Why flat payout structures are better for your mental game

We take another deep dive into poker variance and this week we look at how less swingier a flat payout MTT is to a top heavy structure.

I have enjoyed writing about variance reduction strategies in poker, which so far has included dropping down in stakes vs playing fewer tables, as well as increasing volume. Alongside Dara O'Kearney, we have also previously looked at the variance differences between large and small-field MTTs. 

This week I looked at something similar to field size in terms of variance, and that is payout structure. There is a big difference between flat, steep, and normal payout structures where variance is concerned. 

Once again I have used the variance calculator at Prime Dope to simulate this. 

This is what 20 random simulations would look like in 100-runner MTT with a $10 buy-in. We have an ROI of 20% and we play 1,000 tournaments. In these tournaments, 15 players make the money. 

After 1,000 games in the best-case scenario, we make just over $6,000 and in the worst-case scenario we lose around $1,500. On average we make $2,044. Our risk of losing after 1,000 games is 4.6% and our required bankroll is $1,382.  

Let's now look at what happens if all the details are the same, but we make the payout structure flatter. We can't alter the payouts directly, but we can flatten the structure by paying 20 players instead of 15:

After 1,000 games in the best-case scenario, we make around $5,500 and in the worst-case scenario we lose around $1,000. On average we make $2,035. Our risk of losing after 1,000 games is 2.5% and our required bankroll is $1,091.  

We don't win as much, but we also do not lose as much when we flatten a payout structure. It is clearly much better for your mental game to play in flatter payout structures and this clearly explains why so many people choose to deal in poker tournaments. 

Let's now look at what happens if all the details are the same, but we pay 10 players this time, instead of 15 or 20 in the previous examples. This will have the effect of making the payout structure steeper. You will win more when you cash, but cash less often:

After 1,000 games in the best-case scenario, we make around $7,000 and in the worst-case scenario we lose around $1,800. On average we make $1,972. Our risk of losing after 1,000 games is 5.6% and our required bankroll is $1,451  

When variance is on our side we like steep payout structures, but we need a bigger bankroll to do it because we have a much greater chance of losing money over 1,000 games. 

Ultimately this comes down to temperament. If you struggle with variance and/or like to have a degree of certainty, flat payout structures (and small fields) make for a much easier experience in MTTs. If you are all about maxing value and playing for the top spot, embracing variance is perhaps for you. 

Were you surprised at the results? Let us know in the comments: