Expected Value of MTTs vs. Cash Games and Opportunity Cost

bardorodeobardorodeo Red Chipper Posts: 32
Hi, This past week I crunched a few numbers on what I felt my EV for entering a bigger, live tournament in Vegas over at the Wynn. I used my personal stats of cashing 15% and winning getting to the final three spots about 1% to 2% of the time from 100+ live tournaments.

The model is just a simple EV calculation adding up the expected cashes for each place * the percentage of finishing in that place, and subtracting the entry fees, rake, and staff fees.

It turned out that this tournament would give a EV of double the entry fee. This MTT would take two days, possible 3 days of your time to finish in the top 3. So if you play cash as well you could argue that is doubling your entry fee on average is worth the trade off of not playing live cash games and giving up that EV?

I think of MTTs as more of shot taking for your bankroll and really only want to play ones with bigger prize pools. Otherwise it is seems to be best to just play cash.

Has anyone else done this type of calculation or comparison when deciding to choose if a MTT has a good potential ROI? Curious what other Red Chippers think.

Brad

p.s. Here are the numbers to see how I calculated it ( I used the 2016 results to get the prize pool values) :

Wynn Signature Weekend Back of Napkin ROI estimate
Buy In $600
Rake $55
House take $27,500
Guarantee $250,000
Entrants 500
Prize Pool $272,500
4% Staff $10,900
Final Prize Pool $261,600

About 11% to 12% of the field Cash
1st place 20% $52,320
2nd place 15% $39,240
3rd place 10% $26,160
4th place 7% $18,312
5th place 5% $13,080
6th place 4% $10,464
7th place 3% $7,848
8th place 2% $5,232
9th place 1.5% $3,924
10th thru 20th (Avg 1%) $2,616
21st thru 52nd (Avg 0.05%) $1,308

So, given this payout, an average (not world class) MTT player can expect to
Take 1st 1 out of 100 tournaments
Final Table 2 out of 100 tournaments
Make more than Min-Cash 3 out of 100 tournaments
Min cash 9 out of 100 tournaments

So the Expected Value would be
1st (1%) $52,320
Avg Final Table (2%) $26,596
Avg Medium Cash (3%) $2,616
Min Cash (9%) $1,308
No Cash (85%) -$600

EV = ( 85% * -600 ) + (9% * $1,308) + (3% * $2,616) + (2% * $26,500) + (1% * $52,320)
= $741.32

Comments

  • kageykagey Red Chipper, KINGOFTAGS Posts: 2,241 ✭✭✭✭✭
    so you spend 600 to win 141.32
    you play for 2 days... probably at least 8-hour days

    you're making less than 10 an hour.
    if that's better than your cash winrate, it's worth it.

    I don't see how it's worth it unless you're on a fixed income
    and don't want to risk more than 600 per week


    BTW - I don't know where you got your final table number, but 26,596 seems high.
  • kenaceskenaces Red Chipper Posts: 1,520 ✭✭✭✭
    not really sure about your math but if you are good at 2/5NLH cash and can make $40-60/hr I think your hourly in the cash games is going to be higher.

    You also didn't mention the tax implications/problems of bigger score in the MTT. Of course you personal financial situation is big issue in how much that may or not matter to you in the calculation.
  • SplitSuitSplitSuit RCP Coach Posts: 4,070 -
  • bardorodeobardorodeo Red Chipper Posts: 32
    Agree that a good mid-stakes cash player has a better EV in terms of their hourly Win-Rate. In terms of win rate I think playing cash is obviously a much more reasonable and a better option to slowly and steadily build a bankroll with much less variance and risk.

    I did this EV calc more as an exercise in comparing different ROI's of tournaments. And since I think MTTs should be treated as "shot taking" for the chance to win a ton of buyins.

    @SplitSuit I had listened to that episode a while ago (great episode!) and I remember the take away is to think in terms of the potential number of buy ins that could be won in a particular tournament vs. a cash game.

    So for example, on a good night you could expect to win (or lose) 2 to 3 buy ins in a cash game. In an MTT you have a very small chance to win over 50 buy ins in one event, but you are going to lose at least one buy in 85% of the time.

    Even with the correction of the "Average Final Table" number (Sorry) the number is for this MTT is still a positive one:

    So the Expected Value would be
    1st (1%) $52,320
    Avg Final Table (2%) $19,620
    Avg Medium Cash (3%) $2,616
    Min Cash (9%) $1,308
    No Cas (85%) -$600

    EV = ( 85% * -600 ) + (9% * $1,308) + (3% * $2,616) + (2% * $19,620) + (1% * $52,320) $601.80

    The way this EV formula works it doesn't say that I'm going to win $1.08, because the first term in the equation represents the $600 investment.

    I agree everyone's reason for playing poker is unique. Some people just play their weekly tournament for social reasons and the pure enjoyment of the game (and that is great).

    Brad

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