You’ve heard of staking.
Or at least you probably have if you’ve spent any time with poker players. Over the last decade or so, poker staking has blown up, mostly in tournaments, but cash games as well.
Done right, a poker staking deal can be beneficial for both parties, yet staking deals gone wrong have ended many careers and led into some of poker’s most famous public disputes. So, what is poker staking all about?
Staking in Poker for Dummies
The term poker staking means that a poker investor (“the backer”) puts up money on behalf of a poker player (“the horse”) in exchange for a cut of the profits. The backer typically assumes all the risk – any money the horse loses is on the backer, but if the horse wins, the profits are shared according to the terms of the poker staking contract between the parties (usually, the cut is around 50/50).
At first, becoming staked sounds lucrative to almost anyone.
Wouldn’t it be nice to never lose money during a downswing?
Is there anything better than playing free of stress, without having to sweat coinflips and worry about short-term results?
How about taking your first shots at higher buy-in levels without risking any money of your own?
For most people this would sound amazing. But as usually is the case when something sounds too good to be true, there’s always a catch.
In the case of poker backing,the catch is one of the most loathed-upon terms in poker lingo, a word that gives the chills to anyone who’s ever been under a staking contract.
Virtually every poker staking contract contains a makeup clause, because without one, backing poker profitably would be nearly impossible long-term.
The concept of makeup ensures that to be able to get a profit cut, the horse first has to make good of any previous losses.
For example, if you lose $2,000 on your first day backed, you’re now in $2000 makeup. If you win $3000 on the second day, your share is only $500. The first $2000 goes to covering the makeup, and then you split the rest 50-50.
While many people don’t see it this way, I believe it’s best to view makeup as a debt.
There are only 3 ways to get out of makeup without winning it all back:
- Get dropped by your backer
- Pay it back from your own pocket
- Quit poker
It’s true that it’s not a debt in the sense that if you decide to pursue another profession and actually quit the game, you don’t owe anything and your backer can’t force you to play another hand if you don’t want to. But if you ever made a comeback to poker, you’d still be under the staking contract, and every cent you win would go towards paying back your old backer.
So while not officially a debt, in the context of one’s poker career it should by all means be treated as one.
Cash Game Staking
Let’s say you play $1/$2 No Limit as your main game, and have had good results for some time. Poker might be your main job, side job, or simply a profitable hobby.
You’d like to try becoming a regular at $2/$4, but you’re uncomfortable with the prospect of losing a lot of money if you happen to run bad, so you’re considering seeking backing. While the train of thought here is logical, from a financial point of view getting staked in this situation would make no sense whatsoever.
Playing on a standard 50/50 profit cut (the most common distribution in staking contract templates) at $2/$4 is effectively still $1/$2. The only difference is the $2/$4 game is probably much tougher than your old $1/$2.
Unless the $2/$4 games are somehow softer than the $1/$2 games, you’re making less money. If it turns out you can’t beat those $2/$4 games, you’re making no money, and end up in makeup you might have to end up clearing at lower stakes.
Rather than seek backing, the best way to handle the above situation would be to sell a percentage of your action to someone over a specified sample or single session. If you win, your friend gets the corresponding percentage of your winnings, and if you lose, he covers his part.
There are many poker staking sites and forums that specialize in this kind of thing. But from strictly a financial point of view, it would be the most sensible to just keep grinding $1/$2 until you have enough bankroll and self-confidence to try moving up on your own.
There are scenarios, however, where getting staked for cash games makes sense. The most logical one is if you’re a proven winner at certain stakes over a large sample, but end up without a bankroll for whatever reason (may it be blowing up your bankroll on a tilt shot, or having decided to invest all your money on something and start over from scratch).
Assuming that you can find someone who trusts you enough to stake you for the stakes you used to play, you’ll still be making a better hourly and get to build a new bankroll quicker than by depositing your last $25 and starting from the lowest stakes on the internet.
Poker Tournament Staking
Variance plays a much bigger part in the short-term results of a poker tournament professional than it does in those of a cash gamer. It’s not at all unusual to hit losing streaks of hundreds or even thousands of tournaments, especially if you play mass fields.
A big portion of any tournament player’s annual profit comes from a couple of big scores worth hundreds of buy-ins. The best player in the world could go months without getting much going, until one day hitting that inevitable big one.
In most cash games, a proven winner can feel pretty safe with a bankroll of a hundred buy-ins, but in tournaments it’s not unheard of to lose a thousand buy-ins before turning it around. For that reason, tournament players account for the vast majority of the world’s staked poker player population – and it makes a lot of sense. Poker tournaments are by far the softest form of poker, but many people don’t want to deal with the variance, so they go and get a backing deal.
It’s hard to blame them. It’s never black and white, but in my opinion getting staked for tournaments generally makes more sense than it does for cash games. The variance effect is that much greater, and being able to play tournaments with huge first prizes without worrying about money is a huge upside.
