Poker, a game of skill, strategy, and a bit of luck, is a popular pastime and profession for many.
However, the financial risks associated with poker can be high, especially in high-stakes games and tournaments.
To mitigate these risks, poker players often sell stakes in each other.
This practice, known as “staking,” involves one player buying a percentage of another player’s potential tournament winnings.
We look into the mechanics of staking, its benefits, and how it helps to lower variance in winnings.
Table of Contents
What is Staking in Poker?
Staking is a common practice in the poker world where one player, the backer, invests in another player’s, the horse’s, tournament buy-in.
In return, the backer receives a pre-agreed percentage of the horse’s winnings, if any.
This arrangement allows the horse to play in tournaments they might not be able to afford otherwise, while the backer stands to make a profit if the horse performs well.
How Does Staking Work?
The Agreement
The first step in a staking deal is the agreement between the backer and the “horse.”
This agreement outlines the terms of the deal, including the percentage of the buy-in the backer will cover and the percentage of the winnings they will receive.
These percentages can vary widely depending on the players involved, the tournament, and the perceived skill level of the horse.
Selling the Stake
Once the agreement is in place, the backer provides the funds for the buy-in.
This can be done directly, with the backer giving the money to the horse, or through a third-party service that facilitates staking deals.
These services can provide additional security and transparency for both parties.
After the Tournament
If the horse wins money in the tournament, they pay the backer their agreed-upon percentage of the winnings.
If the horse does not win, the backer loses their investment.
This is the risk the backer takes in staking a player.
Note that backers are often other players, given they know the poker world well.
How To Stake Poker Players
Benefits of Staking
Lowering Variance
One of the main benefits of staking is that it helps to lower variance in winnings.
Poker is a game with a significant amount of variance due to the luck factor involved (i.e., primarily due to the hidden information from hole cards not being exposed).
Even the best players can have losing streaks, and even novice players can have winning streaks.
By staking other players, a poker player can spread their risk and potentially smooth out their income.
For example, if a player stakes ten different players in ten different tournaments, they are not putting all their eggs in one basket.
If one or two of the players they’ve staked perform well, the backer can still make a profit even if they themselves have a bad run.
Access to Higher Stakes Games
Staking also allows players to participate in higher stakes games and tournaments than they might be able to afford on their own.
This can provide valuable experience and potentially lead to significant winnings.
Risks and Considerations
While staking can provide benefits, it also comes with risks.
The main risk for the backer is that the horse will not win, resulting in a loss of the staked money.
For the horse, there is the pressure of performing well for their backer.
Trust and reputation are also critical in staking deals. The backer needs to trust that the horse will pay them their share of the winnings, and the horse needs to trust that the backer will provide the agreed-upon funds.
This is why many staking deals are made between players who know each other well or through reputable third-party services.
Who Makes Money From Professional Poker?
Conclusion
Staking is a common practice in poker that allows players to mitigate the financial risks associated with the game.
By selling stakes in each other, players can lower the variance in their winnings, gain access to higher stakes games, and potentially increase their overall profits.
However, like all aspects of poker, staking requires skill, strategy, and a bit of luck.
