The Truth About Poker Staking | Best Ways to Fund Career

Poker staking sounds complicated, but it’s not. Once you understand it, you get it with ease. Poker staking is most common in Texas Hold’em poker tournaments. They can be found elsewhere as well, but let’s stick to Texas Hold’em poker tournaments for now in order to keep it simple.

Poker Staking: No Ego = No Stake Necessary

Poker staking is when someone pays for some or all of your buy-in and receives a cut if you win or cash. If you’re a strong poker player, then you know to play down. This means that you will play against weaker competition for small buy-ins because the cream will eventually rise to the top.

There might be variance, but if you play in 100 tournaments where you’re by far the superior player, you’re going to come out way ahead. Most poker players don’t want to do this for two reasons. One, the prize pools aren’t big. Two, they don’t want to be seen playing in the smaller buy-in tournaments. Once a poker player is viewed as a “pro,” they wouldn’t dare venture off to something like a $135 Nightly tournament.

Do you see the error of their ways? They’re letting ego play a role. Prior to moving forward on a poker stake, it’s imperative to note that if you want to be successful in this game, you need to toss ego out the window. First place in a Nightly usually pays somewhere between $2,000 and $7,000, depending on the location and night of the week. These can also be referred to as Daily tournaments in most poker rooms. Now … if you want to go for the big time, then you’re probably going to need a poker stake. I’ll explain how it works.

Poker Staking: What Is Markup?

Let’s keep it simple. Let’s say I’m going to play in a $1,000 event and I’m selling 50% of my action at 1.2. This means that investors can buy up to $500 and pay a 20% premium. For example, if someone invests all $100, they must pay $120 for 10%. The premium is usually equal to a poker player’s reputation and results. If this player has scored for more than $1 million total throughout his career, then 1.2 is an exceptional deal for the investor.

Player has earned $30k to a few hundred thousand, then it’s a fair deal on both sides. If this player has earned less than $30,000, then it’s a poor deal for the investor. You see, there is poker strategy on and off the felt.

If a player has won millions, it doesn’t mean they have kept all that money, but it does mean they have experience. There are going to be many times throughout a tournament where most people blow up and can’t handle the pressure. Someone with experience is more likely to remain calm, which is going to give that player a much better chance of moving up the pay ladder.

The point of the premium is for the player to pay for travel expenses and food. If that player has an angle where he can get free room and food, then he gets to pocket the money. The premium (or markup) is still justifiable. The investor doesn’t care what the player does with the money. Pocketing the premium isn’t against unspoken poker rules.

Poker Staking: What Is Makeup?

Makeup is a different type of poker stake. Instead of just one tournament, makeup is for the long haul. This is how it usually works in the poker world. Let’s say the investor gives the player $50,000 to play with during the World Series of Poker in Las Vegas, which is held from late May through mid-July. That money needs to be used for poker buy-ins. The player will figure out which Texas Hold’em games fit his style of play best and send a schedule to the investor for confirmation. This is referred to as off-the-felt poker strategy. The investor will receive 50% of all winnings.

Once the investor and player agree on which tournaments the player will attempt, it’s a green light. If the player wins more than $50,000 for the summer, excellent, everyone is happy. The only potential headache is taxes. Therefore, it’s imperative that the investor and poker player determine if the investor will receive a pre-tax or after-tax cut PRIOR to the first poker tournament. If it’s an after-tax cut, then the player should issue the investor a 1099.

This might sound like a hassle, but it’s very easy. Once you do it once, it’s no big deal going forward, and you certainly don’t want to pay taxes on money that’s being paid to someone else. That can turn into an even bigger headache, with the IRS and the investor. Avoid this situation! It has happened many times before and it has destroyed friendships.

Now let’s say the player loses more than $50,000 for the summer. More specifically, let’s say he loses $100,000. That’s a rough summer! But, hey, it happens when you’re playing in the big leagues. The player might feel terrible, but how do you think the investor feels? Well … that depends on how much money he has. If he’s a millionaire, then there is no reason to panic. Why? Because the player is now in makeup territory, which means he needs to make up for his losses. The player continues to play, and the investor continues to back, until the player makes up all the losses.

So, let’s say the player scores for $200,000. First, the $100,000 the player lost will go back to the investor. That’s the makeup. Now there is $100,000 remaining, $50,000 of which goes to the investor because he gets 50%. The player now has $50,000 remaining (and a lot less after taxes).

This is the life of a poker player. It’s a fun and exciting life filled with freedom, hopes, and dreams, but it sure as heck isn’t easy. It can get easy if you have multiple scores in a short period of time. I recently played against a guy who won two rings within three days. Those two paid $22,000 and $160,000, respectively. He had backers, but he didn’t have any makeup. I don’t know how much of a cut others were receiving, but he seemed pretty happy. I don’t blame him.

My Own Poker Staking Deal

It’s also possible to come up with creative ideas. Over the past 11 months, I grossed $67,000 in Texas hold’em poker. This only pertains to tournaments (cash games are a whole other arena, which will be covered soon because it’s important). I wanted to give people a long-term sweat. The real reason for the offer, however, is to personalize an experience for my fans (I’m also a writer). This creates die-hard fans.

