What is an Overlay Tournament?
A guaranteed tournament is a tournament where the poker rooms guarantee
the prize pool will be a minimum amount regardless
of the buy-ins. Guaranteed tournaments can run into overlay when the
tournament buy-ins do not equal the amount of the guaranteed prize pool.
The "overlay" is
the excess funds the poker rooms add to the prize
pool to offset the lack of entry fees.
An example of this would be the Bovada weekly $100K
GP. This event costs $150 +$12 entry free and always
goes into overlay. The field usually consists of no more than 500
players, with most tournaments attracting between 450 - 475. Using
the 500 number as a base example, the tournament would have $75,000
in buy-ins which would mean Bovada would have to offset the lack of
player buy-ins by adding an additional $25,000 to the prize pool.
You can look at it from another angle. The $150 tournament
entry fee you paid is now equivalent to a $200 tournament
ticket. $100,000(prize pool) / 500 (players) = $200/player.
Now if we take into consideration the prizes paid out in an overlay
with 500 player's vs. a full tournament of 667 players it breaks
down like this.
The overlay tournament would pay the top 63 people
with 1st receiving 19.91% of the prize pool, totalling
$19,910. If the tournament was to receive the full
number of buy-ins to offset the cost of the event
(666 players), 1st place would earn 18.8% of the prize pool, which
equals $18,800. So not only do you receive additional value for your
entry fee, but the payouts are generally higher if you end up cashing.
An overlay occurs when a poker room has to add money
to the prize pool in a poker tournament. Suppose a
poker room runs a $100,000 guaranteed prize pool tournament.
The buy-in is $100+$9, and only 800 players enter.
Normally, the prize pool would be $80,000. Since the
poker room guaranteed the prize pool would be at least $100k, it would
have to add $20k to the prize pool. This additional $20k is considered
the overlay. All prizes in this tournament are 25% larger than they
normally would be had there been no guarantee.