Poker Staking

If you don't have the money to play the games you'd like to, one possible option you could turn to is poker staking. This will allow you to sell off a part of your risk and play in some of the bigger games.

Poker Staking Basics

So what exactly is poker staking? Poker staking is where a person will fund part of the buy-in for a poker player in return for a share of the winnings. This can be for cash games or tournaments and can be either a one-time arrangement or something more long-term.

The player and the backer will agree on a profit split in the event of the player winning and whether or not the player will owe the backer in the event of a loss (this is more common in long-term arrangements).

By selling a part of the buy-in, the poker player eliminates some of the risks that come with playing in the bigger games and allows them to play in them if they don't quite have the bankroll to fully fund it themselves. Many players use this to quickly move up the stakes without having to spend weeks grinding it out at the lower levels.

For the backers, staking a poker player represents an investment. Ideally, you want to be backing a poker player with a proven track record of being able to beat the games they play and the confidence that they're likely going to be a winner at the stakes they've requested backing for.

Poker backing comes with a high risk for the backer as a lot of the time - especially in tournaments - the player is going to lose money, however, the rewards when the player does make money can be great.

When setting up a poker staking arrangement, both parties must be clear on the parameters before any poker is played. It will save a lot of headaches down the line if you get all the questions and answers out of the way first so there are no disagreements about who is owed what later on.

Differences Between make-up and mark-up

Make-up and mark-up are two terms common in poker staking with make-up being an agreement for a longer-term arrangement whereas mark-up is more common for one-time deals.

Make-up

Make-up refers to the amount of money the player needs to win before they start to profit from the arrangement. In these long-term backing agreements, the backer and player will agree on a profit split from the beginning - let's say 50-50. The backer will then finance 100% of the players' buy-ins. If the player starts out losing, they are considered 'in make-up' to the backer for the number of buy-ins they've lost so far.

For example, in this agreement, if in the first tournament the player buys into a $1K tournament and wins $20K then the money will be split as follows - the $1K buy-in goes back to the backer, and the $19K profit is split equally between the backer and the player ($9.5K each).

However, let's say the player doesn't cash in the first 10 $1K tournaments they play. This means they are now in $10K of make-up to the backer. Now let's see how the money split is different if in the 11th tournament the player wins the same $20K. The $1K buy-in is returned to the backer but the $19K profit is now split a little differently. As the player is in $10K of markup, that is returned to the backer to make them 'whole' before the profit is split. As there is now $9K left from the $20K winnings, the player gets $4.5K in profit and the backer also gets $4.5 profit.

In the long-term agreements the financier needs to have all their previous investments returned before the player starts to see a profit, this is because the backer is the one taking 100% of the risk and needs to be compensated for that.

It is generally agreed that the player is not allowed to quit while they're in make-up as it would be in bad faith and could affect their chances of getting another stake in the future. However, the backer can decide to end the agreement at any time, whether or not they're in profit.

Mark-up

Mark-up is very different from make-up. Instead of being about a long-term arrangement, the mark-up is used for one-time arrangements - mainly tournaments - to allow players to sell their action for a fee. The fee that the player adds on is based on how big their edge is over the field.

For example, if the player believes that their Return on Investment (ROI) in a tournament is 20% they may sell their action at 1.2 - meaning that every $1 of the buy-in costs $1.20 to buy for prospective backers. It can be hard to accurately estimate your ROI in a specific tournament so you can see wildly different prices between players in the same tournament. Some players will sell at a price that's a little higher than what they believe their ROI to be, just so they can lock in some profit.

When selling action for individual tournaments, the player can decide how much of the buy-in they'd like to sell. Usually, you will see somewhere between 10-60% of the tournament buy-in being sold by a player - any less usually isn't worth the effort for either side and if they're selling more than 60% it's likely that the player won't have the financial incentive to play at their best.

One of the benefits of these one-time deals is that neither side is locked into a long-term commitment. The player may not want to be 'under the thumb' of a backer if they just want to take one shot at a larger tournament, and the backer may only think that the player is good value for this one tournament.

As these deals are a one-time event and not for the full buy-in amount, the player is under no obligation to return any lost money to the backer(s) but they should promptly pay out any winnings.

Poker Staking Arrangements Explained

There are different kinds of poker staking arrangements based on the length of time that arrangement is for.

Single Sessions

Single cash game sessions or single tournaments are the most common poker staking arrangements that you'll see. Most people, especially poker players, don't want to be locked into long-term commitments, and selling action for one tournament at a time allows flexibility on the player's end. It also allows backers to pick and choose what they perceive as the highest value opportunities.

As we've mentioned previously, these single session backing arrangements are usually handled using mark-up - where the player will sell their action at a fee based on their perceived ROI. For example, if a player thinks they have a 10% edge over the field of a particular tournament then a fair price to back them would be 1.1 - or $1.10 for every $1 of the tournament buy-in.

