Pot Odds, Equity and Equity Realization

We welcome Dustin ‘Oblioo’ Goldklang on the podcast for his first appearance, and the subject is pot odds, equity and equity realization. These are fundamental concepts every poker player must know, and many players are familiar with. Whether you’re new to the game or have these ideas under your belt, there’s value to be had with Goldklang’s detailed breakdown of how odds and equity factor in to a winning poker strategy. For a perspective on universal poker concepts from a coach and pro, don’t miss this episode.

Featuring: Shaw, Goldklang

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Hey, Dustin, welcome so much to the podcast and it’s so great to have you hear to talk to us today.

Dustin: Thanks, Zac. Yeah, thanks for having me on. I’m looking forward to this.

Awesome. So our listeners probably know, or may not know you’re a Red Chip coach on the site now and you’re submitting some really great videos and you also have your own site.

This article caught my eye on pot odds equity and equity realization and I thought these are three concepts that are fundamental. They’re really foundational concepts in poker strategy. Whether you’re just getting into poker or maybe you’ve been playing for a while, you’re familiar with these concepts. They’re really important to know inside and out. You need to know the rules to estimate probabilities to win or tie for starting hands, in addition to many other things.

I thought we’d talk to you about those concepts since you laid them out so clearly and to start with, pot odds. What are pot odds and how do we apply them to our poker decision making?

Dustin: Sure. So I think most people are kind of familiar with at least the term. Most people have at least heard of pot odds. Put simply, it basically just refers to the price you get when you’re faced with a bet or a raise. Some basic math goes into it. If the pot size is one for example and your opponent bets one into one, then your pot odds are two to one. Because you have to put in a bet size of one and there’s two already in the pot.

How that translates to playing poker is you need 33% equity on average for that to be a break even call. I think that a lot of people understand pot odds kind of intellectually. But one reason I kind of break it down in the article is because there seems to be oftentimes a discrepancy between people understanding them and actually implementing them.

An example of what I mean by that is I mentioned a similar example in the article. A lot of kind of semi-serious recreational players, maybe they’re in a hand and they make it to the river and their opponent makes a bet into them on the river. Oftentimes their thought process might go something like, “I’m probably beat here, so I fold.” Or maybe a slightly more specific thought would be, “My opponent usually has top pair and I have second pair, so I fold.”

But in reality, when someone says “usually” or “probably” all that really refers to is more than 50% of the time. So that thought process would only really work if your opponent bet literally infinite, infinity, which is impossible.

A better way to approach that spot is to look at pot odds. So if your opponent bets half pot, you only need to have the best hand 25% of the time or more than that, to have a profitable call in the long run. Poker is all about making decisions that are profitable in the long run.

If your opponent bets half pot into you on the river, if your estimation is that you lose approximately 70% of the time, you should still call. So kind of like calling and expecting to lose is actually a good play in poker pretty often. So that’s kind of the counterintuitive aspects sometimes.

For the more recreational players or players starting out who are looking more to have fun and win pots, that can be a tough pill to swallow.

I feel like a lot of those types of players have sort of a casual understanding of pot odds in the sense of, “Well, the pots so big I gotta call this small bet.” But really there’s a lot of moving parts. You talk about the relationship between pot odds and equity and equity realization in terms of how you put an opponent on a range and use that to calculate equity.

Another thing that a lot of recreational players may tend to do is, when they’re in a hand with an opponent, they might just put an opponent on a specific hand. But it’s extremely difficult, if not impossible, to consistently predict your opponent’s exact hand. More likely you can predict a range of hands that they have.

So again, if we go back to the river spot, if your opponent bets half pot, you might think your opponent sometimes has this hand, let’s say KQ on a queen-high board or something. Maybe they have KQ 50% of the time and maybe they have a bluff 50% of the time.

Of course, when you’re actually hand reading, you’ll want to think about maybe they missed their flush draw so they have those hands in their betting range on the river. Maybe they missed a gut shot and they get to the river with six high and that also goes into their betting range.

So yeah, you just want to think about the whole range of hands that your opponent is betting or just has in any given spot and make your decision based on pot odds and based on that range of hands.

For a more seasoned player, they’re more used to calculating pot odds, keeping an eye on position, and stack sizes and all these other things. But for a newer, more recreational players, often struggle with the thought process. What am I focusing on first and foremost? And then working down the line, what is next most important.

And it seems like, in this scenario when we’re talking about pots odds, you absolutely have to be working on constructing a range for your opponent in order to really be able to calculate your equity, right?

Dustin: Yes. That’s true.

So in terms of equity realization, that seems to be another aspect here and you go in your article you talk about some of those aspects, position, stack depth, hand play- I mean let’s just go through them one by one and kind of talk about how they influence our decision.

