Since writing my last article on effective tournament buyins, I've become obsessed with the subject. Like a melody that plays over and over again in your head, figures of tournament rakes, buy-ins, and percentages have been swirling in my brain like numerical alphabet soup.
Determined to find some answers, I attended a recent Heartland Poker Tour event where the direct buy-in was $1650, no add-on. The number of entrants posted was 76, with no total prize pool posted. I posed this question to 15 players: "What is the actual rake and/or percentage that you are paying to compete in this tournament?" Of course no one knew because the actual prize pool wasn't posted. What surprised me was that these players did not consider their ROI. Here are some of their answers:
1) One player calculated $1650 x 76 on his cell phone; he answered that the prize pool was $125,400. Wrong.
2) Another player stated that $50 was withheld from the buy-in, making the prize pool $121,600, the actual rake being $50, or 3 percent. Wrong again.
3) The majority of players assumed that the $1650 buyin translated to $1500+$150, thus making the prize pool $114,000, resulting in a 10 percent rake. Wrong again.
4) Several players stated that all tournament rakes are basically the same. Wrong. The actual figures for this event:
Total Prize Pool: $106,266. Entrants: 76. Actual Buy-In: $1650. $106,266.00 / 76 = $1,398.34. Actual Rake = $251.66 or 15.25 percent.
I researched the percentages from the past three years of HPT events. Arriving at an exact figure is difficult. Buy-ins can vary from different hosting properties, and additional prizes and/or seats into another event can also be a factor in the amounts of the prize pools. Here's an effective way to calculate a tournament ROI:
1) Total prize pool divided by the number of entrants = your actual investment into the prize pool.
2) Total buy-in amount minus your actual prize pool investment = actual rake.
3) The percentage you are paying to enter the tournament = the percentage of total buy-in/actual rake. You can figure it will cost 13-15 percent of your buy-in to compete in an HPT event. Taking it one step further, I calculated the qualifiers, as the majority of buy-ins are posted as $300+$40, also coming in at a 13 percent rake. Most of the 2008 HPT prize pools have been lower than those in 2007, and I wonder if the rake could be a contributing factor. Arguably, it's not effective to use this method in determining ROI in player-based prize pools prior to entering a tournament; however, you can get the predetermined figures from the tournament venue for the percentage that is deducted from the buy-in. Most poker rooms do post the financial details of their tournaments in advance of the actual event. This information is also often posted on the internet, making it easy to find the most profitable venues.
Comparatively, an example of an excellent value for a tournament ROI is The River, WinStar's new megaevent.
The structure is as follows:
Total Prize Pool: $3 million. Entrants: Capped at 1,500. Actual Buy-In: $2,000+$100. $3,000,000.00 / 1,500 = $2,000. Actual Rake = $100 or 5 percent maximum.
Millions of dollars are up for grabs, for a nominal investment. WinStar Casino is located in Oklahoma and is home to one of the country's top poker rooms. The $3 Million Guaranteed River Tournament is part of the WinStar World Championship Series, currently underway, with the final tournament taking place August 17th-23rd.
For additional details about the WWCS, call 1-800-622-6317, or log on to winstarcasinos.com. You'll find details of "The World's Biggest Deal" as it unfolds in upcoming issues of Poker Player, including additional WWSC news, and coverage of the finals.
In conclusion, take some advice from a banker's daughter: Maximize your bankroll by always calculating your ROI before investing your money.
