The topic of staking in poker, or any gambling related business, is tricky. If it’s handled the wrong manner, friendships are broken, money is lost, and nobody is happy. If done correctly, however, it can be quite a lucrative investment for the backer, and an invaluable tool for usually the one being backed.
Some tips about what a basic poker staking agreement might look like. The Staker will give(stake) the Stakee a quantity of money to gamble with. At the conclusion of a pre-defined time period, the Stakee will probably pay back the Staker the original “stake”, along with a certain percentage of the profits.
You will find two important parts to this agreement. These two issues can lead to one party in the agreement finding a bad deal, even if neither party intends to harm the other. The very first part that is important is the total amount of time. The second is the percentage of the profits to be paid back.
Many people make the mistake of earning the time period too short. Poker, and any form of gambling, involves luck. Even though you are skilled and have an advantage, there’s a variable of luck. You won’t always win. Take, for example, the most popular agreement of someone being staked for just one night of play. There is a $200 no-limit hold’em game. At the conclusion of the night, the original stake is paid back, and the profit is split 50/50. The person being staked is an excellent player, they double their buy-in about 70% of the nights they play, and lose their buy-in only 30% of the nights they play. This would seem like a good proposition for the Staker, but let’s look at the math https://bola228.world.
70% of that time period, the Stakee will double his buy-in, and have $400 at the conclusion of the night. The Staker would get his original $200 back, plus 50% of the profits, or $100. The Stakee would get one other $100. So, 70% of that time period the Staker profits $100, and 70% of that time period the Stakee profits $100.
30% of that time period, the Stakee will miss his buy-in, and have $0 at the conclusion of the night. The Staker can take the total $200 loss. So, 30% of that time period, the Staker will miss 200, and the Stakee could have lost nothing.
Since 70% of that time period, the Staker profits $100, and 30% of that time period, the Staker loses $200. His average expected return is (.65)(100)+(.3)(-200) = (65) + (-70) = -5. With this particular deal, even although the Stakee is an excellent player and can beat the game 65% of that time period, the Staker LOSES money!
When they made exactly the same deal, but rather of splitting the profits after 1 night, the split the profits after 2 nights, then the offer is significantly better for the Staker. In the event that you look at the math, you can find 4 possible outcomes. He could win both nights, lose the very first win the second, win the very first lose the second, or lose both. The days he wins one night and loses another, there’s no profit or loss, so we can ignore that outcome since it’s zero. The percentage chance winning both nights would be .65*.65 = .4225, or just around 42%. The chance of losing both nights would be .35*.35, or just around 12%. The others of that time period, it’s break-even win one lose one. So, 42% of that time period, they will split $400 in profit 50/50. The staker will get $200 42% of that time period, for an average profit of $84. He will miss $400 about 12% of that time period, for an average loss in $48. His total average expected profit would be $36. So, simply by adding yet another day to the time frame, the Staker’s winnings went from -$5 to +$36. The longer term a stake, the safer it’s for the Staker. The shorter the definition of the stake, the bigger percentage of the profits the Staker needs to make up for the loss. There are many in-depth articles and discussions at www.snggrinder.com [http://www.snggrinder.com] regarding staking deals for poker, blackjack, and other gambling games.