Free money. Or, the "value of overlay"
By Steven van Zadelhoff
The game of online poker has changed over the last couple of years. There are more good players now then when I started playing poker. But does this mean it’s hard to make money?
I say “No”. You just have to keep your eyes open, to find the right chances. Let me give an example.
On Everest Poker, I have seen some overlay in some of the tournaments lately. I have the feeling that a lot of players still underestimate the value of overlay in online multi-table tournaments. In short for who’s new with this concept; It’s very common for poker rooms to guarantee a minimum prize pool to attract players. If the guarantee is higher than the total of the buy-ins from the players, the poker room puts up the difference from its own pocket. Needless to say, this is very, very profitable for the players. But let’s take a closer look at how big this value for the players exactly is.
We play tournament because we think it is fun, and/or because we think we play better than the average player. Let’s assume we are playing our regular tourneys with an ‘edge’ of 20%.
This would mean that if we bought in a tournament for $50,- we would, on the long term, win back $60,- from which $10,- is our profit.
What changes in our expected profit if a tournament has an overlay of, let’s say, 20%?
People might think that this increases their expected winnings 20% from $10,- to $12… but this is wrong. Let’s do the math:
As an example, we take a $50,- freezout on Everest Poker, with a guarantee of $5000,- This means that if only 80 people show up, we have an overlay of 20%. The players brought up $4000,- and the last $1000,- is put in the prize pool by Everest itself.
The value of our buy-in has increased now, even before we started playing! The $5000,- prize pool will now be shared by only 80 players, meaning every stack is worth $62,5 instead of the $50,- we bought in for. But on this $62,5 we still have our edge of 20%. So this makes our stack worth even more; $62,5 x 1,20 = $75,-
So it’s pretty easy to see now; the fact that we have an overlay of 20%, increases our expected profit from (60-50) $10,- to (75-500) $25,- ! Our profit more than doubles!
I hope everybody that reads this will see the full value of overlay now. If you are wondering how I am taking advantage of this free money: You can find me on the tables of Everest Poker, grinding it out. Come join me!
Steven van Zadelhoff is a professional poker player and member of Team Everest. You can also follow him on Twitter. Play poker with Steven today and download our free poker software!
