Since this is a PLO forum, I'll tailor my thoughts towards staking for online PLO cash games. A lot of the same principles and ideas can be applied to MTT staking or live games or whatever but there will definitely be other things to think about in those cases not mentioned in this thread.

The first and foremost thing you need to think about when considering whether or not to stake someone is the reason for the stake. Most of the time it is because you think it is +EV for you from a financial point of view. Sometimes people stake their friends because they've hit a rough patch and need a helping hand (for whatever reasons). The only thing I will say about staking friends is that you should approach it much in the same way as lending friends money. If things go sour then the friendship can be ruined. You might want to give your friend a more favourable deal than a random person to "help them out" and that's your perogative but you might also consider whether a straight out loan is a better idea. Either way you should consider the scenario where you lose $x amount of money in the staking deal with the friend and if that will affect the friendship or not.

Alright, let's assume you've got your reasons for staking someone and move onto the more technical specificities of the agreement. Things you need to think about:

The number of hands the stake will run for. The more hands the more favourable it is for the staker. This somewhat depends on the players winrate, number of tables they play, hours they put in a week etc but I would say anything less than 50k hands is very bad and 100k is the point at where things start to become reasonable. You can also consider clauses within this. For example my last stake was to run over 300k hands with the stipulation that if I were down money at that point it would continue another 200k hands. This protected the stakers greatly as it is enough time for variance to even out.

The exact games and site that the stake will apply to. Saying something like 1/2 and 2/4 PLO is not enough. Does that apply to HU games? What about if the stakee plays on a different site to his main site, but sitll 2/4 PLO? Can he shortstack, play deep tables, etc? It is much better to sort these sorts of things out beforehand rather than later on where he might be up/down $xxxx at one variant that wasn't specified and it is much more difficult to be unbias in the decision.

Expanding on this topic, sometimes you will want a stake to be say "1/2 PLO with shots at 2/4 when things are going well". It is wise to define what "going well" is. You can do this by being up x amount after y time or something like that. Putting in a stop loss for higher stakes can also be a good idea. A lot of the time the staker will help coach the stakee in the sense of looking over hands, analysing play, etc, to make sure that they're playing well and on track. I think this is a good idea for both parties and can be used as an indicator for when the stakee should be moving up (or perhaps dropping down).

What I have found useful in this situation is to say that after every x hands (10k, 25k, 50k, whatever) things will be evaluated. If the staker is happy then he can agree to let the stakee play higher stakes for the next lot of x hands. If not then things progress as normal.

When will the profits be split? This one is big too. If the person you're staking needs money to live then it is unreasonable to expect them to wait until the end of, say, 200k hands before seeing any of the money. Then again it is also not a great idea to let them withdraw as much as they want when they're "up" since a downswing will render that money lost. Something I have found to work is to include benchmarks into the agreement whereby if the stakee is up, money is paid out to both parties, with a certain % left in to play in case he goes on a downswing. Perhaps every 25k or 50k hands this can happen. Also be certain to include a clause whereby if the stakee withdraws money while ahead and then starts losing so that at the end of the stake either he is down or not up as much as he needed to be to withdraw the amount that he did then he owes you that money. It's not makeup, it's actual debt.

Speaking of makeup, let's discuss that in relation to cash game stakes. Make up is a system used more for tournament backing that cash game backing in my experience. It means that if a player busts out of a $10k tournament and then cashes for $50k in another one, that the $10k is paid out 100% back to the staker and then any profits after that are split as per the agreement. If the player had not cashed in 20 tournaments and the number was bigger than the entire amount may have to be paid to the staker before the stakee sees a cent. Basically being "in makeup" means that you are down $x amount and $x amount of your winnings must be paid back 100% to the staker before any profits are split.

This is different in cash games. By running a stake for a certain amount of hands there is an inherent method of makeup already in place. If someoen is down 5k after 50k hands and then up 10k after 100k hands, all that matter is that he's up 10k after the 100k hands. In essence he was "in makeup" for 5k but it isn't looked at in the same light as tournament, imo, as there is an end point in sight where net result will be looked at.

