How Much Does Draftkings Take From Winnings

4/3/2022by admin

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How Much Does Draftkings Take From Winnings Average ratng: 4,1/5 5108 votes

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Many people wonder if they have to pay taxes on their winnings. The answer is yes, your cumulative net profit is taxed, and DraftKings is contractually required to send a 1099 tax form to any player that nets of $600 in profit in a calendar year.
Typically in a winner situation of $5,000 or more (no matter what the game), the payee will not only require you to fill out the above-mentioned forms, but will also take 25 percent of your winnings up front to give directly to Uncle Sam source: Bell.If you refuse to fill out the form or provide your Social Security number, most establishments will take 28 percent of your winnings, in.

DraftKings continues to be one of the hottest daily fantasy sites. Even though it’s slightly smaller in overall size than FanDuel, it’s the site of choice for tens of thousands of fantasy sports fans.

Having said that, it doesn’t matter how popular DraftKings is if you’re unable to win. Whether you’re playing fantasy football, baseball, soccer or golf, it’s the chance to win cash prizes that keeps you playing.

How do you win over the long run? It’s a matter of doing solid research, knowing how to draft good talent, watching your competitors’ lineups and managing your bankroll. It’s more complex than it sounds. Entire books can be written on each of those steps.

For example, bankroll management entails more than just knowing how much money you have in play. It also takes into account how to get through losing streaks, splitting your roll between low-stakes and high-stakes contests, and, of course, paying taxes on your winnings.

I’ll boil down the most important points in this two-part series.

Updated for 2019-2020 NFL season

A Crash course on Winning at DraftKings

The current landing page at DraftKings. Cannot help but notice that you’ll get a free entry with your first deposit!

Since NFL is the hottest fantasy sport by far, I’ll use examples from football. But don’t let that throw you. The 10 points we’ll cover below and in an upcoming post apply whether you’re playing daily fantasy baseball, golf, hockey, basketball or any other sport.

Let’s get on with the first key…

Adjust Your Draft Strategy By Contest Format – Cash Game or Tourney

How Much Does Draftkings Take From Winnings

That advice might seem trite. But contest format plays a huge role in how you draft talent. Your priorities will change with the size of the contest and its payout structure.

We’ve talked about this in the past, mostly as it pertains to guaranteed prize pool (GPP) tournaments and 50/50s (cash games). Here’s the gist:

Cash game line-up’s vs GPP Tourney line-ups.

If you’re playing in a large-field tournament, the payout structure is going to be top-heavy. Approximately 10-15% of the field will end up in a cash position, and most of the money will go to the top 10 players. That being the case, you need to take risks to land in a cash position. You need to draft guys who might have a breakout night.

If you’re playing in a 50/50, the payout structure will be flatter. Half of the entrants get paid, and everyone gets paid the same amount. You don’t need to take as many risks because you’re not trying to land in the top 10 of the field. You just need to end up in the 50th percentile.

Here’s one way to think about the draft – the flatter the payout structure, the more guaranteed points you want to log. That includes 50/50s and head-to-heads. The more top-heavy the payout structure, the more breakout performances you need if you hope to cash.

Tread Carefully When Drafting Sleepers

Everyone dreams of picking a sleeper who breaks out and has a huge night. The team owner not only cashes, but ends up looking like a fantasy sports master. When it works, it almost seems like magic.

The problem is, most fantasy players find that picking sleepers rarely works to their advantages. They pick speculative talent, hoping for a miracle. But when the dust clears, they find their sleepers still sleeping.

It’s not that picking sleepers is a bad fantasy play. It can work stupendously well if you know what you’re doing.

That’s the key: being selective.

Remember, a low salary doesn’t imply hidden talent. More often than not, it means the player isn’t expected to turn in a major performance that week.

Drafting sleepers can be a great tactic in building a winning roster. But picking players who break out takes research and a fair amount of luck. It’s not just throwing darts at a board. Listen to the talking heads each week but remember that so are thousands of others. Find those guys who aren’t being talked about so much but who look like they might end up with quality playing time due to an injury or opponent or other myriad of factors.

Check The Latest Injury Report

This should go without saying. But every day, fantasy players at DraftKings clearly forget to check the injury report before constructing their lineups. When game time arrives, they’re stuck with players who end up missing their games.

