Satisfaction Guarantee

A lot of electrons have been spilled over the announcement that the 2015 World Series of Poker Main Event will continue to feature a $10 million guarantee for the first place finisher and World Champion of No Limit Hold’Em, with Daniel Negreanu leading off the critics just a couple days after the news broke. Negreanu tweeted that flatter payout structures and larger percentages of the prize pool being paid were more important than the large first-place prize, and many folks followed along.

It’s an odd argument that’s a little at odds with data. The trend in recent years has been toward a more graduated payout structure that pays more to the bottom end of the field, in addition to paying a higher percentage of the field overall. The modifications made to the payout formula to accommodate the $10 million dollar first place guarantee do have a negative effect on the payouts for the rest of the field (at least so long as the number of players in the Main Event doesn’t naturally support a prize of that size under the current formula), but that is negligible compared to the positive changes made to the payout structure in recent years.

In the 2003 Main Event won by Chris Moneymaker there were 893 entries. Moneymaker won just $2.5 million, and only 63 places paid, barely 7% of the field. Places 54 to 63 got just $15,000, a mere 50% profit on their buy-in. The next year, with nearly three times as many entries, 225 players (8.7%) were paid, but 181-225 just got their buy-in back, with another 100 players making between 50% and 100% profit. You had to make it into the top 3% of entries to get more than $20K.

In the “modern” era of the Main Event—i.e. in fields of more than 5,000 entries—the WSOP has paid out more money on the bottom end of the scale to more people than in the “old” days. This table shows the past ten years of payouts (not counting cases where players split minimum payments because they busted and split minimum payouts).

YearNumber of EntriesNumber of Scheduled Payouts% of Entries PaidMinimum Scheduled Payout
20146,68369310.37%$18,406
20136,35264810.20%$19,106
20126,59866610.09%$19,227
20116,86569310.09%$19,395
20107,31974710.21%$19,263
20096,4946489.98%$21,365
20086,8446669.73%$21,230
20076,3586219.77%$20,230
20068,7738739.95%$14,597
20055,6195609.97%$12,500

While the difference between the 10.37% of entries paid out in 2014 and 9.98% paid in 2009 may not seem that large, that’s 25 more players making it past the bubble than would have before changes to the payout formula were made in 2010. The real change for most players isn’t the $10 million guarantee for first knocking down the amounts paid to everyone else, it’s been an increase in the minimum payouts first implemented in 2007, and a smoothing of the payout curve put in place in 2010.

WSOP_payouts

 

Each line on this graph is made up of the steps in the payout schedule, with the first payout on the left and the largest on the right (the lines have different numbers of steps, because the number of payout levels varies from year to year). Lines indicate the beginnings of payout levels for places 10-99 and the final table. It makes clear the inconsistencies of the pay jump increases between 2005 and 2009.

In 2005, the WSOP rounded off payouts for the top two tables to multiples of $50,000 with a minimum of $1 million for anyone at the final table (something Negreanu was advocating) despite the top prize for Joe Hachem being “only” $7.5 million. The result was a very flat increase for places 4 to 9. Fourth-place finisher Aaron Kanter got $2 million, with the average increase between ninth and fourth being $200K. By contrast, last year William Tonking took down $2,85 million for fourth place, almost four times what Mark Newhouse got for his repeat ninth-place finish. The lacksadasical increase in lower half of the 2005 final table shows up as a dip in the dark blue line on the graph to the right of the line indicating the final table payouts, before it shoots sharply up at the right side.

2006 was almost an over-compensation. The amount paid to the minimum cashers was increased (nearly doubling the profit), but with 3,000 more entries and 315 more players getting payouts, the rate by which the payouts increased was incredibly flattened. Jamie Gold got a record amount on the top, but everyone between 45th and 126th places actually got less than the year before. 82nd place in 2005 paid $91,950 and just $51,129 in 2006, despite the fact that the bar to get there was far higher. The oddities didn’t stop there. If you look at the portion of the 2006 curve at the final table, there’s an odd downward bow caused by prizes between 7th and 3rd going from $2.4 million to $4.1 million, an increase of only 70% in four pay jumps. Comparatively, Jorryt van Hoof’s 3rd place money in 2014 was more than three times what Dan Singular took home for 7th.

2007’s payout structure went the opposite way. The first year after the passage of the UIGEA, numbers were down at the Main Event to 6,358, but the minimum payment was bumped to more than $20K. Players on the bottom levels got more back for their money. But that year the players near and at the final table took a hit, which you can see in the downward bulge of the curve on the right. There were about 750 more players in 2007 than 2005, but payouts at the final table were lower for all but the top three finishers. Players in the 10-12 payout bracket made just 80% of the $600K they would have gotten two years earlier.

Similar disparities can be seen in the lines for 2008 and 2009, with a radical shift visible in the 2008 payouts at the bottom end of the final table, where the rate of increase between payout levels goes from 52% (from the 10-12 level to 9) all the way down to 20% between 3rd place and 2nd place.

By contrast, the curves described by the payout levels for 2010 and later are all relatively smooth. The rate of increase between payouts is slightly different for each year, the number of entries is different, there are varying numbers of payout levels, and below 99th place, each level represents a differing number of players (groups of six or seven tables in recent years), but the wild reversals or surges of previous years aren’t there. The actual payout amounts for 2014, with the $10 million guarantee, are slightly depressed in some cases (there appears to be an anomaly in the way the WSOP is calculating payouts for places 9-18), and the increase in the spots that went up from the year before isn’t as high as it would have been without the extra money going to first, but the guarantee makes a far smaller difference to most players than the overhauls of recent years.

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