Occasionally you can put in a clause where after the stake is completed, if the stakee is down money, that that money or a percentage of it becomes make-up for future staking deal or even turns into personal debt. Depending on other factors you may or may not want to include something like this (doing so is obviously of huge benefit to the staker) but as a standard rule once a cash game stake is completed there is no makeup or debt.

Rakeback, bonuses, promotions, etc. It is important to get in writing what will happen in these scenarios. Rakeback is an easy one and it is generally split 50/50. The same goes for bonuses. But what happens if the stakee is playing and hits a milestone hand on stars? Is that money split? If it's on a table that he was only playing because of the stake then I believe it should be split (50/50 or perhaps a bit more in favour of the player) but you should write it down so there is no confusion or arguing after the fact. The same goes for things like the recent stars leaderboard, rake races, etc etc. Making a blanket clause for any unexpected promotions that come up and how to split those profits will usually suffice. In terms of PokerStars RB I find it easy to ascertain a value of each VPP and multiply that by the total VPPs earned throughout the stake to find the rakeback. This is easier than trying to figure out bonuses, freeroll value, milestones and partial milestones, etc.

It is a good idea to have an exact date and time (including time zone) stated for when the stake begins.

Decide if there is a maximum number of tables that should be played.

Agree on a profit split (50/50 is standard again I believe but this can vary heavily on the other factors).

It's usually a good idea to pre-alocate a third party, or a couple of third parties, to handle any disputes that may come up in the future. Look for fair, impartial people that everybody trusts wil be unbias, logical and ethical in their decisions.

I think that's most of the nitty gritty grunt work taking into account but we're far from being over. There is so much more you need to think about.

What happens if the poker site goes bust, ie FTP? Is the staker responsible for all the money, the stakee? The money is usually considered "lost" and both people lose, but generally it is more on the side of the staker as it is mostly his money. To protect yourself here you should stipulate that only the bare minimum amount be kept online in the account of the stakee at all times and whenever that amount is in excess of X it is transferred back to the staker (who can then withdraw it or do what they want). It's easy to send money back if the stakee goes on a downswing and needs more.

What happens if the staker runs out of money and can't continue to fund the stakee? Usually the stake deal will end and the stakee let "off the hook" for the money he's down but you can add some sort of clause whereby the staker has x amount of time to come up with more money to continue the stake, but in the meantime the stakee can play whatever they want.

What happens if either party dies? It's unlikely but requires consideration, especially in the cases of stakes where 5 or even 6 figures are at play. If the staker dies and the stakee still has a large amount of money of his in his account then there needs to be a written contract whereby the stakee owes that money back to the staker. On the flip side if the stakee dies then the staker also needs written recourse to claim that money back. I don't know the legal specifics of all of this but i imagine it will be *much* easier in dealing with that money if there is a contract which precisely states what is to happen in such an unfortunate incident.

You should also consider what would happen if an accident occurs that renders the stakee unable to play, or if online poker becomes banned for them in their country, etc.

What if the stakee gets their account hacked? Is it the same as the site going under or are they more liable for not securing their account/computer as much? Discuss this before hand. Make sure your stakee has an RSA token and is taking the necessary precautions. Decide on what will happen if this occurs.

There are some things that can be out of the control of either party and should be considered "the cost of doing business". An example is if you're playing in games where your opponents are colluding against you.

How do you stop the stakee deleting hands from HEM or chip dumping? First of all you should absolutely have done your homework and research on the person you're staking and trust them. That's not nearly enough though as it is pretty easy to fake trust and honesty. You should get every single HH that the person plays directly from the site. Don't rely on them sending you the HHs as even those can be doctored. The best way to do this is to have the poker site email the hands to the person and then you access the email and download them directly. That way the hands are never able to be touched by the stakee. Simply the possibility and threat of this should be enough to deter people from trying anything shady but they might assume "he'll never go through every single hand" and try to steal some money anyway. It's tough to combat this (especially if it's small amounts and not often) but if you're suspicious you should definitely do some research. You could even pay a small stakes player a small amount of money to look through a large amount of hands manually for anything unordinary. Obviously if the results that your stakee has been giving you don't match up to the results of the hands imported directly from the site then something is amiss. There can sometimes be genuine reasons for this but you deserve a good explanation and a correction in the results.

