Your Quick Guide to Understanding Tournament Guarantees

Have you ever been confused by the massive numbers often flung around under the moniker “Tournament Guarantees”? Here’s a simple guide to understanding what guarantees are, and whether the stated numbers are true guarantees… or not.

The first thing to remember is that a tourney or series guarantee is always -- always -- a marketing and recruitment tool. WIth that in mind, bigger is always better. A larger turnout means more net income for the site or venue hosting the events.

Yet offering guarantees always involves some risk. Most operators use actuarial projections to come up with their guarantee numbers, considering prior history, recent site or venue traffic, known competition on planned dates, and several other extenuating factors. There’s a bit of the “Price is Right” involved. The idea is to “bid” (promote) as high a number as possible without going over, which in tournament-guarantee terms would mean creating an overlay. A tourney overlay means the house has earned less than it could have, which is why overlays seldom occur.

Overlays aside, there are important things about guarantees to remember. First, be aware of the difference between singular and collective guarantees, the latter term applying to an entire series of events. Imagine a major series with an announced guarantee of, say, $50 million. That’s a huge number, but it’s invariably a collective guarantee. That $50 million guarantee is almost always the sum of dozens of smaller guarantees being offered on individual events. 

In our $50 million example, there might be a handful of events with guarantees of a few million dollars; many more might have guarantees of hundreds of thousands of dollars each. However, you won’t find any single event with a $50 million guarantee. That number is for marketing, because, well, bigger is better.

There are two true concerns for players to keep in mind regarding tournament guarantees: beware the asterisk, and read the fine print. If you encounter a guarantee’s blurb that’s marked with an asterisk (*), it almost always leads to a line reading, “* Based on XXXX entries.” In other words, the guarantee will only be paid if a certain number of entries is reached, and that’s invariably set at a number that means no overlay can exist.

Truth is, this is a fake guarantee. Unfortunately, such fake guarantees proliferate, both live and online. Sometimes, an asterisk should be present but has been omitted, which is part of why reading the fine print about the guarantee’s specific rules is also a must. 

Keep these basics in mind whenever tourney guarantees are offered. Learn to distinguish real guarantees from fakes, and learn what real guarantees cover. You’ll avoid unwelcome surprises.