If you missed the premiere showing of Face the Ace over the weekend, it's an interesting show. It changes the standard ESPN and cable TV poker show formula by injecting an element of game show flair. If you stripped it to its core, it's nothing but a very generous NL tournament freeroll for amateur players against professional players. The format is one-on-one with rising blinds that are unknown to the TV audience.
Based on last night's show, there appears to be asymmetric risk/rewards between the amateurs and the professionals. For the amateur players, they are risking very real money and are playing to the best of their abilities. The professional players have no direct financial risk in playing the one-on-one tournament. The pro players are playing for a $10,000 donation to the charity of their choosing, an admittedly weak incentive. I suspect the pros are not playing their A game.
I won't recap much of Saturday's show since it's available on Hulu, but the portly by lovable Don "the Basement Dweller" won a few favorable showdowns against Erick Lindgren and Howard Lederer. Don knocked both Lindgren and Lederer out of the tournament for a $200,000 win. Don has to make the difficult decision of whether or not to risk $200,000 for $1 million dollars against one more pro.
Lederer gave his opinion on whether Don should proceed. My chin shot straight up as Lederer strongly recommended Don continue with the tournament. He reasoned that Don's skills, while below that of the professionals, are decent enough that there will be value for Don to continue on.
For those of you who have read my previous Poker Romps, I am nowhere near the level of pro poker player. If I were to play against the pros they would cut me up. (Well, maybe they wouldn't cut me up. In cash games, I'd play maybe like the top 5% hands. There's no way I can out poker the pros. I'd fold everything but my top premium hands and defend my blinds against late positions with 10% hands. I wouldn't bleed very much with such a virgin tight strategy, but I digress.)
Anyway, Lederer is very correct to say Don has good value in risking $200,000 to go for $1 million dollars. It's very likely that Don does have positive expected value in risking $200,000 for $1 million. Even though Don isn't as skillful as the pros, the luck factor in being dealt good cards should give him enough positive equity.
Assuming a very conservative estimate that Don has a 30% chance of winning the tournament and the Pro has a 70% chance of winning the tournament:
EV = $800000*.3 - 200,000*.7
EV = $100,000
If the game is worth maybe $100,000 why shouldn't Don take the gamble? One word: Bankroll. It's very likely that Don will lose the last match up and there are no further games with such a positive advantage. Following the maximization of logarithmic wealth, aka Kelly Criterion, one should only risk approximately the fractional percentage of their edge adjusted for variance. Don's expected return is nowhere near 100% and there's considerable variance in the wager. If he'd risk it all, he's over betting and would never reach the "long run". He'd bust out before then.
To frame it in a more accessible way. Don is no longer playing with some "imaginary house money". That money is his. If instead of using his recent winnings, he had to write a check for $200,000 from his bank account to wager it for a 30% chance to win an extra $800000, should he do it?
Dumbing things down even further. $200,000 is life changing for a man of modest means like Don. He's a truck driver making $60,000 a year. $200,000, after taxes is about $100K+. That would be more than enough for a down payment for a house, a nice vacation, and a good start on his retirement plan. $1 million dollars is even better, but he's risking all of the nice things possible with $200,000.
That was an overbet. Lederer should not have advised Don to continue with the tournament. It just doesn't make for good gambling sense.
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