Overlay Calculator

Better does not mean good. Stop thinking that overlays are free money. Or even good for that matter. An overlay is simply an amount of money provided by the casino to bump up a prize pool to a guaranteed level. Better? Yes. Good? Not always.

Instead, think of them as a rake reduction mechanism. In every tournament, part of a buy-in goes to the prize pool and the rest to the rake. When a guarantee doesn't get hit, it essentially changes the stated cost breakdown (e.g. $50 to prize pool + $25 fees) to one that satisfies the math of the guarantee ([Guarantee] / [Entries] to prize pool + [Remainder] to fees). Often, tournaments with overlays are still a bad deal because they don't effectively lower an enormously high rake.

Stop being impressed with the dollar amounts of overlays and instead focus on how they can lower the rake. Do this by calcuating the number of players it takes to get the rake down to specific targets for guaranteed tournaments:

For example: A $50 + $20 + $5 tournament has a $5,000 guarantee. The prize pool gets fully funded from entries at 100 players ($5,000 / $50 per/player). If only 83 people enter, it results in a $850 overlay ($5,000 - (83*$50)). Awesome, right?

No, not really. Better? Yes. Good? No. That overlay doesn't sweeten the tournament enough.

Full rake on that tournament is 33.3%, at 83 entries 20% of every buy-in is still not going to the prize pool. Still not good, but better than horrible. With that guarantee and that number of players, $60.24 ($5,000 / 83) of every buy-in is going to the prize pool and $14.76 ($75 - $60.24) goes to fees. Better, but not good.

This is how guarantees and overlays should be judged - by how much they lower the rake. So before you jump into a tournament that's going to generate an overlay, properly evaluate it using the above calculator to find if it is truly a good deal.