The Problem of Pay Structures

The World Series of Poker tournament staff did a marvelous job this year. The blinds increases, customer service, overall organization, and day-to-day operations were all but faultless. There was, however, one area in which I'd like to see improvement, and that's in pay structures.

For a long time, it was relatively easy to create a reasonable payout plan for any poker tournament. Tournaments never had more than a few hundred people in them, everyone who went deep made a decent score, and the winner was justly rewarded. When Chris Ferguson won the WSOP main event in 2000, there were 512 entrants and Chris received $1.5 million - 29.3 percent of the prize pool. The first player to finish in the top 1 percent, fifth-place finisher James McManus, earned $247,760: almost 24 buy-ins of profit. The first in-the-money player got $15,000. All of this seemed obviously fair, and hardly anyone even bothered to question it.

In the years after Ferguson's win, poker exploded. Suddenly, poker tournaments routinely drew thousands of players, especially online. With those fields came the question of how to pay them. The winner couldn't continue to rake in 29 percent of the prize pool - as there just wouldn't be enough money left to pay everyone else. At the same time, a decent chunk of the prize pool had to be reserved for the final table, which made it tougher to keep up the rate of return for many other in-the-money finishers.

In 2004, Greg Raymer bested a field of 2,576 players and took home a $5 million first prize - 20.6 percent of the prize pool. The first player to finish in the top 1 percent got $120,000, an 11 buy-in profit, and the first player eliminated in the money got $10,000, for no profit. As before, roughly 10 percent of the field was paid.

Everything was OK for a while, but then people complained. Too many players didn't like just getting their money back when they cashed in an event. "How can I finish in the money and make only a tiny profit, or none at all?" they argued. Their concerns seemed legitimate, and their voices were loud. After all, far more people were finishing in low-paying positions like 147th or 216th than were making the final table.

In this year's WSOP main event, 6,844 players entered and 666 were paid. The lowest-paying spot was worth $21,230 - more than twice what it was four years earlier. Meanwhile, first place is $9,119,517. It's a lot of money, but it's a mere 14.2 percent of the prize pool. The 68th-place finisher, despite finishing in the top 1 percent of the field, got $96,500, a profit of less than nine buy-ins. When they decided to give more money to the lowest finishers, they had to get the money from somewhere. It turns out that they got some from the winner, and some from the deep finishers who didn't make the final table.

For a player like myself, who believes tournaments should reward those who play to win, and who believes in never playing just to sneak into the money, these developments in the pay structures were somewhat disturbing - and there are even more egregious examples online.

PokerStars' recent World Championship of Online Poker (WCOOP) had a $5,200 buy-in main event that attracted 2,185 players; 324 of them, 14.8 percent of the field, were paid - 48 percent more than is customary. Not only that, but 324th place was a whopping $8,740, for a profit of about 0.7 buy-ins. To pay for these massive sums handed to the bottom finishers, they of course took a little something from the winner, who got $1.775 million, or 16.25 percent of the prize pool. But the real crime is what happened to other deep finishers.

The 19th-place finisher in this year's WCOOP main event got $22,942.50. This person finished 19th out of a field of 2,185. He was in the top 0.87 percent of entrants in the biggest online tournament in history, and he received a profit of less than 3.5 buy-ins. To put that in perspective, he played about 17 hours over two days, beat out 2,166 of the 2,185 competitors, and received a rate of return less than he would've gotten from winning a sit-and-go. I can't be the only one who thinks this is a travesty.

You can understand, to some extent, why online cardrooms have structured their tournaments this way. The average player loves to know that a bigger percentage of the field is getting paid. But I think there are ways to keep the average player happy while still managing to pay the very deep tournament finishers their fair share. Here's why:

1. The WSOP still pays only about 10 percent of the field, and it remains wildly popular.

2. There are ways other than paying more places to attract customers. If tournaments gave more money to the top 1 percent-3 percent of the field, they could say things like, "Earn $150,000 just by coming in 72nd place!" (See the example structure.) That would sound pretty inviting.

3. My structure would give more money to the winner, and everyone likes to see a nice big number at the top of the pay sheet.
Here's the prize structure I would propose for the 2008 WSOP main event, compared to the actual prize structure:

Entrants: 6,844; Prize Pool: $64,333,600




In the actual structure, more than half of the prize pool is at the final table. That seemed a bit extreme to me, with 6,844 entrants. I took $3.2 million off the final table to be redistributed among the other 657 in-the-money finishers, and I did this at no expense to the top three. In fact, I gave the winner an additional half-million dollars, and then steepened the pay scale near the top of the final table while flattening it at the bottom. In the actual structure, a player wins almost half a million more by finishing seventh instead of eighth. In my structure, he wins only a quarter of a million more. My structure encourages those at the final table to play for the win from the get-go, not just when it's down to the final five.

I also lessened the payouts for the bottom finishers - specifically, those who finished 316th or lower. That got me another $2.75 million to play with. I took that money and the final-table money and gave it to the rest of the field - the deep finishers who didn't make the final table. Under my plan (I sound like I'm running for president!), 301 out of the 666 in-the-money finishers would make more money than under the actual structure. My structure doesn't alienate the average player, or give the prize money to much fewer people. My structure just makes more sense. I hope the powers that be strongly consider something like it next year.

Matt Matros is the author of The Making of a Poker Player, which is available online at www.CardPlayer.com, and a featured coach for stoxpoker.com. Matt finished 78th in the 2008 WSOP main event.