Stake and chips

‘I know you know this feeling… you know this feeling very well. I mean, you got your table all set up – your fork, your knife, your A1 sauce – you just don’t have the steak.’

So jokes Ed Norton’s character Worm, as he gets back into the familiar routine of extracting cash from his friend in seminal poker movie Rounders.

Well, I don’t know what the feeling of having my A1 sauce is like, mainly because I’m from England and we have ketchup, but every poker player knows the feeling of not having the funds to play in the game they’d like.

Thankfully, there’s a popular way of bridging this gap in the poker world, and that’s known as staking. In practice it involves someone, presumably with a bigger bankroll, buying a player into a tournament in return for a cut of any potential winnings. The staking may be all or part of a player’s action, it can be a long-term deal or one-off arrangement, and it may be a solid business proposition or the last resort of a desperate gambler. Whatever the situation, the commonality is that somebody is playing poker with someone else’s money.

What’s more, there’s far more staking in the poker world than most people realise – even at the very highest levels. Did you know, for example, that Annette Obrestad was staked for 50 percent of her WSOPE Main Event win and had to give half of her £1m prize away? And with the online scene providing the ability to move money at the push of a button, it’s only served to increase the amount of staking that goes on.

WHY IS STAKING NECESSARY?

There are many different motivations for it, with the most common being that players are simply broke, that they want to take a shot at a bigger game, and that they’re having cashflow problems. The first of these, sadly, is often the most common. Individuals want to be in action but are broke and in need of help to play. They might be broke through poker losses, or they may be a talented player that has fallen on hard times or lost money through other gambling activities. Equally they could just be a losing player who wants to keep playing. Money could be given as a gift to a struggling friend, a loan with or without interest, or with conditions that a share of the player’s profits would also be paid to the staker.

The second reason for being staked is that a player wants to play higher than their bankroll will allow – this could be a cash game or tournament – and might often involve selling pieces of their action. So, for example, a player wants to enter a £1,000 tournament but is only comfortable risking £500. He can raise the remainder of the buy-in by selling pieces of himself on an equal money-to- percentage ratio – in this example £100 would see a backer get 10% of any winnings the player made – or for the staker to pay a slight premium on their share, as it’s the player that’s doing all the work.

Another scenario, in long-term staking deals in particular, is where a player must pay back the entry fee(s) first and then the agreed percentage of any winnings. This is known as ‘make-up’. With tournament variance as high as it is, it’s possible for a player to get deep into make-up before having what appears to be a big score, only for them to actually see very little of the money from the win.

Finally, a player could be staked because of cashflow problems. This is, of course, used as a euphemism for being broke! However, in this case I’m referring to poker players enduring a losing run and being physically short of cash, but good for the dollar amount. This is particularly prevalent at the higher stakes, where borrowing between players is common due to the huge amounts of cash needed and the disincentive for keeping these sums in cash form. The top pros will invest their bankrolls rather than have the money sitting idle. This kind of staking is a straightforward loan rather than taking a share of action.

STAKING AS AN INVESTMENT

Staking also happens because players or wealthy individuals want to invest in other players. The idea here is that a winning poker player has an expected return when they play, just like any other type of investment would have, so backing them for either some or all of their action is a money-making proposition. Some players, such as Erick Lindgren, Cliff ‘JohnnyBax’ Josephy, Eric ‘sheets’ Haber, and many others, do this to such an extent that it’s almost a small sideline business. It’s very common in big tournaments, such as the WSOP, where a winning player has an edge over the field, but the field is so large that having a piece of many players he knows to be better than the average, increases his potential return on investment. These kinds of arrangements are often personal relationships of one kind or another and are done on a handshake; however, a number of companies have started to appear online and have taken staking to the next level by backing a whole range of players on a more formal basis.

SUPPORTING THE POKER ECONOMY

There is no doubt that staking, lending and borrowing are an integral part of poker. In fact, at the higher levels the game wouldn’t exist without them. For instance, $10,000 buy-in tourneys are now so common that if a player was to observe strict bankroll management (of let’s say 50-100 buy-ins) he’d need a roll of around a million dollars, which only a handful of players actually possess.

