Tuesday, December 18, 2007

MTT ROIs & Was the Venetian MTT a Complete Rip-off?

I have read a bunch of trip reports and have heard pretty much nothing but positive reviews of the Venetian WPBT event. I have to admit that I loved the structure, and it is the best by far offered at a Casino on a regular basis. 6000 in starting chips, 30 minute levels, and all the in between levels you don't get at other locations make for a structure with tons of play. A huge advantage for me based on my MTT strategy. I figured that with a start time of 3PM this thing would run past midnight, and I was right.

What nobody has mentioned so far is what a complete rip-off the fees were for this tournament. The fees were so high that you can argue not a single one of us bloggers could beat that tournament long term for a profit. I will argue this point in a minute. When the fees are so high that a game can't be beaten, it is not a game of skill any more, or even really gambling. It is simply charity for the house. In this case the house is the Venetian, owner of the largest hotel casino in the world. A company that is building bigger and better casino's all over the world. Is this on the back of us poor poker players?

So did anyone even look at the fees? Total buy-in was $135. House entry fee was $25. Add-on/Dealer toke was $10. So this was a $100+35 structure. Don't even try to argue that the add-on $10 was not a fee. The add-on was mandatory for this tournament and not optional. The fact that the dealers get the money is of no concern. If it is a mandatory fee, it is a fee that goes to the house. If the house does not pay dealers enough that a mandatory tip are required, that is not my problem. And why the fuck do I have to mandatory tip the dealers. Traditionally this is done by people who actually win the MTT or place highly. Just let them tip out of their winnings, and the other 90% who did not cash don't need to throw down a $10 tip per person. It's like demanding all players tip a $1 in a cash game every hand win or lose. It's not how its done. The winner has the option of tipping. Losers should not be required to tip. For that matter tips should never be mandatory. Imagine that you win an MTT, and all the dealers were complete tools. They screwed you over every step of the way, but you overcame and won. So now I have to mandatory give these a-holes 10% of my winnings? Mandatory tips are complete BS.

So the question is, is it possible for a skilled player to overcome a $100+35 fee structure, for a long-term profit? The answer is pretty much no. There are probably a few high level pros who could make a very small profit in these things, but for the average blogger no way. For the best of the best MTT bloggers I think they could come close to break even, but forget about profiting. So we all came to Vegas, and played in an unbeatable (long-term) MTT. That is just the facts. Let me put some numbers behind this for some clarification.

Lets take the normal rake of an online MTT to be 10% of the money that goes in the prize pool. So for a $100+10 MTT you have a rake% of 10/110 or 9.1%. That is actually a pretty high rake level. Cash games average in the 3.0-4.5% range depending on the stakes. About 1/10 people can beat cash games long-term against that rake. For MTTs I would imagine less than 5% of players can beat the rake long term. If you pool all MTT players together the combined Return on Investment (ROI) is -9.1%. For cash games it is something like -4.0%. So the average player loses 9.1% of their buy-in on average when entering a MTT. Some players do much better, some do much worse. Profitable MTT players can overcome the -9.1% average rake and turn their ROIs positive. The rake for the Venetian WPBT event was 35/135 or 26%. If only 5% of players can overcome a 9.1% rake, how many can overcome a 26% rake. Not too many I would imagine.

So what is a typical ROI for a very good MTT player, and is it high enough to overcome a 26% MTT rake? I can't really look at myself for answers here, as I would not call myself a "very good MTT player". I would say I am OK, and am close to break even long term in these things (possibly slightly profitable). Luckily there is a website called OfficialPokerRankings.com. This site has been compiling MTT results including buy-in amounts since the last part of 2006 on various poker sites. With the buy-in information, not only can they show you who has cashed the most in MTTs, they can also calculate overall profit in MTTs and MTT ROI for all players. For those of you out there who refuse to keep records, this site has done it for you, and you can see your results over the last 14 months or so. On the player summary tab, you can see profitability by month, year, and all-time. The site tracks all MTTs held on the major poker sites. Private MTTs are not counted so no blogger tournies in the results (which is the correct approach IMO). They also count Sit and goes with 18 or more players to start in the results as well as multitable token MTTs and satellites. I think this is fair as well as multitable S&Gs are not much different than a normal MTT.

