Staking Contracts within Poker, Gambling — What you need to Understand as well as The direction to go

The topic of staking in poker, or any gambling-related business, is tricky. If it’s handled the wrong manner, friendships are broken, money is lost, and nobody is happy. If done properly, however, it can be quite a lucrative investment for the backer, and a valuable tool for the one being backed.

Here is what a simple poker staking agreement might look like. The Staker will give(stake) the Stakee a quantity of money to gamble with. By the end of a pre-defined time frame, the Stakee can pay back the Staker the first “stake”, plus a certain percentage of the profits.

There are two important parts to the agreement. These two issues can lead to at least one party in the agreement getting a bad deal, even if neither party intends to harm the other. The initial part that’s important is the quantity of time. The second reason is the percentage of profits to be paid back

Many people make the mistake of creating the time frame too short. Poker, and any form of gambling, involves luck. Even although you are skilled and have an advantage, there’s a variable of luck. You won’t always win. Take, as an example, the common agreement of someone being staked for just one night’s play. There is a $200 no-limit hold’em game. By the end of the night time, the first stake is paid back, and the profit is split 50/50. The person being staked is an excellent player, they double their buy-in about 70% of the nights they play, and lose their buy-in only 30% of the nights they play. This may seem like a good proposition for the Staker, but let’s go through the math.

70% of that time period, the Stakee will double his buy-in, and have $400 by the end of the night. The Staker would get his original $200 back, plus 50% of the profits, or $100. The Stakes would get another $100. So, 70% of that time period the Staker profits $100, and 70% of that time period the Stakee profits $100.

30% of that time period, the Stakee will miss his buy-in, and have $0 by the end of the night. The Staker can take the total $200 loss. So, 30% of that time period, the Staker will miss 200, and the Stakee will have lost nothing.

Since 70% of that time period, the Staker profits $100, and 30% of that time period, the Staker loses $200. His average expected return is (.65)(100)+(.3)(-200) = (65) + (-70) = -5. With this particular deal, even although Stakee is an excellent player and can beat the overall game 65% of that time period, the Staker LOSES money!

If they made the same deal, but instead of splitting the profits after 1 night, the split the profits after 2 nights, then the deal is a lot better for the Staker. If you go through the math, you will find 4 possible outcomes. He could win both nights, lose the first win the 2nd, win the first lose the 2nd, or lose both. The occasions he wins one night and loses the following, there’s no profit or loss, so we are able to ignore that outcome since it’s zero. The percentage chance winning both nights would be .65*.65 = .4225, or just around 42%. The opportunity of losing both nights would be .35*.35, or just around 12%. The others of that time period, it’s break-even win one lose one. So, 42% of that time period, they will split $400 in profit 50/50. The staker will get $200 42% of that time period, for the average profit of $84. He will miss $400 about 12% of that time period, for the average lack of $48. His total average expected profit would be $36. So, simply by adding one more day to the time frame, the Staker’s winnings went from -$5 to +$36. The longer term a stake, the safer it’s for the Staker. The shorter the term the stake, the more expensive percentage of the profits the Staker must replace with the loss. There are more in-depth articles and discussions at [] regarding staking deals for poker, blackjack, and other gambling games.

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