Comparison of luck factor in Cash and Tourney Games.

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Comparison of luck factor in Cash and Tourney Games.

Postby vaevictis » Wed Jun 25, 2008 7:09 pm

Cross-posted from: http://lesliepoker.blogspot.com/2008/06/comparison-of-luck-factor-in-cash-and.html

This article shall discuss the luck/variance factor and attempts to show the difference between Cash and Tourneys. (Readers please take note that I'm a primarily a Cash game player and thus they maybe be some form of inherent bias, but there is objectivity in the discussion that follows)

For the purpose and direction of this article, let us limit luck to the form of badbeats only (Times when you put your money in good, but end up bad). Speaking of positive variance is no doubt essential, but it is something we prefer and not dread aganist.


Main Premise
Be in Cash or tourney, the short term luck factor is the same. In X number of hands, on a reasonable luck, you will hit Y number of badbeats. However, we do not know in which sequence or series this Y number will occur. Yet surprisingly, this fact alone has different implications for both cash and tourneys.

Suppose in a span of 1000 hands:

-For Cash: having a bad beat stretch in the last 900-1000 hands is not a big deal. It is theoretically possible to regain your lost dollars and sklansky bucks in the future. As cash is played in a continual basis, having a bad stretch does not seriously matter.

-For tourneys: suppose that 900-1000 hands is near the region of your final table. Especially when the payouts are crammed into the top 3 positions and they are especially huge, having a bad stretch in that period have more sinister implications. If that bad stretch occurs early in the tourney, it probably doesn't matter as well since it will be hard to go deeper. (Note, I have not spoken of positive variance which may occur in the similar stretch, and in most tourneys, you need them to occur in the right timings in order to win big)

Deductions from example and through observations:

In tourneys, the luck factor, both positive and negative, appears to be more significant. The reason being is, I propose, that due to the nature of tourneys themselves, at the later stages, chip stacks are shallower, M's get smallers, there is more Preflop, less significant postflop decisions, and thus a Good players edge aganist a weaker player is more diminished. (Think about it, the number of mistakes made/hand by a bad player is at most limited to 1 or 2 streets, preflop and flop)

In cash, the luck factor is essentially non-existent by virtue of the law of large numbers.(see my sklansky bucks article). Most of the money is made postflop with deeper stacks than tourneys, and a good players edge aganist a weak player can be maximised through more streets of play. By increasing the no of mistakes made by players across all 4 streets of holdem, it appears in literal sense to double the EV compared to tourneys.

In tourneys, the heavy payouts and the "idea of higher variance" may give a player the appearance of being really good (when they are running good) or being really bad (when actually running bad). The nature of tourneys and escalating payouts makes the game impossible not to ignore the emotional aspect of poker in short term poker. You need to embrace this aspect to do well in tourneys.

In cash, the emotional aspect has to be dealt with differently. Short term wise, one has to be emotionless with regards to his results. In a sense, grinding cash game is more suited to the milder and less emotional temperament players.

Last but not least, its important to consider the long term aspect of winning players in these 2 games. In the long term, the good tourney and cash player, who ride through their variance train, will also come out winners. ROI of tourneys and ptbb/100 in cash ultimately translate to $/hr. However the path of getting to this $/hr is very different indeed. One is a gentler gradual path, the other is an emotional rollercoaster promising big rewards as well as big disappointments. One cannot ignore the fact that winning a big tourney has serious life changing implications - like Jerry Yang or Jamie Gold. But in all true sense you just need to be very lucky in order to take down huge tourneys.

Takeaways
A good understanding of the nature of different games helps in your game selection. Different games cater to different mental psyches of different players. If you find yourself liking the adrenaline of playing tourneys, and don't mind the variance train, by all means play them. If you are like me, who prefers to be able to maximise my edge on weaker players, being able to rebuy and sit back with donks, play cash.

While its important to be good in all areas, the saying of "Jack of all trades, master of none" is very applicable in poker due to the sole reason that all games are different and are catered differently for people with different needs and mental psyches. Try out different games, and select the one that best suits your character. It might do you good in the long run!
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby newbie » Wed Jun 25, 2008 7:25 pm

genuinely very good post.. i think tourneys are essentially too mechanical for amateur players to profit.. cash games, on the other hand, are more profitable in a sense that you're playing a style, your style.. in tourneys, most of the time, the stack sizes forces you to put in money when you know you're most likely only 50-50/60-40 and stuff. In my opinion, it's very sick in a sense that if you get sucked out lets say on the bubble, you feel like shit knowing the past two hours you've earned zilch.

