Lee Jones: It is long past time to flatten tournament payouts

Lee Jones poker writer
Lee Jones
Posted on: August 10, 2023 08:15 PDT

I am probably wasting my time here, but I have to try, for the good of poker.

I have been a member of the poker community for almost 40 years now (geez, that was sobering arithmetic), and an industry participant for most of it. While the game has changed and improved immeasurably in many ways, there are a few hold-outs from the 80's, and I am here to address a crucial one.

The continued use of two-colored, rather than four-colored, decks in live poker. Tournament payout structures continue to be far too top-heavy.

To be fair, things have improved a bit since the Bad Old Days. Recall that the original WSOP was winner-take-all. They didn't really move very far off that mark for decades. It was common to pay only 10% of a tournament field, with the winner receiving 20-25% (or more) of the prize pool.

Consider the 2006 WSOP Main Event, a relatively recent 17 years ago. 10% (873 of 8773 runners) made the money, and the winner, Jamie Gold, received $12 million – a whopping 14.5% of the $82.5 million prize pool.

Players like smoother flatter payouts

If you want to know how people truly feel about something, see how they vote with their feet – everything else is idle chatter. When it comes to voting with their feet (or more specifically, their pocketbooks) poker players want flatter payouts.

We know this because payout-chopping deals are all but a given at the end of a tournament. During the event, people mention the $150,000 "up-top," but the moment they get down to 3-4 players, the calculators come out and a deal is made. Most poker players are deeply uncomfortable playing short-handed, and they intuit (correctly, per the Kelly Criterion) that they shouldn't be gambling for the sums involved in each pay ladder. Even the top professionals, who know with precision what move to make when, routinely make deals at the end. Consider this spot where crushers Ike Haxton, Adrian Mateos, and Seth Davies chose to chop up the money in a super high-roller rather than let a fickle deck of cards decide the payouts. From the Sunday morning Omaha-8 tournament at the Orleans to the Triton $250k buy-in, deals are ubiquitous.

Flatter payouts are better for poker and the poker economy

I am writing this piece in early August, known in Las Vegas as "the post-WSOP doldrums." Why? Because after the end of the World Series of Poker, poker is nearly dead. Everybody is licking their financial wounds from firing multiple WSOP and WSOP-adjacent tournaments and whiffing most of them. Of course, the exceptions end up on the front page of this fine website. But for every one of those winner pictures, there are hundreds – or thousands – of players who invested $1,500 or $3,000 or $10,000 and got nothing back. It's why tournament players routinely look for staking deals, but even with those deals, tournament poker is very much a boom or bust (mostly bust) environment.

Furthermore, when somebody binks a massive tournament payout, a lot of those winnings disappear from the poker economy, never to fall onto the felt again. First, the tax authorities get their share. Then the big winner goes and makes non-poker purchases. O.G. poker author Mike Caro, never a fan of tournaments, once said, "Do you know what happens when somebody wins $35,000 in a poker tournament? They go out and buy a refrigerator. Nothing is as sad as seeing perfectly good poker money spent on a refrigerator." Mike Caro has a way with words.

Of course, the whole point of a poker tournament is for 15%-ish of the runners in the event to collect from the other 85%. But how that money is distributed matters a lot. Suppose, for instance, that instead of winning $12 million, Jamie Gold had won $7 million. Would Jamie Gold's life today be much different? Probably not. But that would have left another $5 million to spread around – life- or career-changing money to multiple people. And at the very least, a more robust and less moribund poker economy for a couple of months.

Why do tournaments continue to have cliff-face payout curves?

Poker players prefer flatter payouts. Flatter payouts are better for the poker community and economy. Why do tournament promoters continue to offer such steep payouts?

My theory – and that of many industry participants – is that it's all about the marketing. The marketing person (or department) of every poker tournament operation wants to be able to shout about some absurd top prize. There's no better example of this than the 2023 WSOP Main Event, when they were determined to beat Jamie Gold's record for the biggest first place prize. So yes, they eclipsed Gold's $12 million payout by $100,000 (a whopping 0.8% increase), which resulted in second place being $6.5 million, or $5.6 million less.

Daniel Weinman winner photo Daniel Weinman winner photo Jamie Thomson

What's crazy is that nobody really cares about the top prize because (a) they don't expect to win it, and (b) even if they get close, they know that deals will be made to balance the payouts. When tournament players talk about events, they always quote the total prize pool guarantee ("There's a $500k at Wynn this weekend"). Rarely do they say, "There's $100k up top at the Wynn this weekend."

The marketing people are shouting into their own conference room bubble.

What does a sane tournament payout look like?

Some 40 years ago, as a newly hired software engineer at IBM, I went into my manager's office, and told him that we had a problem with X. He said, "What do you suggest we do about it?" I told him I didn't have any idea.

"Kid, I'm going to give you a good piece of advice. When you walk into your manager's office with a problem in one hand, you better have a proposed solution in the other hand. I don't have to take it, but I want to know you've at least thought about how to solve it."

That is as good advice today as it was 40 years ago. So proximate to that wisdom, I decided that I couldn't publish this article without proposing something better. I had recalled Matt Berkey's Only Friends podcast discussing this problem (it's a recurring topic for them), and mentioning that somebody had asked ChatGPT for a better payout structure for the WSOP Main Event. I couldn't find that source, so I went straight to ChatGPT.

It took a couple of iterations, and even then, the engine couldn't quite make all the numbers add up. But its underlying plan was spot-on, and with 15 minutes of spreadsheet work, I massaged its numbers into a structure that I love.

This is for 10,000 runners at $10k each, paying 15% of the field. The minimum payout is $20k. I left $5.65 million for Caesar's.

Is this the perfect WSOP Main Event payout structure? Probably not, but it's way better than what we have now. And I've shown that anybody with the Internet and Google Sheets can come up with a fine structure in 20 minutes. There's no good reason for these absurdly steep payout structures – tournament organizers are serving nobody but their marketing people by blindly adhering to hidebound practices of the Bad Old Days.

I am probably wasting my time here, but I have to try, for the good of poker.