So in terms of position as it relates to pot odds, you’re essentially saying this is going to affect whether your equity actually gets realized or not?

Dustin: Exactly. So basically maybe we should kind of define or try to define equity realization first?

Sure.

Dustin: It basically just refers to how much of your equity you actually realize. So that’s kind of using the same words to explain it.

So if equity is explained as the percentage of times you would win the post if both players go all in. Or another way to look at it is, the percentage of the pot you quote unquote deserve if you are all in with your opponent. Then equity realization is what percent of your equity you actually get to see based on future streets and whether you get bluffed or fold or things like that.

In the article I discuss kind of the five factors of equity realization. Position would be the number one. Are you considering that above these other things? Or do you see these all as part of the same thing?

I order them in rough order of importance, in my opinion. I don’t think you can make kind of a strict tier list for them just because some of them influence each other. And a lot of it just depends on the situation.

So yeah, number one: I have position. This is I mean probably the easiest factor to just see because it’s quite obvious who is in position and who is out of position. So if you’re in position on average you get to realize more than 100% of your equity. And the player out of position on average is gonna be able realize less than their real equity or whatever you want to call it.

Since the player acting last has more information on every street, they can get more value with their strong hands. They can kind of minimize losses when they have weaker hands. They can bluff more. This is just since they act last, they have more information. They also have the opportunity to see a free card on the next street if they want to because if the out of position player checks, then the in position player can just say, “I want to see a free card. Let’s do it.” But the out of position player does not have that option.

Right. Okay. So that gets into that. Now in terms of stack depth, and we talk a lot about SPR on this podcast as being really, really important for post flop planning. Can you talk a little bit about how stack depth affects the equity realization?

Dustin: For sure. So basically stack depth is closely related to position in terms of equity realization because the deeper the stack depth, or the higher the SPR, the greater the advantage position is. So the greater the player in position’s advantage is.

So if the SPR on the flop is gonna be one tenth of the pot, then you’re probably gonna be able to realize all your equity whether you’re out of position or in position and it’s not gonna matter too much.

But if you’re 200 big blinds deep or more, the player in position is gonna have a lot more leverage and so that’s going to again, allow the player in position to realize more than their fair share of equity. On average, assuming or taking into account all these other variables. And similarly, when you’re deeper and you’re out of position, you’re going to have a harder time realizing close to all of your equity.

One other thing on your list here that we don’t really talk about a lot on this podcast — In fact, I’m not sure if we’ve actually addressed it directly yet — You call it hand playability. You talk about Matthew Janda who wrote Applications of No Limit Hold ‘Em. He calls it robustness. What is this concept of hand playability or robustness about?

Dustin: Sure. So I’m actually not positive that he coined robustness but that’s who I heard that term from. But basically it- the way that I think robustness is simply defined is just basically a hand that gets to realize their equity well or retain their equity well.

The reason I call it hand playability is because I think that makes it easier to kind of conceptualize what those hands actually are. So suited connectors for example, 98s or, whatever, any suited connectors pretty much. Those hands are quite playable, especially again this kind of relates to stack depth, like the deeper you are the more playable these hands are.

But the reason a hand like 98s has such a high degree of robustness, gets to realize so much of its equity, often more than its fair share of equity is not only because it can make straights and flushes but because it’s often gonna pick up some kind of weak enough draw that it can be aggressive.

So whether that’s a back door flush draw and a back door straight draw on the flop. Maybe picks up a gut shot on the turn, something like that. All of these are situations where we can be aggressive with this hand because it has enough equity to do that. And then on the river, this is one of the most important aspects of these hands. On the river, it’s very often either going to be a very strong hand, like a straight or a flush, or complete air like nine high or eight high or whatever.

Basically, this hand turns into a polarized hand on the river and that’s the perfect situation to make a really big bet with on the river and again be aggressive.

If you have the nuts on the river, then you obviously want to bet big and hope to get value. And if you have seven high on the river, that’s almost always the spot you need to be bluffing. Which again gives you a chance to win the pot because your opponent can fold.

So on any given flop or turn or river, usually one of the players that’s in the hand is going to have A, the highest percentage of not combos and the way that I like to define nuts on the flop is basically hands that want three streets of value comfortably on the most run outs. So usually that’s gonna be two pair plus. It might be pocket aces as an over pair plus something like that. It just depends on positions and things like that.

But one player’s gonna have a high percentage of those hands in their range that are very strong hands basically. And that’s the player that has the range advantage. That’s what range advantage means.

That player, according to poker theory and practice, is the player that should generally be doing more betting on that street. On whichever street they have the range advantage. Usually in no limit it’s one player is gonna have the range advantage the whole way. Probably usually. But yeah, that’s basically what range advantage is.