An amateur trying out 10 tourneys and busting out on every one of them without making the money would have caused a great deal of damage to his bankroll, whereas in cash, if he's decent enough, he can at least be breakeven, earning from the rakeback and bonuses.

Just my two-cents.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby ohboy » Wed Jun 25, 2008 8:34 pm

basically, gambler's ruin sets in faster in tournies than cash games. That's what leslie's trying to say.

This is hardly surprising if one thinks about it for awhile.



Actually, let me elaborate on why gambler's ruin is so sick. It means that mathematically, if i have much more chips than you, I will eventually own all your chips even if you get QQ every hand and i have AK. That's right. In the long run, making mathematically incorrect plays can still win me the game in the long run as long as you 1) have much less chips than me and 2) cannot rebuy. That's why casinos win btw. It's not just because of the odds. In fact, it has very little to do with the odds=)

"In cash, the luck factor is essentially non-existent by virtue of the law of large numbers."

I would also like to point out that the law of very large numbers actually mean that the "luck factor" is always significant in a finite period of time. Your statement is simply a more sophisticated deviant of the gambler's fallacy=)
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby vaevictis » Wed Jun 25, 2008 8:58 pm

yep to ohboys post.

Interesting to know as well that the martingale system works theoretically should u have an infinite bankroll, but this statement itself is already an oxymoron.


And yes by "law of large numbers", luck plays a significant role in a finite short term period. Long term wise its inconsequential. I would flip a coin all day with a 70/30 edge even if i lost the first 10 or 100 flips. Thats basically what long term in poker is all about.


However I would like to disagree on ohboys view on "That's why casinos win btw. It's not just because of the odds. In fact, it has very little to do with the odds=)"
Casinos win by similar logic, by law of large numbers, flipping a one-sided coin (odds), as well as having an "infinite" bankroll. Show me a game, that doesnt have a house edge in casino (poker obviously doesn't have anything to do with the house, but the house still wins cus of rake), and perhaps your statement has some validity.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby newbie » Wed Jun 25, 2008 9:30 pm

blackjack at the casino in '21', i guess.. haha..
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby felixleong » Wed Jun 25, 2008 9:41 pm

Tournament Luck Factor can be very extreme, consider this event.
1000 entry freeroll, 1st place wins a 12.5k WSOP main event package

you got lucky most of the way and end up heads up with a 10 to 1 chip lead, but somehow you suffer a row of bad beats and end up 2nd place with nothing at all !!!!!!!
Imagine this scenario deep down inside your mind, how do you feel? Sad? Frustrated? Tilt? Mad?

But wait... its a freeroll and you didn't even spend a cent, but yet you feel like you lost so much!!!!
While this is an extreme example but it goes to show how sickening tournament swings can be, and how big of a "heart" you'll need to take the unfortunate moments.

Another example
Busting 10th place when your AK flips and loses to JJ, 1 off the WSOP main event final table is probably like 500k payout, but just a few steps ahead is the 1st place live changing 8.5 million~
You whole life might had changed on that single AK vs JJ flip, you might had won the main event instead !!!

Tournaments = very high risk but potential super reward

Cash = Slow and Steady( but still a significant amount of risk of ruin)

But in reality cash games are much much much more profitable then tournaments due to the deeper stacks, the edge between the good player and the fish amplifes greatly with each addition decision points ( more streets more complexity gives the fishes more chance to make major mistakes which we can gain )

Hope this gives you guys a even better view

Cheers to Cash Games ^_^
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby chiku » Wed Jun 25, 2008 11:17 pm

My transition into cash games is gonna take place earlier than expected now.... :D
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby ohboy » Thu Jun 26, 2008 6:33 am

vaevictis wrote:

However I would like to disagree on ohboys view on "That's why casinos win btw. It's not just because of the odds. In fact, it has very little to do with the odds=)"
Casinos win by similar logic, by law of large numbers, flipping a one-sided coin (odds), as well as having an "infinite" bankroll. Show me a game, that doesnt have a house edge in casino (poker obviously doesn't have anything to do with the house, but the house still wins cus of rake), and perhaps your statement has some validity.


You're making the mistake of equating correlation with causation. You're also begging the question. Yes, casino games have odds that swing towards them. This helps them make money. But this is not their major source of revenue. Like I said, the reason you usually leave with a loss at a casino after a night of <insert fav casino game here> is not because the odds have eaten your bankroll up slowly. Gambler's ruin is the casino's best friend here. You might be more familiar if I simplified it to "improper bankroll management".

See, there's no such thing as perfect bankroll management. A good bankroll management system simply minimises the risk of ruin. The only way to eliminate the risk of ruin is to hold all the money in the world.

