information on investing/staking?

[akishore 0]

don't worry, i'm not asking for a stake here. my working bankroll right now is around $1300. mostly i play $1/2 limit (it's just what i'm comfortable at, and i've also been finding it's the most profitable to clear bonuses on also), but i've been playing one table of $2/4 regularly (on pacific and noble), so i have an ample bankroll for both limits.my friend is interested in investing in me, and i want some information on this sort of thing. i googled for a little bit, but didn't come up with much.here's what i'm thinking right now.if he invests 100% of my bankroll ($1200), he is entitled to get 50% of my winnings. this logic leads me to think that if he invests 50%, he'll get 25% of my winnings, and 10% gives him 5% of my winnings, etc. correct?if he invests 100% of my bankroll, does he assume 100% risk? or should he only assume 50% risk since he only gets 50% winnings? by risk, i mean sharing losses, so that if i lose $100 in one week, does that mean all $100 comes from him, or do i contribute $50 to the loss?right now, he wants to start out slow by only investing around $120 (10% of my bankroll), so it doesn't seem very profitable at all for me. i can easily afford the $120 in my bankroll, i'll be playing at the same limits so i'll be winning the same, but i'll be giving him a portion (5%) of my winnings, so it doesn't seem profitable.i guess the idea is that down the line he might increase his investment considerably so that it becomes profitable for me (either by putting forward all of my bankroll or investing enough to allow me to play higher limits). another problem i'm thinking is that even if this is true in the future, i'll be able to build a bankroll to the higher limits by then on my own, anyway, so is it really worth it?so i guess my big quetions are:1. is there a difference between investing and staking? i don't need to be staked, but he's interested in some kind of investment in me.2. is there a profitable way to be invested in or staked by only a small amount? my play (limits, etc.) would essentially be unchanged.3. is it worth it?4. what is a fair type of deal?5. are there any resources online (links, articles, etc.) that talk about this?thanks in advance for the help.aseem

[chuckf410 0]

3. Is it worth it?What is your friendship worth with this person. Money deals with friends and family have a way of destroying both if the deal fails for any reason. That's why unless there is a clear understanding of all the bad that can happen, and even then, it's normally not a good idea to do it.

[speedz99 145]

You seem to do pretty well for yourself. I would think that it would only be worth it to you if your investor could push you up a few limits, maybe to 4-8. Otherwise you can just keep building your bankroll yourself.No?

[justblaze 0]

1. is there a difference between investing and staking? i don't need to be staked, but he's interested in some kind of investment in me. only in semantics. Staking is when an investor gives a player money to play with, in exchange for some percentage of that players profits. Notice you have to make an investment, in the form of a stake. 2. is there a profitable way to be invested in or staked by only a small amount? my play (limits, etc.) would essentially be unchanged. then its useless. the whole point of being staked is in order to play at a higher limit than you could otherwise afford. why would you give away your profits? i can see no benefit in adding 120$ to your roll. 3. is it worth it? being staked is worth it in some circumstances. - if you would like to hedge your losses (this assumes you are likely to lose).- if, where P1= hourly rate at your current limit in real dollars, P2=expected hourly rate at the limit you could play if staked in real dollars, and x=investors percentage of P2, [(100%-x)P2>P1]. That is, your percentage of profits at your new limit (in real dollars) is greater than the total profits at your old limit. 4. what is a fair type of deal? the best deal you can negotiate the 'standard' backing agreement for ring game play is backer takes 50% of profit, eats 100% of the losses. 5. are there any resources online (links, articles, etc.) that talk about this? not really. its kind of a grey area. Its not really supposed to be done, as it creates all kinds of ethical problems, particularily when one backer has several horses in the same game. thanks in advance for the help. no problem, but dont take me too seriously, apparently i havent contributed a fleck of useful material to this board.

