ROI, which stands for \"return on investment,\" serves as a means for tournament players to monitor their performance. It's akin to the way cash game players track their success using bb/100 , measuring big blinds earned over every 100 hands played.
However, employing this measure as a winrate for tournament players can be misleading. Why is this the case? A player might register a positive bb/100 statistic yet still incur losses, particularly due to rising blind levels. It's entirely feasible to accumulate more big blinds than competitors in a sit-n-go or a tournament while ultimately falling short of a top finish.
Consequently, tournament and sit-n-go participants require a distinct approach to gauge their earnings—this is where ROI comes into play.
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How to Calculate ROI
Calculating ROI is a simple process.
*as a decimal – multiply by 100 for ROI%
To determine our overall profit, we need to subtract our tournament buy-ins from our total winnings. Essentially, we find our net profit by deducting buy-ins from overall earnings.
Tip - The resulting figure will be in decimal form, which should then be multiplied by 100 to present our ROI as a percentage (ROI%).
Let’s go through a few examples to ensure that the formula is clear.
Example 1: Let's say we've entered 100 sit-n-go tournaments at $1 each. Our total winnings amount to $256 (this represents gross winnings, not net profit). What does our ROI look like?
Try to solve this problem by calculating the ROI. Once you have your answer, you can check it against the calculation given below.
Tip – The term \"gross profit\" refers to all the funds we've won, disregarding any losses or buy-ins.
Answer - The first step is to work out the profit. We may have unintentionally complicated this a bit. If we were aware of our starting bankroll, we could simply look at our current balance to find our net profit. bankroll In this context, we have invested a total of $100 in buy-ins (100 times $1). So, with gross winnings of $256, our net profit must be $156.
Keep in mind that this figure represents our ROI in decimal form. If we wish to express it as a percentage, we can multiply by 100, which gives us an ROI% of 156%.
Overall Profit = $156
Amount spent on Buyins - $100
156/100 = 1.56
In effect, this means that for every $1 sit-n-go we participate in, we’re achieving an average return of 156% on our buy-in, equating to roughly $1.56. Such an outcome signifies an outstanding return on investment, whereas a reasonable ROI over a large sample size might hover around 10%.
Example 2: After participating in 1000 sit-n-go tournaments at $5 each, we notice our ROI is at 13%. Can we figure out our total profit and gross winnings?
While gross winnings provide minimal insight as players primarily focus on net profit, calculating the gross figures is beneficial for solidifying our grasp of the ROI formula and understanding the distinctions between gross and net profit.
Once more, give it a try and calculate the answer, then compare it with the solution provided below.
Answer – If our ROI stands at 13% for this set of data, it effectively suggests that for every $5 we invest, we receive an additional 13% on our buy-in. So, what does 13% of $5 sum to?
Thus, for each of the 1000 tournaments played, we earn an average of $0.65. Now, what is our total profit?
$5 * 0.13 = $0.65.
Nevertheless, our gross winnings will incorporate the buy-in amounts. For this situation, our buy-ins total $5000 (1000 times $5), leading to gross winnings of $5650, which implies our losses are $5000 since we've established our net profit as $650.
$0.65 * 1000 = $650
Engaging in a bit of reverse engineering can be helpful to verify our calculations. Let’s input the values into the ROI formula to see if we can confirm our original 13% ROI.
Sometimes, when doing maths We can multiply this by 100, thereby returning to our initial ROI figure of 13%.
So, overall profits were $650.
We spent $5000 on buyins.
Our ROI expressed as a decimal is 650/5000 = 0.13
Perhaps a factor contributing to the exceptionally high ROI in the first instance was the small sample size; we only completed 100 sit-n-go tournaments.
ROI and Variance
Despite seemingly significant, this sample is rather limited. Playing under 200 sit-n-go tournaments can yield a highly unreliable ROI. Variance in results can extend over many hundreds of tournaments.
The situation gets even more intricate when we opt for larger field tournaments, as the number of players increases, so does our required sample size to achieve an accurate ROI.
In numerous scenarios, we aim to optimize our ROI while participating in tournaments. MTTs Joining networks that have lower tournament fees is advantageous. variance Searching for platforms featuring softer tournament games can be beneficial too.
Maximising ROI
However, it’s worth noting that ROI is not the paramount concern for tournament players. While a high ROI may boost our reputation, typically the more significant metric is $/hr (earnings per hour). poker tournaments .
We can maximise our ROI by -
- For instance, if we engage in faster-format sit-n-go tournaments (quicker blind structures and escalations), our ROI could decrease. Yet, if those formats yield a higher hourly income, should we really be troubled by a lower overall ROI?
- The same principle applies when we consider higher-limit sit-n-go tournaments. Though pursuing a higher ROI through lower-limit games may appear logical, a higher hourly rate in higher-stakes settings could make the discrepancy in ROI negligible.
Ultimately, while ROI serves as a decent benchmark for evaluating our standing in tournament play, it's critical to acknowledge that it is significantly influenced by variance. Often, it may not represent the key determinant of success for tournament players. professional poker players Chad Holloway, who won a WSOP bracelet in 2013, has formerly held a position at PokerNews as a managing editor and live reporter.
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