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Getting Staked vs. Borrowing
Regardless of their current bankroll or financial situation, many poker players will sit down at certain games to play on someone else's money.
When making a deal to play with someone else's money, the first thing you have to decide is if you're getting staked or borrowing the money.
Risk vs. Reward
The most obvious difference between the two options is the risk versus the reward. If you're getting staked, you have no monetary risk, but you are greatly limiting the size of your reward. In a $1,000 buy-in tournament, let's say the first-place winner makes $125,000.
Stake (at 50%): ($125,000 - $1,000)/2 = $62,000
Loan (at 0%): $125,000 - $1,000 = $124,000
As is fairly obvious, the reward for taking a loan of $1,000 is a net gain of $62,000. If you feel that you will win this tournament one out of every 61 times you play it, you will be losing money by taking a stake. What you lose on the bottom line you gain in reduced variance.
The staking equation I've used here is only applicable if this is your first tournament being staked by this specific backer. In the real world of professional staking, your back stakes accumulate and you're accountable for all of them.
Don't play a game unless you have a roll, or a way to support the loss. If you don't have either of those options, play on a stake.
When both parties involved understand how a stake differs from a loan, it frees you up to play strong poker without having to get gun-shy at the thought of losing your stack.
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