[elkang 0]

I would invest in you.Check out how Raymer did it mentioned above in question #3, I had a deal with my wife where my bankroll was a fixed amount. By 2001, I was playing in some pretty big games, as my bankroll had grown to support it. For example, I would often play in the 75-150 mixed games at Foxwoods and Mohegan Sun, and occasionally these games played as high as 150-300. In 2002, I spent a big chunk of my bankroll on my family and house, more than I should have. I then went to the 2002 WSOP, and paid cash to enter the main event, as well as a couple of other events just prior to the main event. Unfortunately, I lost about $30,000 on that trip, and was left with a bankroll of only about $15,000. The good news was I still had plenty of bankroll to play poker, but the bad news was I could not afford to play in the big mixed game at the local casinos anymore. Since the next biggest game that was regularly available was 20-40 holdem, I decided I should see about getting some backers to add to my bankroll, as I felt that having a piece of my self in the big mixed game would be more lucrative than having 100% of myself in the 20-40 game.Thus, I went out on the internet to raise money. I could’ve asked many of my poker friends personally, either live or by email, if they wanted to invest. However, I did not want them to feel any social pressure to do so, and did not wish to have any investors who were doing it because we were friends. I only wanted them to do it if they thought it was a good investment, and they had the bankroll to afford it. So, I put up a post on the rec.gambling.poker newsgroup, as well as on the 2+2 forums, laying out the deal and asking interested parties to email me. As you might imagine, I caught a lot of flack from the naysayers out there. Fortunately, I also found about $30,000 worth of interested investors, who bought anywhere from 1-10 shares each at $500 per share. I bought shares with my bankroll also.The deal was simple, though we laid out a multipage contract to cover all the details. Each of us bought shares at $500 per share. I played poker within prescribed limits for the rest of 2002. If we lost, each share took a proportionate share of the loss. If we won, I got the first 35% of the win for my time and effort as the player, and each share then got it’s portion of the remaining 65% of the win. Since I owned about 1/3 of the shares, I was getting a bit under 60% of the win.At the end of this deal, each share was worth about $488. We decided to renew the deal and do it again for the first half of 2003. Of course, there was some turnover, with a couple of investors who cashed out, and a couple who bought more shares (or new investors who came in). At the end of deal 2, each share was worth about $550. We did it again, and the shares were worth about $600 at the end of 2003. Finally, we renewed the deal in 2004, with the deal set to end as soon as I was done in the WSOP main event. At the end of the deal, each share was worth over $36,000. My largest single investor collected well over 1/3 of a million for his initial $5000 investment!

[UnionGuy 0]

...and will most likely say again: Aseem is the guy I would stake on this forum if I were going to stake anyone. If someone does decide to stake him (like Ekang), it would be great to know how that worked out. Could be very educational for everyone involved.

[akishore 0]

thanks for the replies.again, i'm not asking to be staked. i have the funds available to me, and i also don't think i'm ready for the higher limits at all yet, so i have no intentions of asking for a stake right now to give some higher games a go.so while it can be profitable and helpful, the key question is:if i won't be moving up in limits and can afford to play on my own, is it worth it right now?aseem

[TS Clark 0]

thanks for the replies.again, i'm not asking to be staked. i have the funds available to me, and i also don't think i'm ready for the higher limits at all yet, so i have no intentions of asking for a stake right now to give some higher games a go.so while it can be profitable and helpful, the key question is:if i won't be moving up in limits and can afford to play on my own, is it worth it right now?aseem

As several others have said already, absolutely not. Not under the circumstances you've outlined. It presents no tangible benefit to you right now at all.The post quoted from Raymer above is an excellent illustration of when it WOULD be a good idea -- the shares he sold of himself allowed him to play in the bigger game and maximized his expectation above what he would have made in the smaller game. The deal you are being pitched does not meet this criteria.Say no -- both because it's sketchy to go into business with friends and because it is not in your financial best interests.Shane

[faketree 0]

thanks for the replies.again, i'm not asking to be staked. i have the funds available to me, and i also don't think i'm ready for the higher limits at all yet, so i have no intentions of asking for a stake right now to give some higher games a go.so while it can be profitable and helpful, the key question is:if i won't be moving up in limits and can afford to play on my own, is it worth it right now?aseem

i don't think so. you seem to be doing pretty well on your own and i can only seeing wanting a stake if something like what happened to raymer happened, i.e. you had to take some money from your roll for some unforeseen circumstances in your life.if you have the proper roll to play the limits you are comfortable, there is no reason to take a stake.

