Pot equity is a term that gets tossed around at the tables a lot and quite often, people aren't entirely sure what it actually means. Part of this is because pot equity is intricately related to many other concepts in poker, including value betting and expected value (EV), but strictly speaking, none of these terms are actually synonymous. This is why it's imperative to keep them separate in your head to avoid confusion and making uninformed (or misinformed) decisions.
So what is pot equity?
Pot equity is the amount you can mathematically expect to win given the current deal. Pot equity is calculated by taking the amount of money in the pot and then multiplying it by your probability of winning. For example, if the pot has $100 and you have a 50% chance of winning it, you have $50 equity in the pot. Again, equity does not refer to how much you WILL win; it only refers to how much you can rightfully expect to win given your hand at a specific point in the game.
And speaking of specifics...
You should note that when we are talking about our pot equity, we are talking about the current deal, and as such, the current point in the current deal. We’re talking about specific circumstances. Your pot equity pre-flop is not going to be the same as your pot equity on the flop, turn or river.
Let's look at an example to flesh this concept out a little more.
Player 1 holds K♠,Q♠ pre-flop and Player 2 holds A♦, 9♥. At this juncture, there's $50 in the pot. By calculating our poker odds (either by yourself or using a poker odds calculator), we discover Player 1 has a 45.45% chance of winning and Player 2 has a 54.09% of winning as it stands.
Since there is $50 in the pot, we can determine that Player 1’s share of the pot (i.e. his or her equity) is roughly $22.73 and Player 2’s equity is rough $27.05.
(money in the pot) x (winning odds) = Pot Equity
At this point pre-flop, Player 2 has the better odds and more equity.
However, let's say a flop comes down with 5♠, T♦, 2♠. Player 1 bets $10 and Player 2 calls, increasing the pot size to $70. Suddenly the tables have turned and Player 1 now has the better odds (56.06% vs. 43.94%) and more equity ($39.42 vs. $30.76).
Pot Equity = Fool’s Paradise?
All this is fine and dandy, but the fact of the matter is we very rarely know exactly what our opponents’ are actually holding, so we have no way of accurately accessing our pot equity while in the hand. Doesn’t that make relying pot equity a little like living in a fool’s paradise?
We can understand the question, but the answer is an emphatic NO.
Why It’s Important to Know About Pot Equity
Pot equity allows you to understand how much equity you have in a hand, and even when you come by this knowledge retrospectively, it teaches you about how you should play your hands in the future. This is why pot equity is such an important part of value betting. Pot equity is not so much about gleaning information about the here and now, but about getting a glimpse of the big picture by understanding what hands best open avenues for value betting.
Pot Equity and Value Betting
Let's look back at our example:
Player 1 was drawing toward a flush with 56% pot equity, so for every dollar Player 1 can get into that pot, he also stands to score the $.056 (so the bulk) of it - and as a general rule, if you have upwards of 50% equity in a hand, you are going to want to drive as much money into the pot as possible. Sure, the turn and river could deal you duds, but overall, the odds are in your favour. This is value betting, and this is one of the main reasons understanding pot equity is so important: it allows you to step out of the hand, as it stands, and view your decision making in terms of your overall game. Playing winning poker is not just about winning a specific hand; it's about winning lots of hands over the long run.
Pot Equity and Pre-Flop Strategy
Getting a handle on pot equity will also help you optimize pre-flop performance so you can win more (and more often) overall. More specifically, pot equity illuminates why you should only raise with premium hands pre-flop. Of course, it’s not the only reason; raising pre-flop also allows you to control the action and can reduce the number of players in the pot. Still, knowing what hands have good pot equity allows you to get the most money in with the best hands.
Once again, it comes down to betting for value, and because you’re upping the ante with a pre-flop raise, you’re also opening avenues to get more money into the pot now to reflect the equity you’ll have in the pot later on.
Pot Equity and Reading the Competition
You can also calculate your pot equity against a range of possible holdings for your opponent. So even if you can’t narrow them down to one specific set of cards, you can still figure out your equity against the full spectrum of hands.