Wednesday, February 25, 2009

The FSL Contest Hog Issue

The post below is from the FSL Blog. I am also posting it here, because it shows an interesting contrast between online poker and daily fantasy sports.

Over at the FSL Forum there has been a lot of talk about the issue of contests hogs. We have also received a handful of email complaints about the same issue. I thought it would be a good idea to go over our thoughts in depth about this issue in one place. So what exactly is a “Contest Hog”? Basically a contest hog is someone who enters a large number of fantasy leagues every day. Because it just takes a couple of minutes to draft a team at Fantasy Sports Live, it is pretty easy to enter 10s of contests a day. In general, we call these types of users volume players, and they are our best customers. They help to create a lot of action on the site, which helps us to attract new users. There are two things that volume users (contest hogs), sometimes do that can hurt business at FSL.

Blanketing The Contests

This is where one user enters every contest for a given sport and re-enters any empty contests that reform. They basically are not giving anyone a choice at all of who they play against because they are literally in every contest. This has been attempted a few times in the past for brief periods, but we have always asked the user to stop, and they have complied. In general this is a very high variance move any way. If you are risking say ½ of your bankroll to cover every contest, even with an edge you will go bust in a very short amount of time.

Preying On New Players

This is where a user is constantly watching the website, and will fill up any heads up contest with one entry no matter how low the stakes are. The problem with this approach is that you need a lot of time on your hands to constantly be watching the web site, and you can only win so much money anyway at the lowest stakes. New users will feel like every time they enter a contest, it gets filled by the same guy, and he happens to be near the top of the all-time leaderboard. This type of behavior is what the recent complaints are about.

Before I go into what we are already doing to address this issue, I wanted to go over why this will always be an issue for daily fantasy leagues that use a salary cap type draft. It gets down to the concept of leverage. Many people will notice that our site does not look like the most of the other fantasy sports sites out there. Our site it based on what is called a “Sit & Go” at an online poker site. A Sit & Go is a small fixed sized tournament that forms in real time and starts running when it fills up. A good poker player can be profitable playing these long-term, and may chose to move up to higher stakes (where the competition is tougher), or play more than one at a time to leverage their skill advantage. In online poker, the leverage you can apply is greatly limited. If you move up to higher stakes, your win rates will go down because of the tougher competition. If you play several S&Gs at a time at lower stakes, you do not have as much time to make decisions, and you lose your feel and reads for the table lowering your win rate. So the amount of leverage you can apply in online poker is greatly limited. You will eventually find high stakes that you can’t beat, or you will find that playing an additional S&G, actually lowers your hourly win rate. In sports betting your leverage is limited as well. There are maximums you can bet on a game, and they will start moving the line against you if you start betting a ton on one side. By contrast, in fantasy sports the leverage you can apply can be nearly infinite. Once you draft your team for a daily league you are done. Joining another league does not reduce your chances in the first one. If you can’t beat the highest levels on the site, you can focus on the lower levels and leverage your advantage there to a great extent. If you can draft your team in 2 minutes, you can enter 30 leagues an hour. For one hour of work you can 30x your leverage. What you win on average over the 30 leagues is your hourly win rate. As long as spending 2 minutes to draft another team, increases your hourly win rate, it is worth your time. So as long as you have a fast draft interface (like we do) you are inviting players to leverage their skill advantage. A live draft that took 30+ minutes would solve this issue, but that is not really what our customers want. So we have a trade off between customers wanting a quick and easy way to play fantasy sports, and skillful players exploiting a quick draft to leverage their skill advantage. We have been aware of this issue from almost the beginning in June 2007. There are several things that we already do to address this issue.

What do we currently do to discourage / prevent this type of behavior? discourages this type of behavior, in several ways based on our rules and how we operate. When this is not enough, we contact the player and ask them to voluntarily change what they are doing. For the players that were “Blanketing the Contests”, they have always complied with our requests. For the other type, we have also had good luck in the past, but still receive some complaints. The current user being discussed in the forum really only enters about 10 contests a day out of about 60 basketball leagues that we run, and they tend to be at the higher stakes. This is enough compliance in our opinion, though some users to not think it is enough. It is in our volume user’s best interests to comply with our requests, because in the long-term, anything that helps out FSL helps out our volume users. They will get more people to play against, and higher stakes leagues as well. This is why we currently have stuck with this approach. The following additional measures are already in place on the site.