[jonnyz 0]

4. what is a fair type of deal? the best deal you can negotiate the 'standard' backing agreement for ring game play is backer takes 50% of profit, eats 100% of the losses. Maybe in the movies the backer eats 100% of a loss but I have never heard of that happening in real life. I have been witness to a couple of stake arrangments and its usually a 50-50 share of the losses. Jon

[obrien64 0]

Does Raymer now have investors? or does he just have a substantial enough bankroll to make it so he gets all the winnings and doesnt have to worry about all that "shares" business

[speedz99 145]

thanks for the replies.again, i'm not asking to be staked. i have the funds available to me, and i also don't think i'm ready for the higher limits at all yet, so i have no intentions of asking for a stake right now to give some higher games a go.so while it can be profitable and helpful, the key question is:if i won't be moving up in limits and can afford to play on my own, is it worth it right now?aseem

Maybe I'm reading this wrong, but it seems so simple that I am surprised you are even asking this. So let me ask you something...Can you think of any reasons why you should sell a piece of yourself?

[speedz99 145]

Does Raymer now have investors? or does he just have a substantial enough bankroll to make it so he gets all the winnings and doesnt have to worry about all that "shares" business

He gets all the endorsement money, but he can't force anyone to sell him back their shares.

[akishore 0]

Maybe I'm reading this wrong, but it seems so simple that I am surprised you are even asking this. So let me ask you something...Can you think of any reasons why you should sell a piece of yourself?

well, i guess my issue is that i'm having a hard time comprehending/believing that it might not be profitable for someone to invest in me.from a business point of view, what business would ever decline an interested investor? they get capital, they face less risk and they increase their economies of scale (they increase their power to earn more).how can i make it possible for me to accept his investment and still keep it profitable for me?i agree with all of you--i wouldn't want to split my winnings unncessarily, so i definitely agree that being staked for something small is unprofitable--but i want to know if there's any way this situation can be positive.thanks,aseem

[speedz99 145]

Simple business. It's only profitable if it:1. allows you to move up a level or2. allows you to play more oftenIn either of these situations you could make more money, simply based on the fact that the extra amount you'll bring in will be greater than what you have to pay out to him

[asandu 0]

Note also that Raymer is an attorney and he refers to a contract that he had with his investors.

[faketree 0]

Does Raymer now have investors? or does he just have a substantial enough bankroll to make it so he gets all the winnings and doesnt have to worry about all that "shares" business

He gets all the endorsement money, but he can't force anyone to sell him back their shares.

he probably can. its called a corporate takeover. if he is the majority shareholder, he can act as the chairman of the board and decide on someone being able to buy all the shares. this would most likely take place at a substantial profit to the shareholders and never a loss. for example, if the shares are currently at over $38K a piece, someone can make an offer to buy all the shares at $50K a piece and the board can decide on accepting that deal or rejecting it. he may have something like that set up in his contract.however, i do believe that pokerstars and maybe now some other companies endorse raymer and he probably does not have to incur any of the costs of the buy-ins for the tournaments that the enters.

[Puddleglum5555 0]

1. is there a difference between investing and staking? i don't need to be staked, but he's interested in some kind of investment in me. only in semantics. Staking is when an investor gives a player money to play with, in exchange for some percentage of that players profits. Notice you have to make an investment, in the form of a stake.  2. is there a profitable way to be invested in or staked by only a small amount? my play (limits, etc.) would essentially be unchanged.  then its useless. the whole point of being staked is in order to play at a higher limit than you could otherwise afford. why would you give away your profits? i can see no benefit in adding 120$ to your roll.  3. is it worth it?  being staked is worth it in some circumstances.  - if you would like to hedge your losses (this assumes you are likely to lose).- if, where P1= hourly rate at your current limit in real dollars, P2=expected hourly rate at the limit you could play if staked in real dollars, and x=investors percentage of P2, [(100%-x)P2>P1]. That is, your percentage of profits at your new limit (in real dollars) is greater than the total profits at your old limit.  4. what is a fair type of deal?  the best deal you can negotiate   the 'standard' backing agreement for ring game play is backer takes 50% of profit, eats 100% of the losses.  5. are there any resources online (links, articles, etc.) that talk about this?  not really. its kind of a grey area. Its not really supposed to be done, as it creates all kinds of ethical problems, particularily when one backer has several horses in the same game.  thanks in advance for the help.  no problem, but dont take me too seriously, apparently i havent contributed a fleck of useful material to this board.

