Evidence of Skill and Strategy in Daily Fantasy Basketball

Using hand-collected data from DraftKings.com, a major daily fantasy sports website, we analyze draft selections of thousands of participants in daily fantasy basketball (DFB). In our study, the first thorough examination of DFB, we show that DFB is a game in which skill is necessary for success. Using econometric analysis, we find that winning participants utilize different strategies than losing participants; for example, winning participants more frequently select NBA rookies and international players. We also find that participants paying to enter more lineups in a given contest earn profits far more often than those entering few lineups, indicating that the number of lineups entered can serve as a proxy for skill. Additionally, we provide a thorough discussion of industry characteristics, prior literature, and gameplay, which should help readers familiarize themselves with this burgeoning fantasy sports variant. This study should further the literature on the contentious activity, which has been outlawed in many U.S. states and continues to elicit controversy.