However, knowing what someone's exact ROI is in a single tournament is impossible as there are a lot of factors at play that you can't know before entering the tournament. These include the total number of players in the tournament, the number of players better than the player you're backing, and how the player you're backing will perform.

Therefore there are opportunities for value if a player under-estimates their ROI compared to what you think it is (if a player thinks they only have a 5% ROI and sells at 1.05 but you think they should be priced at 1.10, for example). On the other hand, some players will overestimate what their ROI is, either purposefully or erroneously, so you should be careful if you're looking to buy a piece of a player you don't know.

This also assumes that a player is always going to be selling at face value (where they set the price at exactly what their ROI is). Most players will add on a couple of extra points to either make sure they make money or just in case they're off with their assessment of their ROI. It's important to do your due diligence if you're buying a piece of someone in a tournament and they're selling at a mark-up.

Tournament Series

This is the medium-lengthed backing arrangement - not a full-time deal like the long-term ones but not just for one tournament either. These are usually reserved for big tournament series such as the World Series of Poker (WSOP) in live poker or series such as Spring Championship of Online Poker (SCOOP) or (WCOOP) in online poker.

In these tournament series, the prize pools are usually a lot larger than equivalent tournament buy-ins throughout the year and will see an increase in recreational players. This means that players are likely able to beat higher stakes than they would usually play but they could require backing to afford them.

These deals have a lot more components than a single tournament backing due to the fact it's over a whole series rather than one event. The proposed player will usually have a schedule outlining exactly which tournaments they want to play, the edge they believe themselves to have in each tournament, and how much action they're looking to sell. They can send this to prospective buyers to outline where the value lies and whether the investment will be a profitable one.

Other factors will need to be agreed upon between the player and the backer before any poker is played. These include; what happens if a tournament is canceled or if the player cannot make it to the tournament for any reason (such as illness), how is any bonus money (such as rakeback) split between the two people, what happens if a player wants to play an extra tournament that wasn't on the original schedule - as well as many others.

The player and the backer must have good communication, as there are a lot of unforeseen situations that can arise over a tournament series that will need resolving.

Long-Term Agreement

The long-term agreements are by far the least common arrangement you'll see. This is due to the large amount of money needed by the backer to make the agreement worthwhile for both parties.

In these long-term agreements, the backer and player will agree on a profit split (usually 50/50), with the backer financing 100% of the player's buy-ins without any markup. The difference is that the player will owe the backer any lost money through 'make-up', which needs to be paid out of any tournament winnings before the player gets to take profits.

For example, if a player is in $20K worth of make-up going into a $1K buy-in tournament and wins $22K then almost all of the money goes to the backer - the $1K buy-in is returned, the $20K make-up is returned to the backer and the remaining $1K is split evenly between the player and the backer.

It may seem unfair that the player must fully pay back the backer before they take any money at all but it's important to remember that the backer is taking 100% of the risk in these situations and should be compensated for doing so. There have been situations in the poker world where players have gone into 7 figures of make-up - not a great situation for the backer to be in!

But what happens if someone wants out of the agreement? This will depend entirely on the exact deal you make but commonly the player cannot leave if they are in make-up unless they agree to pay the backer what they owe. If the player is not in make-up, they are free to quit the arrangement. 

The backer is the only person who can decide to end the arrangement at any time, but if they do so while the player they're staking is in make-up then they're writing off any money owed by the player.

Benefits of Poker Staking and Getting Staked

Poker staking has been around for a long time in poker so there are benefits for both player and backer when things are done correctly.

Poker Players

Players benefit from being staked as it eliminates a portion of the risk that they have to take and can allow them to play higher stakes more quickly (and if they're winning make more money).

If a player is selling action for individual tournaments or tournament series, they will keep a portion of their action and sell off the rest to prospective buyers for a fee. The player then benefits in two ways as not only do they make money from the mark-up that they sold their action, but they don't have to pay 100% of the buy-in which allows them to play higher than they usually would without a backer.

In a long term arrangement, the backer will be providing 100% of the buy-in so the player takes a lot less risk than they usually would (they will need to pay the money back in make-up if they start off losing so it's not 100% risk-free) and still get a decent amount of the profits.

If a player is a proven winner but doesn't currently have the capital to play the stakes they can beat, getting a backer to play those stakes will often make you more money than taking the time to grind back to those stakes by yourself. 

Backers

So what do the backers get out of it? They seem to be taking the majority of the risk in these situations - so do they get anything from it? What they get is access to the money to be made in poker without putting in anywhere near the amount of work it takes to beat the game. 

If they can find a player who can beat the game, and the backer knows enough about it to be able to discern the actual winning players from the people who only think they can, then they can split the profits with the winning player just by being the financial force behind them.

