Everything You Need To Know About Backing & Staking

Poker is one of the most popular games in the world, attracting millions of players and millions of more viewers around the world. In essence, poker is a form of gambling reliant on skill, luck, intelligence and then some more luck - it is essentially the perfect gamblers cocktail.

Therefore, you may be surprised to find out that an extra layer of gambling has been added onto the game in the form of backing and staking. This form of poker investing has blown up in the past decade and in this article, you’ll find out everything you need to know about backing and staking.

What Is Backing & Staking?

Every poker tournament worth playing has a buy-in, with some costing a lot more than others. Despite having to have a supreme level of self-confidence to play the game professionally, a lot of players choose to sell investments in their progress to lessen the buy-in outlays.

Players will sell a share of their potential winnings in return for a percentage of the tournament buy-in. For example, a player could sell 50% of their WSOP main event winnings in return for half of the buy-in ($5,000.)

If they lose, they are under no obligation to reimburse the investor, but if they do secure any winnings, 50% will have to go to their financial benefactor. Of course, backing & staking is not always as simple as that and often involves multiple backers and varying stakes.

Who Backs & Stakes?

Traditionally it is non-poker players or amateurs that invest in professional but fellow players can often invest in one another also.

Why Back & Stake?

Non-players see backing as a way of getting in on the action, a way to have a say in something they would never normally be involved with. At a basic level, it is also a form of gambling, so asking why people back & stake is akin to asking someone why they bet on their favourite sports team to win.

There are however people that back purely for financial reasons, although as investments go, poker backing is a particularly high-stakes one. Buy-ins can cost up to $100,000 so some backers will have to shell out significant amounts of money with no promise of a return or profit.

However, when a player that has been backed is successful, the returns are frequently more than one hundred times the value of the original stake.

The professional players may also back their friends or players that they know to ensure they have an interest in the tournament if they go out before the final hand. Professionals also have a greater insight into the relative skill set of their fellow players so will often feel quietly confident in their backed bets.

Why Do Players Sell Stakes?

Here is where the hypocrisy starts to come in. Players who are selling a stake of their winners to backers will often do so under the pretence that they are incredibly confident of their chances in a particular tournament.

The first question a backer should ask themselves is, ‘why are they willing to split their winnings if they’re so confident of winning in the first place?’ It’s a good question to ask and can often be answered simply, by the fact that a player doesn’t have the funds available to cover the buy-in.

However, most players choose to sell a stake of their winnings because they DO doubt their chances of winning and want to consolidate their losses. Spotting the difference between these two types of players is the biggest barrier to making money from poker investing.

How To Back

Most agreements between players and backers are made verbally in the form of a ‘gentleman’s agreement’. However, if you are thinking of investing in a player it would be wise to draw up at least a basic contract to avoid losing to an untrustworthy player.

Deceiving backers isn’t a common practice as it destroys the reputation of a player for good, but it does sometimes happen. Ten years ago Constant Rijkenberg sold 120% of his winnings to backers so that he could pocket the excess money from the buy-in.

Rijkenberg then went on to scoop the $8 million prize and was unable to pay out his backers, leaving some of them high and dry for the money. So, always make sure you have some form of agreement in place that will stand up in court if you do happen to fall foul of a fraudster.

Also, make sure you scrutinise the terms of your agreement before handing over any cash. Backing deals aren’t always a case of 50% buy-in for 50% of the winnings. Sometimes players put a mark-up of 1.2/1.3:1 leaving you with a lesser share of the prize pot than your investment would usually command.

Mark-ups like this should only be imposed by the very best players, so if an unknown player is demanding a mark-up from you, steer clear and take your business elsewhere.

Can I Make Money From Backing?

Yes. Although it isn’t a surefire thing. To make money from backing you will need luck, perseverance and a sizeable bankroll to get you started. Just a 10% stake in one of the best players in the world could earn you around $2 million a year, but it would cost you tens of thousands for your stakes and don’t forget, you won’t always be backing the best player in the world.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.