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Listen to Buffett before you fill out that DraftKings lineup. Photo source: The Motley Fool.

Warren Buffett is certainly full of sage-like investing advice, but my favorite Oracle of Omaha quote is about another game of chance: "If you've been playing poker for half an hour and you still don't know who the patsy is...then you're the patsy." The quote, which can be applied to a variety of games, essentially boils down to this: You should know your odds of success before making a wager.

Of course, even the best advice is oft ignored. If you read any financial publication, you're probably well aware that playing the lottery -- in any form -- is a waste of money. The odds of a large payout are so low that many on Wall Street harshly refer to the Powerball lottery as "a tax on the stupid" -- and that was before the new rule change that makes it even harder to win the jackpot.

More recently, if you've watched television or browsed the Internet, you're probably well aware of one-day fantasy sites FanDuel and DraftKings, as their ad spots are seemingly constantly on screen. The slick ads, which seemingly show millionaires minted every day, forgets to mention that, if you haven't signed up for the service yet... you're probably the patsy, and will "win" at transferring your hard-earned wealth to fantasy's 1%.

A game of chance or a game of skill? Who cares, you're probably going to lose
Data from the Sports Business Journal, by way of Bloomberg, details how hard it is to win on a long-term basis on these fantasy-wagering sites. According to the article, "only 1.3% of players finished in the green" during the quarter year that the survey measured.

Bloomberg's article chronicled Saahil Sud, a math and economics student and data scientist who quit his full-time job to become a fantasy sports shark. And it's seemingly worked out well for him, as he has made more than $2 million year to date, and risks an average of $140,000 on any given day through a combination of lineups and contests to earn a return of 8%.

The new players, commonly called fish -- but a more apropos moniker should be chum -- are good for business. When asked if the increase in new players makes his, ahem, "job" easier, his response: "A lot easier." In a weird way, having sharks like Sud is a good thing for FanDuel and DraftKings, as it provides a powerful rebuttal against the charge that it's a game of chance, or gambling, which needs to be strictly regulated and controlled. Instead, this appears to be mostly a game of skill, which has an exemption, and has been essentially left to self-regulate (more on this later).

However, as far as actual chances of winning go, with such a low percentage of winners, do you really care if it's a game of skill or a game of chance?

What's worse than trading against sharks? Trading against sharks with possible inside data
It's hard to argue against what Sud is doing. After all, he's simply utilizing years of training and data savvy -- alongside a whole lot of capital -- to its highest and best use. Simply put, that's capitalism, and nobody is forcing users to take the opposite side of the bet. However, things become a little different when there are some sharks who are privy to non-public knowledge competing against the hoi polloi.

Earlier this month, DraftKings faced criticism after an employee prematurely released data with regards to contestants' lineups. The same week, that employee won $350,000 on a FanDuel site, bringing charges that employees may be using inside information -- as in percentage of contestants that own (and do not own) players -- a technique Sud noted provided a "particular advantage" in the Bloomberg article.

While it should be noted that an outside investigation, commissioned by DraftKings, cleared the employee of direct wrongdoing, mostly on the basis that the employee didn't have access to his company's data until after the lineups were locked, the episode raises concerns as to what information employees had, and a greater concern about integrity. In the end, this outside investigation may have absolved the employee of wrongdoing in this particular case, but seemingly on a technicality more so than on strong data and information controls. 

Now, employees are banned from playing on their sites and those of rivals, but a wide-ranging report detailing all employee wins, along with disclosures on what information they were privy to at the time of wager, would go a long way to restoring integrity.

After all that, if you're still convinced you will win millions on these fantasy-sporting sites, go ahead and sign up -- but don't say you weren't warned, patsy.

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