If someone has a range advantage on any given street, that actually allows them to realize more equity with their entire range, including their weak hands because they can bluff with their weak hands. And since they have all these strong hands in their range as well, their opponent with the range disadvantage is going to have to fold more often. If that makes sense.

Makes sense. We talk a lot on the podcast about the dangers of thinking about the absolute value of your whole cards. That’s a common mistake that a lot of beginners make. And range advantage seems like the antidote to that thinking. You’re not thinking in terms of your whole cards, but in terms of what your range is likely to be versus your opponents range.

Dustin: For sure. And I think it’s important to do both. You mentioned that some players have a tendency to focus too much on just their hole cards. I have actually had some students who have a tendency to focus too much on their range and not enough on their actual whole cards. So you have to, definitely have to do both.

Gotcha. Since we’re talking about it, I mean skill is a major part of a player’s advantage and edge at the table. How does the skill advantage factor into the decision making?

Dustin: Right. So I did put skill advantage as kind of the last factor of equity realization because it is a factor. The more skilled one player is, the greater percentage of the pot they are going to win on average and therefore they’re able to realize more equity.

I do think it’s the least important because for one thing a lot of players tend to overestimate their skill and for another thing, it’s the least important to focus on by far. If you’re focused on all these other things then your skill advantage will kind of come out naturally. But it’s not really worth focusing on unless there’s an extremely weak player and you want to play a lot of hands with them.

In terms of math, I’m one of those players that doesn’t have a strong mathematical background and I was excited to see your table of equity shortcuts here. Where you talk about you don’t really have to be calculating, running a formula every time you enter a pot. You can kind of memorize the relationship to a bet size and the equity that you have in order to simplify the math, right?

Dustin: Exactly. I do not have the strongest math background either. So I actually made this table for myself a while ago and occasionally I’ll still just bring it up every once in a while, maybe while I’m playing. But yeah it basically shows when you’re faced with a bet, depending on how big the bet is in relation to the pot, how much equity you need to continue profitably.

So the ones that I think everyone should just know and if you don’t know I would suggest memorizing them, is versus a half pot bet, you need more than 25% equity. Versus a full pot bet, you need more than 33% equity.

And those are kind of like the two main ones. If there’s a bet in between then you need maybe 30% equity against the three quarter pot bet. If you are in games where you’re faced with a lot of over bets, then I go down all the way to five x pot where you need 45% equity to continue.

So when we’re determining what our equity is and we’re using our ranges to do so, what is your thought process? Are you just kind of using the shortcut, doing the quick math, and then trying to make a decision based on that? Are you focused more on, “Are my ranges correct given the information I have?” I’m just curious what the main pieces of information you’re focusing on and what is intuition?

Dustin: Sure. It depends on the situation. In terms of kind of how I use that information. One kind of side note, another way you could interpret this chart is, instead of bet size, you could basically replace bet size with SPR.

So if in the chart I say, facing a bet size of two x pot you need 40% equity. Another way to look at that is if the SPR is two, you need 40% equity against a getting it in range.

So that’s one way that I actually use it. If I know that I want to be getting all the money in on the flop and the SPR is let’s say two point five, I know that on average I need 42% equity so I’m gonna think about what my opponent’s range is for actually getting all the money in on the flop. And if I think I have more than 42% equity against that.

On occasion, I actually will — if I’m only playing a couple tables — I actually will bring up Equilab and run the numbers while I’m playing. But more often than not, that’s kind of off table work to do on your own with kind of one of these simple free equity calculators.

So that’s one way I use the chart. Another way is again facing a bet on the river is a very common example because if I have a bluff catcher on the river and my opponent bets three quarters pot, in that case what I do is I try to get more specific about all of the combinations of hands I think my opponent is betting.

I don’t know if it’s worth creating a random example, but if divide my opponent’s betting range into value hands and bluffs on the river and I’ll kind of count up all the combinations of each, and if I think that I beat more than 30% of those combos then I’ll make a call.

Right on. I mean that’s a totally clear example and I hope our listeners really got a better understanding of the factors that go into the thought process behind calculating pot odds and equity realization.

This is all from a really great article on your website and I want to point players to it. So can you tell us about your website and other ways that people can get in touch with you?

Dustin: Sure. So the website I started pretty recently. There’s only a few articles right now, but there’s also website reviews, places where you can play online poker, things like that. And the website is totalonlinepoker.com. So you can go there and check it out.

All the strategy material is free. The way that I profit from it is I use affiliate links to the poker sites. So if you sign up to a poker site through me, I get a small percentage of your rake. And for people that do that, I make sure to try to be as helpful as I possibly can. I’m open to anyone emailing me with strategy questions, anything like that. Because the more you win and keep playing, that’s good for me too.