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Poker Tournaments And Hedging

by Ed Miller |  Published: Jan 03, 2018


Gamblers are funny. They come to the casino, to the cardroom, to the sports book, to gamble. Most of them aren’t getting the best of it, so they’re trading some long-term losses for the short-term thrills of being in action. That makes sense.

The funny part is that in many cases, just when they’re about to catch that big win they spent all this time gambling to get, they desperately want to buy out of their position. Here’s an example.

A popular way to bet sports is the big parlay. You can bet many games on one ticket, and if you win every single one, you get paid big odds. For instance, if you pick eight NFL games against the spread if you win them all you get paid 150-to-1. So let’s say you pick seven games on Sunday and then the Monday night game, and you bet $100 to win $15,000.

At the end of Sunday, you’ve won all seven of your Sunday games. Just one more win tomorrow will get you the $15,000. But if the Monday game loses, your ticket is worth $0.

All of a sudden you realize that you’re now just betting $7,500 straight up on one game. You also realize that this is something you’d never actually do—walk up to a window and bet $7,500 on a football game. Sure, $100 a weekend is no big deal. But $7,500 is way beyond what you’re comfortable with.

So you try to hedge the ticket. You try to find someone who will buy it for $7,300 or $7,000 or $6,000. Or maybe you just bet on the other team (paying the bookmaker’s vig). For instance you could bet $7,875 on the other team (laying the standard 11-to-10). If your original team wins, the parlay ticket cashes for $15,000, but you lose $7,875 and you’re up a net of $7,125. Or if the team you bet on wins, then the parlay ticket loses, but the bet you made won $7,159. Either way you come out with nearly the same amount.

But here’s the silly thing. You aren’t obligated to pick eight games when you bet the parlay. You could pick seven games at 75-to-1 odds. If you’d done that in the first place, you’d already be cashing your $7,500. Adding that eighth game—a bet you never actually wanted because it was too much gamble for you—ended up costing you over $300 to get out of.

Gamblers are lured in by the big paydays. But the big payday bets are often mathematically equivalent to winning a series of smaller payday bets. Bet $100 and win it’s $200. Bet $200 and win it’s $400. And so on. Pretty soon most people who are interested in betting $100 in the first place want to quit the game and walk away—at $800, or $1,600, or $3,200. Not too many will put that $51,200 up to try to win $102,400.

If you make the bets in a series like this, walking away is free. But if you prepay the series—like the big parlay—you can’t walk for free. You usually have to pay your way out. Why sign up for a bet in the first place that you are just going to want to pay your way out of?

It pays to think ahead, decide exactly how much you want to gamble near the end of the bet, and stick to those stakes. If your limit is $7,500, then stick to seven games. Or pick eight games, but only put $50 on it in the first place. A little foresight could save you a lot of grief.

Poker Tournaments

Maybe you already see the parallels here to poker tournaments. Poker tournaments have defined entry fees, but undefined prize pools. How much you can win depends on how many are in the tournament. Not all $100 tournaments are created equal. There’s the local $100 tournament with 100 entries. And there’s the online $100 tournament with 10,000 entries.

If you get to the final table in the first one, you’re playing for a few thousand dollars. Probably no huge deal to the typical $100 player.

If you get to the final table in the second one, you’re playing for a few hundred thousand dollars. The average $100 player would feel those stakes in a serious way.

Tournament players often try to make deals to try to lower the stakes at the end of a tournament. But not everyone is going to make a deal—after all many who play a tournament with hundreds of thousands at the final table actually want to play for that much. Most poker players will make a deal if you’re willing to give up enough in the process.

It may feel like a “win” to get to the final table and cut a deal that costs you “only” a few thousand dollars of equity. But when deciding to play the tournament in the first place you were probably thinking about how soft the field is. And how you would have an edge against those players. But if you aren’t factoring in the fact that you’re going to light thousands of dollars on fire and be happy about it every time you make the final table, then you’re missing a big part of the EV equation.

So what should you do?

If it’s a once-a-year thing like entering the Colossus at the World Series of Poker for $500 with a massive prize pool, don’t worry about it. Getting to the final table of that one is a once-in-a-lifetime break, and if you end up dealing away a little money to lock in a win, oh well.

But if you play tournaments a lot, you’ll likely be entering ones with varying size fields and prize pools. I know many tournament players who will try to make a deal at every final table of every tournament, almost no matter how big or small. They’ll play a one-table satellite and start trying to make deals with four players left.

If you do this in every tournament you play, you are absolutely killing your bottom line. Stop it. Play smaller. Or better yet, just train yourself to accept that sometimes you’re going to stone bubble and it’s not the end of the world.

Often players are attracted to tournaments because of large guaranteed or expected prize pools. For many players, this is exactly the wrong type of tournament to play. Because obviously it’s when the prize pools are large that people are most desperate to try to deal.

If you’re ready to gamble in these big pool events, then go for it. But if you know you’re likely to want badly to hedge if you make the final table, then be honest with yourself, skip the big prize pool, and play tournaments that make you comfortable. ♠

Ed MillerEd’s newest book, The Course: Serious Hold ‘Em Strategy For Smart Players is available now at his website You can also find original articles and instructional videos by Ed at the training site