What is Overlay and How Can You Take Advantage of It?
The term “overlay” gets used a lot in Daily Fantasy Sports, and for good reason. Overlay isn’t just a huge source of theoretical edge, it’s a guaranteed edge. Unlike expected value or player “boom” percentages that are estimates based on simulated outcomes, overlay is a quantity that can be measured precisely. Nonetheless, it’s time to answer the what is Overlay DFS question.
Overlay means that the amount of prize money in a contest’s prize pool is higher than the number of entry fees. For example, if a DFS GPP has $1,000 in guaranteed prizes, a $10 entry free and 800 people enter, then there is $200 in overlay. The contest might pay out $1,000 to the top 200 finishers in that GPPs standings, but only $800 of fees were ever put in.
Keep in mind that this is only the case for Guaranteed Prize Pool tournaments (GPPs), although those are the contest types that you are most likely to encounter.
What Is Overlay DFS?
You’ll want to become adept at making an ad hoc calculation of the overlay relative to a contests “rake” when you view it in the lobby. DFS sites make money by having more entry fees than there are prizes. The contest that only had 800 people might have been intended to have 1,200. The additional $2,000 in entries (200 lineups at $10 apiece) is the rake that the site’s keep. This is sometimes also called a management fee.
The size of the rake can depend on the platform and on the field size, game type, and stake level. That’s a conversation for another piece. What you need to recognize for this purpose is not only that there is overlay in DFS, but how it benefits you as a player.
It’s always better to play in overlaid contests than contests that are completely filled. If the contest above had 1,100 entrants, the overlay would be smaller, but nevertheless it would still reduce the rake. Not to mention, the number of opponents you would need to beat to win, or to cash would be reduced as well.
Overlay above the rake is such a huge bonus to DFS players because it means that any lineup equal to any other in the field is guaranteed to have a positive ROI in the long run.
With an additional $200 in a contest like the one above, spread across 800 lineups, the value of any entry– all projections, construction or strategies being equal– would be $11.25. That is $1.25 more than the $10 entry fee. You would win $1.25 for every dollar you entered over the long run. In a game like DFS where a 5-10% edge is a big one, that kind of expected ROI is a big deal.
Of course, not every lineup is equal. If you make good use of our Stokastic projections and tools like our lineup generator, you will have an edge that increases your profitability even further.
It’s rare to find overlay that is very large, there is any at all. Platforms like DraftKings and FanDuel are experts at sizing contests with their customers in mind, using their own algorithms to predict demand on any given slate and sport.
Nevertheless, overlay does happen from time to time, and it doesn’t need it to be so large that the contest is rake free to make it worth your effort. A contest at normal rake would have each lineup, all things equal, being worth $8. So even with some entries out of the way, your ROI in an overlaid contest increases significantly.
Those situations are usually referred to as “reduced rake.” It’s a term you might hear on newer sites that promote rake free or reduced rake contests to build their user base.
Overlay DFS is Great, Learn Where to Find It
Given how difficult gaining and maintaining an edge is in DFS, you should always be ready to jump on overlay. You’ll hear our Stokastic crew shout it out often on The Deeper Dive and Live Before Lock when it doesn’t look like contests are going fill before the slate start. And sites like No House Advantage are always ready to give away overlay as they build up their user base.
These are opportunities that you shouldn’t pass up. That said, you still have to be aware of how much of your bankroll you’re committing into an overlaid contest. Although these are usually the highest EV situations that you will find in DFS, the increased ROI and reduced variance are just that. An increase in expected return and a reduction in variance. DFS will always be high variance. Cashing in an 800 man contest is easier than a 1,000, but it isn’t easy. Don’t go too far when you spot overlay, use it mindfully as a bankroll booster.
As you get more acclimated to the management side of bankrolls and overlays you’ll begin to become adept at spotting when and where overlay might pop up. The DraftKings and FanDuel lobbies have so many sports going on concurrently, and often at low traffic hours like mid-afternoon and late at night you can find contests that will never fill.
Don’t burn the midnight oil and oversleep your day job hunting for League of Legends overlay on the Chinese League of Legends LPL slate that locks at 3 a.m. ET. But don’t pass it up if for some reason you are in the lobby at that time.
These situations don’t just come up in esoteric sports like League of Legends or Tennis. The occasional NHL slate or NBA slates that locks during day time often have overlay. If you notice the contest might not fill, be prepared.
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Satellites, in Any Sport
One of the most common places to find overlay in any sport are satellites. A satellite is a contest that pays one (or a handful) prize at the top, which is usually a ticket to a larger contest at a much higher entry fee. Some satellites also award live final tickets. When satellites are filled, the number of entries pays the platform’s rake just like any other GPP. But it’s quite common that satellites do not fill, and depending on the sport, you can often pick off satellites with extreme levels of overlay.
The same warnings as above apply to satellite contests. You only win a ticket or qualifier by finishing in first place. When you do win, you will be winning an entry into another contest that you will also need to win, or at least cash in. That makes overlaid satellites highly plus EV situations, but one with high variance that can quickly punish your bankroll.
Be mindful of how often you take advantage of this strategy. Some pros like, Jordan Cooper have discussed only playing satellites that award tickets to DFS sports they would play in anyway, and that know that they will have an edge in should they take down the satellite.
Former Stokastic host and current contributor, Kyle Dvorchak has made satellite hunting a major part of his DFS strategy. He recently went into detail about the ins-and-outs of building a bankroll using satellites on Neil Orfield’s High Stakes podcast. You can find many more insights and nuances to overlay hunting in their conversation.
Now that you’re familiar with the concept and have Stokastic’s tools at your disposal, you can’t take your overlay capture to a new level.
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