Question of the Day - 11 August 2019

[Editor's Note: This answer was graciously provided by Blair Rodman, long-time poker pro and co-author of our book poker-tournament strategy book, Kill Phil.]

The first freezeout-style poker tournament was in 1971 at the newly created World Series of Poker at Binion's Horseshoe in downtown Las Vegas. That year, the buy-in was $5,000, with six players participating and Johnny Moss taking down the title of World Champion.

The next year, Jack Binion decided to raise the buy-in to $10,000; he thought the bigger prize pool would attract more publicity. To help increase the number of entrants, Jack put up half the buy-in for all players, numbering eight that year. That was the first instance of staking in poker tournaments. Since then, both poker tournaments and poker staking have greatly evolved.

From when I started playing in the '80s up until the poker explosion in 2003, the standard staking deal for the best players was that the staker, or backer, put up all the entry fees and the backer and player split any winnings. Sometimes it was on an event-by-event basis, other times it was settled at the end of a tournament series. Sometimes players were on a "makeup," meaning any losses were carried over to future tournaments and the player had to earn that money back before being eligible to profit.

Other players, who wanted to be in action, but didn't have a sufficient bankroll to put up all the entry money themselves and couldn't attract backers to give them a freeroll, sold pieces of their action "at par," meaning backers got paid a percentage of any winnings equal to their investment percentage, with no "markup" or premium to the player.

When poker went crazy in 2003 and easy money was plentiful, players realized that they could make money playing, but also by staking other players, both in tournaments and cash games. Some made it a business, not only backing numerous players, but even setting up training schools for their stable.

The next step in the evolution of staking involved companies formed to put together players and backers, the subject of today's question. The modern vernacular uses terms like a "markup of 1.1," meaning the backer pays a 10% premium. For example, at 1.1, a backer puts up $1,100 to have 10% of a player in a $10,000-buy-in event. In the example used for a player on youstake asking for a markup of 1.7, a backer would put up $1,700 for 10% of a player in a $10k event.

Youstake offers a menu of players at various markups for selected events. The company charges a small fee for the service. The players make the offers and set their markups. The better-known the player and less the markup, the better chance he or she has to attract backers. Money is collected and paid by the company.

However, I don't know what recourse a backer would have if a player made a big score and disappeared without turning his winnings over to the company. This and other shenanigans have always been an issue in staking.

Is it profitable to back players? Likely not, although tournaments like the WSOP Main Event offer great value for really good players and backers, maybe even as high as 1.7. As in most things gambling, for the non-expert, it should be done more for entertainment than the expectation of making a profit.