It can take years to get to the point of being a winning player, it can take even longer to be a winning player at stakes significant enough to be worth the time and the truth is most people don't have the time or resources to make it. They have day jobs and families and other things that get in the way.

By taking the money they've earned in their day jobs, they can treat the poker table as the stock market and back the winners to make money from it - even if they'd be a loser in the same game.

Disadvantages of Poker Staking

While there are positives to poker staking, it doesn't always go well and there are downsides to these agreements.

Players

When a player sells action or agrees to split profits in return for their buy-ins being taken care of, it means that when a player does win big they're not able to keep all of the money they've won as it needs to be paid out to their backers. With staking, there is immense psychological pressure for players to win a major tournament or be able to win enough to pay back the money.

This can be a big deal for people, especially if they're taking a shot in a much larger tournament and they sell off a significant portion of their buy-in. In these scenarios, some players will feel like they've 'wasted a tournament' as they've run/played as well as they could to win the whole thing but they only get to keep 20% of the winnings - 0% of it if they're still in make-up.

A lot of people play poker professionally to be away from the traditional boss/employee dynamic as they'd much rather work for themselves. By bringing in someone who is financially backing you, you're returning to that dynamic where you have someone to answer to if you lose. For some people that's uncomfortable and they'd much rather play with their own money - where if they lose it, they only have themselves to answer to.

Backers

For the backers, the challenge comes from finding players who are winning players in the stakes that they want to be backed for. There are a lot of players that can talk a good game or manipulate their stats to look like they're winning at a slightly better rate than they are to get your money - but when it comes to it will be losing your money when they play.

Similarly to investing in other things such as the stock market, you have no impact on things as an investor. Just as you can't tell the CEO of Tesla what he should/shouldn't be doing to make the stock price go up, you can't tell the player you're backing how they should be playing in their games. Even if you're in the rare situation that you're a better player than the person you're backing, there's no controlling what they do in-game - no matter how much good advice you give them.

Also, if you're getting into a long-term poker staking arrangement you'll need a significant amount of money to invest as well as a strong nerve due to the large downswing even winning players can go on. It's not unheard of for make-up to reach 7 figures for players - it's not for the faint of heart!

Guide to Poker Staking Strong Players

So as a backer, how do you find these strong, winning players to back?

First of all, you'll want to find the players who are consistently getting good results and consistently studying. These can be players who are posting a lot on the forums or they can be players who are advertising themselves to get a stake - but what you're looking for is consistency.

It's no good if a player has a good month or two and then blasts it all off within a week, or if they've only been playing for a short period and want to skip on putting in the hard work and want to take a short cut to the higher stakes. 

There's a reason that some players will need backing despite winning in the games and it's due to personal leaks such as reckless shot taking/playing while drunk/losing it all on blackjack. You do not want to be backing these players as there's a good chance they'll just do the same with your money. Winning players embrace the grind and will be on the felt day in, day out trying to make money.

Once you've found a player like this, it's important to try and get as much personal information about them as possible and verify it. When making poker staking arrangements over the internet, there's always the risk that someone will just take your money and run. By taking the personal details of the player you're staking, they'll feel a lot less inclined to try anything shady. 

When you're agreeing, you'll need to explicitly state exactly what games are expected to be played by the player, exactly how the money will be divided - both the money won at the tables and any bonuses such as rakeback, as well as what happens if a player gets into makeup. Make everything as clear as possible in the beginning so there can be no arguments when the situation arises.

Finally, it's important to have good communication between yourself and the player. There are a myriad of problems that can arise when staking a player, and if there is an open line of communication between the two of you they will be much easier to resolve.

How to Get Backers' Attention

So what if you're a player who wants to get backed - what should you be doing to get someone to choose you over another player?

The most important thing you need to do as a player to get a backer is to prove that you're a winning player. No one is going to back you financially if you've got a track record of losing your own money - that's just common sense - so you need to work on your game enough to be a winning player in games you can currently afford on your own.

Once you've got to the point where you're a winning player, you need to show consistent results over some time. Anyone can win one hand or one session, for someone to want to put their money behind you, you need to prove that you're not a flash in the pan and that you're a consistent winner. Showing discipline by consistently playing and winning at the same stakes, without spewing off or taking crazy shots at higher stakes will show you're a reliable player to back.

When you have the credentials to show that you're a winning player you need to get the word out so people can find you. This can be done by posting online (a lot of poker forums have specific subforums where people who are looking to get staked can advertise), or by asking around people who you know that are looking for investment opportunities.

You'll need to have a clear presentation of exactly what games you're looking to be staked for, how long (or how many games) you expect the stake to last as well as what the risk/rewards will be for the backer.

Make your pitch as clear, and as appealing as possible - backers value good communication so start yourself off on the right foot with your advertisement.

Staking in Poker: FAQ

We've collected and answered the most common questions surrounding poker staking.