But I digress. The main reason the casino can make so much money isn't because of that 1-5% odds in it's favor. No, that's just a sweetener. The reason it's making money so fast is because it utilises the gambler's ruin. Basically, they are bullying you with their ultra deep stack, because sooner or later the bitch that is variance will hit you, and the smaller your stack, the faster you go busto. You may be losing 5 cents a hand in odds for a 1 dollar bet, but you could easily lose 3 dollars in 3 hands, not the mathematically calculated 60. And that's where most of the casino income comes from. The odds are nice yes, but this facet of gambling is where the real money pot is.

In fact, the casino would happily offer you even odds if that encourages you to play more. They don't NEED the odds. Some casinos even give you rakeback as high as 1 percent. That's enough to offset the odds in blackjack by the way.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby ohboy » Thu Jun 26, 2008 6:49 am

felixleong wrote:Tournament Luck Factor can be very extreme, consider this event.
1000 entry freeroll, 1st place wins a 12.5k WSOP main event package

you got lucky most of the way and end up heads up with a 10 to 1 chip lead, but somehow you suffer a row of bad beats and end up 2nd place with nothing at all !!!!!!!
Imagine this scenario deep down inside your mind, how do you feel? Sad? Frustrated? Tilt? Mad?

But wait... its a freeroll and you didn't even spend a cent, but yet you feel like you lost so much!!!!
While this is an extreme example but it goes to show how sickening tournament swings can be, and how big of a "heart" you'll need to take the unfortunate moments.

Another example
Busting 10th place when your AK flips and loses to JJ, 1 off the WSOP main event final table is probably like 500k payout, but just a few steps ahead is the 1st place live changing 8.5 million~
You whole life might had changed on that single AK vs JJ flip, you might had won the main event instead !!!

Tournaments = very high risk but potential super reward

Cash = Slow and Steady( but still a significant amount of risk of ruin)

But in reality cash games are much much much more profitable then tournaments due to the deeper stacks, the edge between the good player and the fish amplifes greatly with each addition decision points ( more streets more complexity gives the fishes more chance to make major mistakes which we can gain )

Hope this gives you guys a even better view

Cheers to Cash Games ^_^


I hate being the one always correcting you guys, but here goes...

1) just because it's a freeroll does not mean you lose nothing. From the moment the freeroll starts, the game has value to you. at 12.5k prize with 1000 entrants, the value of playing in the tourny for you is $12.5. When you're heads up with a 10 to 1 chiplead, the value of your seat rises to $11.3k. The reason why you feel frustrated and angry is because your conscious has not caught up with your instincts. Your mind already knows you donked off $11.3k, but you are able to rationalise it away by saying the seat was free. I think just about everyone here would require a big heart to lose 11.3k over an hour or two. It's not just the tournies.

2) That is one sick swing to drop 10 to 1 chiplead. As mentioned in an earlier post, simply utilising gambler's ruin would give you a great advantage even if you shoved with every hand.

3) nassim taleb had a great example about winning coinflips. I'm at a restaurant having dinner with you. The bill comes, and we decide to flip for it. You end up winning the flip and I pay the bill. The question here is : did you contribute to the bill? The answer is yes. You paid for half of it, because the value of agreeing to the flip was half the bill. Same thing can be said of your example. Let's really stretch it here and assume that whoever wins the coinflip would win the tourny, a difference between 500k and 8.5 million. You didn't have to play the coinflip, but by choosing to play it, you're really saying you're willing to flip the guy for 4 million. Having made that choice, you can hardly feel frustrated about losing. Too few ppl understand this concept, which is why I see ppl moaning about losing coinflips every single game I attend. You should never feel frustrated or dissappointed about losing coinflips. Remember, your opponent paid the same price to flip it. He's paying for the dinner too.


Totally agreed about more streets = greater potential for skill disparity to manifest.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby vaevictis » Thu Jun 26, 2008 9:34 am

ohboy wrote:
vaevictis wrote:

However I would like to disagree on ohboys view on "That's why casinos win btw. It's not just because of the odds. In fact, it has very little to do with the odds=)"
Casinos win by similar logic, by law of large numbers, flipping a one-sided coin (odds), as well as having an "infinite" bankroll. Show me a game, that doesnt have a house edge in casino (poker obviously doesn't have anything to do with the house, but the house still wins cus of rake), and perhaps your statement has some validity.


