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What if you’ve got mad poker skills but do not have enough money to buy in a slot at a poker tournament?
What if you have the money but with amateur poker skills not enough to qualify for a seat at the World Series of Poker (WSOP)?
Unknown to many, several poker players have become successful thanks to the moral and financial support from their colleagues and eager investors. For instance, Scott Blumstein’s stint was only possible because his college friends contributed $60 each to finance the $10,000 buy in fee so he could have a seat at the 2017 WSOP. The 25-year old ended winning the $8.15 million grand prize. His friends got $40,750 each for supporting him. Not bad for shelling out $60 to help a friend. For Blumstein’s friends, they were all for supporting their buddy. For some, this can be a lucrative business they can get their hands in.
Staking
This practice of investing a poker player in exchange for a cut in the winnings is commonly referred to as “staking.” Over the years, it has become a growing business. In 2014, as much as 50% of the players of the WSOP were financially backed. Today, as much as 80% of the players of the tournament have financial backing.
Its success is not only evident in poker. Almost all sports that require a player to place an entry fee can have a financial backer. This includes tennis, golf, bowling, and even drone racing. The rising popularity of competitive video gaming is also now requiring financial investors since e-sports rarely get government support. Staking has even given birth to online sites that match players with an investor.
What exactly is staking? How does it work?
The backer, a poker investor, is the one who puts up money on a behalf of the poker player (the horse). In exchange, the backer will get a portion of the profit should the poker player win. In agreements like this, the backer accepts the risk including the horse’s losses. However, should the horse win, the two parties share the winnings according to what was agreed upon – commonly 50/50.
Staking can be compared with buying stocks from a particular company. It is also hugely similar to horse racing. Investors put their money on something they think will perform well and have a good return of investment.
While poker staking is a lucrative business, it comes with risks. For several years, many of the deals were not deemed official and legally binding. Most were agreed through handshake deals that were unsafe for both parties. Some events may cause the deal to go south. Take for instance the case of Hal Lewis and Maurice Hawkins. Lawyer Hal Lewis financed professional poker player Maurice Hawkins but their agreement led to a lawsuit when Hawkins lost more than $22,000 in unauthorized side gambling. Hawkins played in 2017 WSOP and lost. The WSOP trending player wanted to get out of the deal but he couldn’t because he lost the money on bets that were not covered by the deal.
Instances like this make it necessary to make the staking deal legally binding, particularly when large sums of money are involved already. Online sites like YouStake provides both players and financial backers a platform on where they can enter into a safe and secure financial agreement. The said website requires the parties to sign contracts.
In the world of poker, it is common for friends to place a stake on their friend. Particularly, if they want to support their friend’s passion and they are also poker enthusiasts. Today, staking is possible or any poker fan. They can easily support a professional poker player for as low as $20.
For most poker fans, staking is more than just making good money. A good chunk of them wants to add a thrill while watching the tournaments unfold. Being a financial backer comes with the adrenaline rush similar to watching your horse run at the Japan Cup. They get an undeniable rush knowing they have a stake on that horse. The same goes for poker. When a poker fan knows that they have a piece of the poker player, they also feel the rush, especially when the player starts to go deep and deeper and might even have a chance at the million grand prize.
Understanding the Deal
Before anyone enters a poker staking deal, both parties should understand what they are getting themselves into. The most common deal is 50/50 plus make-up. This translates to the financial backer paying for the full cost of the poker player’s tournament entry and should the player win, they split the profit. For example, the entry fee is $2,000 and the player wins $20,000, the backer gets straight back the $2,000, and both parties split the $18,000.
Deals like this cannot be beneficial for a player who goes on a losing streak. They can rack up buy-in debts. This “make-up” should be earned by the player and be returned to the backer before they can receive their share of the winning. So if the player keeps playing without winning and racks up a total of $40,000 in make-up, the player would need to win $50,000 and take $5,000 home. The $40,000 is paid to the backer and the $10,000 profit is split.
There’s no such thing as a perfect deal. Entering into agreements like this has its own drawbacks including making lesser money when players end up winning. Owning only 50% of their action in a tournament means that winnings are only half as well. To the novice player, this can be quite unappealing. But this has great benefits including opening more chances of hitting the big win in the long run.
How can one effectively make bank on a player?
Staking is more than just placing money on a player. It takes careful study and research. Those who want to place a stake on a player should base their choice on the player with the most outstanding recent performance. Don’t look at the overall reputation. Aspiring financial backers should look at a player’s track record. Online websites that come with tracking of tournament results by minute is a good place to start.
Experts suggest picking a player “in form.” These are the players that are “on a roll” or “hot”. They often win consecutively more than a player who is in a slump. Staking has become flexible to accommodate new financial investors. They can start by covering only a small percentage of a player’s entry fee. Their percentage of winning depends on their stake. Some players with outstanding track records put a “mark-up” or an extra 20% fee in addition to the base share price – this is for the privilege of investing on them.
Choose a player with a good temperament. Invest on a player who is willing to learn, has discipline, and has an admirable work ethic. More than choosing the poker player with the mad skills, financial backers should also have the right knowledge of the game. This is the reason why many of the backers are professional poker players as well.
It is also important to know the platform to use when staking a player. This platform must be reliable and has put up legal counter-checks to make sure that both parties are safe and secure in their deals. Some online platforms require their clients to sign contracts. Do keep in mind that these platforms act as middle-men and may charge a fee. Factor that in when placing a stake.
Does poker staking affect a player’s performance?
More than being able to pay for the entry fee, players accept financial backing because it allows them to perform better. Phil Hellmuth, an American professional poker player known for holding the most number of WSOP bracelets, believe that being staked on can improve table performance.
Hellmuth himself lent a helping hand on other poker players since the 1980s. He has also received investments from investors popular for traditional businesses including Chamath Palihapitiya, a venture capitalist who also owns a part of the Golden State Warriors. Receiving financial backing, according to Hellmuth, pushes players to step up their performance. Knowing someone has placed their money on you pushes you to give that extra effort.
Selling a piece of themselves or some poker action also allows players to lessen their variance and still earn a profit. As players reduce their personal costs, they can allow themselves to go deeper in a tourney and end up with a payday. Variance is much more important in short-term poker tournament results than in cash gamers. It is not impossible for a player to lose several tournaments. So reducing this upswings and downswings is highly beneficial for a player.
In poker, players and financial backers can become big winners. They just have to play their cards right and know when to call or fold.
Should you be a poker staker or a staked player? Let us know in the comments below.
