Knockout tournaments are the same as standard Multi-table tournaments, with one exception: a part of the prize pool is set aside to provide players who knock out other players with a bonus.
In that way, knockout tournaments are basically the same as bounty tournaments. The one key difference is that the funds for the prize in a bounty tournament are often provided by the room, while the funds for knockout prizes are provided by the players.
Here’s an example. Let’s say you sign up for a $75 knockout tournament in Full Tilt Poker. $70 goes to the prize pool, and $5 goes to the knockout pool. So, if a hundred players sign up, the total prize pool will be $7000 and the knockout pool will be $500, meaning you’ll get a $5 bonus for each player you knock out.
Knockout tournaments were first introduced online by Full Tilt Poker. PokerStars also offers knockout tournaments, and other rooms are sure to introduce them in the near future.