Can we discuss the rake in here? (1 Viewer)

[Peyton Marino]

This week, FanDuel has decided to raise rake to 15% on its GPP contests with entry fees of under $25.  With the decrease in player base last year after so many states decided to call into question the legality of DFS, and the negative effect that reputation damage had on its existing player base, I was already kind of on the fence as to whether or not it is profitable to play DFS (it still likely is in the early weeks of NFL season, but I'm probably out on NBA and MLB).  But man, is this the way the industry is going?  -125 on most cash games is already pretty egregious imo.  I had hoped the trend was going to be toward decreasing, not increasing, the rake.  

And, to be clear, this isn't just about the recent rake increase, which (seemingly) does not even affect most of the contests on FanDuel.  I looked through some of my H2H and 50/50 contests during week 1 and, while maybe the problem is my game selection (doubtful), it sure looked like the DFS player base as a whole is getting a lot sharper (thanks tout sites!).  When everyone knows the top plays, you're already grinding a small edge to begin with, and then the industry decides to trend towards more rake on top of that... I just don't know what you do.

Anyone have any thoughts here?  @Assani Fisher

 

[John Lee]

I am in complete agreement that the sites are going to eventually squeeze the grinder out of the industry with the rake increases.

Rough example: Let's say that you're a mid-stakes grinder who plays (on average) $1K per day across multiple sports (NFL, NBA, MLB). At 10% rake (circa 2014), you would be paying ~ $35K per year to the sites; at the new 15% rake, you're now paying ~ $55K, a difference of $20K. For a person playing that kind of moderate volume, that $20K difference can represent what he profited last year (and won't profit this year).

With information getting better (particularly for NFL), there isn't much of an edge to be had when the rake hits a certain threshold and I think we're nearing that range. The unfortunate part in all of this is that the sites are going to tell us that regulation is causing increased costs and that they have no recourse but to pass along those costs to us, the players. And the majority of casual players will not care because their $50 per Sunday during NFL season is not intended for long-term profit, but more of an entertainment budget. The grinder, however, is affected. The only way to get the attention of the sites is a boycott from *all* high-volume grinders to demonstrate that we won't continue to play the game with these ridiculous rake structures in place. Without that key player base, many of whom (including myself) are playing five-figures on a weekend, they will see that their business model is unsustainable without us. I'm afraid, however, that organizing such an effort would be a major hassle and I'm not 100% certain that *every* major DFS player would buy in.

 

[NixonMask]

I remember when this conversation came up last year they argued a large percentage of the rake went to stat services.  Did anyone ever figure out what that realistically costs them per contest/entry?

 

[Peyton Marino]

I am in complete agreement that the sites are going to eventually squeeze the grinder out of the industry with the rake increases.

Rough example: Let's say that you're a mid-stakes grinder who plays (on average) $1K per day across multiple sports (NFL, NBA, MLB). At 10% rake (circa 2014), you would be paying ~ $35K per year to the sites; at the new 15% rake, you're now paying ~ $55K, a difference of $20K. For a person playing that kind of moderate volume, that $20K difference can represent what he profited last year (and won't profit this year).

With information getting better (particularly for NFL), there isn't much of an edge to be had when the rake hits a certain threshold and I think we're nearing that range. The unfortunate part in all of this is that the sites are going to tell us that regulation is causing increased costs and that they have no recourse but to pass along those costs to us, the players. And the majority of casual players will not care because their $50 per Sunday during NFL season is not intended for long-term profit, but more of an entertainment budget. The grinder, however, is affected. The only way to get the attention of the sites is a boycott from *all* high-volume grinders to demonstrate that we won't continue to play the game with these ridiculous rake structures in place. Without that key player base, many of whom (including myself) are playing five-figures on a weekend, they will see that their business model is unsustainable without us. I'm afraid, however, that organizing such an effort would be a major hassle and I'm not 100% certain that *every* major DFS player would buy in.

I actually thought about the bolded this morning.  I think there's a pretty interesting game theory aspect involved where it's optimal for every grinder to say they're going to participate in the boycott, and then re-neg and play against a weakened player base that week.  But every grinder does that, and nothing gets accomplished (at least that's how I thought through it in my head).

 

[Maurile Tremblay]

There are still contests out there with negative rake. They are hard to find at the major sites (although the FBG Championship contest at FanDuel is one of them). If you're willing to look around at the smaller sites, they are there.

This is one way that smaller players have an advantage over high-volume grinders. If you are playing $100 a week, you can easily get all of it in at a negative rake. If you are playing $10,000 a week, the majority of it will necessarily be at a high rake because that's way more than the total overlay available.

 

[karmarooster]

I've noticed this too, and will be shifting all cash game entries from Double Ups to 50/50s (still 10% rake) and GPP entries to 100-player leagues (also still 10% rake).  It's not a perfect solution because the 100 player leagues just don't have the upside of the massive tourneys, but then again, I've never hit a big win in a massive tourney.  

15% rake for large double ups and large GPPs is simply too much.  

 

[(HULK)]

I remember when this conversation came up last year they argued a large percentage of the rake went to stat services.  Did anyone ever figure out what that realistically costs them per contest/entry?

That's complete BS.  A live stats feed to power their scoring engine would run them not very much.  I paid for one in 2007 or 8, and it was $30K for the entire NFL season.

 

[BroadwayG]

Apparently I should finish and sell my live nfl stat program.

 

[Joe T]

Wouldn't more rake make it even more like gambling and even less likely to get government approval?

 

[NixonMask]

That's complete BS.  A live stats feed to power their scoring engine would run them not very much.  I paid for one in 2007 or 8, and it was $30K for the entire NFL season.

It's possible I am mistaken.  Last season was chaos, it's possible they were saying it was just part of the cost.  I am pretty sure I remember a podcast where someone asked the CEO of one of the companies why the rake is what it is/so high.  The answer I remember is, aside from the obvious expenses every business have is "we have to pay for stat services.  It's not cheap.". Again, that's not a quote, but what I remember hearing from someone else's second hand conversation.

 

[MAC0923]

I have been seeing the Rakes go up on the major sites as well and In the end i think it will have an affect on filling their contests. there are definitely smaller sites available with a lower rake. I came across a site yesterday on FNTSY called Draft World and their rake is a 5%. They may be a start up i never heard of them until yesterday myself. Does anyone else know about them? 

 

[(HULK)]

The rake is so high because they're still paying off all the commercials from last year and the ones they bought this year.  That is probably 95% of their costs.

 

[Peyton Marino]

There are still contests out there with negative rake. They are hard to find at the major sites (although the FBG Championship contest at FanDuel is one of them). If you're willing to look around at the smaller sites, they are there.

This is one way that smaller players have an advantage over high-volume grinders. If you are playing $100 a week, you can easily get all of it in at a negative rake. If you are playing $10,000 a week, the majority of it will necessarily be at a high rake because that's way more than the total overlay available.

i mean... sure.  but if you've been a "smaller player" taking advantage of these things for a couple of years, and you're still a small player... well, just solve by inspection.

for the larger volume players, this really sucks.  

 

[Dan Lambskin]

15%.  That's it?

Sincerely, 

Horse Racing