At the end of the day you can never 100% protect yourself. You can make it very, very hard to steal your money but if someone is determined then they can probably find a way to pull it off. This again is why you should absolutely trust them and find someone with good references to stake. You must also take into account the possibility of losing money into your EV calculations when deciding whether or not it's a good financial decision to stake this person. You should also consider the amount of time you must spend doing all of this for every person you're staking. You might come to the conclusion that staking a person is worth $5k to you but if you have to spend 30 hours and a lot of headache getting a contract drawn up, getting references, looking over hands, verifying results, dealing with unforeseen circumstances, etc, then it might not be worth it at the end of the day.

Then again it might be greatly worth it if the person you stake is smart, trustworthy and a good player and has had unforeseen and unfortunate financial difficulty away from the tables resulting in a greatly diminished roll despite being a winniner player at mid-high stakes.

At the end of the day just make certain to do everything written in this thread, do your homework on who you're staking, stay smart, be aware of the risks, and hopefully everything will work out great for all involved.

I'm sure that I have missed some things so if anyone wants to add to my thoughts please do -- this thread should serve as a reference point for anyone who wants to ask about staking someone or being staked.

This thread become a bit longer than I hoped and my thoughts are a bit all over the place, perhaps if we keep adding to it and get to a pretty "final" point that encompasses everything I (or a mod) can organise it better.

Excellent post that comprehensivley covers almost every possible contingency, well-done Roy. IMO, this deserves to be stickied both here and in the cash game staking marketplace forum and will save a lot of naive stakers $ and anguish.

The only thing I might suggest elaborating on is the second point, "The exact games and site that the stake will apply to. " and what happens in the event the stakee loses it one session and plays a limit higher than what was agreed upon. It also might be wise to think about including stop-loss clauses in a stake and what happens if a stakee fails to stick to that.

Yeah those are good areas to get into. I think in both cases the stakee should bear the full load of the consequences. If they "lose it" and play a limit higher than any results are not included in the stake. This applies also if they think there's a soft fish and they chase him up the stakes too. Any scenario where the stakee plays stakes that aren't explicitly agreed upon are on him. I once had a clause that if there was a big fish that I wanted to chase up I could do so and institute a stop loss, or contact my staker and have them check out the game and agree to let me to continue to play, but without any of that the wins/losses would have been entirely on me.

If a stakee fails to stick to a stop loss there should be some penalty, perhaps he loses all money beyond the stop loss amount.

awesome well articulated post roy,

i'm not as articulated as you but heres a couple of things you didn't touch on:

coaching, i don't think i'd ever stake someone longterm if they didn't have a coach/mentor, and if you yourself will be coaching them?how do you quantify the cost seeing you will be directly profiting from the coaching (assuming your good)

and also is the stakee able to financially support him/herself for the duration of the stake?this is an important issue to make clear before staking someone/being staked (you sort of covered this in profit splits).

your thoughts on these subjects?

I don't totally agree with not coaching someone just because they don't have a coach/mentor. There are definitely cases of players who are very +EV in certain games but for whatever reasons outside of poker are unable to back themselves. Maybe they had an injury and had to use their BR to pay for it. Maybe they have poor BR management and lost it taking a shot at higher stakes but under strict staking guidelines they would be able to consistently profit. Etc etc etc. Of course if they are receiving coaching from someone else then that's great but it's not a deal breaker if they're not in a lot of cases.

If you yourself are coaching them then it's a different story. I think there are two general scenarios that can happen here. One is when you stake someone and tell them you'll help out along the way with the occasional HH and strat talk but there will be no formal coaching. The other is where you build in a certain number of hours of coaching into the agreement. Since this will benefit both of you but benefit the stakee more as they gain long term knowledge which will profit them outside of the stake you can maybe receive a higher share of profits or rakeback or something else. Maybe if the stakee doesn't profit even after your coaching then they owe you X * Y where X is the hours of coaching and Y is your hourly rate, perhaps discounted for the special circumstances. That's just a thought but it should definitely be discussed and worked out beforehand and written into the agreement just like anything else.