For example, according to the latest NFL injury report (at the time of writing), the Falcons’ Jeremy Langford is out with an “undisclosed injury”. Is he going to make their first season game against the New York Jets? Who knows? He’s currently listed as “Questionable”. If he ends up missing training camp or some games, you don’t want him on your roster.

The same goes for Jaelon Acklin, wide receiver for the Baltimore Ravens. He’s also dealing with an undisclosed injury and may miss training camp and/or some games. Will he play that first week against the Jaguars? At this point, it’s anybody’s guess. His status is also listed as “Questionable”.

The point is that you should always check the most recent injury report to make sure your lineup is filled with guys who are going to show up. The last thing you want to do is waste your salary cap on players who will add zero points to your score and your chances to win.

Learn How To Work DraftKings’ Bonus Points

The scoring system at DraftKings includes a few bonus items that a lot of team owners neglect. If your players hit certain numbers, you’ll earn extra points!

Take a look at the DraftKings’ scoring system for weekly fantasy football. Hidden in the numbers is a 3-point bonus if your QB passes at least 300 yards. You’ll also receive a 3-point bump for logging at least 100 rushing yards. And you’ll receive another 3-point bump for logging 100+ receiving yards.

You want players who can turn in those numbers.

QB Bonus Points
In the QB slot, that means keeping an eye on Ben Roethlisberger, Patrick Mahomes and Matt Ryan for starters heading into the season. They were the head honchos for QBs last year, will they do it again?

Your receivers can bring you a lot of bonus points. You have 3 WR slots to fill at DraftKings, and each one can potentially earn you 3 points by receiving 100+ yards. Julio Jones, DeAndre Hopkins, Mike Evans and Tyreek Hill,lead the pack last season. Each one turned in an average of 100+ yards per game. Again with these gentlemen, will they be able to do it again?

The rushing bonus at DraftKings is tougher to earn. There are two reasons. First, you only have two running back slots to fill at DraftKings. There isn’t as much opportunity in your roster as you have with your three receivers.

Second, there aren’t a lot of RBs who maintain an average of 100+ rushing yards per game (current group).

Bottom line: the bonus points at DraftKings can come in handy, especially when you’re trying to squeak past other team owners in a small league or 50/50. But don’t rely on them. They’re tough to earn.

Establish Your Bankroll Metrics

As I mentioned earlier, bankroll management in daily fantasy sports involves more than just keeping track of how much cash you have at risk. You need to start with a plan that gives you control over your daily and weekly spend. Then, you need to figure out how many bets you should have in play at one time.

The most reliable way to do that is to come up with a formula that reflects your results. As you win more contests, your optimal number of bets will change.

Here are a few guidelines I recommend if you’re just getting started in fantasy sports.

First, limit your daily spend to 10% of your entire bankroll. If you deposit $200, don’t risk more than $20 in entry fees each day.
Second, track your wins and losses. Make a note of the date, sport, contest format, field size, entry fee, and dollars won or lost. It doesn’t matter if you do this with a legal pad and pencil or on a spreadsheet. I prefer the latter since it allows me to sort the data. The most important thing is that you do it.
Third, use a formula that takes your results into account to determine how much money you should risk each day (or week for fantasy football). There are several formulas you can use. A lot of veteran fantasy players use the Kelly criterion. We’ll discuss that method, as well as other bankroll management issues, in more detail in the near future.

Those are the basics when it comes to bankroll management. The key is to reach a point where you don’t have to think about how much to play. Your metrics will lay it all out for you.

This is only Part I of a two-part series of playing and winning at DraftKings. In Part II we’ll cover the final 5 keys to daily fantasy sports success at DraftKings. You don’t want to miss it!

More Awesome Reading Awaits!

DraftKings review.

[toc]DraftKings and FanDuel make their money in one major way: Taking a cut of the entry fees to their daily fantasy sports contests.

The cut that they take went up in some of their NFL contests, a move that was not popular with a wide range of their most loyal users on social media on Monday.

What is rake in DFS?

First, here’s a quick primer about “rake” in DFS, in case you’re not familiar with the concept.

When a DFS operator creates a contest, it has a prize payout and a maximum or required number of entrants. The difference between the entry fees paid by players and the prizes paid out is the “rake.”