You're making the mistake of equating correlation with causation. You're also begging the question. Yes, casino games have odds that swing towards them. This helps them make money. But this is not their major source of revenue. Like I said, the reason you usually leave with a loss at a casino after a night of <insert fav casino game here> is not because the odds have eaten your bankroll up slowly. Gambler's ruin is the casino's best friend here. You might be more familiar if I simplified it to "improper bankroll management".

See, there's no such thing as perfect bankroll management. A good bankroll management system simply minimises the risk of ruin. The only way to eliminate the risk of ruin is to hold all the money in the world.

But I digress. The main reason the casino can make so much money isn't because of that 1-5% odds in it's favor. No, that's just a sweetener. The reason it's making money so fast is because it utilises the gambler's ruin. Basically, they are bullying you with their ultra deep stack, because sooner or later the bitch that is variance will hit you, and the smaller your stack, the faster you go busto. You may be losing 5 cents a hand in odds for a 1 dollar bet, but you could easily lose 3 dollars in 3 hands, not the mathematically calculated 60. And that's where most of the casino income comes from. The odds are nice yes, but this facet of gambling is where the real money pot is.

In fact, the casino would happily offer you even odds if that encourages you to play more. They don't NEED the odds. Some casinos even give you rakeback as high as 1 percent. That's enough to offset the odds in blackjack by the way.



I would have to say casino wins by virtue of gambler's ruin, in conjunction with having the house edge (which is crucial for casino operation). Just by the basis of this thought experiment.

Suppose Casino has infinite bankroll, while the constant stream of gamblers have a total pool of 'X' bankroll. The only game in the casino is one that favors the players, which means no house edge. A +1% edge to the players.

Yes, based on Gamblers ruin, some gamblers may bust despite having a 1% edge. However for the casino to place its infinite bankroll aganist the constant stream of incoming gamblers 'X' bankroll, by the law of large numbers, the operation of the casino will show a net loss.


Translating in poker terms, I have a bankroll of X. The entire network of online poker players have a pool of bankroll that is way larger than mine (analagous to the casino). I constantly take good edges in my poker games, and yes sometimes I lose due to variance and probably gamblers ruin, but in reality and in law of large numbers, my bankroll grows. This consequence dictates a net loss for the pool of players playing aganist me with an 'infinite' bankroll.


The odds are definitely the central working premise for any casinos. What follows next are the more subtle and unseen theories and such. If I know of a casino who would offer me a player's edge just to encourage me playing, I'd probably be very rich, and it wouldn't take long for the world of literate people to realise how to exploit it.


And yes, Nassim Taleb is a good writer.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby statix » Thu Jun 26, 2008 10:19 am

ohboy wrote:
felixleong wrote:Tournament Luck Factor can be very extreme, consider this event.
1000 entry freeroll, 1st place wins a 12.5k WSOP main event package

you got lucky most of the way and end up heads up with a 10 to 1 chip lead, but somehow you suffer a row of bad beats and end up 2nd place with nothing at all !!!!!!!
Imagine this scenario deep down inside your mind, how do you feel? Sad? Frustrated? Tilt? Mad?

But wait... its a freeroll and you didn't even spend a cent, but yet you feel like you lost so much!!!!
While this is an extreme example but it goes to show how sickening tournament swings can be, and how big of a "heart" you'll need to take the unfortunate moments.

Another example
Busting 10th place when your AK flips and loses to JJ, 1 off the WSOP main event final table is probably like 500k payout, but just a few steps ahead is the 1st place live changing 8.5 million~
You whole life might had changed on that single AK vs JJ flip, you might had won the main event instead !!!

Tournaments = very high risk but potential super reward

Cash = Slow and Steady( but still a significant amount of risk of ruin)

But in reality cash games are much much much more profitable then tournaments due to the deeper stacks, the edge between the good player and the fish amplifes greatly with each addition decision points ( more streets more complexity gives the fishes more chance to make major mistakes which we can gain )

Hope this gives you guys a even better view

Cheers to Cash Games ^_^


I hate being the one always correcting you guys, but here goes...

1) just because it's a freeroll does not mean you lose nothing. From the moment the freeroll starts, the game has value to you. at 12.5k prize with 1000 entrants, the value of playing in the tourny for you is $12.5. When you're heads up with a 10 to 1 chiplead, the value of your seat rises to $11.3k. The reason why you feel frustrated and angry is because your conscious has not caught up with your instincts. Your mind already knows you donked off $11.3k, but you are able to rationalise it away by saying the seat was free. I think just about everyone here would require a big heart to lose 11.3k over an hour or two. It's not just the tournies.

2) That is one sick swing to drop 10 to 1 chiplead. As mentioned in an earlier post, simply utilising gambler's ruin would give you a great advantage even if you shoved with every hand.

