To say things went off the rails for the Heartland Poker Tour during its latest stop in Las Vegas, Nevada would be an understatement.
Things began to go haywire before the series even started at the Westgate Las Vegas Resort & Casino, and the series was a public relations disaster for the mid-major poker tour and the Westgate throughout.
You keep using that word; I do not think it means what you think it means
When is a tournament guarantee not a guarantee? When it comes with a lot of fine print.
For several years, some poker tournaments have been using the word guarantee, when what they really mean is an estimated prize pool. If you read the fine print of some events with prize-pool guarantees you’ll discover that it’s not a guarantee, but simply based on attendance estimate.
To be fair, the HPT does have legitimate guarantees, but there is a minimum threshold that needs to be crossed before they kick in.
According to the HPT website for the Westgate series:
“Guarantee will not be offered for Event #1 with less than 250 entries; #3 – 60 entries; #4 – 60 entries; #5 – 60 entries; #6 – 40 entries; #7 – 300 entries.”
Basically, the HPT was willing to slap a $500,000 guarantee on its $1,650 Main Event ($1,440 + $210), but only if the event reaches 300 entries, which would put the HPT on the hook for up to $68,000 in overlay.
But as some tournament structure watchers have pointed out, for HPT events the rake is removed before the overlay is calculated. So, in the event of an overlay, the minimum rake they would collect is $63,000, while at the same time paying out a $68,000 overlay: worst case scenario, the tournament loses $5,000.
Still potential for $70k overlay. That's significantly different from "estimated" pool with zero chance of money added.
With that said, we've responded quite a few times on this. We've heard loud and clear that players prefer no guarantee and will pull future guarantees.
— Heartland Poker Tour (@HPTPoker) April 7, 2018
But the loose use of the word guarantee (I don’t have much of an issue with it) was just the beginning of the HPT’s Westgate problems.
With the registration period coming to a close the worst case scenario was unfolding, and the HPT and Westgate would be on the hook for close to the full overlay.
And that’s when this happened:
End of reg for the @HPTPoker Main Event we chose to pay a portion of the entry fee for select VIP. Full $1,650 entry$ accounted for in the $500k main event that continues through 4/9. WR is upholding all prize packages & guarantees are being upheld. Good luck to the participants
— Westgate Las Vegas (@WestgateVegas) April 8, 2018
Essentially, with the tournament on the hook for $68,000, they decided to pay half of the entry-fee for certain players. Since each entry would reduce the overlay, this was a win for the tournament — the final tally was 329 entries.
Paying half the buy-in for 25 players (I don’t know the actual number) would cost the tournament $16,500 (assuming they didn’t collect $165 rake from these entries but did collect the $45 staff fee). More importantly, by getting these players to put in $825 of their own money (totaling $20,625) they managed to reduce the overlay to just $26,240.
Assuming 304 full-price entries, had the tournament not offered the half-price buy-in it would have:
- Collected $50,160 in rake and $13,680 in staff fees
- Owed $62,240 in overlay
- Net of -$12,080
When all is said and done, by paying $16,500, the tournament significantly reduced its overlay liability.
- Collected $50,160 in rake and $14,805 in staff fees
- Owed $26,240 in overlay
- Net of +$7,420
Needless to say, this didn’t sit well with a lot of people, particularly one Allen Kessler, who described the potential overlay the tournament might be on the hook for as little more than a rake reduction.
No, HPT there wasnt a $26,240 overlay. The rake was just reduced from a ridiculous $1440+210 to a normal rake of $1520+130
329 x 1520 = $500K
The rest is rake. No overlay.
— Allen Kessler (@AllenKessler) April 8, 2018
In addition to the definition of “guarantee,” and the half-priced entries, Kessler is arguing that the HPT uses an inflated rake as a backstop against overlays.
Mistakes have been made
The good news is the HPT is working on coming up with terminology that is amenable to the community.
Not trying to shift blame. We made the wrong decision and won’t do it again.
I was genuinely confused to see players say they’d prefer no guarantee but understand that those few don’t speak for all.
— Korey (@HPTKorey) April 7, 2018
The tour also seems as frustrated as its players when it comes to the half-priced entries that were selectively given out.
According to Jeremy Smith, the HPT’s Tournament Director, letting certain people enter for half-price was a Westgate decision:
I did not ok this. It was a Westgate decision.
— Jeremy Smith (@HPTJeremy) April 8, 2018
Thanks @SavagePoker Yes I had no say so in this. It was a Westgate decision.
— Jeremy Smith (@HPTJeremy) April 8, 2018