So I signed up for free and started punching in some big name bloggers to see what a typical MTT ROI would be for good MTT player (I only looked at FullTilt results). I will not name any names here, so you will need to link over and see for yourself, but what I did find out was that almost none of the big names have a positive ROI in MTTs for 2007. I have to admit that this was a bit expected. Big results can be extremely misleading, and we all tend to focus on big results. Results need to be taken in the context of all of the entry fees spent. They should be taken in the context of ROI and $/Hr which are much better measures than an isolated big result. My impression that MTT satellites are for suckers was pretty much confirmed as well. So I kept digging and finally found the data point I was looking for in KOD. This guy is an absolute stud in MTTs and his results confirm this. He has over 20k in profit (not cashes PROFIT) in 2007 on FullTilt. His ROI for 2007 is 24%. So KOD can overcome the 9.1% rake and grab an additional 24% in equity when he plays a MTT. I think I found the player who might be able to beat the Venetian fee structure long-term. He can earn a slim profit by playing it. I did not find anyone else who was even close.

For the record my MTT ROI for 2007 is 127%. I do not claim that number to be real, as my sample size is too small at less than 100 MTTs for the year. There is no way I could play the Venetian MTT for a long-term profit, even though I am 2 for 2 in cashes against that structure. It does not matter. I am no KOD, and KOD barely profits in this thing.

Is there a moral to all of this? Possibly. I have always said that cash games is where the money is made at poker. When you see a bunch of big name MTT specialist bloggers with a -12% ROI for 2007 (or worse), you need to start questioning who, if anyone, is profiting from MTTs long-term. MTTs may be funner than cash games, but there is not much money to be made in them even at a rake of 9.1%. When you sign-up for a live MTT, make sure you understand the fee structure. If the fees exceed 20%, understand that you just can't profit from this MTT long-term. Now, I have no problem tossing $35 in the garbage for the chance to play a great structure with all of my blogger friends. My point is that this is what we all did when we entered an MTT that was basically unbeatable. The big WPBT winner was the Venetian.

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At 10:21 AM, Blogger Chad C said...

I completely agree with you, why do you think I live in Vegas yet play MTTs on line? The rake and structures are just retarded! Also important to not forget about rakeback! I hate to brag (no I don't) but I get 29% rakeback at Full Tilt, cannot beat that! Live tournaments for under $500 in this town generally suck ass structure and rake wise.....

Don't ever compliment me again btw. You are supposed to get me all riled up! Lucko has like an 80% ROI at Poker Stars just so you know! I really wish Mansion poker was viewable on OPR hahaha! I only got to play there for 6 days and left with $32K cause they banned Americans :( Tournaments are for lucksack donks though :)

At 11:21 AM, Anonymous Anonymous said...

Good thing we only play two live blogger tournaments a year so at least it's worth it to play with a bunch of our blogging friends.

But your point is accurate about live tournaments and the rake. Dumps like the Sahara take out 33% in fees and they still get 100+ a night because it's only $42 to get in.

Cash is and will always be king.

At 7:22 AM, Blogger TripJax said...

It's not doable in the long run, but like don said, once in a blue moon I will pay out my ass just to have the chance to donk it up with you guys live. They accomodated a ton of ghey ass bloggers and we paid for it. Nuff said.

But don't think I didn't drink more than $50 worth of alkeemahol while I was there on their tab.

I was drinking tons of Sam Adams, Jager, Red Bull, and Fiji water on their dime. If anything I put a sizeable dent in the $35 fee I paid.

Kudos to Falstaff for making the tournament happen, regardless of the fee...

At 8:35 AM, Blogger Blinders said...

Trip you make a good point. With the exception of the first 90 minutes when we got no table service, the drinks came pretty quick. I am sure I had at least 10 Coronas, San Adams... and those are like $7 each at the bar. I guess they need to account for table service over a 9 hour+ tournament, and charge a little extra. The post was not really a huge complaint but more of a statement of facts. What I was really trying to explore was at what point does the rake get so high that an MTT can't actually be beat. $100+35 MTTs seem to be pretty close to unbeatable.