Drafting is not instant at FSL

We do not allow you to enter a second contest with the same team without redrafting your team. Since redrafting a team takes time this discourages volume users from focusing on the lower entry fee leagues where less money can be made. Other competitive sites let you enter additional leagues instantly with a single click which encourages contest hog behavior.

We offer varied salary cap structures and amounts

We offer a wide variety of salary cap types and amounts on our site. Each one requires a thought process on how to draft the most effective team. After figuring out a team for one structure, a contest hog will need to spend the time to figure out the other structures before hogging those leagues as well. Other competitive sites only have a single structure, making it much easier to hog every league on the site.

We offer higher payouts at the higher dollar entry fee amounts

This is a big magnet for the volume user (contest hog). Volume users are painfully aware of how much we payout because it is huge to their bottom line. If we payout 91% at one level, and 93% at another level, they will simply move up to the better value. Not only can more be made at the higher entry fees, but more of the total fees are paid out in prizes as well. This is how we try to keep out best users out of the lower dollar contests. In general, it works pretty well. Our competition does not offer these types of incentives to stay out of the lower dollar leagues.

We pay out multiple places in multiplayer leagues

Our 6 player leagues pay out the top 2, our 10 player leagues pay out the top 3. Even if a good player is “hogging” the multiplayer leagues, you do not have to beat them to get paid. At lot of competitive sites are “winner take all”, meaning you will have to always beat the contest hog to get any prize.

We do not conceal the competition

This is how users may always avoid contest hogs at FSL. If you are the first one to enter a contest, you are basically saying “I am willing to challenge anyone who is currently viewing the site”. When you are the last one to fill a contest you are saying “I am willing to challenge the other users already registered for this league”. It is obviously much riskier to be the first in versus the last in. If you avoid entering contests first, and only fill contests as the last entry, you can completely avoid any contest hogs. As I said above, the hog in question really only enters about one out of six leagues on average. Plenty of users are successfully avoiding him. Many of our competitors conceal the identity of registered entries in some way or another.

We offer $1 100% payout 10 player leagues

For the benefit of our new users we offer 10 player leagues that payout at least 100% of the entry fees, and also pay the top 3. Even is a contest hog were to enter one of these, they are still a better overall value than a league with a standard payout. Also, with the top three paid, you don’t even need to beat the contest hog. This will always be a safe place for new users to compete.

We don’t allow running leagues to be viewed by people who are not entered

This probably hurts us a bit when it comes down to signing up new users, but it serves a purpose. The idea is that you need to pay to see your opponent’s fantasy team. If you want to know the types of teams a top player is selecting, you will need to move up to their level. When a top player moves down to the lowest levels, they are inexpensively giving their opponents information about the types of fantasy teams that they draft. This helps the lower level competition improve there skills to where they may be able to beat the better player when they move up. This is intended to discourage top players from playing at the lowest levels. They are better off to let the newer players move up to their level before revealing how they play. Otherwise there will be less money to make when new players move up. It does not make a bunch of sense to crush the $3.40 leagues, if it will hurt your chances in the $107 leagues.

Other potential future measures

We came up with a concept of a software fix for this over a year ago. Most “contest hogs” since then have voluntarily complied, and we have not had to roll it out. Any software fix (rule change) would need to be applied equally to everyone. Any restrictions on “contest hogs” would also restrict all users in the same way. We are very reluctant to do this, but it is in our back pocket just in case. The other way this issue goes away is to simply grow the traffic on the website. Let’s say we started running 300 basketball leagues a day (should be there by next season). Even if a hog were to now play 20 leagues a day, they will be entering a much smaller percentage of the leagues. Bankroll issues also come into play. It already takes a pretty large bankroll to try to hog the contests today. With increased traffic the bankroll requirement keeps increasing. Also with increased traffic you are more exposed to better players than yourself. If you are putting ½ of your bankroll at risk every day, and a better player than yourself shows up, you will lose everything in 2 days. So currently rather than spending money to put in a software fix that will reduce the number of leagues we run, we choose to spend that money advertising the site to grow the number of leagues that we run. If we can grow the site fast enough this issue should go away pretty soon.

Now that you know in detail what the issue is and what we are doing to address it, are there any comments or suggestions on our current approach to the issue?

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