Variance in tournament poker, especially large field, high buy-in events is extremely high.
For this reason, many people sell a percentage of their action to help make it more manageable. It’s the same reason why you typically invest in mutual funds, rather than an individual stock.
The basic premise is that a person who wants to be staked puts together a list of tournaments they plan to play. They may not play all of the tournaments in their package, and indeed for events like the WSOP with overlapping tournaments, it’s often impossible to do so if they make a deep run.
They then list the markup they plan to charge for the package, which is a multiplier that effectively charges a premium for allowing people to buy a piece of their package. If you have a $10,000 package of tournaments, a 1% piece of that would normally be $100. At 1.20 markup, 1% of that package would cost the investor $120. Experienced tournament poker players with a good track record can charge markup; unknowns generally cannot.
When you buy a piece, you are buying a % of the total package offering. If person being staked cashes in a tournament, they pay investors a % of their gross winnings based on how much of a % piece they bought. They also refund investors for any tournaments in their package that they don’t play.
Anyone who's played poker tournaments knows about the costs involved. Besides the tournament entry fees and re-entries, a travelling professional has a raft of other expenses to contend with on long trips. The list of costs is pretty comprehensive, plus of course the player is physically putting in what is often very long hours trying to win a tournament.
Though a "mark-up" is perfectly normal, often the rates that different people might charge investors can vary wildly depending on certain factors:
- The value a player puts on themselves for both their time, and their level of skill
this can vary greatly from player to player, based on their past results, and also their standing in the poker community
- The nature of the event/events to be played. Things like the WSOP, WPT, EPT
typically command slightly higher premiums due to the status and the larger prize funds which are typically involved than in smaller regional events
- Flights, hotels, rental car/taxi costs, endless tipping, food and beverage
The rate I charge for ALL my tournaments is 1.20. Obviously on these trips I still have my expenses, but I bear the cost of a lot of this, and I think giving a fair rate is a far better approach than charging investors stupid prices. I think this theory holds water, as the site has been going for years now, and I always sell all my shares and have lots of regular investors at all levels.
Roby is always looking for partners and sponsor who are eager to partecipate in this success.