I was talking about your useless shots at new and semi new posters.you had a series of posts/flames with a player who helping me with my tournament game. I was doing this through pm's because you and others were consistently flaming him. his tournament posts, and quizz answers were always 100% in the line of what DN would answer. he was also correct on the post with suited ups hand.as far as the way he handled himself I dont agree with it. obviously you have contributed to the strategy sectionI have no problem with you, other than your comments for new posters.I lurked here for 3 months before posting, and I almost knew you would be a wise ass to me.your opinion means nothing to me, whether you can play or not.I will skip all posts with your name, so I will not get into flaming wars. that was the problem of the poster who was helping me, he let you get to him, I wont.

[Diabolical 0]

I have to disagree about it being unprofitable. What better time than now to show your future investors that you can turn a profit for them. Don't you build credit with a bank when you really don't need it? That's why they give you credit. Cause "YOU DON'T NEED IT!!!!!" If you have a savings account, then that tells creditors that you have extra money. Which they WANT! So, they give you a small credit line. And, since you really don't need it, you make some purchases only to pay it back right away. This gives your creditors faith in your money manegement. So, They INCREASE your credit line.You can do the same thing with potential backers for the future. What's better, is that if your a winning player and others know how skilled you are, you don't need your own money cause people will WANT to invest in you. They see you as a "money machine" and want some of your cake. Remember, going broke cause of some loooonnngg losing streak from hell is not uncommon. And when you really need a stake, you'll be glad you took the time to get some backers while you didn't really need them.

[troutsmart 0]

Taking a real business situation, lets look at a small business and a scenario that many in the business world face. Lets say James Doe has decided to go into the service industry. He wants to clean carpets, so he takes some of his savings and buys the necessary equipment at a cost of $5000. He needs customers, so he also invests another $1000 for various advertising (flyers, yellow page listing, etc.). He proceeds to recieve a favorable respone and his schedule quickly becomes full. A few months later, he is able to draw an income of $2500/month for his living. He has also managed to pay back to his savings his inititial investment of $6000. At this point, a friend, notices his success and approaches him. He proposes a partnership. However, he is unable to commit time, but can invest dollars. When is this a good decision for James? How much would his friend need to invest for it to make sense? Under what conditions?I'll let everybody give their take on this issue, and then I'll give my analysis. I think the situation is actually very similar to that faced by Akishore.

[pokerplayer24 0]

Raymer said the contract ran out right after the wsop and i'm assuming they didnt renew it as his bankroll was now sufficient. As far as staking normally I hear of the person who stakes taking 100% of the loss. If you're going to play 2/4 and take 50% of the profit or loss why not just play 1/2 with all your own money and the game being easier to beat.Really the only was being staked is benificial is if it allows you to play high enough limits where you make as much if not more profit then before with no added risk of losing any of your own money.

[chuckf410 0]

well, i guess my issue is that i'm having a hard time comprehending/believing that it might not be profitable for someone to invest in me.from a business point of view, what business would ever decline an interested investor? they get capital, they face less risk and they increase their economies of scale (they increase their power to earn more).how can i make it possible for me to accept his investment and still keep it profitable for me?i agree with all of you--i wouldn't want to split my winnings unncessarily, so i definitely agree that being staked for something small is unprofitable--but i want to know if there's any way this situation can be positive.thanks,aseem

The only way for this to be profitable to you is to take the investment and move up in limits. Staying at your current limit with investment is just not a good idea. There is no benefit. And yes, business do take investments. But only to grow. It's not in thier interest to take an investment and stay at the level they are at unless they are sinking. And from what I know of you here in the forum you are not sinking. Also if a business is profitable, they don't (shouldn't) use credit.I may be reading too much into your posts on this subject but it sounds almost like you want to be staked to prove that you're worthy of it or you want your friend to share in your fortunes.If you BR is growing at a comfortable rate for you you are worthy of the investment, but you shouldn't take it if it's going to move you ahead faster than what you are ready for. If you want your friend to share in your fortunes, I would not take the stake. Like I said before, friends and money deals don't mix well. (just look at the court shows over cell phone bills...)

