Guaranteed tournaments work like this: a buy-in is set, the number of players is predicted, and a guaranteed pool is offered.
This “guarantee” is calculated based on the predicted total amount of buy-in money of a tournament. Poker sites offer guarantees so that people will play their tournaments.
Nobody wants to join a tournament without knowing the prize pool in advance. Furthermore, it’s important that networks can constantly offer a regular, predictable schedule of tournaments for its players.
Tournament Overlay Example
Imagine a poker site offers a $20+2 buy-in freezeout on Friday. Based on the number of players who usually play the freezeout on Friday, they expect to bring in 500 buy-ins.
So, they set the guarantee at 500 * $20 = $10,000. They expect to profit 500 x $2 = $1,000.
For whatever reason, on some particular Friday only 300 people join. Maybe there’s another better tournament on another site, or lots of other distractions in the world at that time. Sometimes it’s simply random chance.
Here, the poker site takes in $6,000 + $600, but has to put up $10,000 for the tournament because of the guarantee. So, they inject $3,400 of their own cash to meet the guarantee. This $3,400 is called an overlay.
Why do Tournament Overlays Matter to me?
If 500 players had the same chance of winning in the $10,000 prize pool, each person’s expected value would be effectively $10,000/500 = $20. Since they bought in for $20 + 2, this represents an expected loss of $2.
However, if you were lucky enough to get in on the tournament with the overlay, your expected value is $10,000 / 300 = $33.3. Since you bought in for $22, if you are a simply average player, you stand to profit $11 just from joining the tournament.
Thus, joining tournaments with favourable profitable overlays is a good way to increase our winrate.
Where can I find overlays?
If you want to maximize your profit by throwing some overlay tournaments into your routine, it’s best to look on smaller networks.
Generally, they are more vulnerable to big fluctuations in player base since their pools aren’t so large to begin with. Tournament Overlays are also found at uncommon poker formats for the same reason.
If you’re a good Open Faced Chinese player, there are probably overlay tournaments to be had somewhere!
Finally, check at off-peak hours on early weekdays. From week to week, there are often big fluctuations in the numbers of players on, for example, a Monday Night.