Keys to Tournament Success - Payout Structure

In tournaments, the amount you win in chips does not correspond to the amount of money that you win. If you were playing a cash game and won all the chips on the online poker table, you would take all that cash home, you wouldn’t have to give away 75% or so of it to the losers, depending on how recently they lost. That simple fact makes for some tricky adjustments in strategy.

In tournaments, the winner takes all the chips, but only a fraction of the money. That leads to some significant strategy corrections. For one, it privileges sticking around, even with a low chip stack and little chance of actually winning. Some plays that have positive Expected Value (EV) in terms of number of chips, have negative EV in terms of actual cash payoff. In other words, a chip gained is worth less than a chip lost.

Whenever you play a tournament, you have to be aware of the payout structure. Let’s take an obvious example. Say you’re playing in a satellite where the top four players win an entry into a big tournament. Everyone else gets nothing. There are six players left, and you have the second biggest stack of chips. Three of the players have very very short stacks. The one player with more chips than you goes all-in. You have pockets aces; what should you do? It’s obvious, fold! Having a monster stack (the result if you win) doesn’t mean anything, as you’re very likely to take one of the prizes anyway. Even though the chip EV of calling would be very high, your cash or prize EV is extremely negative.

Here’s another, less obvious example. You’re at the final table of a tournament, where there’s a big jump in prize money with each place, but no special incentive to win 1st place. This is called a “flat” payout structure. You have a decent chip stack, and someone that has you covered goes all-in. You know that his range of hands is pocket pairs JJ or higher, and AK or AQ (either suited or unsuited). You have QQ. In this situation, you have a 51.3% chance of winning. Plus, there’s some extra blind money in the pot, so your chip EV is positive, and somewhat substantially so. However, it’s correct to fold here. You can make extra money just by waiting for some of the small stacks to drop, so why take a 51/49 chance of going out? You would call here if you were short stacked, however.

The lesson here is that you must be aware of the payout structure of the tournament that you are playing in, and adjust your strategy accordingly. If the payout is top-heavy, meaning there’s a really premium in coming first (and maybe second or third), you can basically use your cash game strategy. If the payout structure is flat, you have to tighten up significantly with a large stack. If you’re playing a satellite or other unusual structure, be prepared to make very significant strategy changes.