All About Staking
It's no secret that a very large number of poker players are staked, or "backed", by other well-bankrolled players. This is especially the case in major live tournaments, where the capital needed to hang around on the scene is very large due to the hefty buy-ins and brutal variance. In the live tournament scene, players can have years of losing before it's all erased by a seven-figure score.
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Staking is less common in the world of cash games except in the high-stakes action. Players are not usually flat-out staked all the way in high stakes cash games; what's more common is that they sell pieces of their action to other players. For example, one player could buy 20% of another player's action in a huge cash game meaning they must repay 20% of losses or collect 20% of any profit. Of course, it is important to trust the player being staked as they are in a position to set up a profitable arbitrage (ie: sell-off 120% of their action and then purposefully lose).
Staking is unbelievably common in poker. Without it, there would be much less action in the game similar to the way that there would be much less development in the business world if taking on debt were not possible. On a personal anecdote, two years ago in the WSOP Main Event, a player who was backing me had 50% of my action and only 27% of his own action. We thought it was pretty ironic that he stood to benefit more from me winning than himself winning. Because of staking arrangements, that type of scenario is not rare in poker.
How to Stake Someone
Almost all long-term staking arrangements involve what is referred to as "make-up". This means that the losses of the player being staked are carried over, or must be "made-up" before they can collect any profit. Suppose a player is staked for two $10,000 buy-in tournaments. They wash-out of one and win $20,000 in the other. With make-up, the player simply broke even and therefore collects no profit. Without make-up, the player would receive $5,000 (half the profit from the successful tournament) leaving the backer in the hole for $5,000 despite his player having broken even. As you can see, make-up is an imperative component to any sensible staking arrangement.
Most staking deals state that the player can only leave the arrangement in one of three ways: a.) if they are in the black (ie: up), b.) if the backer ends the relationship, or c.) if the player refunds the backer for any losses. This protects the backer from having their player stick them with a loss in the event of receiving an inheritance or something. So if a player is down $50,000 and receives $1M from their dead Grandma, they would have to give their backer $50,000 in order to be free to play on their own dime.
Bax and Sheets: Kings of the Staking World
Two players notorious for staking other players are Cliff "johnnybax" Josephy and Eric "sheets" Haber. Bax and sheets effectively run a staking corporation. At any given point, they fund the poker careers of between 30-100 broke degenerates. From my observations, they run a very tight ship. In live tournaments, players are required to call and leave a message staking their chip count during each break. This requirement is likely the product of wanting to ensure that they are not being scammed for thousands of dollars by players who they do not have a very close personal relationship with.
Staking players has turned into a full time job for these two players who earned their wealth through careers in the finance industry. On any given weeknight, they might have as much as $100,000 in play through their "horses" in online tournaments. On Sundays, that number might be as high as $250,000. In live tournaments, particularly during the WSOP, they are in a position to endure a million dollar swing over the course of the series.
This staking empire has spawned a new term in the poker world: when sharing details of their financiers, horses of this duo simply say they are "baxxed".
Other players known for financing the careers of their peers are: Phil Ivey, Erick Lindgren, Haralabos Voulgaris, Steve-Paul Ambrose and Mike McDonald (joint venture), and James "mig.com" Mackey.
Significant Scores through Staking
Players landing a major, seven-figure payday under the financing of a backer is incredibly common. It's possible that more than half of the winners on the WPT were backed by another player. Here are a few examples of major paydays in which this was the case:
- Jimmy "gobboboy" Fricke's 2nd place finish in the 2007 Aussie Millions for $800,000 (sold 70% of his action to a conglomerate of players)
- Tuan Le's win in the WPT Championship for $2.8 million (backed by 3rd place finisher Hasan Habib; controversy arose on suspicion that they were soft-playing each other)
- Ivan Demidov's 2nd place finish in the 2008 WSOP Main Event for $5.8 million (backed by wealthy Russian guy who maintains a large stable of poker players)
- David Chiu in last year's WPT Championship for $3.3 million (backed by Daniel Negreanu)
- Carter "ckingusc" King's win for $1.7 million in last year's WCOOP Main Event (baxxed)