Tournaments Have High Variance
By Jerrod Ankenman

Several months ago Phil Hellmuth wrote an article in CardPlayer about a method of play that he was using in big-bet tournaments. He described a situation where he folded KsQs on a board of JsTsX to an all-in bet, saying that he didn't want to commit all his chips with a draw and a presumably narrow edge, preferring instead to wait for later when he could get larger edges. This principle is also put into practice by many other top tournament players. David Sklansky's recent book on tournament play also indicates that an important principle of playing well in tournaments is being willing to adjust one's play in situations where one only has a small edge. These principles assume that the player in question has a significant skill edge on the field.

Phil also wrote about a critical hand he played against eventual winner Robert Varkonyi in the WSOP $10K event. Varkonyi moved all-in on Phil's AKs with QTs. At the table, Phil correctly called but lost. In his post-mortem analysis, however, Phil maintained that he should have folded. His contention that folding was correct is based in this same principle of passing up small edges early on in anticipation of larger edges later. In this case, this was neither "early on" nor "a small edge," but this typifies the type of thinking that encourages players to fold in marginal situations early.

More players are playing no-limit holdem tournaments than ever before, as the number of NL tournaments spread with reasonable buyins grows, especially in Southern California. As this occurs, it would stand to reason that many more players will become comfortable in the no-limit structure. As the gap between strong players and the average player narrows, the "later advantages" that this approach counts on will begin to evaporate. Not completely, as long as there is any skill differential. But as more and more players become proficient at no-limit holdem, the amount of "wait for better edges" leverage that strong players have will become less and less. This, in turn, will force these players to adapt and to accept somewhat lesser edges in the early going. Additional variance will be created in tournament play for these players, and the appearance of even more luck in tournaments.

In addition, the fact that many players are playing more tournaments means that they are far more comfortable making moves, such the all-in reraise that Varkonyi made with QTs. Against a player who will fold any marginal hands, such all-in moves are hugely profitable. In the past in the WSOP, there was, I would think, a fear factor that prevented many amateurs from getting "out of line" against pros and former world champions. But more and more of them are realizing that the same good aggressive game that gets the money in their $100 tournaments doesn't do that badly in their $10,000 ones.

Optimal strategy for players of average skill is rather different than the way that many players up till now have played no-limit tournaments and the way that "the conventional wisdom" characterizes these things. Example: You hold 87s in the 300 big blind. (there's 550 in antes and small blind in the pot). A player raises all in for 1200 from early position. You have about 4000 in chips. When a similar situation came up, I made what I considered to be a routine call, whereupon a number of players at the other end of the table practically jumped out of their seats. But folding here is a pretty significant EV mistake if you think the other player would raise with small pairs or big cards in addition to big pairs. For many players, it seems that all-in calls and the like are basically binary decisions: either you have the best hand or you don't. But this is a huge mistake with dead money in the pot laying you odds.

Now, the upshot of this is that many players have been (and will continue) laying down hands that are clear calls from a tournament EV perspective. In most poker situations, when a player is making the mistake of folding too much, it reduces variance. The same is true here. As more players begin (correctly) defending their raises when reraised and calling short all-in raises before the flop, it will increase variance. So not only do you have the effect of players playing better creating variance by reducing the edge of stronger players, but that effect is compounded by the fact that the very mistake that they are correcting was artificially reducing variance itself.

What does this mean? Tournaments have high variance. Excessively high. And it's getting worse. On the bright side, if you're losing money in tournaments, it's better this way.