about making a lineup that maximizes points scored per dollar spent. That means finding players who have are priced at a bargain. The way DFS experts normally do this is by exploting good matchups where players are expected to overperform there averages. However, because of the way DFS websites price players you get mispricings from the faults of the pricing algorithm. This essay will talk about what you should be looking for to find mispriced players and what players I believe are mispriced at this point in the year. I will use NBA as my main example as this is the biggest sport in DFS at this time of year.


Pricing Algorithms

As far as I know, DFS websites do not tell people what their pricing algorithms look like. Sometimes, you do see pretty obvious examples of players prices being hand set, i.e. Kendall Marshall this year. But for the most part, DFS websites price based on an equation. By watching prices over time the inputs of this equation seem fairly straight forward.

The first factor used to price is average fantasy points scored. In the case of the beginning of the year this tends to be based on previous years stats, and as the season goes on the previous stats used move towards the current season. Because of this, when previous stats are not representitive of future stats, you can expect a player to be undervalued.

The other main factor used is recent demand. If a player is being played in a large percent of lineups the players price is adjusted upwards, if a player is not being used his price is adjusted downward. Draftkings in particular tends to do poorly pricing recently injured players because of how they use recent demand in their equation.


What causes non matchup mispricings?

There are 4 main causes of a non matchup mispricing of a player.

One, an injury to a large contributor. Think Al Horford this year on Atlanta. Two, a trade of a large fantasy contributor to another team, this would be either Luol Deng or Al Horford. Both of these events mean a player who scored a lot of fantasy points has left the team and for the most part you can expect at least some of those statistics to be distributed to other players on the team.

Three, a player has been injured for a period of time. Again, Draftkings tends to have the worst mispricing in this case. Because they factor in demand, and an injured player will not be played at all, their price falls despite people finding his price reasonable. Most recently, Kyrie Irving was out for a few games and his price went down from $8600 to $7400, causing an over 5 fantasy points per game to price ratio, a huge value. A lot of times I like to look at all players and sort by fantasy points per game to see if someones price has been affected a lot by recent injury.

Lastly, a young emerging player or rookie. Young players and rookies tend to have their statistics improve over time, so previous statistics tend to not be representitive of their future output. People are enticed by young players and rookies because of their upside so their price tends to adjust fairly quickly, but if you catch an emerging young player early you can do really well.


Who are some mispriced players this season?

Kyle Lowry and Demar Derozan

Rudy Gay was traded midway through the year and both players got a giant fantasy point boost. Since the trade Lowry is averaging 37.8 FPPG while Derozan is averaging 35.17 FPPG, much much higher than their previous numbers. While both of their prices have risen, both players will have their salaries held down by their previous statistics from when Gay was on the team, so always look to use both especially when you find a favorable matchup.


Demarre Carroll

This is a sneakier pick. Al Horford’s season came to an end December 26th. Horford isn’t a superstar but he was the best player on Atlanta and a top fantasy player. With their two next best players Paul Millsap and Jeff Teague unable to create their own shot efficiently, Carroll has actually stepped in and seen an increase in production. His average fantasy production over the span Horford has been out is 27.625 FPPG, 6 points above his previous average of 21.41 FPPG, even with unfavorable matchups like Indiana, Chicago, and Golden State. I think Carroll will sustain these numbers as his minutes stay up and his role in the offense continues to increase.


Carlos Boozer

Luol Deng was recently traded to Cleveland. In that trade, Chicago lost there best fantasy player in Deng, and there was a lot of slack to pick up. Although we’ve only seen 3 games without Deng, Boozer performed very well when Deng was injured earlier in the year and has averaged 16.7 points and 10 rebounds in the games since the Deng trade, above his season averages of 14.9 and 8.8. His fantasy production should continue to stay up if not increase more in the near future.

With knowledge of how DFS websites price, you should be better able to set quality fantasy lineups.

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View all posts by Daniel Steinberg
Daniel Steinberg

About the Author

Daniel Steinberg Daniel Steinberg is a former bond trader at a multi-billion dollar proprietary trading firm in Chicago. He uses his knowledge of statistics and his creativity from his career as a poker professional to create the most advanced Daily Fantasy statistical analysis that you will find anywhere. Follow him on twitter @DanielSingerS

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