Estimating Equity in No-Limit Hold'em

Before we start the article, let's first understand what Equity is and how it relates to poker in general.

What is Equity?

The word itself actually means "fairness" - or the quality of being just or impartial. This idea comes to us sometimes when things don't seem so fair at the poker table. You take your stack with :As :Ah against an opponent's :Kc :Kd and a K on the river - not fair!

Equity also refers to someone "sharing" something, such as shares of ownership in a company. With your aces you may have claimed your "fair share", i.e. most of the pot, while your opponent with kings has much less "right" to the dead money in the center of the table. But after the community cards came and his king came, you lost your equity and he got all the chips.

This situation refers to equity after all-ins. What happens during a hand, when there are still decisions to be made? What relevance does equity have then?

The first time I really bothered to think seriously about what equity meant was at some point after buying a house. For those of you who haven't been through the process, most of us don't buy a house outright, but perhaps make a down payment (a percentage of the total cost) and take out a mortgage to cover the rest. From then on, we pay each month, with most of that payment actually going towards the interest on the loan and the rest towards the principal.

Ultimately, your home equity refers to what part of the house you actually "own", as determined by the original payment plus what you've paid so far. In addition, if the house has appreciated in value since you bought it, this also helps build your equity in the house (Just as, if your house depreciates in value, you lose equity).

While buying a house can be quite complicated, the general idea of equity is quite simple. The equity you have in your home is essentially what you would get if you were to sell it, something that is greatly affected by what you "put down", both at the time of purchase and with the mortgage payments you made afterwards. Before selling the house, you can estimate this value by looking at the current market value of the house and subtracting the balance of the mortgage debt. If I think I can sell the house for $200,000 and it currently has a balance of $120,000, my home equity is $80,000.

That said, I don't really get the equity until I sell the house. And the longer I wait, the more things can change between now and then.

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Equity = Current Value

The idea of equity works in a similar way in poker. It essentially represents a theoretical amount that you "own" from each pot you play in. I say "theoretical" because in the end, not everyone gets their equity in every pot - in fact, usually only one person does.

You hold :Ad :Kc and your opponent has :7h :7s . You raise in late position, he calls from the small blind, building a pot of $300. With five cards to come, you have just under 45% chance of improving enough to hit a pair of sevens. Your equity at this point is 45% of the $300, then, or $135.

The flop then comes :Ac :8h :2s , giving you a top pair. Now, with two cards to come, you have a better chance than 91% to win. Suddenly, your equity has risen to 91% from $300, or $273. It's as if the market value of your hand just went up, way up (unlike when you buy a house, equity values change much faster in poker hands). Or you might think that the Ace on the flop is a big, fat payout lowering your mortgage. In any case, the future is bright.

If you can find a way now to increase the size of the pot, you will also increase your equity. If you bet $100 and your opponent calls, the pot grows to $500 and your equity increases again to $455. For every dollar that goes into the pot here, you increase your equity by 91 cents.

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Equity = (usually) an estimate

Of course, in a real poker hand, you wouldn't know that your opponent has a pair of sevens, so you can't know exactly how much equity his AK gives you. Instead, you estimate - top pair, top kicker is likely to be ahead of most of the hands your opponent has, you then think that you probably have more equity than he does, considering the likely range he has in his hands. This makes it preferable to try to develop the pot further and increase your equity.

It was a similar estimation that led you to raise pre-flop with :Ad :Kc in the first place. AK is a premium hand, which is better than most other hands pre-flop, and so your equity would increase, raising and increasing the size of the pot. Homeowners looking at the value of the house in the current market are also making an estimate about how much equity they have in the house, understanding - just as the person with :Ad :Kc does before the flop - that this may change in the future.

Returning to Seidman's discussion, he looks at situations where he has lost the flop, but could still have equity in the form of a draw that would improve his hand. Thus, when he has :Js :9s after a :Th :Tc :6h on the flop, he estimates that he has virtually no equity, despite having the same hand on a flop with :Ts :Th :6s giving him a flush draw and considerably more equity - a difference (which, along with his opponent's style) will affect his decision to call or raise after a continuous round of betting.

Equity doesn't equal money in your pocket. You still have to close the deal, so to speak, which can be tricky - whether you're selling a house or trying to win a hand of hold'em. But by being able to estimate your equity at any point in a hand, accurately comparing your value with the value of other people's hands, the better your decision-making will be from now on.

Article translated and adapted from the original: Subject to Change: Estimating in No-Limit Hold'em Hands