Staking in poker refers to the practice where an individual, often termed a “backer,” puts up the entry fee (buy-in) for a poker player to participate in a tournament or cash game. In return, the backer receives a pre-agreed percentage of any winnings the player secures.
While this system can be mutually beneficial to the backer and the “horse” when things go well, there are also big potential drawbacks.
Pros of Staking:
Players: Many talented players lack the bankroll to participate in major tournaments. Staking provides them with a platform to play bigger events without the immediate financial burden.
Large field tournament poker has an enormous amount of variance with the best players in the field cashing around 20% of the time and the big returns usually limited to players making the final table (usually top 1-2%).
Being staked allows players to ride out periods of not cashing or going through downswings and still stay in action until they are able to achieve a big score.
Potential for High Returns:
Backers: By identifying and investing in promising players, backers have the potential for significant returns on their investments, especially in high-stakes tournaments.
Risk Mitigation:
Backers: By staking multiple players, backers can diversify their investments, increasing the likelihood of some returns.
Similar to how a VC firm will spread their investment portfolio across different start-up companies in the hopes that one hits it big with a 20X+ return, backers can take a similar approach to investing in promising horses. One big score can more than make up for all of their other investments that didn’t pan out.
Professional Growth:
Players: Being staked often means getting access to a network of experienced players and backers. This can lead to being coached/mentored by the backer, connections and further growth in the poker world.
Shared Success:
Both: Staking fosters a partnership between the player and the backer. Successes are celebrated jointly, leading to a sense of camaraderie and shared achievement.
Cons of Staking:
Financial Loss:
Backers: Not all staked players will win or even cash in tournaments. Backers need to be prepared for potential losses on their investments.
Backers need to be prepared for their horses to spend time in make up – which can be taxing.
Pressure and Stress:
Players: Knowing someone else’s money is on the line can add an extra layer of pressure, potentially affecting a player’s natural game or decision-making.
Being stuck in make up can lead many players to feeling desperate and not playing their “A” game.
Dependency:
Players: Continual staking might make players overly dependent on external funding, inhibiting their drive to build a personal bankroll or manage their finances effectively.
Complex Agreements:
Both: Long-term staking deals can become complex. Misunderstandings or disagreements about profit splits, duration, or other terms can strain relationships.
Many staking agreements are also handshake deals which can lead to big problems down the road.
Reputation Risk:
Backers: If a backer consistently funds players who underperform or are involved in unethical practices, it could harm the backer’s reputation in the poker community.
Players: Being staked and not providing returns repeatedly might make future staking agreements challenging to secure.
The poker community is small and word gets out quickly on a player not performing well or honoring their staking agreement.
