Size Does Matter

Hearkening back to the discussion of median return on investment (mROI) from a couple months back, what tournaments should you be playing to maintain profitability?

The big determining factor is your in-the-money percentage (ITM). If you’re some sort of poker god and cash in half the tournaments you enter, you should be profitable, assuming your mROI is above 200% (i.e. you aren’t always min-cashing). When you’re in the more mortal realm of 12% to 18% ITM, however, the math gets a bit murkier.

Let’s assume you have a solid but not outrageous ITM value of 14%. You’re cashing in about one out of every seven games, not just small games but across the board including games with more than 100 players. If you’re playing in casinos where tips are taken out of the total prize pool, your mROI needs to be +600% or better in order to be profitable. If you’re playing in something like Portland’s social gaming clubs where the winning players need to tip the dealers in order to keep the scene going, your mROI needs to be +440% or better to stay ahead. As an example of the latter, if you enter a tournament with a $25 buy-in, a $10 add-on, and a $10 door fee, your payout needs to be about $350; pay $35 as a tip and subtract $45 for other costs, and the remaining $270 buys you the six tournament entries you don’t cash in. Although the overall mROI for social clubs is lower, the tip means that the prize has to be a higher multiple of the other costs (buy-in, add-on, door) for a positive average return (+677% in the example above).

A $350 payout for a $25 entry tournament is a fairly decent-sized prize, though. Depending on the prize structure, that’s more or less the top prize of a $1,000 guarantee tournament with 25 or 26 players. The median payout in a tournament that size would be less than $300; unless you got the top spot, you’d be dragging down your mROI.

This is why the Poker Mutant is focusing on larger fields, these days. Aside from a preference for the blinds structures of deep stack games, larger fields are simply the only way to maintain profitability. A tournament like the Encore Club’s $25K Guarantee earlier this month paid 12 places with a scheduled median ROI of +490% (the 9-way chop actually made the median ROI +1150%). But that required a field of 150 players.

Small-field tournaments in Portland—i.e. those with 20-30 players—pay about 45-50% for the top prize, with three or four places total paying (before any bubble agreements), and with the median payout in the range of 20-30% of the pot. The pot to basic cost ratio varies considerably depending on the tournament structure and club. An 11am $250 guarantee freeroll tournament at Portland Players Club ($5 door, $5 pre-add-on, $10 add-on) with close to 30 players can generate a pot to cost ratio of nearly 25:1 with a third of the players re-buying (I don’t include re-buys in basic costs because as I’ve explained, rebuys are the death of ROI). That means the median payout in those tournaments is approximately 625% of your basic cost. If you tip your dealer 10% of your 625% prize ($125), your ROI for the game is +285%, which sounds great, but only if your ITM is better than 26%. Of course, if you win the top prize in that tournament you’re doing better, but then if you cash in third you’d better be cashing in almost every game you play.

Games that induce a lot of re-buys, like the afternoon Pot Limit Omaha Hi-Lo tournaments at The Final Table ($10 door, $20 buy-in, $10 add-on), can change the math a little. It’s not uncommon for there to be nearly as many re-buys as original entries, which can juice the pot a bit. One game late last year had 28 entries, 21 re-buys, and 22 add-ons, for a $1,200 pot (30:1). That’s still not a great number, though, with the median payout at just under 16% ($190), for a potential ROI of only +222%; more money but not as high a return as the median payout in the PPC game. Again, the top end does better—+450%—but that’s just keeping your head above water for someone with an ITM of 14% (and it means you need to take first place every time you cash).

Is there a sweet spot? Is there a magic number that makes it more likely that your tournament cashes will be profitable cashes? So much of that decision rests on variables like re-buy and payout structures, but in Poker Mutant’s humble opinion—in the world of Portland poker rooms, at least—you’re more likely to be profitable in events with 75 or more entrants. Apart from the opportunity of winning a big stake if you take down the top prize, which can have a pot to cost ratio of 20:1 or 30:1, the average cash in a field of that size is large enough to maintain profitability for most above-average players. You’ll still find Poker Mutant at the tables for smaller games, but our focus is on those bigger tournaments for the time being.

Anyone heading down to Reno for the World Poker Challenge?

Poker Mutant 2011 In Review

Since my concentration on live tournaments after missing out on my home league’s Player Of the Year WSOP buy-in pool and Black Friday’s crushing of the online poker action in the US, I’ve played 169 tournaments, mostly at Portland-area poker venues.

