Last week, on the 9/24/2010 edition of *Killer Poker Analysis*, one of the topics I discussed was the correct approach to cashout tournaments at Full Tilt. In cashout tournaments, buy-ins are split into two prizepools: a regular prizepool and a cashout prizepool. Typically, half of the entry goes to the regular prizepool, and the other half of the entry goes to the cashout prizepool. For example, in a $100+$9 cashout tournament, $50 would go to each of the prizepools.

The regular prizepool is awarded in typical multitable tournament (MTT) fashion. The cashout prizepool allows players to exchange their chips for cash in units of 10% of the starting stack. For example, in a $100+$9 cashout tournament where players start with 5,000 chips, players can cashout their chips in units of 500 chips (and the exchange rate would be ($50/5000)(500) = $5 per 500 chips). Once play reaches the final table, money remaining in the cashout prizepool is distributed among players using a chip proportional method (i.e. players at the final table receive a percentage of the cashout prizepool that’s equal to the percentage of total chips in play the have).

The most obvious question to ask about cashout tournaments is: “when (if ever) should I consider cashing out.” The answer to this question: *NEVER*. I talked at great length about this topic last Friday on *Killer Poker Analysis*. But the basic argument is that your total equity in a cashout tournament is the sum of two equities: your equity in the cashout prizepool and your equity in the regular prizepool. Players can only cashout with chips they have; therefore, your equity in the cashout prizepool is the same regardless of whether you cashout or keep your chips in your stack. Meanwhile, your equity in the regular prizepool is maximized by maintaining the largest stack possible – and the way to maintain the largest stack possible is not to cashout.

The example I used to illustrate this concept was FTOPs Event #24 (a $200+$16 cashout tournament where $100 went to the regular prizepool and $100 went to the cashout prizepool). Since this stuff is sometimes easier to see in writing, I figured that it would be good to write the example out here in my blog.

FTOPs Event #24 had 1,248 players, and the starting stack was 5,000 chips. The cashout exchange rate was 500 chips for $10. At the final table bubble, the average stack was 624,000. This means that a full cashout was worth (624,000/500)($10) = $12,480. Meanwhile, the payout structure for the regular prizepool was as follows:

1st: $28,800

2nd: $17,850

3rd: $12,375

4th: $9,525

5th: $7,275

6th: $5,325

7th: $3,900

8th: $3,150

9th: $2,400

10th: $1,875

The total of the remaining regular prizepool was $92,475. Suppose that all 10 remaining players had 624,000 chips. If all players are of equal skill, then each player would have $9,247.50 equity in the regular prizepool. Each player would have $12,480 + $9,247.50 = $21,727.50 in tournament equity. A player who cashes out for $12,480 at this point of the tournament forfeits $9,247.50 in equity. As a percentage of total equity, that’s about 42.56%. In terms of number of buy-ins, we’re talking about a catastrophic mistake on the order of 46 buy-ins.

I know, some of you might be saying: “You’re assuming that no one ever cashes out. It’s almost always the case that some players choose to cash out at some point, meaning that there wouldn’t be as much money in the cashout prizepool.” If there’s less money in the cashout prizepool, then each player would have less cashout equity and less regular prizepool equity. However, regardless of the exact magnitude of the mistake, the bottom line is that cashing out is a mistake – and you should be happy whenever your opponents exercise their option to cashout (regardless of whether it’s a partial cashout or a full cashout). Opponents who cash out:

1.) Aren’t taking away any of your cashout equity

2.) Are giving you some addition equity in the regular prizepool

Having driven that point home, let’s now move on to the more interesting point. Assuming no one cashes out on the final table bubble and that, in the long run, all players who real the final table will have the same stack on average, each player who gets to the final table gets (693,333/500)($10) = $13,867 from the cashout prizepool (693,333 is the average stack with 9 players left in the tournament). Because of how the cashout prizepool is distributed, the real payout structure in our FTOPs cashout example is as follows:

1st: $28,800

2nd: $17,850

3rd: $12,375

4th: $9,525

5th: $7,275

6th: $5,325

7th: $3,900

8th: $3,150

**9th: $16,267**

10th: $1,875

*9th place pays almost as much as 2nd place!!!* Is this going to impact your strategy with 10 players left? DAMN STRAIGHT! In fact, this is probably going to impact your strategy with 12 or 13 players left…and quite possibly beyond that. Survival is absolutely huge at this point of a cashout tournament. Because of that, you can’t call as often. At the same time, because your opponents can’t call as often, you should be stealing quite liberally.

Relative stacks are *extremely *important here though. The final table bubble is usually huge for all players if everyone has the same stack (I use “usually” to cover the cases where the remaining cashout prizepool is almost non-existent). However, if you have a very short stack, your situation is much different. Suppose that instead of having the average stack of 624,000, your stack is only 50,000. With only $50,000, your cashout equity is only $1,000. The prizepool looks something like this to you:

1st: $28,800

2nd: $17,850

3rd: $12,375

4th: $9,525

5th: $7,275

6th: $5,325

7th: $3,900

8th: $3,150

**9th: $3,400 + ? (where ? is probably on the order of $0 to $1,500)
**

10th: $1,875

It’s tough to know exactly what your expected stack would be if you were to reach the final table (which is why the “?” is included in the 9th place payout). However, it’s fair to say that 9th place pays something around 6th or 7th place for you (on average). As a result, your strategy is still going to be relatively tight here when it comes to calling. At the same time, your strategy needs to be aggressive – particularly when you’re in situations where you’re pitted against other short stacks. Overall, though, the adjustment from typical final table bubble strategy isn’t going to be as extreme as when your stack is average or above average.

Besides educating you about how to approach cashout tournaments, I hope this blog post teaches you a more generalized lesson: even the slightest change to a familiar game can alter proper strategy substantially! As always, do your homework!

May Your EV Always be Positive!

The Tsunami

Tags: cashout tournament, final table bubble, FTOPs, Full Tilt, payout structure

You Rock Tony! Thanks so much for the awesome analysis as usual. Really didn’t expect you to go into this as much as you did. But, I as well as my poker buds really appreciate your work!

-tb

Thanks…I try I think the effective payout structure in these tournaments leads to some really interesting situations.