Another commonplace way for MTT players to deal with variance is selling poker tournament shares. Instead of covering the entire buy-in of a tournament or series of tournaments, they sell a percentage to buyers (often with mark-up multiple, which is like charging a fee for your services).
In this case, the player still assumes some of the risk, since he puts up the rest of the money himself. But there’s also no makeup – you don’t need to recover any losses. Selling shares is a simple and effective way to manage your bankroll and take controlled shots.
Things to Consider Before Applying for a Stake
Are you convinced that you want to seek for a full staking deal? Don’t send in that application just yet! Here are some topics you must understand first.
- The big picture. This is something that incredibly few people realize, even that it’s plain obvious: By getting staked, you’re the one paying, not vice versa. Every staked player is essentially paying their backer to eat all the risk and to not have to worry about variance. It may not look like that on the surface, because it’s the backer who’s throwing money at you, but the goal is to win, right?
- You still need a bankroll. Not a poker bankroll, but a life bankroll. When you’re backed, you spend ninety-nine percent of the time in makeup. Virtually everyone makes the mistake of overestimating how frequently they’ll get to see a paycheck when they’re backed. Naturally, if you’ve gone broke because of a tilt shot, your local McDonald’s rejected your job application and someone offers to stake you to get back on your feet, it’s not like you have much of a choice. But in general, you should be prepared to go months, even a year without seeing a dime. Obviously a twelve-month downswing should be rare, but it’s significantly less rare than you’d think.
- You should view a backing agreement as temporary, not ongoing. I believe that every poker player’s ultimate goal should be to have a deep enough bankroll to be able to play on their own money. I know that some people will disagree, but I think you should always view your staking deal as a temporary arrangement. It doesn’t mean you’d have to set an end date or anything, but always keep in mind that you’re getting staked, first and foremost, to build your bankroll (and often also your skillset). I can’t stress enough how important it is to keep your head straight, because when you’re playing without risk, it’s so very easy to get distracted and start caring too much about secondary goals, such as the pseudo glory of winning this and that tournament.
Still unsure if getting staked is for you? Let’s look into some pros and cons.
Cons of Being Staked
- When you’re staked, you’re not your own boss anymore.
Many people, myself included, end up playing poker for a living because they have a hard time coping with authority figures, crave freedom, and/or have a personality not well suited for the nine to five hamster wheel (the author of this article got fired from his last job before becoming a poker professional for calling his boss a c###).
The moment you sign that poker staking contract, your freedom is long gone. While the backer doesn’t have control over your life and can’t force you to play when you don’t feel like it, he can still demand many things from you, such as playing a certain amount of volume each month, recurrent audits and so on. Typically, when things are going well none of this is a big deal, but when you’re in makeup, it can add a lot of unwanted stress to your life trying to please someone whose money you’ve lost.
- The mental toll of being in makeup.
When you’re playing on your own dime, things are pretty simple. You play in games within your bankroll, if it works out you make a living, and if it doesn’t you don’t. While virtually every poker player struggles with mental issues every now and then – tilt, motivational problems, you name it – the palette of negative emotions associated with the job becomes much more diverse when in a lot of makeup.
You may have to deal with emotions such as guilt, regret and pride, and the burden is much heavier when you’re also accountable to someone. There’s nothing more devastating than running out of life roll and being so deep in makeup you have to ask for a loan to pay the bills. Knowing that you won’t be making a profit cut anytime soon can mess with your head, haunt you in your dreams and make enjoying everyday life impossible. Yes, in case you wondered, I speak from experience. It doesn’t always have to be this gloomy, but you need to be prepared for the worst.
- The risk of things getting out of hand.
A friend of mine was one of the most celebrated figures in MTT circles a while ago. He won three big tournaments, including the Sunday Million, within a single month for a total profit of over $250,000. I went out for dinner with him one night, wondering why he was picking the cheapest dish at the restaurant and drinking tap water. I had imagined him wanting to order Dom Pérignon to celebrate the incredible month he’d had. He told me he was still over $400,000 in makeup, and hadn’t made a profit cut in over three years. He was living on loans.
I’ve heard numerous similar stories over the years, and they outnumber the positive accounts by a mile. There’s just something about receiving “free” money that messes with people’s psyche and makes them act irresponsibly. I’ve never heard of a single player planning to get deep in makeup, yet so many people end up way over their head (again, I’m speaking from experience).
If you asked a random $50 buy-in tournament player what he thinks is the most makeup he’d estimate he could possibly get into, he’d probably answer something like $15,000. I’d recommend most everyone to multiply their estimate by at least three to get a more realistic figure.
Pros of Being Staked
- Free coaching.
This is one of the best reasons to reach out for a stake. Many of the biggest poker staking stables pay top pros for group coaching sessions, do one-on-one hand history reviews, produce exclusive video content and provide other learning material.
If you’re an up-and-coming player, I’d go on to say that it’s almost irresponsible to seek only for a monetary stake without coaching. One of the most effective ways to develop your poker skills is having a poker investor help you out, since him having a financial interest in your progress will ensure he’ll be doing his best to help you thrive.
