Pot Odds, Equity, and Equity Realization
Pot odds, equity, and equity realization. You are likely familiar with at least some of these terms, and the ideas may seem relatively simple. All of these topics, however, can at times be complex and even counter-intuitive. By the end of this article, you will have a complete understanding of what pot odds are, when they are relevant, and how to effectively implement them into your game. You will learn how to calculate equity, and I will also introduce the concept of equity realization and explain how it affects the impact of pot odds on our decisions at the poker table. So buckle up and let's dive in.
Pot odds in poker simply refers to the price you get when faced with a bet or a raise. For example: let's say the pot size is $1, and your opponent goes all-in for 100% of the pot. The pot now equals $2, and the amount for you to call is $1. Therefore, your pot odds are 2:1 (two-to-one). In order for your call to be break-even, you need 33% equity---after you call, the pot will be $3, and you need to win back at least your call of $1. If you have more than 33% equity then you should call, and if you have less than 33% equity you should fold.
Let's put this into practice.
$0.50/$1 No Limit Hold'em. We are in the big blind, and everyone folds around to the button, who goes all in for 5 big blinds. The small blind folds, and now we have a decision to make: should we call or fold?
First let's look at our pot odds: There is $6.50 in the pot (the button's shove plus the blinds). To call, we need to put in an additional $4. Our pot odds here are 6.5:4. To determine how much equity we need, we can do a quick division problem: the amount to call divided by (the pot size plus our call).
amount to call
(pot size + amount to call)
(6.5 + 4)
So we need more than 38% equity to make a profitable call.
How do we figure out how much equity we have? First we need to make an assumption about the button's shoving range. Let's assume the button is shoving a range of 40.9%:
(Incidentally this is an optimal shoving range for BTN with 5 big blinds.)
Now we need to calculate the equity of our hand against this range. The simplest way to do this is with an equity calculator. I recommend Equilab, which is 100% free to download:
Once you have Equilab installed, enter your hand in one of the "hand range" boxes, and select your opponent's range with the hand range selection pop-up. Now click "Evaluate", and Equilab will show you how much equity each hand/range has. Let's assume we have T♠ 7♠:
As you can see, we have 39.31% equity, which is greater than the 38% needed for a break-even call. Now we know that T♠ 7♠ is a call in this spot!
Clearly we cannot do all this at the table. But working on this away from the table helps improve your knowledge and intuition while playing. I encourage you to play around with Equilab and figure out what other hands you should be calling or folding in this spot.
Now let's think about situations where our opponent makes a bet on the river, and we are not sure whether to call or fold. A lot of players make the mistake of thinking something along the lines of, "I am usually beat here, so I fold". Do not fall for that false logic trap! Instead, we want to emphasize pot odds to make our decision. If our opponent bets 1/2 pot, we only need to have the best hand more than 25% of the time to make a profitable call. In other words, even if we expect to lose 70% of the time, we should still call! This is counter-intuitive for a lot of people, but if you can begin thinking this way, you will dominate your opponents in the long-run.
Even though on the river we either have 0% or 100% equity vs. our opponent's actual hand (ignoring split pots), we can still use Equilab to figure out how often we have the best hand against our opponent's range. First, calculate your pot odds to determine how much equity you need for a break-even call. Then enter the board cards, select what you believe your opponent's betting range to be, enter your hand, and click "Evaluate" to see if you do indeed have more than the required amount of equity.
In the example above, as long as our opponent's bet size is less than 75% of the pot, we should call.
Earlier in this article, you learned the equation for calculating pot odds. At the table, however, you will want to be familiar with some basics, such as knowing that you need 25% equity against a half pot bet, and 33% equity against a 100% pot bet. Here is a chart I put together so we can see at a quick glance how much equity we need against a shove or river bet of any size (betsize is expressed as a fraction of the pot):
Memorize the equities in bold, and feel free to save this chart and use it while you're playing online.
The Issue of Equity Realization
Up to this point, we have only examined situations in which our opponent has either gone all-in or made a bet on the river. How do things change when we are faced with a non-all-in bet with deep stacks and future streets left to play? This is where we need to start thinking about equity realization.