At 8:43 AM, Blogger TripJax said...

Nah, I knew what you were getting at...and I agree. The fee can be tough to overcome live. It's good to get analysis in general so we can figure if it makes sense. I'd say for the majority of people, MTT's are a drain. Add a huge fee and that just kills things even more.

Still, I'd pay 100% rake once a year just to play a tournament with you fonkeys.

That makes me a sick puppy.

At 1:36 PM, Blogger Falstaff said...

No argument here. And if the guy who set it up isn't going to argue, Blinders must be right on, right? And I'm being sincere, the juice on all the live tournaments in Vegas is ridiculous, and our private event was no different.

A couple of points as to why I went with a high-juice event which are outside of the simple percentages.

1) Nobody wanted to host us. The MGM does not have a large enough facility to host our event. The Imperial Palace, Harrah's, Bally's and Paris wanted to turn us over to their banquet division and treat us like a corporate meeting, with rental on all the tables, chairs, rooms, etc. We could have likely had a juice-free tournament under those circumstances, but there would have been a separate facilities charge that we all had to pony up for. The Orleans was not an option, and Caesar's wasn't interested.

The Venetian at that point became the only game in town, and I felt fortunate that they waived their typical $40 per person juice (plus the $10 toke) for a private tournament in favor of a $25 per person juice (plus the $10 toke).

2) I set the buy-in and suggested the juice. When we were first at Caesar's a couple of years ago, I remember looking down at my ticket and realizing that I was paying 27% juice on my initial $80 buy-in. I figured if I could keep the house portion (not counting toke) down around 20%, I'd be doing pretty good. 20% of $125 is $25. Mission accomplished. So actually, given that logic, we had a low-juice tourney compared to a lot of the daily tourneys in Vegas.

3) They allowed us to modify their standard structure. The changes weren't huge, but we did pay for the privilege of having a 75/150 level and another level in the middle rounds that I don't remember (maybe 300/600). Allowing us to skew the structure for more play early counted for a lot.

Good read on the 9-hour time frame. I think very few of us (you and I are two) expected it to be midnight when we finished when we walked into the Venetian on Saturday. I don't take any of your analysis of the juice as a slam on me or my efforts to set things up, I agree with all your statements and the comments and just added these few things to make sure everyone knew what went into my decision to have the tourney there. Let's face it, it was all about the comfy chairs and hot waitresses. The ones Don tried to bean with beer bottles :)!

I know everyone had a good time, and I certainly wouldn't play in a tourney with that kind of juice very often, so it is a good thing we only get together a couple times a year.

I can't decide if I said anything in here to piss anybody off, so somebody insert a comment under this one in my name to fire somebody up :).

This comment got too long, I'm gonna go make it be a post.

At 5:28 PM, Blogger Special K said...

The same thing occured to me even before the tourney, but I had also heard from Falstaff about how difficult is was to find a place to play host.

I choose to look at it as $35 for the use of the room and the dealers. Now at $35 for the 45 minutes that I played, that comes to just under $46.67 per hour.

Crap! I really got screwed. I'll have to take it out of Falstaff at the home game.

At 5:59 PM, Blogger Blinders said...

At some point in time live casino MTTs morphed from a loss leader to fill the room for cash games into a profit center for the casino. I don't play a ton of live casino MTTs so not sure when or how rapidly this happened. It's interesting how now they can demand a 26% edge for MTTs and less than 1% edge for craps. I understand the time difference between a roll and a MTT, but you would need to roll over $135 like 35 times for them to get the same absolute profit.


You did an amazing job at organizing everything including the WPBT MTT. Thanks so much!

At 9:59 AM, Blogger Joaquin "The Rooster" Ochoa said...

i hear what everyone is saying. But I had like three red bulls and those are like 3 bucks each...one beer...three sodas and I still tipped the dealers out...no problem here.

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