Staking? Stop being the idiot

In this article I will talk about the topic of staking & selling action from both perspectives.

Staker perspective:

Usually staking is a very good business for the person who is investing. You can have a very high return on investment, often with extremely little risk. Let’s say you can trust player xy and you simply know he won´t scam you and steal your money.  Since we only stake winning players, we can basically sit back and watch the money come in. We don´t care about shortterm losses. The stakee is a winning player and in the long run is going to show a profit. It’s as simple as that.

—–> Staking in theory is a darn good business

Why the golden gates are not golden

But since there is no such thing as a free lunch, we have to watch out. Since staking poker is such easy money and I prefer that the people that I´m staking are intelligent (otherwise it’s safe to assume that they suck at poker as well), you´d have to ask yourself why an intelligent person is willing to give away around 50% of his winnings (or whatever your deal is) just for not having to experience short term variance. I´d be extremely skeptical in 99% of cases.
The person in question has to come up with an extremely good story. And even then, chances are something is wrong and very fishy. If you´re into staking, you will hear lots of drama stories like family members dying, school tuition to be paid and whatever people come up with. While some or most of the time those stories are true, I simply can’t get rid of the feeling that always the same kind of people get “unlucky” and other people somehow always get “lucky”. Now I´m not suggesting that all of them are necessarily lying. But I do suspect that in most cases those “circumstances” are just excuses. Circumstances rarely ever stop somebody unless some huge tragedy happens, like parents passing away.
Of course a few have the right mindset poker to play winning poker even in those circumstances. But it’s pretty tasteless as well to ask for a stake, if somebody is clearly playing with negative expectation.

When people give you the excuse “I had to buy this and that and now my BR is short”. Yeah, right! Especially at low stakes it does not take long at all to move up again IF you are a winning player. You can easily calculate how long it would take you to come back. If you´re broke, because you were not insured and had to pay a huge medical bill, all you have to do is borrow a couple hundred (or thousands etc) from a friend and start again at lower stakes.

—-> Most excuses are pretty lame and you should be very skeptical in general and err on the side of declining. You’re rarely making the wrong decision. But most of the time, if it smells like a fish and walks like a fish… it is a fish.

—-> I´d stay away from staking people that you don´t know in person, unless you have a very very good reason. If you´re professional when it comes to staking, you´ve made your own experience. My advice here is geared towards those who don´t have a lot of experience. In short: It’s a hassle and will only cause you unwanted trouble

Cases where staking does make sense:

—-> You know the guy is a winning player, but simply has other problems (guy is a huge degen in life)

—-> The person plays highstakes cash games or tournaments

For this to happen, you need to know the stakee very well though. Some people simply play better with their own money (like myself). I can recall one time, when I was not motivated at all, hit a “downswing” in tournies and didn’t wanna play for a long time. A friend said he´d stake me. This gave me motivation, 0% risk and willingness to play.
Turns out I blew around 20 buyins on NL 50 (no tilt, I just sucked?!), before he ended it. Then I played with own money again and never looked back.
Other people feel easier when they don´t play with their own money. It’s some mental issue, that doesn´t make any sense rationally. Like I have a very good friend and he´s a winning player above and beyond any doubt. For some reason he wanted to get staked?! I asked him if he was drunk or something and explained to him in detail how he would be giving away 50% of his winnings. Anyways, he gave me some explanation about his situation and how he feels more comfortable on a stake. Well, I repeated that it’s pretty expensive insurance, but he didn’t care. It´s worth for him.  Have to mention though that I´m mentoring/coaching him fulltime.

The general irony about staking

There are other people that I would also always stake. I know them inside out. In general the ironic part is that most of the deals that I would agree on, are in my opinion not good deals for the other side. Simply because I would only stake winning players and those guys could win with their own money as well ;)

One exceptions to the rule: A classic win-win situation

The buyin is very high and the extra EV gained is worth some EV that one is losing by getting staked. That’s mostly in tourney or nosebleed cash games cases. Almost nobody is properly rolled at those limits, so getting staked or selling action makes sense. One other friend of mine plays NL5k, but isn´t  rolled completely solid for it. Theoretically it can happen that he´ll bust. And before grinding NL50 again, of course I´d stake him for whatever he wants to play. Then again, maybe playing NL50 might be a good lesson for him?! So in the end, I´d be up for it, but know that most of the time it’s not the best thing.

Stakee perspective:

If you are a winning poker player, why would you want to give away winnings for free? Being staked is nothing other than paying money to delete variance. But most of the time it’s even worse. Most staking deals include make-up, which means that you have to win back what you´ve lost anyways. So what you´re basically paying for is a very expensive insurance against the risk of going broke.

– You have mindset problems and you can´t perform under pressure
– You like the feeling of playing it safe and not having to risk anything
– You´re very bad when it comes to dealing with/keeping your money
– You´re playing way above your normal stakes, but it’s justified for some reason and you need support

In any way. Just think twice about it. I refrain from saying stuff like “nobody should get staked”, since I´ve got to know people who really play a hundred times better when on a stake. I always took this mental ability for granted to “put your own money on the line”. But most people are actually very risk averse. If you read this and would categorize yourself as rather risk averse, then go ahead and find a good backer who doesn´t take advantage of you.  Just keep in the back of your head that you might be able to learn to be more “risky”. I have no idea if a person can learn this, or if this is some deep psychological issue.

Advice for Sharing and Selling action (also staking):

Most poker players are extremely professional when it comes to this topic. I did have to mediate a few times though. What I´ve learnt from those cases is:

1) Make a very clear agreement. Be very exact about poker stake Terms and Conditions. Have an “exit agreement”. Things don´t always work out the way you want it. Make sure you thought ahead of certain scenarios (like tragedies) that can happen all the time.

2) Count on good will. You can´t write down every theoretical scenario. So make sure the person has personality with integrity.

3) Be very selective in the people you do business with. With some people I will not do any business anymore, not because I don’t trust them, but because with those people, things always tend to become a hassle. Doesn’t make them bad people, nor bad friends, but bad business partners.

4) Don´t do business with bad business persons. This sounds self-evident, but from reading forums and staying up to date on gossip, this does not seem to be.

5) I´d advise you to write down very clear principles that are important for you. And unless every single one of them is met, don´t do business. Don´t make compromises in the wrong spots.

6) Last but not least, make sure the person is comfortable losing the amount they invest in you or vice versa. If you don´t think it’s good for them, show responsibility as a friend and back out.

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