Let's say we are in the big blind at a 6-max table with Q♥ 4♣. UTG (under-the-gun) min-raises, and it folds around to us. We are 100 big blinds deep. If we examine our pot odds, we'll see that we are getting 3.5:1, and we seemingly only need 22% equity to make a profitable call (1 / 4.5 = .22). Let's use Equilab to take a look at our equity vs. a tight, 13% UTG opening range:
As you can see we have 29% equity, which is well above the 22% needed dictated by our pot odds. Does that mean we should call? Well... no. The reason we cannot make a profitable call here is because our equity realization factor in this situation is extremely low. Due to the threat of bets on future streets, we are unlikely to realize anywhere near our full 29% equity. Let's take a look at the five factors that contribute to equity realization:
In most cases, the player in position is able to realize more equity than the player out of position. In my article on Preflop Play in No Limit Hold'em, I explained:
Being in position is inherently an advantage over being out of position. Since the player in position acts last on every street, they are able to extract more value with strong holdings, minimize losses with weak holdings, bluff more effectively, and realize equity more easily than the player out of position.
2. Stack Depth
Stack depth goes hand in hand with position. The deeper the effective stacks are, the greater advantage the player in position has. When we tie that back into equity realization, this means that when stacks are deeper, the player in position will realize more than 100% of their equity, and the OOP (out of position) player will realize less. When stacks are shallower, this discrepancy gets smaller, and position becomes less of a factor.
3. Hand Playability
Some hands realize their equity better than other hands. Matthew Janda, author of Applications of No Limit Hold'em and No-Limit Hold'em For Advanced Players, calls this factor robustness. Suited connectors and suited one-gappers (hands like 9♥ 8♥ and 8♣ 6♣) have a high degree of robustness, since they do not lose equity even when our opponent's range gets stronger. In other words, when a hand like 8♣ 6♣ wins at showdown, it usually doesn't matter if our opponent has top pair, two pair, or even a set, because the winning hand will be a straight or a flush. These hands will often pick up draws on the turn and either be a very strong hand or a very weak hand on the river, so we can use them to be aggressive, therefore often realizing more than 100% of our equity.
Pocket aces also retains its equity extremely well, because with aces you almost always either get to showdown or win the pot on an earlier street. Disconnected off-suit hands like K♣ 4♦ retain their equity quite poorly, since they are often a bluff-catcher at best, and are forced to fold on many flops and turns.
4. Range Advantage
On any given flop, turn, or river, usually one player has a higher percentage of nut combos (sets, straights, overpairs, etc.) in their range. This player has what we call a range advantage, and therefore they can---and should---be more aggressive on earlier streets than their opponent. This allows them to realize more equity with their weaker hands, since the player with the range disadvantage is forced to fold so often. When you are faced with a preflop raise or a bet on the flop, plan ahead and ask yourself: who will most likely have the range advantage on the following street? If the answer is your opponent, you should consider folding some of your medium-strength hands right away, despite getting seemingly-reasonable pot odds.
5. Skill Advantage
Finally, the stronger player in a hand is able to realize more equity, on average, than the weaker player. This is the least important of these factors, as many players tend to overestimate their skill edge. Just remember that you can play more hands profitably against very weak players, since you will be able to realize more equity against them.
Now let's jump back to our Q♥ 4♣ BB vs. UTG example, and consider each of the equity realization factors above: We are out of position with deep stacks; our hand has poor playability, being off-suit and disconnected; and we will have a range disadvantage on the vast majority of flops. Even if we have a skill advantage, we cannot use that to overcome the other 4 factors working against us. Clearly we can see that Q♥ 4♣ is going to realize much less than 100% of its 29% equity, and we should be folding it vs. early position raises.
Equity realization is not an exact science, and---for better or for worse---there's no way to plug in numerical values for all these variables and come up with an accurate measure of our "true equity". Instead, you just need to keep these factors in mind and make educated guesses about how they affect your equity.
When you are in position with deep stacks, you can often call with less equity than your pot odds suggest, since you can use the equity realization factors to your advantage and realize more than your "fair share" of the pot. When you are out of position with a disconnected off-suit hand, you need to be a lot more careful.
I hope this article has been helpful for you, and you now have a strong grasp on some basic poker theory. Feel free to get in touch if you have any questions, and good luck at the tables!
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