Why does an overlay occur in poker?

[Julio88]

An overlay occurs in a poker game when the amount of money guaranteed by the poker site or tournament exceeds the total amount of buy-ins from players. This means that the poker site or tournament organizers have to add their own money to make up for the guaranteed prize pool, resulting in an overlay. An overlay can be seen as an advantage for players because it means there is extra value to be won in the tournament.

 

[CR7]

Exactly, an overlay represents an opportunity for players to compete for a prize pool that is larger than the buy-ins collected. This is especially beneficial because it creates an overlay on the guaranteed prize pool, with the poker site or tournament organiser effectively putting up the additional funds. The overlay provides added incentive for players to participate in a tournament as it means their expected value is higher than what they would usually expect from similar tournaments. Additionally, overlays can sometimes attract weaker competition, further increasing the value for skilled players. Therefore, overlays are generally regarded as positive in poker tournaments.