Poker Staking Definition:
The act of putting cash up on behalf of a poker player. With the agreement that the person staking will receive a share of the winning money (cash game) or tournament prize. The one who puts the cash up is the backer, while the backed poker player who receives the stake is referred to as the horse. Staking is an investment. Ref: Poker King & Upswing
What is Staking in Poker?
This is where a player receives money to play in either games of their choice or ones preferred by the backer. It’s similar to what angel investors do: put money into a prospect they believe will yield a positive return. However, instead of the investment being a company, it’s a poker player.
Early staking deals used to consist of nothing more than a handshake agreement between two people. Whereby someone gave someone else X dollars in return for Y percentage of their winnings. It may have been one professional poker player backing another or a business person supporting a rising star.
Today, it’s more sophisticated. There are still deals based on trust. However, online poker players will often sign contracts that lay out the terms of the deal. Including everything from the time period and specific games to staking taxes and markup. All are agreed on ahead of time. This is because stakers and backers usually don’t know each other.
Anyone can support anyone with dedicated staking sites connecting people wanting to invest with people wanting funds. This made it a lot easier to get backing in poker, but it also increased the risks. That’s why contracts are commonplace. Moreover, it’s why a backer will often have much more input into their horse’s (horse = the person being staked) activities at the felt.
Why Get Involved in Staking and Why Stake Somebody?
Why would you want to get staked or start staking poker players in cash games and tournaments? The answer is variance - because poker is a swingy game. Even if you’re the best player in the world, there will be times you go on a losing run.
Online and live poker staking help:
- reduce volatility
- backers/players keep earning, even during a downswing.
- players take shots in bigger games or move up levels.
Say you’re a winning player at $100 NL but don’t want to risk your poker bankroll to take a shot at $200 NL. High stakes players competing in $100,000 buy-in tournaments usually have a backer or they’ve sold a piece of their action.
Backers Only Back Winners
The backer’s investment has to be worth the risk - a +EV move to earn money without playing. So, a lot of research usually goes into finding someone to stake. Including a player’s stats, ROI, community opinions, and hands analysis. A player has to be strong enough in all areas if they want to be staked. Likewise, backers need to invest in the right people.
Yes, it’s a great way to earn money if you’re a backer, and great to reduce variance and risk for players. However, both have to work in harmony.
How Does a Poker Staking Agreement Work?
What steps should you take to secure a deal and what will that deal look like?
Step 1: Find a backer/staker. You can do this through dedicated staking sites, real money poker sites like GGPoker, forums, social media, or through friends.
Step 2: Prove your worth. Any poker staking platform or individual will want to see how good you are. This means showing your results and, possibly, running through some hands with a backer to demonstrate your thought process.
Step 3: Agree on terms. Every deal will be different. As a general rule, the profit split will be 50/50. However, the backer might see you as a bigger risk and demand a greater share of the profits. The terms will also include the following:
- The amount to be staked.
- How long the agreement will last.
- The types of games to play.
- The stakes to play for.
- The number of hands/games/hours per week.
- Additional requirements, like XX hours of coaching and sharing hand histories.
Step 4: Receiving/Sending your funds. Once the agreement is complete, the backer transfers funds to the player account to play online games or live games.
Step 5: Playing and tracking. Playing outside of these games can nullify the contract and incur financial penalties. There may be scope to play outside of the contract, but this has to be agreed upon with the backer. Finally, the player has to track results and share them with the backer.
Poker Staking Agreement Example:
The backer and horse (player) agree to a certain split percentage, which depends on the type of games being played. If the deal is for low-stakes online cash games, the backer’s risk is low. However, if the player is competing in a series of $25,000 high-roller tournaments, the risk is high. So, the higher the stakes and risk, the greater the backer’s percentage will be.
Let’s assume the deal is for standard online MTTs with $10-$100 buy-ins, considered a low-medium risk. The backer agrees to stake $2,000 and is happy with a 50/50 split, minus the stake (known as stakeback.) The player and the backer each take 50% of any prize money won. However, because the backer is taking the risk, they also want the stake back. Some deals require the stake to be paid first.
Here are the different scenarios:
- The player wins $1,000, so all that money has to go to the backer to clear the debt - zero profit.
- They win $1,500, send $1,000 to the backer + 50% of $500 ($1,250 total), leaving the player with $250 profit.
- The player doesn’t win, so they’re in make-up. Meaning, they have to make up the debt before earning money for themselves.
Some poker staking deals don’t require the player to pay back the stake instantly. In this scenario, the stake is a floating debt that’s always there. However, anything the player wins will be split according to the agreed terms. The stake only has to be paid back at the end of the deal or within a timeframe the backer decides. The backer always gets their stake back and any profit is split based on an agreed %.
What is “The Makeup”?
