If you’ve watched any high-stakes tournaments or know someone who’s deep in the tournament scene, you may have heard people discuss the concept of tournament staking. You’ll hear stories about how people were able to play in huge tournaments and go on to win thanks to staking, but what exactly is tournament staking, and why do people do it? In this article, we’ll be looking at all of that, as well as how you can get staked yourself.
What is Tournament Staking?
Tournament staking is when a player receives money from someone (the backer) to play in a tournament. The backer will receive a percentage of the winnings if the player goes onto cash in the event but must pay the player part or all of the tournament entry fee. It’s a simple investment - Person A thinks Person B will do well in a poker tournament, so they take on some of the risk to earn some of the rewards.
How Does Tournament Staking Work?
But how exactly does tournament staking work? What are the details of the deal? Well, that’s entirely up to you! There is no specified way in which you must make a tournament staking deal; all the details are up to you and your backer. If your backer is happy to pay 100% of your entry for 1% of the profits, then that’s up to them!
However, there are two main types of tournament staking agreements that people enter into, one short-term and one long-term. Let’s take a closer look at these.
One-Time Agreements
As the name suggests, these are one-time agreements in place for one tournament. The backer agrees to put up a certain percentage of the tournament buy-in in exchange for a percentage of any winnings. If the player wins, they hand over that percentage of their winnings to the backer, and if they lose, then nothing happens. This is often called “buying a piece”, as you’re buying a piece of the player’s action in the tournament.
This is the simplest form of poker staking agreement, as it doesn’t require complicated tracking - two people make an agreement, and all parties are paid out at the end of the tournament.
Backing Deals
Whereas one-time agreements are only for a single tournament entry, backing deals are prolonged agreements to back a player in a series of tournaments. In this type of tournament staking, the backer usually pays the whole entry fee for each tournament but receives a higher percentage of the profits.
In this kind of deal, if a player loses, they must make up that loss to the backer over the course of the staking arrangement. Fittingly, this is called being “in makeup.” The player doesn’t necessarily need to pay the backer back, but the backer will take a larger percentage of profits to account for previous losses until the player is out of makeup. However, there may sometimes be a clause in this kind of arrangement that means if the staking deal ends while the player is still in makeup, they must repay all or a percentage of what they owe.
While this type of deal allows players to play multiple tournaments without worrying about the buy-in, things can turn sour if there is a sustained period of losing. Playing on a staking deal while deep in makeup can be a real grind, as nearly all of the profits you make from subsequent tournaments go to paying back the backer.
What is Markup?
One thing that’s become more and more common over the years is players charging a markup on the pieces they’re selling. Markup is essentially a premium on the action you’re selling. You’re saying that you’re better than the field and expect to perform better on average; therefore, you need to pay more if you want a piece of my action.
For example, if you’re selling action to a $100 tournament at face value (meaning there is no markup applied), buying 10% of your action would cost $10. However, if you were selling at a 1.1x markup, buying 10% would cost $11.
Deciding whether or not to add markup and how much markup to add is difficult, as it relies on you accurately gauging your skill level against the field. It’s easy to over- or underestimate your edge, which leads to a lot of players selling at ridiculously high markups.
Why Do Players Get Staked?
So why do people get staked in the first place? Isn’t it better to just play with your own money and be your own boss without having to report back to investors? Well, that depends on what your goals in poker are. If you’re just playing for fun, then it’s probably best that you just play with what you can afford. However, being staked helps eliminate some of the risks of playing such a high-variance form of poker if you're a professional player.
Let’s take a look at all the reasons why someone would choose to get staked for a poker tournament.
Eliminates Risk - This is the main reason why people look to get staked in tournaments. When someone stakes you, they pay a percentage of your buy-in for you, meaning that your overall exposure is reduced. If you’re only playing $70 to play a $100 tournament, then your losses are reduced in the likely event that you don’t cash.
Can Play Higher - Another reason why people look to get staked is that it allows them to play higher stakes more quickly. Playing on your own dime and grinding up a bankroll can be a long and arduous process, but if you’ve got a proven track record of tournament success and can convince someone to give you a shot in a bigger tournament, you can make the jump much quicker.
Bank An Edge - When selling action to a tournament, players can add “markup” to their package. Selling action at a markup essentially banks some of the edges that you expect to have in the tournament, further reducing your losses if you don’t cash in the event.
Opportunity To Play Professionally - If you’re lucky enough to find someone who will put you on a long-term backing deal, it gives you the opportunity to play professionally. You get to fully commit to playing poker tournaments under the watch of a backer who is providing your tournament buy-ins. As long as you’re a winning player, it’s a great way to play professionally that minimises your overall risk.
How Can I Get Staked in a Tournament?
The best way to get staked in tournaments is to play a lot of tournaments yourself! Playing tournaments build up a track record of how well you perform, which you can then use to persuade investors to back you. Most people aren’t going to back a player who they don’t know anything about, so having a solid record of results gives them something to work with.
The best people to ask about staking are people who are already in poker. These people understand how staking works, the risk they’re taking, and the likelihood of you winning. Many people look to their friends and family when trying to find a stake. While that’s all well and good, these people often don’t understand what they’re doing when they’re buying a stake, so things might get awkward later on if they expect to be paid money that you don’t have.
Another way to find staking is by playing tournaments on Natural8. Natural8 has a built-in staking platform that allows others to browse your results and see whether you’re worth investing in. You can create your own staking profile by clicking on the PokerCraft button at the bottom of the software and going to “Staking Profile” on the web page that pops up.
After creating your profile, you can start to sell action to tournaments you want to play. All you have to do is register for the tournament, select how much action you’d like to sell, and add markup. You can only sell action while the registration period is open, and you can cancel the sale at any time.
Currently, GGPoker and Natural8 are the only sites that offer an in-built staking platform for people who want to sell action, making them the ideal place to play if you want to see the benefits of poker staking.
Summary
Poker staking is the perfect solution if you want to reduce some of the risks of playing poker tournaments or take a shot in a higher buy-in event. It allows another person to take some of your risks in exchange for some of your profits, making a mutually beneficial situation. If you want to try out poker staking for yourself, check out Natural8’s built-in tournament staking feature that allows you to buy and sell action for several of their great tournaments.