There are certainly many upsides to being staked, or, indeed, staking another player. The key one, obviously, is that a player is able to get his mitts on some cash he wouldn’t otherwise have! If the player is an aspiring pro who is trying to resurrect his career after a downswing or misfortune of some kind, this can be life changing. There are several examples of players who are very talented, but through their own mismanagement or misfortune have been bought in to events with amazing results.

Recent examples include David ‘Chino’ Rheem in the 2008 WSOP Main Event (one of the November Nine), and perhaps most famously Stu Ungar for his third WSOP Main Event victory in 1997. On the flip side there’s Vinny Vinh and his troubles at the 2007 World Series where he disappeared after some shady characters turned up looking for their money. And the biggest problem with staking someone who’s out of cash, of course, is that the staker might simply be fuelling an expensive habit, or worse, a full-blown gambling problem.

BIGGER GAME

Perhaps the most appealing reason to be staked is to play in a game you otherwise wouldn’t be able to. In fact, this option often makes sense, and may be a valid way for you to play bigger events. Tournaments offer a chance to make exponential profit and return a handsome dividend to backers. It’s also true that players can have a lot of talent without having the massive bankroll needed to enter a top-level event in strict bankroll management terms.

It’s also the case that staking a player in an event like the WSOP or EPT can offer the staker a vicarious thrill. They may never play in a massive event themselves, but having an interest in a good player they know gives them a chance of a handsome return. For the player being staked this kind of arrangement, potentially with several backers sharing their action, can create an opportunity that wouldn’t otherwise exist. In fact, it may never exist for some players as their bankrolls would have to be very large before they’d spend $10,000+ on one tournament.

STAKING FOR CASH GAMES

Using staking to play in a cash game you can’t currently afford is a more spurious route to go down. In general terms the higher the cash game stakes the tougher the game. Therefore if a player can’t afford a cash game stake from his bankroll, it’s tough to argue he should be playing in the game. Years ago there was an argument for it on the basis that few games existed and a player could face game selection problems. But in the modern era, with so many sites, tables and stakes available online, there’s no reason why players can’t build their bankrolls and move through the limits without being staked. Of course, if the staker and the player are convinced that the player is good enough to beat the higher game, then staking could be seen as a way of either giving the investor a good shot at some short-term profit or to accelerate the player through the limits.

HOW TO GO ABOUT STAKING

If you see staking as a way forward for you, there are several ways to go about it. The easiest way is to find a friend – or at least someone that won’t tell you to jog on – and ask to be staked. The richer they are, and the less they know about poker, the better; although, of course, another poker player will understand when you get knocked out of a tourney on a cooler and lose their dough. You may want to think twice before borrowing from a friend though – as you should before any commercial relationship with a friend.

If you’d rather keep things impersonal there are other ways of being staked. Several online sites and forums offer stake-raising facilities, and there are websites that are just for staking. These typically enable you to raise money from a number of backers – sometimes putting up small sums of money for a particular event or events. The advantage of this kind of facility is that the site will often not only record the agreement but facilitate the money exchange and so on.

Finally, companies like Badbeat.com, will back you with funds in return for a share of your profits. The advantage of this kind of arrangement is that you don’t have to put up your own money and can be offered tutelage and other support from the site. The downside is that they’ll want paying for their investment through your profits and, sometimes, rakeback. If you’re a winning player it’s hard to see the appeal of this arrangement; but then that could be said of a lot of staking deals. The best candidates for these types of arrangements tend to be talented players with discipline problems who benefit from having stop-losses imposed on them.

BIG PROBLEM

By far the most common problem with staking is players simply defaulting on debts. This might be because there’s a disagreement over the arrangement, because a player is broke and incapable of paying, or because the player has committed a straightforward theft.

Stories of this nature are reported on a pretty regular basis in the poker community. The cautionary lesson is that if you’re involved in a staking arrangement, either have a formal arrangement with a professional organisation or only deal with people you know and trust, preferably with the deal witnessed by others.

CREDIT CRUNCH

The old maxim of ‘neither a borrower nor a lender be’ is a big generalisation, but a lot of poker players would do well to follow it. There are plenty of players who have built their bankrolls through talent, hard work and good management, without the need for staking. In fact, if you’re a winning player already, being staked doesn’t often make a lot of sense, as you’ll be giving up some share of your action. By the same token, if you’re contemplating staking players, bear in mind that it’s often losing players that need the money! Despite all this, staking and being staked can be a way of increasing your profit and your enjoyment from poker.