Poker staking makeup is a type of debt - it’s money the player owes a backer because they lost it. If you quit playing poker forever, the debt goes away. Alternatively, you can pay the money out of your own pocket and renegotiate. What many do is continue playing for a backer and try to pay off the debt.
How makeup works
For example, the player gets a $1,000 stake and loses it all, falling into $1,000 worth of makeup. The scenario can play out like this:
- The backer gives you $1,000 more - so you’re $2,000 in debt.
- Player X wins $1,500 and sends the backer $500 to pay some original loss.
- Player X keeps $1,000 to play the next day and wins another $500.
- They send that $500 to the backer and are now out of makeup.
- The player has a $1,000 stake left and a clean slate.
As a player, once you’re out of makeup, you have the chance to start earning money for yourself. We suggest not taking any other deals while still in makeup because this is frowned upon and may tarnish your reputation.
What is Markup in Poker Staking?
Poker markup is where you charge a premium for investments. For example, you could be selling action for a $1,000 tournament. If you were selling at face-value, a 10% stake would cost $100 (10% of $1,000 = $100). However, you’re a strong player with a positive return on investment (ROI). Therefore, you believe you’re a better investment than the average player.
If that’s the case, you can charge markup. Instead of selling at face value, you decide to charge a 10% markup. That means the cost of investing is now $110 instead of $100. The formula for calculating this when staking in poker is:
$1,000 buy-in X 10% stake X 10% markup = $10 added to the cost of investing
(1,000 X 0.10 X 0.10 = 10)
Most players use their ROI and expected value (EV) to determine how much markup they charge. For example, if a player has a 10% ROI over 5,000 tournaments (i.e. they’ve made 10% more than they’ve invested), they’ll say their EV is 10% better than the field. Therefore, they’re entitled to charge 10% markup. Of course, other people may not agree. However, this is the general principle players work towards and, in turn, how markup in poker works.
Extended Staking Agreements Over a Period of Time
Many cash game and MTT poker staking agreements are one-time affairs. Someone wants to play a specific tournament, someone else offers to cover their entry fee and it’s game on. Yet sometimes, there are long-term deals:
Usually when there’s a big event happening like the World Series of Poker (WSOP). Even players with a world-class poker tournament strategy will ask a backer to cover them for XX amount of money or XX number of events. All the clauses with regards to makeup and paying back the stake apply.
The backer agrees to cover the cost of XX number of games/hours per day/week for a set period. This could be six months, a year, or more.
People that don’t want to enter into formal long-term deals can still get financial help by selling pieces of their action. Selling a piece can be done for single events or, more commonly, a series of events. For example, you want to play 20 MTTs on GGPoker for the online WSOP.
The total cost will be $3,500 and you want to reduce your risk. So, you sell 60% of your action ($2,100 total) split into 10 equal chunks and put in 40% of your own money ($1,400). Each person can buy a piece of you for $210 and get 10% of anything you win.
Cash Game Staking
Yes, you’re trying to get money to move up and play bigger games or offset your risk. But cash game staking doesn’t usually involve standard 50/50 deals.
For example, you’re a winning player at $5/$10 and you want to take a shot at $10/$20, for which a backer offers you a 50/50 split. You’re playing for double the stakes but giving away 50% of your profit. Theoretically, you’re only going to win the same amount of money. Plus, $1/$2 games are likely to be tougher. So it’s not worth having a 50/50 deal with the same earning potential against better players.
It’s better to have a 25/75 split that’s weighted in your favor or sell percentages. So you can control how much risk you have and your potential rewards. You may decide to sell 30% of your action and take 70% of anything you win.
Whatever deal is on the table, the reason poker tournament staking is popular is because of variance. The variance in MTTs is much greater than cash games. The number of players in the running makes a difference. Because 1,000 players is tough to beat; particularly when blinds continually go up and there are bad beats. Of course, the payoff for accepting more variance is the amount of money you can win.
It’s possible to enter a $100 online tournament and win $250,0000. That’s a huge return on your investment. However, the problem is that you may have to play 200 MTTs before you hit a score like that - if ever.
For the backer, it’s a risk vs reward proposition. Is the player good enough and consistent enough? Basically, can a player win more than they lose over a long period? It might take months for a tournament player to recoup their losses and generate a profit. Backers accept this because they know the player/s they’re staking can win in the long run and, moreover, they can hit the jackpot one day.
- Forums & Socials
Staking poker players has become big business in recent years. Investors and successful pros have spotted gaps in the market and created staking poker sites. With a variety of deals and the added benefit of having official contracts.
For investors, these websites and apps allow them to build up poker staking stables. This gives them strength in numbers. The more strong players they back, the more chance they have of making a profit. Basically, backing deals can be good business for all involved. So, here are some of the best poker staking sites:
GGPoker Has Integrated Staking
GGPoker even won an award for its staking innovation which allows you to buy and sell action via its client. Instead of passively watching, you can invest in players at all levels. Or sell your own action at a price you think is fair.