This is definitely important and should also be considered. If they can't support themselves and are relying on money from the stake then you can include a clause where they pay themselves a salary each week/month to pay for living expenses. This money would of course come out of their share of the profits at the end of the stake and if they can't cover it or are down then it turns into a personal debt (since you essentially loaned them money to live off). Again you should be cautious of people in these sort of circumstances as they can potentially be more desperate for money thus making them more likely to take the money and run or steal from you in another fashion. It also might put them in a worse frame of mind resulting in a lower quality of play which can turn a +EV stakee under better circumstances into a -EV one.

really good post

had some trouble doing all that in the past.
now i am not stacking people anymore becasue in my experience its -ev. because you have spend a lot of time.
people often also do things that are not exacly defined before. or they just violate the rules and spew of my money and i have no time and all that stuff to get a lawyer and all that stuff to try to get money back from a guy who is prolly broke and you can not even get you money even if the court will say that you are right because the guy simply is not having the money.
i also think people think that they are playing with hosue money or something if they are down and do stupid stuff because if they bust they only loose your money and with the risky dump stuff they get the chance to get unstuck and earn money again for themselfes.



so all in all its not worth it unless you really trust that guy and at best also know him personaly

Great post Roy !

Have you staked a lot of people in the past ? How has your experience been?

Yeah I have definitely found this to be the case for the majority of staking deals. I've had a few that went fantastically with the person being 100% transparent, always playing well, returned good profits, and all was well. They're the exception to the rule though and you need to know what to look for and do your work to really find them. I didn't do it at the time and was just staking a whole bunch of people -- some worked out great, some not so much. I probably about broke even at the end of the day but there was a lot of headache involved.

I kind of touched on this above. I went through a phase where I was trying to stake everyone and their mother for a while. A few years ago I was able to get people 60-70% RB through a friend of mine on a fairly major network and figured that since the RB would be going through an account I have control over and is of such a high amount that even most breakeven / slightly losing players would be profitable quickly and dolling out $100-$500 would quickly see it returned.

Sometimes it went well, sometimes it didn't.

I asked for references and results to make sure I wasn't giving it away to just anyone.

All in all there were probably about 50 people that I staked over the course of 6 months or so. Almost everyone was "legit" in the sense that they didn't just break off contact after they got the money. Maybe 2 or 3 did that for small amounts. A lot of them were pretty average players who didn't win or lose much and I probably lost a little overall on them all things considered. There were maybe 3 that were fantastic though. Constant winners, always happy to discuss things and be transparent, never any suspicions of them doing anything shady. I would gladly move them up in stakes a few times and they continued to do well. I made a decent amount of profit from these 3 people (5 figures) but, as with all good stakees, the fact that they're good means that soon enough they'll want to quit and be on their own. There is no true "long term" profit for cash game staking imo as pretty quickly they will build their own roll.

Overall it was a good learning experience even if I didn't make a huge amount of money from it (definitely not huge relative to the amount of hours I put in to the admin work). I think there is a lot of money to be made if you are highly selective in picking your stakees and take all the necessary precautions. It seems similar to value investing -- there are great buys out there but you must spend time finding them. You can achieve extremely high returns with relatively low risk (as you include all risk factors into any $EV calculations) and if it's something you're good at it can be a formidable income stream.

Will post a bit more later, got to run now.

nice post roy.

sticky this scott?

lol

a sophisticated response, this is not

Great thread ! Thanks a lot OP

Thanks for the nice post roy

Great post.

Out of curiosity and puzzled / intrigued by the "lol" response coupled with his location offering staking, I searched zima's recent posts that he started (OPs only) made, and the of 25 on the first page of results, it seemed like a good half of them dealt with some type of staking dispute, so even though he made a cryptic no-content response, it seems like he has a ton of experience in staking and accounting for the unreliability and shadiness of people.