Tournament Poker is Swingy
I think another important factor that has played into the successful tourney trend is the finality that comes from one player winning. The game has a resolution that is simply missing from cash game play. I think there's a certain allure that comes from one player capturing every chip in play and being crowned the champion. It a nutshell, the tournament environment effectively captures the essence of competition. Its success has been fueled by our human natures' inherent competitive drive. Despite the recent tournament poker explosion and the infatuating nature of the format, most professionals agree that the best way to make a steady living at poker is to play the cash games. Don't worry, I have a solution.
The biggest obstacle one encounters when playing, exclusively, tournament poker is the detrimental risk it can put on your bankroll. Even the best player in a 1,000 player tournament has only a very small chance of making final table money at the event. The swingy nature of tournament play is just too volatile for most players who intend to make or supplement their income thru tournament poker.
Tournament Play Example
I'd like to use a very simple example to illustrate the variance of tournament play. The simplest way to show my point is to invoke a make believe tournament poker league with imaginary players. The tournament is a 100 player; winner takes all NLH tourney. It has a buy-in of $1,000.00 and takes place every Saturday and every Wednesday of every week. Our competitors are all very new to the game. All of them, that is, besides Texas Donny. Texas Donny has more experience than all of the other players combined. Texas Donny sees a tremendous opportunity to profit against all of these newbies. So much so, in fact, that he has decided to commit his entire bankroll to these events. Texas Donny has been experiencing some money trouble as of late and his total bankroll is down to $8,000.00. Not to worry, he figures, it'll just take one win to bring that roll up to $100,000.00.
Let's assume that Texas Donny is so much better than the other players that he is three times more likely to win this event than any of the other players. That is actually a remarkable edge, as even the very best tournament players in the world are hoping to make a 100% return on investment. So, what's the most likely outcome of this little thought experiment? Well, the most likely scenario is one in which Texas Donny reduces his entire bankroll to zero on game eight and has "gone bust".
Was Texas Donny wrong to believe he was in a statistically favorable situation? Absolutely not, Texas Donny should expect a 200% return on investment in the long run, say over 100 games. He should lose 97 times and win 3 times. He will put up a total of $100,000.00 over the course of 100 tournaments and walk away with $300,000.00. The mistake Donny made was to ignore the concepts of "variance", and "risk of ruin". Mathematically Texas Donny had to win one of these tournaments before he lost eight of them. If he is three times more likely to win than any one else he still only has about a 24% chance of winning one in eight of these games. That means he has a 76% risk of ruin. That's bad. Math savvy poker pros usually like to use bankroll management techniques that limit their risk of ruin to an estimated 2%. So, Texas Donny is most likely broke in eight games. So, I think we've identified the problem, lets see if we can find a solution.
Texas Donny goes broke on game eight, but he's got an idea. He has a gang of ten friends of his that all play at exactly the same skill level, and one of them owes him $8,000.00. They are all in similar financial situations, in fact, after Texas Dutty pays his brother the $8,000.00 he owes him, they each have exactly $8,000.00. Texas Donny proposes that they all play together. NOT colluding or cheating in any way at all, the idea is simply to share there winnings in order to reduce the variance of the situation and drastically decrease there over all risk of ruin. I think Texas Donny is brilliant (in case you haven't figured this out, I'm Texas Donny). By playing as a tournament team they will effectively be pooling there bankrolls and increasing the rate at which they should statistically be able to turn a profit from the tournament league.
Let's look at the math again now that we've established a team of ten players, each with a 3% chance of winning a 100 player tournament. If each of ten players has a 3% chance of winning they have a combined 30% chance of one of them winning any particular tournament. They still only have eight trials in which one of them must win for them to not all go bust. In simple terms, it should only take 3 or 4 games for one of them to grab the $100,000.00 pay out. Split ten ways the pay out will be $10,000.00 each as soon as one of them wins one. Assuming that occurs twice in eight games our team should be able to turn a consistent profit with a relatively low risk of ruin. Still a bit higher than 2%, but only until there first win. We should also ask what effect this team should have on each player's individual return on investment. That's just more good news. Assuming all of the players are equally skilled, and each is three times more likely than the average player to win a single event, there return on investment will actually not dip far below the 300% mark. The only reason it dips at all is due to there now only being 90 players each of our team mates has a 3 to 1 advantage over, instead of 99. The difference relatively negligible and is more than made up for by the rate at which they will likely earn money and the reduced volatility or risk of ruin.
The example above is a simplified and imperfect representation of the most common reality of team play. In reality, there are not many players who have a 3 to 1 advantage over a field of other players at a $1,000.00 buy in event, and there are very few "winner takes all events". The concepts I've described in this article are, however, very applicable to even 50 player tournaments with each of your team mates having smaller edges on the field and with a more standard pay out structure.
I've just explained to you exactly how I play tournament poker. I can tell you from experience that it does work. I can also tell you from experience that there are some small problems you can run into in the real world of poker team play. I plan on writing a follow up to this article, in which I will lay out some of the things I've learned playing on a team for the last few years. I'll leave you with a few suggestions though. Just some things to think about if you decide to implore this method.
Tournament Poker Advice
The biggest advice I can give you is to be very, and I mean very selective as to who you include in the group. I'd also suggest using a very formal and specific try out method. Remember, if one of the players in your group is playing at a level that is below average for the field, you are actually taking a loss on that player. You should also keep in mind that certain players may not bring their "A-game" to the table when they know there are other players who can make them money. My team uses this idea to keep players motivated, we always bonus the player who cashes the highest in a tournament. Typically we allow the player(s) who cash an event to pull their buy-in out before we distribute the winnings. We also free roll the team member who finished in the highest money for the next event. In other words, the best money finisher on our team will have his buy-in paid for by the rest of us in the next tournament we play. That does cause some complications, and I'll address them and some of the remedies, along with some other advice on building and managing a poker team when I write the follow up to this article. Until next time, Good "Luck!"
♣ More tournament strategy from Dead Money: Tournament vs. Cash Games.
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