This is where revenue comes from for DFS operators.

There are two types of contests, generally:

Contests that must fill to run, generally with a small number of entries. These contests always have a static rake.
Guaranteed prize pool (GPP) contests, which can have hundreds of thousands of entries. These run regardless of how many people enter. As a result, these have an “effective rake” if they fill (which they usually are designed to do). In reality, the rake can vary depending on how many people actually enter. If a contest doesn’t fill, its effective rake goes down.

The easiest place to see rake on display is in two-person “head to head” contests. For example, H2H contests at DraftKings and FanDuel with a $10 entry fee award $18 in prizes. Since users are paying in $20, the rake is $2.

What happened Monday with rake

It’s important to note that increases were not across the board, and were actually fairly minimal. But rake has crept up at DraftKings and FanDuel over the years. And then Monday saw increases in some large GPP contests, to a rake of 16 percent in some cases.

Monday’s increases were apparently a bridge too far for a number of players who were upset with the changes, some more vocal than others:

https://twitter.com/AndrewWiggins/status/912390893885444096

Looks like @FanDuel stealth raised the rake too. @FantasyDraft and @YahooFantasy about to get all my money. Speak with your wallets! pic.twitter.com/4BEXBtyiev

— Aaron Hendrix (@aaronhendrix) September 25, 2017

I, for one, will be making @DraftKings lineups while kneeling this week in protest of the rake increase and exclusion of SNF. Join me.

— Dan Gaspar (@MrTuttle05) September 25, 2017

DraftKings’ take

DraftKings co-founder Matt Kalish offered that the latest increases were small in the grand scheme of things, and that the money it takes in is often reinvested in its product.

“DraftKings is committed to providing the best value to daily fantasy sports players of all experience levels,” Kalish told Legal Sports Report. “We’ve invested more than any DFS provider to create the best platform with the most sports and contest types, the largest prizes and the biggest active player base.

“While we understand our players want the lowest commissions possible, in order to continue offering an unmatched level of service and innovation, we have raised our rate by less than 1/3 of a percent in aggregate, which enables us to make important investments to grow the industry.”

Also on Monday…

The rake increases also came as DraftKings took the Sunday Night Football game off of its “main slate” of contest — the one that includes the Millionaire Maker among many other contests. That’s another move that was widely greeted as unpopular, and primed the pump for displeasure with the rake increase.

That decision was explained thusly by a DraftKings representative:

https://twitter.com/JonAguiar/status/912349919809327104

How Much Money Does Draftkings Take From Winnings

Of course, Monday Night Football used to be part of that same “main slate” and was dropped previously, as well.

Rake and the DFS industry model, ecosystem

Let’s start here: No one likes paying more rake. That’s always been the case in online poker, and it’s the case in DFS.

But the rake, as it increases, makes the contests more difficult to be profitable for anyone, including high-volume pros. The more money being paid to the sites means less money going to players.

Therein lies the rub. DraftKings and FanDuel make their money from rake. And there are basically two ways for them to increase how much money they make:

Acquiring a lot more customers that pay rake.
Make existing and future users pay more rake.

While DFS is growing, it’s not at the fast rate that had been forecasted in the salad days of 2015, when both sites raised hundreds of millions of dollars.

In the wake of a merger that didn’t go through, both sites have to focus on turning their companies into profitable ones. That means trying to make more money. And making more money could be done by raising rake.

At the end of the day, market forces will determine if the rake is actually too high. Will people actually stop playing, or is there a tipping point at which rake is simply too high to sustain the ecosystem? DraftKings and FanDuel would certainly lower the rake if that became evident.

Alternatives to DraftKings and FanDuel?

Some players have said they’ll move their action away from either DraftKings and/or FanDuel in protest.

The proof of that is in the pudding, of course; the combo of the SNF decision with the rake changes seems to have annoyed players at DraftKings more than its competitor. But there’s no denying that DraftKings has bigger contests and more liquidity right now, so it’s not likely a protest will hurt unless it becomes widespread and longer than a week.

Where once there were a number of sites that might cash in from displeasure with DraftKings and FanDuel, the list of DFS operators today is fairly minimal. Those that adhere to the salary cap model are basically just Yahoo and FantasyDraft. Other alternatives in the DFS space with a different way to play are Draft and Boom Fantasy.