- Managing your finances better.
While getting staked can certainly hurt your finances in the long run, many players have also successfully built their bankrolls that way. If done right, it can be an effective tool to do so. Certain personality types – you may want to call them nits – also benefit from getting staked, because they’re too afraid of losing their own money to play as high as their skillset would allow them to.
I know a couple of people who bought houses with more or less their entire bankrolls, because that had simply always been their primary goal. As soon as they had the money, they did it without hesitation. In both cases, getting staked after the house purchase to build another bankroll would’ve made a lot of sense.
Every poker player has dreams that have more to do with experiencing something specific rather than monetary gains, such as playing in a WSOP event. When you join a poker staking stable, you’re more likely to get a chance to realize some of these dreams. If you’re playing $11-$22 tournaments on your own bankroll, registering for a $1500 WSOP event isn’t exactly within the frame of sensible bankroll management. But if you’ve had good results playing similar buy-ins backed, it’s not unheard of to get a chance to play in a WSOP event or two under the same deal.
Most stables have large Skype groups and they encourage horses to independently work with one another. Talking to like-minded people with similar goals can also help you achieve yours. Especially if you don’t know a lot of other poker players, socializing with your stable mates is a good way to build a network for yourself.
I’ve met some incredibly interesting people through poker as well as some of my best friends in life, and networking has provided me with a lot of opportunities I could only have dreamed of if it wasn’t for poker.
How to Get Staked in Poker
Getting staked in poker isn’t easy. If someone offers you a deal without asking you to provide a graph showing solid results or a list of credentials, chances are you’re getting scammed. The more successful the backer, the tougher it is to get backing.
I have no statistical data to prove this, but I’d estimate that probably 90 percent of staking applications get rejected. If you’ve decided that getting staked is the way for you to proceed, my best advice is try to build a reputation for yourself on a poker staking site, a specific poker forum or in the poker world in general. This also needs to happen organically, without rushing.
You should start out by trying to get some shares sold for a single tournament on a poker staking forum, posting in a lot of threads, networking with other people and making poker friends who you can use as references.
Many stables have been in the business for a decade, and they’ve done well for a reason. No one’s going to give you a bunch of money to gamble with if they have the tiniest reason to suspect your trustworthiness or poker skills. Work on your game and getting some results to show for prospective backers, and again, network and build that reputation.
It’s entirely possible to land exactly the kind of staking deal you’d wish for – I’d estimate that the number of staked poker players right now is well in the four, possibly even five figures – but you have to be smart and patient about it.
Also, it’s not just about the backer picking his horses; you should put effort into finding the best possible backer for you as a well. To have a successful backing deal, it’s key to have a good relationship with your backer.
The Myth of MTT Riches
I’ll end this article with some food for thought. We tend to always look up to the name players and online beasts who’ve won big tournaments recently, like the ones who appear in the top 100 of the online MTT leaderboards on tracking sites.
You might browse and find some guy who’s close to the top, and take a closer look at the tournaments he’s won over the last few months. You find several five-figure scores.
“What a beast this guy is,” you think to yourself. “I wish I could one day be like him.”
In many cases, you may want to think again. The list of the top 100 online tournament players on a site like PocketFives will at any given time contain at least 50 so-called-beasts who are deep in makeup and completely broke.
The most surefire way to land yourself broke within a year or two is getting backed. It shouldn’t be that way, but it just happens to an alarming amount of people.
In general, the riches in poker, and especially in the MTT world, are divided much more unevenly than you’d think. A handful of guys have all the money, and a bunch of name pros have nothing at all, because they’ve sacrificed making money for chasing titles and glory – ending up so deep in makeup that they may never get out of it.
MTTs tend to attract certain personality types – attention-seekers, gloryhunters, dreamers who chase that one big life-changing score – and having this type of personality combined with getting staked can be a recipe for disaster.
On the flip side I know several somewhat nameless $25 average buy-in players with six-figure bankrolls, who’ve made a very nice living for themselves away from the spotlight without ever getting backed.
I’m not trying to discourage you from seeking backing, but I’m not advocating it either. After all, it’s impossible for anyone but you to tell if it’s the right thing for you. It all comes down to your own personality and individual needs.
What I do urge you to do, though, is think it over carefully before signing that staking agreement. Getting or not getting staked may have more effect on your poker career than any other decision you’ll ever make.
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Read more from Miikka and Upswing Poker:
- Learn exactly how top pros analyze their own poker hands
- Miikka explains how to set yourself up for the win in There’s Big Money to be Made on the Final Table Bubble
- Step up your tournament game with 7 Tournament Tips for Running Deep More Often
- Learn Miikka’s strategy for How To Open-Raise in MTTs So The Big Blind Doesn’t Crush Your Soul
Miikka Anttonen is poker professional from Finland with $2.4 million in career earnings and a world championship title under his belt. His autobiography is Once A Gambler. Find out more at https://www.onceagambler.com/