How to Stake a Player on GGPoker - Buy a Piece
- Go to the tournament lobby and find an event you like, then pay the entry fee.
- Go to the “staking” tab in the lobby and see the option to buy/sell shares during registration.
- If you’re selling, you have to specify the amount (%) you want to sell and the cost.
- You can choose any amount of markup, based on your perceived edge, or none at all.
- You can buy pieces of players that make it to Day 2 - the cost will be based on the player’s stack.
- Once you buy or sell, the deal is locked. Refunds only occur if the player unregisters or the event is cancelled.
YouStake is a crowd-funding site for poker. You list a package of events you want to play, set the price and decide the markup amount (a premium charge players apply to the package price.) Once you’ve posted your package, people can invest via a secure payment process and legally binding agreement.
ChipMeUp launched in 2008 and allows you to buy and sell action. What’s unique about this poker staking online site is that you can often buy pieces of famous players.
This poker backing website is similar to its peers in that you can buy and sell action for a variety of tournaments. However, what’s unique about PokerShares is that you can also bet on players. This means you can invest in the fortunes of another player without staking them.
Poker Forums and Social Media
Another way to get backing in poker is through forums and social media. For example, if you can prove you’ve got strong results, you may be able to get backing from the PokerListings community or via other online platforms.
How to Get Staked in Poker - Selling Action
Find a reputable poker staking app.
This is the best way to find a backer as you’ll be able to sign legally binding agreements and know that everything is fair.
Decide on an offer.
See what money you can make based on your projected win rate and staking percentages. Once you’ve figured out an offer, you can publish it on the site/app.
Show your results.
You’ll have to prove you’re worth backing when you offer up a package. If your results are poor, you may struggle to get support.
Agree on terms.
This is the stage where both parties sign a contract. This locks you into a deal and ensures everyone sticks to the terms agreed.
Wait for your money and start playing.
When everyone is happy and the deal is done, the only thing left to do is play and go for gold.
Considerations Before Staking in Poker
Regardless of whether you’re the backer or the player, the numbers have to add up. To guide you in looking for a backer (or a stake) - here are some points to consider.
Am I Good Enough?
If you have a negative ROI or can’t show a consistent win rate, no one is going to back you. In most cases, you’ll have to have positive results for at least a year. Anyone can win a big MTT and look like a pro, but can you do it consistently?
A standard split is 50/50, but you may be able to get a bit more. Don’t take up a deal that gives you any less than 50% of your winnings unless it’s under exceptional conditions. For example, if you typically play $100 MTTs but someone is investing in you and putting up $10,000 for an event, 70/30 might be OK. However, if it’s a fairly standard deal, 50/50 is the baseline.
Should I Charge Markup?
Markup is a premium added on to the cost of a package. Usually, players will charge it if they believe they have an edge. You’re aiming to attract investors, so either way, don’t be too overconfident with markup.
For example, Fedor Holz playing a $100 MTT has a huge edge. He may charge 20% extra for a piece of his action. So, if he was selling 50% ($50) to five people, the standard price without markup would be $10 ($10 X 5 = $50). However, because he’s confident, he’s charging a 20% premium. This means someone would have to pay $12 instead of $10.
Who Carries the Most Risk when Staking in Poker?
Backers carry the most risk - So, why then would someone start staking a poker player? Well, the upside can be huge. If a backer puts someone in the $10,000 WSOP Main Event and they win it for $10 million, the backer is going to get a few million dollars.
However, the risk is just as big. They’re putting up the $10,000 and, because there are thousands of players in the Main Event, the odds are that the stakee isn’t going to win. The variance is slightly lower in SNGs and cash games, but still quite high.
Meanwhile, the player has the pressure of performing well and there’s also the issue of makeup. So, while the player doesn’t risk as much, they have commitments to keep.
Staking Pros and Cons
No risk to your own money.
Someone else is covering the costs, so your bankroll stays intact. Yes, you have to give away some of what you win, but you don’t have to suffer the downside.
You can move up limits.
Staking is a great way to access games that are beyond your budget but, perhaps, not beyond your skill level.
It takes the emotion out of poker.
Losing hurts, but less so if it’s someone else’s money. So you can play poker online or live while, in theory, making better decisions.
Access to coaching and advice.
Most backers will either offer coaching or connect you to a team of coaches. It’s in the backer’s interests to make you the best player possible.
You don’t keep all the winnings.
The biggest reason people don’t like being staked. Although someone covers your costs, they get to take some of the profits when you’ve done all the hard work.
Makeup can sting.
You may be in so much makeup that you’re playing just to pay off your debt. This piles on pressure and takes the fun out of poker.
You have commitments to fulfill.
Agreements come with T&Cs. You have to play a certain number of hands/games per week. Or study/review hands and complete various reporting tasks.