It’s simple math. There’s a 16-player tournament, single elimination. Entry is $100. $1600 in total. Pays top 4 finishers. 1st place is $700, 2nd place is $400, and 3rd/4th is $250. All players either play equally or perfectly handicapped. The chance to win is the same for every player. No money is added. There is no overlay. Each player could expect to win, over time, the exact amount they invested. In other words, the money will be equally distributed to all players and they all invested the exact same amount. It’s a zero-sum game.
Now. Consider this. Same 16-player tournament. 15 players enter for $100, but one player played a qualifier event, paying just $10 to get into it, knowing that if they win, they are entered into the larger event.
The prize pool is still $1600, but that one player got in for only $10. Granted, they had to come out with a victory in the qualifier (investing sweat equity), but that extra effort has created overlay. Considering the same circumstances where every player plays equally or the event is perfectly handicapped, that particular player will win money over time, where the others are maintaining a zero-sum game. If they played this tournament 128 times, for example, each player would cash 32 times, and their net winnings would be zero - except for the player that created overlay through sweat equity. They would also cash 32 times, and their total investment would be $1,280.00. ($10 for each of their 128 attempts). But their winnings would be $12,800.00 for a total net profit of $11,520.00.
That’s overlay through equity.
Havoc works with this in mind. If a player is trying to qualify for a Tier IV event, they could fire more than 30 barrels at the Tier I level and still be getting overlay if successful in getting to Tier IV on their 30th attempt. Tier V - they could fire more than 125 barrels and still be getting the right price.