3) nassim taleb had a great example about winning coinflips. I'm at a restaurant having dinner with you. The bill comes, and we decide to flip for it. You end up winning the flip and I pay the bill. The question here is : did you contribute to the bill? The answer is yes. You paid for half of it, because the value of agreeing to the flip was half the bill. Same thing can be said of your example. Let's really stretch it here and assume that whoever wins the coinflip would win the tourny, a difference between 500k and 8.5 million. You didn't have to play the coinflip, but by choosing to play it, you're really saying you're willing to flip the guy for 4 million. Having made that choice, you can hardly feel frustrated about losing. Too few ppl understand this concept, which is why I see ppl moaning about losing coinflips every single game I attend. You should never feel frustrated or dissappointed about losing coinflips. Remember, your opponent paid the same price to flip it. He's paying for the dinner too.


Totally agreed about more streets = greater potential for skill disparity to manifest.


Very very great explanation on 'Gambler's Ruin'. This makes one of the best reads (for me) on Pokerkaki so far.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby statix » Thu Jun 26, 2008 10:24 am

vaevictis wrote:Yes, based on Gamblers ruin, some gamblers may bust despite having a 1% edge. However for the casino to place its infinite bankroll aganist the constant stream of incoming gamblers 'X' bankroll, by the law of large numbers, the operation of the casino will show a net loss.


I think you're using the "law of large numbers" incorrectly here by summing up all the bankrolls of the gamblers.

Each gamblers have a limited amount of bankrolls and I'm willing to bet that by having a casino of equal odds (no rake), the casino will still be making money in the long run. Law of large numbers, or simply, probability would say that the casino would break even, but the "gambler's ruin", or simply - the inability for players (due to bankroll size) to cope with variance, would result in the win in the long run to the casino.

"Law of large numbers" and "Gambler's Ruin" are talking about 2 diff things. 1's strictly about probability, the other's about the ability of cope with variance.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby vaevictis » Thu Jun 26, 2008 11:15 am

statix wrote:
vaevictis wrote:Yes, based on Gamblers ruin, some gamblers may bust despite having a 1% edge. However for the casino to place its infinite bankroll aganist the constant stream of incoming gamblers 'X' bankroll, by the law of large numbers, the operation of the casino will show a net loss.


I think you're using the "law of large numbers" incorrectly here by summing up all the bankrolls of the gamblers.

Each gamblers have a limited amount of bankrolls and I'm willing to bet that by having a casino of equal odds (no rake), the casino will still be making money in the long run. Law of large numbers, or simply, probability would say that the casino would break even, but the "gambler's ruin", or simply - the inability for players (due to bankroll size) to cope with variance, would result in the win in the long run to the casino.

"Law of large numbers" and "Gambler's Ruin" are talking about 2 diff things. 1's strictly about probability, the other's about the ability of cope with variance.



In all essence, one has to consider the long term operation of the casino, not the short term gamblers ruin of individual gamblers. You are talking about the long run, which is all about probablity and law of large numbers, but claiming gamblers ruin due to poor BR management, a short term variance process, will help casino to win despite giving equal odds. It appears your claim has logical fallacies issues.

Assume equal edge, casino with infinite bankroll vs a stream of constant gamblers with a much smaller, but summative bankroll, is an independant probability process. Every bet is independant of previous bets, as well as individual persons. It doesnt matter if a gambler blew his roll due to gamblers ruin, someone else out there will be showing positive variance on the other side. Over the course of large numbers, the casino operation will net 0 profit and loss. It has to be understood that the law of large numbers over its course, overrides short term gamblers ruin. I guess a mathematician should be able to prove this with proper statistical analysis.

If based on your argument, if its true, I would simply operate a casino which gives equal edge to the players, just to entice them into knowing they have a better edge in playing in my casino compared to other casinos. This would prove disastrous in all its entirety. My concern is not on the individual players or gamblers ruin of small time players, my concern is getting my casino to operate at full steam, logging the hours, and letting the odds take care of themselves.
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Re: Comparison of luck factor in Cash and Tourney Games.

Postby gooddoggg8 » Thu Jun 26, 2008 12:45 pm

A little sidetrack off the topic, although tourney variance is higher, there a consistent MTT/SNG/cash pros who constantly eek out a tremendous amount of profit, they are what i say - a complete player. Their style/strategies are well rounded towards high stakes cash/MTT/SNG and thus funds their huge bankroll in cash games as well.

Check out the leaders on OPR.

http://www.officialpokerrankings.com/fu ... C.html?t=3

Is this purely due to luck then his AK always hit vs QQ?

I beg to differ
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