I didn’t know the whole concept of staking was so complicated. Paul Newman was the money man behind Tom Cruise 23 years ago in “The Color of Money,” and George C. Scott with Newman a generation before. In my mind, staking has always been a simple concept.
And yet, there are weekly posts on PocketFives about how staking relationships work and numerous questions regarding fairness and execution. Arguments are started, acquaintances turn hostile, and friendships are destroyed. So let’s touch on the general terms and basics, while hopefully answering some of these questions and avoiding the pitfalls.
Playing pool in my misspent youth, I was on both ends of staking relationships at various times. More recently, I have staked players more recently in online poker. I’ll define a couple of terms for the two parts of the relationship…these are general phrases I’ve heard many people use over the years; if you like something else, feel free to substitute:
The player is the person getting staked to play the game.
The stakehorse is the person putting up money for the player to play.
The overwhelmingly most important factor for a successful partnership between player and stakehorse is trust. The stakehorse has to know the player isn’t burning him regarding wins and losses – with modern technology in online poker, it’s tough for the player to blatantly steal from his backer, but for live games, this happens on a regular basis if the player is sufficiently shady. Along a similar vein, the stakehorse needs to trust the player is only getting in agreed-upon games. If my player went off and played high-stakes cash games, when I’d staked them for tournament play, I would be livid.
In return, the player must trust the stakehorse is going to take care of him and put him in the spots which provide the best opportunity. If I believe I can compete with Ivey & Durrrr at $200/$400 NLHE, but my stakehorse tells me to play $5/$10…I have to trust his assessment of my abilities and the overall profitability of the situation. The truth may be brutal, but also may be very necessary. If you don’t want to give up game-selection control, don’t get staked.
As a stakehorse, I’m looking for a player who shows the proper amount of disregard for money…but not too much. When the Corporation pooled resources as a huge stake against Andy Beal, some players responded awfully and got crushed. They felt far more regard to someone else’s money than they would have their own – too much regard to be successful. On the other hand, you don’t want someone who is overly reckless and doesn’t really care if they win or lose, since it’s not his money in the first place. Finding the right balance is really important, and often times much tougher than it seems it should be.
So, here’s how it normally works, based on my experience. The stakehorse gives money to the player, and arranges games for the player. This may be a regular schedule of tournaments, or in the case of cash games, the two look around to select the right spots and opponents. Unless time off is agreed upon by the stakehorse, the player plays – this is their job. If I'm staking you because I believe you’re +EV for every game you’re in, I want you in as many as possible.
If I’m being staked, as a player, I stick to the schedule…nothing less, and more importantly, nothing more. If you take some of your own money and play on it in addition to your games for the stakehorse, at best, you’re confusing the money situation. The bigger issue is one of abusing trust. The stakehorse is putting up money to get the best the player can give. By playing additional games, you’re diluting the profit potential, an indirect form of theft. It’s crass, rude, and unprofessional.
The rate of return is negotiable. In the most common staking arrangement, profits are split 50/50 after makeup. Makeup works like this:
– I stake you to play a long-term series of $100+9 MTTs online
– You don’t cash in the first ten, so we’re down $1090
– In the 11th, you cash for $1590
– After making up my $1090, we have $500 to split…we each get $250 in profit
In a short-term staking deal, the 50/50 balance is usually shifted to 60% in favor of the stakehorse. Over a small sampling of tournaments, poker is very high-variance, and the stakehorse deserves extra consideration for their risk. But this is negotiable. Honestly, there’s no right or wrong answer when it comes to how the stakehorse and player split the money. The only criterion is what is acceptable and fair to both parties.
I often see the terms “staking” and “backing” used interchangeably, and maybe they should be within the scope of online poker. Personally, I define “backing” as being more comprehensive in terms of outside expenses and general costs. Let’s say I’m looking to fund a player for several events at the World Series of Poker, or to play a season traveling around on the World Poker Tour. If I’m staking them 50/50, I’m paying all of their buy-ins, and we’re dividing the money equally after makeup. I am not responsible for how my player gets to Las Vegas for the WSOP, or from town-to-town on the WPT. I don’t care where they stay and how they afford to eat.
If I’m backing the same person, I pick up the rest of the expenses…travel, hotel, and a food per diem. It’s important to me to make sure my player doesn’t have anything to worry about other than getting to the game focused, well-rested, and doing his very best. In this relationship, there’s no makeup…I absorb each loss completely. In return, I get a much higher cut of the winnings, usually between 70-80%.
As with split percentages, there’s no right or wrong approach between stakehorse and player with regard to staking v. backing (as I’ve defined them).
We’ll end the article with another, often very difficult conclusion…the end of a partnership between a stakehorse and a player. Many times, feelings will get hurt and egos bruised in both directions. I think either party should be able to get out of the relationship at any time…with caveats to keep things fair if the partnership hasn’t been successful. If the player is down and gets dropped by the stakehorse, the amount lost is absorbed. There’s no makeup. Conversely, if the player quits while he’s behind, he owes it to the stakehorse to makeup the negative balance.
If the player wants to quit while he’s ahead, well…it sucks to be the stakehorse. But if he’s built up enough of a roll to give it a go on his own, be glad you made some money off the deal and helped a deserving person out.
So, that’s staking in a nutshell. There are a number of online poker players who are actively doing it…probably many more than most people realize. But don’t ask me. I’m not in the staking business at the moment.