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The GameMaster's Secrets:
Playing Blackjack Tournaments as a Business - Part 1

Although I've been playing a lot of Poker tournaments lately with a goal of teaching myself how to win at them, Blackjack always has been - and probably always will be - my first "love." While Blackjack tournaments are hardly a new innovation, there's definitely been a resurgence of interest in them, probably because Poker tournaments have become so popular on television. While Blackjack tournaments aren't nearly as exciting (in my not-so-humble opinion), the opportunities offered to the skilled player in the form of good, ol' American $$$ cannot be ignored. Just as an example, my friend Ken Smith (he of www.blackjackinfo.com/ fame) who is a VERY experienced tournament player, recently opened a new site called BlackjackTournaments.com (that's the URL, too) and, as this is being written, there's a listing of no less than 23 events with over $800,000 in prizes scheduled for the first two weeks of November, 2004. Of course, this is a nation-wide listing, so the events are located all over the map but the majority are in Las Vegas, yet I see Biloxi and Tunica listed, as well as Gary, Indiana and Bossier City, LA.

Point made? Okay, so how can we turn these opportunities into a business, you ask. Perhaps you already know that any kind of tournament play, be it Blackjack, poker, bridge, chess or bowling typically has what we call "high variance". What I mean by that, is you cannot expect to come in first every time you play; in fact, you're more likely to end "out of the money" most of the time. However, if you're a skillful player and you participate in tournaments that have a minimum of 100% player equity, somewhere in the long run you'll at least break even. (For an explanation of this concept and a lot of other ideas on playing in Blackjack tournaments, see my series "Tournament Blackjack Training", which is in the archives on this page.)

Playing tournaments as a business is a lot like playing Video Poker as a business. To succeed, you have to not only be skillful, but also have to have a rather large bankroll set aside. Video Poker is a high variance game, which basically means you lose most of your playing sessions, but eventually you'll hit a "jackpot" like a Royal Flush and that (hopefully) gets all of your $$$ back, plus a profit. Blackjack, the game, is not a high variance game in the grand scheme of things, because you usually cannot win or lose much more than 3 or 4 bets per hand. Let's say you make a bet, get a pair of 9s, split them and then double on both. That's a total of 4 bets and, while you might lose them all, such a situation is rather rare. Most often, you'll either win one bet or lose one bet at a Blackjack game, so the variance for one hand is about 1.32 bets (depending upon the rules), whereas the variance may be 20 times that, or more, in a Video Poker game. It's the same thing in tournament play. While the variance of one hand of Blackjack is low, the variance for a Blackjack tournament is very high. If you're a $5 Blackjack player, it'll take a fairly large amount of play to lose $500, but you could easily lose that amount in one tournament, especially if the entry fee is $500.

So, before we can use Blackjack tournaments to produce a (relatively) consistent income, we must reduce the variance to an acceptable level. That can be done in several ways. The first is to become a skillful tournament player and the series of articles I mentioned earlier will help you do that. Because there's software that'll recreate Blackjack tournaments on your computer, there's no risk of loss as you're learning and/or increasing your skill. The second way to reduce the variance is to play a lot of tournaments. Assuming you're a skillful tournament player, the more you play, the more opportunities you get to have your "edge" kick in. Remember, you're not playing against the casino in a tournament. You're competing against the other players, so the more skillful you are in comparison to them, the better your chances are. Luck will still enter into it, but the luck factor is reduced as you gain skill and exercise that skill in more and more tournaments. It'll never be completely removed, although it will at least become less important. But that's not what I'm here to show you.

What I want to talk about is the most important variance-reducing secret I know for Blackjack tournaments, which is team play. Let me paint a scene here. Let's have "XYZ" casino sponsor a tournament that costs $500 and the entries are limited to thirty 7-player tables, which is 210 players. Let's further assume the casino does this as a promotion, so there's no "rake" or other entry fee, so the total prize pool is $105,000. While prize structures vary widely, let's say this tournament awards all of the winners of the first round (one per table or 30 players) $500, which puts them at breakeven. That leaves $90,000 in the prize pool and let's say it all goes to the final table of 7, with the winner getting $36,000, 2nd place getting $18,000 and so forth, down to $2500 for the 7th place finisher. What the actual numbers are isn't important, but you can see that the odds of anyone winning the tournament (based on luck alone) is 1 in 210. This basically means that you'd have to spend $105,000 to make $30,000 and that's not a formula for success. In all fairness, your odds of being a winner in the first round, where you'd get your entry fee back, is 1 in 7 and you'd also have some probability of ending in 2-7 at the final table, so in the long run you'd get back all of your entry fees because this tournament offers 100% "player equity".

That said, who wants to play 210 tournaments at $500 a pop in order to break even? Sure, you might win your first time out, but care to bet on it? The reality is, approaching Blackjack tournaments by yourself is a tough way to go. However, if you can create a team to approach this same tournament, the variance - losing most of the $500 entry fees, while occasionally winning $500 and, once in a blue moon, winning $2500 or more - can be greatly reduced. Let's say you have 6 friends who are interested in playing Blackjack tournaments and they want to be a part of your team, which now consists of seven fearless warriors. Basing everything on luck alone, it should now take only 30 tournaments for one of your teammates (or you) to win one. Already, we've cut the odds down considerably - we haven't increased the "take" any, because it collectively cost you seven times the entry fees to accomplish that - but we have very definitely cut down the variance. Now, instead of playing 210 tournaments to get to the breakeven point, only 30 are needed.

The reason I'm making such a big deal about variance here is that it works both ways. While the long-term is still going to ultimately prevail, what happens on the road can be quite dramatic. For example, there's nothing to stop anyone from winning two tournaments in a row or, perhaps more reasonably, having two or three of your teammates get "in the money" each tournament you play. The more players you field, the more often your team will win at least something. Getting ahead of the curve, so to speak, makes the trip to the long term a much more enjoyable ride. Of course, we cannot rely upon something like that happening, but putting yourself in the position to allow it to happen is a direct benefit of team play at Blackjack tournaments. There are more.

If you were to play a lot of tournaments over the next year on your own, there's every possibility that your cash flow situation will suffer. After all, how many entry fees should you set aside for playing, say, 30 tournaments? Is 5 enough, 10? In reality, you probably need at least 20 entry fees, if the type of tournament you're playing has a structure where you stand a reasonble chance of getting your entry fee back. No matter how you cut it, that's a lot of $$$. But, if you're playing with a team, the ups and downs of your bankroll undergo a "smoothing" action; the highs aren't as high and the lows aren't as low. That's because a team arrangement naturally includes some sort of revenue-sharing plan and team money management is what I'll talk about next time.

See you here for Part 2.