We study contextual bandits in the stochastic i.i.d.\ setting, where a learner observes contexts drawn from an unknown distribution, selects actions from a finite set
A, and aims to identify an approximately optimal policy from a given class based on bandit feedback. Motivated by bandit multiclass classification with zero-one rewards, we focus on the \emph{
s-sparse} setting in which, for every context, the reward vector has
L1-norm at most
s≪∣A∣. Our main result is the design of algorithms that, with high probability, output an
ε-optimal policy compared to policy class
Π using
O~((s/ε2+∣A∣/ε)log∣Π∣/δ) samples. We extend this bound to general Natarajan classes and complement it with a matching lower bound (up to logarithmic factors), thereby closing a substantial gap left by prior work (Erez et al., 2024, 2025), which incurred an additional
Θ(∣A∣9) dependence. We obtain these results via two complementary approaches. First, we analyze contextual bandits through the lens of contextual decision making with structured observations, designing an exploration-by-optimization algorithm whose sample complexity is governed by the \emph{decision-estimation coefficient} (DEC; Foster et al., 2021, 2022). We show that, with
s-sparse rewards, the induced model class admits a sharp DEC bound that scales with
s and directly yields the optimal rate. Since this approach is largely information-theoretic and involves solving complex min-max optimization problems, we also develop a second, more specialized algorithmic method based on a low-variance exploration technique. This approach leads to concrete, tractable algorithms and naturally extends to contextual combinatorial semi-bandits, leading to improved sample complexity guarantees for bandit multiclass list classification.