Effective Odds

Effective odds are the ratio between the amount of money you have to call on the current betting round to the amount of money you expect to be in the pot at the end of the betting round. Effective odds are very similar to implied odds, it requires a good knowledge of your opponents likeliest actions, they are most appropriately applied in a multiplayer environment.

Example: You hold AcQc hole cards under the gun in the early stages of a Sit and Go tournament and decide to call pre flop, the blinds are 10/20 and 4 other players limp in behind you, the big blind checks; there are 6 people, including yourself, involved in the hand and 120 chips in the pot. The flop brings a club flush draw, you expect to win the pot if you hit your flush; the small blind checks but the big blind makes a near pot sized bet of 100 chips meaning you have to call 100 chips to continue and there are 220 chips in the pot. The pot odds to draw to your flush are 4.2/1 but the pot is only offering you slightly more than 2/1 odds; based on your pot odds, you are not getting enough value to continue, but your effective odds could mean there is value in calling.

There are 4 players to act behind you, if you are certain a number of them are likely to call the 100 chip bet to see a turn card, your effective odds improve, if you feel a large number of the players behind you will fold, your effective odds deteriorate. Assuming the majority of your opponents are loose, if you expected at least 3 out of the 4 players to call the 100 chip bet, your effective odds would be over 5/1 because at least another 300 chips would be added to the pot, swelling it to 520 chips from the current 220. Using effective odds can make the difference between chasing a draw and folding it, your read on your opponents must be reliable though, otherwise you are likely to find yourself in situations which offer poor value.