DFS Concept: Getting a Grip on Variance

NBA All-Star Break is upon us and like the end of December for most people, it’s time to reflect. For the daily fantasy sports world (DFS), things switch a bit. NBA shuts down. MLB ramps up. NHL is business as usual since they just had their ASB. NFL guys are still snug in their caves hibernating until the draft. So, even though the NBA fan is decompressing a bit, the DFS fan is still rabidly running around like the proverbial chicken with his head cut off looking for action……looking to add to his knowledge.

So, let’s take this little self-reflection period and take a look at a key concept: Variance. It’s on all your minds. Some of you handle it better than others. Hell, I should throw myself into the mix. I can really crank up the Whine Machine if I let myself. And, take it from my wife, it can get LOUD. Variance, however, is simple.

Webster defines variance as an amount of difference or change. Other definitions were “not in harmony” or “two parties at conflict.” The mathematical based definition was “the square of the standard deviation.” The last one means more to me than the others when it comes to DFS. I’m not going to attempt to break it down thoroughly, but I am going to try and describe it in a way that you hopefully will become at peace with the concept….as maddening as it can be.

Square of the standard deviation. Standard deviation sets parameters to a projection, something we’ve all heard too much about in the NBA lately. If Player A is projected to reach 27 pts, and is a relatively consistent player, he may have a standard deviation of +/- 5 pts. This means he will likely run in a channel between 22 and 32 points based on tonight’s circumstances. I would call this variance. However, we all know Player A will sometimes violate that standard deviation and go outside those boundaries, both on the high side and the low side. If we “square the standard deviation,” we get +/- 25 pts. Wow! Player A’s variance actually runs in a channel from 2 pts to 52 pts. This was a crude and hypothetical example, but it is meant to illustrate how wild variance can be at it’s extremes. Imagine putting together a lineup of NBA players that all project 30 points but might run between 10 pts and 50 pts. It’s possible. And, we’ve seen it happen. The whole 9 player LU might run between 90pts and 450pts. Probably would wind up closer to 270pts most times, but it’s a weird game. Phew. That got a little technical. Let’s tackle this in another way.

Let me describe how I see variance in a more conceptual manner. How many of you have played the game Chuck-A-Luck? You know…vertical roulette. Spin the wheel, place your bets, and when the wheel stops, either you win or lose. Before you laugh me off the church casino floor, hold tight for a few seconds because it directly relates to how I view variance when it comes to daily fantasy sports.

The left graphic is a simple pie chart. Let’s pretend you enter 8 different 50/50s. Let’s also pretend the numbers are the cash lines. Green, for example, is a contest in which the cash line fell at 292 pts. The right graphic is another pie chart representing the 5 LUs you built for the night along with their corresponding scores. For example, green here is 315 pts.

What I want you to do is envision spinning both wheels. Let’s pretend the one on the left stops on blue…….291. And, the one on the right stops on blue also…….289. Oopsie…..you missed. Now, let’s pretend you spin the wheel on the left and it stops on orange. The one on the right stays on blue for 291. Yippee….you hit the cash. Do you see where I’m going with this? There is a TON of variance in the contests you enter and where your LUs fall within them. On a given night, you might get completely unlucky. If you look closely at the two wheels, you will find the lowest moneyline on the left wheel is 272. Your lowest LU is 264 on the right wheel. It doesn’t much matter where the wheel on the left stops, you are going to miss out. On a given night, you also might get super lucky. If you look at the highest line on the left wheel, it’s 301. If you spin the wheel on the right and stop on the green pie piece of 315, again it doesn’t really matter….you win. Obviously, for you to lose them all, you would have to get very unlucky. Conversely, for you to win them all, you’d have to get very lucky. This is spinning the wheel of variance.

Let’s go a bit deeper. Let’s do this each night/slate for a week. You could easily get very unlucky or very lucky for the week. Heck, over a week’s time, this doesn’t even mean you are a bad or good player. You simply could be getting unlucky or lucky. To determine your skill, you would have to spin this wheel hundreds, maybe thousands, of times over the course of many nights or weeks, maybe months.

Folks, the only way to beat variance is through the long run of events. Like flipping a coin, there will be hot streaks and cold streaks. Only through the long run will your numbers normalize and start to beat variance. The problem with variance is that the long run is really, really, really long. It’s hard for a small bankroll to wait it out. That is why we preach so hard in the DFS Army about bankroll management and discipline. If you are wanting to learn more about these key concepts, and many more like lineup construction and finding reliable value, I recommend you read on and learn how you can join the DFS Army…..hands down the best community driven DFS site on the web. And, become a VIP Insider to the NBA because this is what you can expect to read a lot more often in the VIP Insider rooms. Good luck in your 2nd half of the NBA season…..variance will definitely spin, may it stop on your side. #ArmyDismissed