Poker is an insanely popular game. Simple at it’s very foundations, but incredibly complex once you add a few money-hungry players into the equation, poker is equal parts luck, intelligence, knowledge and sheer brashness. There’s no other sport in the world where you can win using techniques that include lying, cheating (if you’re a naughty card counter), memorising (i.e. knowing your odds theory inside out) or just straight up bullying.
As well as the main game, there’s the big picture too. If you’re a pro poker player, then there’s international tournaments, major events like the World Series of Poker and a whole ocean of opponents waiting to be beaten online. Sometimes it’s like there is too much poker to handle, and if you’re good, not enough time in a lifetime to really take advantage of it all.
Poker is fundamentally all about betting. You bet that the next card will sort out your hand. You bet that your opponents hand is garbage. You bet that someone is bluffing, or isn’t bluffing. You also wager an often-large chunk of money to even get access to the pot. Then there’s the next-level, inception style betting-on-betting; backing and staking.
Not everyone is good at poker. And not everyone has the time to sit through 14 hours of tournament play. And some people just enjoy gambling on things they have little control over. The world of backing and staking refers to the groups and individuals who don’t use their cash to enter tournaments themselves, but put up the entry fees, buy-ins, or buy-back-ins of other players to try and turn a profit. A bit like investing in a prize racehorse, the investor gambles on their thoroughbred winning the tournament, or winning back more money than they entered the game with.
The concept is quite simple. An investor will pay the buy-in or entry fee for the player, in exchange for a cut of the winnings. This can be anything from 50/50 or as much as 90/10 if the player is in the driving seat and the winnings are big enough to draw that investment. Then the player will do their best to win the tournament or make a profit, before splitting the money as agreed. This is obviously a gamble for the investor, as the player could win nothing and lose the buy-in, and 50% of zero is zero. It also puts pressure on the player, as they aren’t playing with their own cash anymore.
Usually investors will either walk away with a profit or nothing, but you do hear horror stories of players being chased for the investment back from shady characters, or even fraudsters like Constant Rijkenberg who once agreed to give 30% each to 4 different investors, who naturally ended up getting stung, even though he won $2 million in the game he was playing in. The other tricky part is that backing and staking is usually agreed verbally and without legal contract, so players could end up disappearing or not following through on their agreements. It can be very grey.
The easiest way to get around these tricksters and scammers is to back trusted players or players you’ve played with or know well. It’s less likely for a friend or someone you know well to drop you in it, and you’ll also know their capabilities, playing style and history. Backing and staking isn’t just for people with money looking to make money, but is often used by players who want to get in on the action, but can’t make the tournament or didn’t make the cut when it comes to finals or invite-only events.
Finding a player to back or stake isn’t hard either, opening up the concept to Joe public. All you really need to do is approach a player who you think will perform well, and offer to either pay their buy-in in exchange for a percentage of the overall winnings (staking), or pay for their chips and any tournament re-entries for a similar split of profits (backing). With databases like the Hendon Mob that lists every ‘pro’ player in the world by rank and multiple online listings of the best players in the online world, with a few emails, a possible meet up and some gentle cajoling you’ll soon find someone who will accept your money if it means they can play in more tournaments with a lower risk.
This is where extreme caution and trust is needed however, and backing and staking isn’t a guarantee of money, or recommended for people who don’t know much about poker. Someone may look really good on an online database, but could turn out to be totally useless the moment they’re dumped in a noisy casino with plenty of bigger fish waiting to swallow them up. Conversely, you could end up chasing a shark who will whittle your profit margin down, before fluffing it anyway and leaving you high and dry. Nothing is clear-cut when you are investing in poker. But, if you strike gold and get a wonderkid or seasoned pro who can find soft games and who is happy to split their winnings, you can turn a small investment into something much bigger very quickly.
A safe way of backing and staking is to use the wonders of a third party. Services like YouStake and 2+2 are a bit like the Uber of poker staking, with the website acting as a guarantor and ensuring both parties get a fair outcomes. Granted, you’ll have to battle hard for the best players, but the micro-transaction nature and rules and regulations improve your chances of not getting ripped off.
The other way of reducing your risks is to become a poker expert yourself. You’re already a good candidate for becoming an investor if you’ve won tournaments yourself or have a ranking, but if you’re an enthusiastic amateur then it will pay to really get your game together before putting money towards someone else.
As mentioned earlier, if you’ve played with someone who kicks your backside every time, then they’re a better investment if you’re a good player yourself. Someone who beats you easily may not be that good themselves when a better player comes along. As with any money making scheme, the more you know about it, the better.
A big one to watch out for if you’re successful is tax implications. Depending on your location, you’ll need to declare any profit made on an investment, and it’s a totally different ball game than picking red on the roulette table. If you’re in the US, the tax return you’ll need to complete is infinitely more complicated than what you’ll need to do in Monaco, so check out what you need to do before deciding on big investments that could net you big winnings. It’s also worth getting a decent lawyer too, and try and get agreements on paper. But good luck finding a decent player who will sign anything willingly!
Although you should now know a little bit more about investing in poker, our best tip is to do your homework before putting down any cash. Treat your ‘horse’ (the player you’re investing in) like an employee. Check their background, make a few calls, ask for references. Watch them play a few times. Build a relationship. If they’re invested in you too, they’ll be more likely to work harder for you, and ultimately be more loyal. If you’ve developed someone and a bigger backer comes along, it’ll be harder for them to abandon you or pull a fast one. Oh, and don’t forget to have some fun when you’re backing and staking – it’s designed to be exciting and full of moments of panic when your horse stops answering their emails.