I had a couple of goals:

  1. Make it to the WSOP. I hoped to put together enough between 1 May and mid-June to make up for missing out on the POY pool, so I could play one of the low-end WSOP events and visit with Tomer. Two early wins at the PPC right off the bat gave me some hope, but times were tight, I had to dip into my poker bankroll for personal expenses, and June slipped away before I made it up.
  2. Make it to Prague. My next goal was to make it to the EPT event in the Czech Republic that started on my 50th birthday. Prague’s supposed to be a great place to be just before Christmas, I could take Ms. Poker Mutant with me for part of the trip, we’d make a little European vacation of it, and maybe I’d get lucky. Problem was, I figured I needed about $20,000 for travel expenses, the $7,500 EPT buy-in, and some money for side events that might make the trip worthwhile, poker-wise. Kept coming up waaaaay short until a win just a couple of weeks before I needed to be on my way made it possible—if unlikely—to build the roll up. No luck, but I tried.

I’ve played an average of 21 tournaments each of the last eight months. Thirty-one of those have been games where the buy-in was $100, $120, or $150. I played three tournaments at Foxwoods. And—briefly—the $2,500 Venetian Deep Stack Extravaganza IV at The Venetian. I’ve made the final table in two of the seven $10,000 guarantees I’ve played at the Encore Club, placing 8th in a field of 142 back when they were monthly, and taking first in a field of 75 since they’ve gone weekly. I also took second in their 138-player Tournament of Champions back in August. Got to play 2-7 Triple Draw the other day with a guy who was a hair’s-breadth from winning a WSOP bracelet. So even though my main goals were thwarted, not a bad year for the Poker Mutant.

The Recovery Act

Encore Club (5,000 chips)

A late game on the Westside seemed like a nice way to relax at the end of the day. The first hour started off quite well. A player two seats to my right was heads down over his chips and shoving late into the hand what seemed like a little too frequently. I picked up Ax8x and we played cautiously, with me catching third pair on the turn. He made a big bet on the river and I called with my eights, which were better than anything he had. That seemed to put a stop to the endless raising.

Got really lucky and picked up AxAx in late position, just watching people put money in, re-raised it well but not too much and was pleasantly surprised when there was an all-in to my left that let me push. The aces held up, I forced a re-buy, and things were looking good.

A couple of missed opportunities. Even with the chips I had I was loath to call some large bets with 3x3x in my hand but was really wishing I had when a 3x dropped on the river, with that set beating the two pair that won the hand. A 6x9x I dropped pre-flop would have made a Tx.

Another player fell victim to my play while I was speculating with 35. I had the flush by the turn, he didn’t seem to believe me, and the diamonds double-crossed him.

I was one of the bigger stacks at the table toward the end of the hour when I got KxKx. I was in seat #4 and the guy in seat #1 had been playing seriously and aggressively but he was well behind me. We were all-in before the river and the best he had was a gutshot straight draw to 8, but he made it and my kings were taken to the cleaners for 7,600.

Going into the break, I had 12,700 chips. I would have had about 30K if I’d won that last hand. From here on, it was harder going and almost all downhill, doing things like raising to 1,200 with AxTx only to have to fold when other stacks went all-in.

Got knocked down to 8,700 when I called a small stack all-in. We were heads-up but his KxKx held up against my Ax9x. I picked up blinds and calls with a suited AxKx all-in raise.

My big regret of the night? Laying down a 4x5x pre-flop from the big blind at 400/800 with just a 1,000 raise on top. There were five callers, the flop was Ax5x4x, and many thousands of chips went in before the river when another 5x was down. My full house would have been best. I can remember before tossing the cards thinking: “If only they were suited….”

Just 8,300 by the second break. Seat #6 had 40,500. My notes from the Tournament Director screen showed there were 14 of 33 players still in play. There were 10 re-buys, and the total pot was $1,075, paying 5 places.

I was out before consolidation to the final table, in 11th or 12th place. I had TxTx and re-raised all-in but got called by seat #1 who had enough chips he wouldn’t notice a loss. He showed very low connectors but managed to pull a 6x-high straight.

D and I had discussed playing in some of the $40 satellites to the Mizrachi/Levy $340 tournament this weekend, but my schedule just wasn’t working out for it.

In other news, @pokermutant is now followed on Twitter by Portland-based online player Dusty “Leatherass” Schmidt and I’ve got copies ordered of his Don’t Listen To Phil Hellmuth: Correcting The 50 Worst Pieces Of Poker Advice You’ve Ever Heard and Treat Your Poker Like A Business (although I’m rather hoping my poker playing is more successful than the various business ventures I’ve been involved in).