My offer: $500 for 1% of my gross in poker tournaments over the course of 11 months. If they had taken this deal last year, they would have made $170, which isn’t much, but they would have had an entire year of a sweat while still making money. That’s a goldmine! And it’s completely within the poker rules.

I just offered this in 10 installments and have interested parties. Will they all pay? Probably not. Some will, some won’t. You have to understand something about poker players. When they’re not using their money for poker, they’re pretty darn cheap. Well, it’s not that they’re cheap; they just want those buy-ins for Texas Hold’em poker tournaments. In their minds, the next big score is right around the corner.

Collusion

Collusion refers to poker players working together in order to give themselves an edge over the rest of the field. This could be someone kicking a friend under the table, someone purposely revealing their hole cards to their friend next to them, two players raising everyone else out of pots so they take the majority of the chips, and more. However, when it comes to a poker stake, collusion is rare and not something to worry about.

Some people believe that punting is a common form of collusion, but I don’t see it much. In fact, I can only think of one instance where I think I saw someone punt his stack to someone else in Texas Hold’em poker. It was a poker tournament and the two players knew each other.

One of them called an all-in with 83-off. This made no sense at all since it was Level 1 in the tournament. They might as well have held a billboard over their heads with the word: “COLLUSION!” It was so bad that another player was about to call the Floor, but nothing was done about it and the dealer continued the game by dealing the next hand.

In case you haven’t figured it out yet, punting refers to someone making a terrible decision in order to give their stack to someone else. That someone else is usually someone the punter has a deal with. In many cases, they will purposely go all-in heads-up against one another so one of them can double their stack and have a better chance of cashing. Sometimes, this is a 50/50 partnership where they both bought-in full price, and sometimes the weaker player is the investor and the punter. He’s trying to give his horse a better chance at a win.

Poker Staking In Cash Game

If you need poker staking in a cash game, you probably shouldn’t be playing poker. This isn’t to say cash games are easier, even though that’s usually the case. A cash game is completely different than a tournament because you can search for your prey. You can literally walk around the room, find the softest game in that room, and request to wait for that table. You can’t do anything of the sort in a poker tournament, you land where you land.

If you’re walking around the poker room and you can’t find a soft cash game, you can still usually find a soft player. Request that table. When you get there, play a lot of pots against that player and few against everyone else. Even if you have a slight edge against other players, you don’t want to risk wasting your chips when there is softer ground available to conquer.

If you do happen to receive poker staking in a cash game, it will likely be a one session deal. These staking deals are often at higher levels, and it sometimes happens because a player at a lower-level game played against you and was impressed. A light bulb went off in their head and they decided to give it a shot. This can be nerve-wracking because it’s usually completely out of the blue and you have to report back, but keep in mind that it’s an investment, and there is always risk involved with an investment.

Reducing Variance

Most poker players require poker staking because variance kicks them in the ass. This has happened to me as well. However, when I think back on my best stretches of play in Texas hold’em poker tournaments over the past year, it was always the same style of play.

I forget what everyone said about what you’re supposed to do in a specific spot and played my own game. While it might not look cool, that game was to control the size of the pot by keeping bets small and calling and checking more often. I know this sounds backward, but hear me out. You would do this all the way to the river, which is when I would have an opportunity to fully evaluate the whole story. I would use my reading ability in an attempt to make the right decision.

My thinking was that most poker players wouldn’t fold on the flop with a draw, top pair, two pair, or a set anyway. And 99% of the time, they have one of those hands. Betting big would do nothing but lead to gambling. By controlling the pot and seeing how the story played out, I would minimize my risk and slowing grind my stack higher, allowing me to go deeper in the tournament.

In August of last year, this style of play led to three final tables and one second final table out of six tournaments. Two of those final tables were in the same day. Every tournament had more than 500 players. In November, I used the same approach and came in 7th of 2,373 players for $20,843. In February, I used that same style of play and won three small tournaments in one week at a WSOP Circuit stop.

And in Pearl River (Mississippi), I played in two tournaments with hundreds of players and made two final tables. It wasn’t until after Pearl River where my confidence went too high and started to become more active. I started playing “how you’re supposed to play.” This will lead to a downswing because you’re playing like everyone else, which doesn’t lead to an edge.

The point here is that while poker staking can be beneficial for the short term because variance kicked you in the ass, it is truly possible to reduce variance. Instead of letting variance kick you in the ass, you should be kicking variance in the ass. In order to pull off the style of play mentioned above, you’re going to need to be very confident in yourself because other players will make rude comments about how you play. I look at it this way: the less ego you have, the more money you will make in Texas Hold’em Poker.

Final Thoughts

You can charge markup for a one-tourney stake and you can have makeup if someone invests in you for the long haul, but you can’t win long term if you let ego join you at the table. If you want to join the ranks of an exclusive club where you play your own money and avoid the staking world, come up with your own style of play that fits your personality. That’s how you win! See you at the WSOP!
♠ pokerjournal.org

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