[nolvicrudie 0]

I think Chuckf is right on, but the one question that seems to be outstanding is where do you want to be in the next 6-12 months and longer? Based on where you are now, the investment doesn't seem to make sense from either a business or personal standpoint. However, is part of the interest the fact that you may want to move up dramatically given your past success?

[justblaze 0]

1. is there a difference between investing and staking? i don't need to be staked, but he's interested in some kind of investment in me. only in semantics. Staking is when an investor gives a player money to play with, in exchange for some percentage of that players profits. Notice you have to make an investment, in the form of a stake. 2. is there a profitable way to be invested in or staked by only a small amount? my play (limits, etc.) would essentially be unchanged. then its useless. the whole point of being staked is in order to play at a higher limit than you could otherwise afford. why would you give away your profits? i can see no benefit in adding 120$ to your roll. 3. is it worth it? being staked is worth it in some circumstances. - if you would like to hedge your losses (this assumes you are likely to lose).- if, where P1= hourly rate at your current limit in real dollars, P2=expected hourly rate at the limit you could play if staked in real dollars, and x=investors percentage of P2, [(100%-x)P2>P1]. That is, your percentage of profits at your new limit (in real dollars) is greater than the total profits at your old limit. 4. what is a fair type of deal? the best deal you can negotiate the 'standard' backing agreement for ring game play is backer takes 50% of profit, eats 100% of the losses. 5. are there any resources online (links, articles, etc.) that talk about this? not really. its kind of a grey area. Its not really supposed to be done, as it creates all kinds of ethical problems, particularily when one backer has several horses in the same game. thanks in advance for the help. no problem, but dont take me too seriously, apparently i havent contributed a fleck of useful material to this board.

I was talking about your useless shots at new and semi new posters.you had a series of posts/flames with a player who helping me with my tournament game. I was doing this through pm's because you and others were consistently flaming him. his tournament posts, and quizz answers were always 100% in the line of what DN would answer. he was also correct on the post with suited ups hand.as far as the way he handled himself I dont agree with it. obviously you have contributed to the strategy sectionI have no problem with you, other than your comments for new posters.I lurked here for 3 months before posting, and I almost knew you would be a wise ass to me.your opinion means nothing to me, whether you can play or not.I will skip all posts with your name, so I will not get into flaming wars. that was the problem of the poster who was helping me, he let you get to him, I wont.

so i assume you are referring to splashmaster? just because someone can answer a quiz does not make them a good mentor.

[chuckf410 0]

Don't you build credit with a bank when you really don't need it? That's why they give you credit. Cause "YOU DON'T NEED IT!!!!!" If you have a savings account, then that tells creditors that you have extra money. Which they WANT! So, they give you a small credit line. And, since you really don't need it, you make some purchases only to pay it back right away. This gives your creditors faith in your money manegement. So, They INCREASE your credit line.

But if the money that he has is growing at a good rate why worry about the credit? If you get that line of credit you start to dip into it with the thought of 'I'll pay it right back when the bill comes'. And for a while it's all good. You're paying the bill each month. You get a second higher line of credit. Then you overspend one month to get that cool new widget. But it's okay, next month you'll finish paying the balance. Then next month the car needs a transmission overhaul. The following month it's the furnace. Then you find yourself in debt and can't get more credit and your cash is gone because you're paying your bills.But if you build up your roll right (as Aseem is doing) and have a good cash foundation, you never need that credit, everything's paid for and it's all good. 100% of the profits are Aseem's.Now one thing that does make sense as I think about it is on a per tourney basis. If someone says 'Here's 10k and expenses for the wsop. 50/50 split of the winnings' that would be a deal as there is no other way (for this example) for him to play the game. As long as he feels confident in his skills for that, it could be justified. But on a day to day basis for where he's at, a stake would be a bad thing.