Lets say your typical good online/live reg (however you want to define that) wants to be staked in just the WSOP main event. One tournament, no makeup.

2 options given to the staker:

1.Staker puts up all the money and gets 80% of the cash.

2.Staker puts up all the money and gets 100% of the first X amount of the cash, and 50% of the excess amount of the cash in excess of X.

Player has NO knowledge of which option you select and is playing to maximize his ROI at all times. (good luck with that...but anyway)

What is the value of X where a staker should be indifferent to which option he selects?

Based on whatever method of assessing your typical reg you wish, how results distribute etc.

Your being pretty generous w 80% imo as a backer.

Staker gets the 80....its like buying 100% of someone at 1.25 markup...sort of.....as opposed to option b which is sort of like giving the horse a makeup figure of X where u get 100% of that and then splitting the excess 50/50....what should X be to make the scenarios similarly profitable for the staker?

It depends

X = 6000(1+(ROI/100))

It depends on the Player.

Don't give 20% freeroll to the player who can't buy in to the WSOP main himself?!

Why wouldn't you just buy the action at a mark up? Either one of these seems dumb for both of you.

it's not taking into account mincash is high.

Why does that matter? By definition being indifferent is when the two outcomes are expected to be the same.

Example : Let's pick a roi of 25%. so X=7500.

a) for a cash of 20000 (let's say mincahs is 20k), option 1 would give 16k to the staker and option 2 would give 7500+ 50% of 12500 = 13750, less.

b) for a bigger cash, it's quite easy to see option 1 would still give more to the staker.

c) if there is no cash, boths are the same.

As there are no cashes <20k (it's the mincash), all finishs gives more to the stacker with option 1.

Option 2 is supposed to compensate this by getting X when the cash is small (ie < to buy-in), but there are no "small" cashs.

Conclusion: you need to take into account cash is either zero or minimum twice the buy-in.

So you would change roi to roi if player cashes?

i would do something like X=6000.(1+roi%)/itm%

So something around 45k for a roi of 25% and a 1/6 itm.

I wouldn't offer Option B as a backer. Not interested in Player bubbling the tournament because he knows there's a 50% chance that he won't get anything for simply cashing. It'd be in Player's better interest to gamble outside the money more so than he would if it was an 80/20 deal

Wild guess is X would be ~100k, and guys trying to actually do the math....obv he thinks this player has more than 25% roi, min 50% but prob more or he wouldnt consider staking them at 80/20

http://www.wsop.com/2014/2014%20Main...%20Dollars.pdf

Lets say 6481 runners

Prize pool is 6092 buyins, (1-X) should be 40%, so first 60% of prize pool should go to you, so he's have a piece of 2436 buyins.

Top 15 payouts sum to 3074BI, so an excess of 638 BI, so minimum should be like 42.5BI

Since he is a winning player and presumably a slightly larger % of his EV comes from his deep runs, I'd estimate a 450k mincash is about your point of indifference

option 2 ainec

tbh if a horse doesn't cash for at least half a mil he should be paying me to make up the difference anyway. what an absurd proposal that backer should have anything less than 100% w/o 500k+ score by horse.

kinda early for sarcasm though, it is a business after all, nobody forcing anybody to do anything

Something about the way I posed the issue seems to be confusing people....I am not asking to choose between two options here.

The threshold payout is the variable here. If a staker would get 100% of the first **10 million** and 50% of the excess then that would be a better option that taking 80% of the total.

However if a staker would get 100% of the first ***$5**** and 50% of the excess than than in that case he would be better taking 80% of the total.

The question is not what is "better". What is "better" is completely dependent upon where the **threshold requirement** is set. I am looking for, as Timex put it, the indifference point of the threshold requirement which makes both options about the same.

It is never too early for sarcasm on 2+2.

It is a simple math and graphing exercise.

X = cash amount
Y = backer's 100% holdback

Backer's winnings in option 1 is first 100% amount (y) + 50% of remaining (.5(x-y))

Backers winnings in option 2 is 80% of cash amount (.8x)

So, to find break even, set both options equal

y + .5(x - y) = .8x
y + .5x - .5y = .8x
.5y = .3x
y = .6x

So, for every $1 in backers's holdback player needs to cash $1.66~ to have both deals equivalent.

Example with $100k holdback
.6x = $100k
x = $166k

Option 1 Backer gets $100k + 50% of remaining $66k which is $33k for a total of $133k. Player gets $33k
Option 2 Backer gets 80% of cash $166k which is $133k. Player gets $33k.

I rounded in above example. This formula works for all cash points.

Hope this helps.

Bender- your math is right if you know the result in advance. As results are uncertain you must look at the payout structure to solve this

Since we were not given a static holdback amount and obviously we can not predict the op's outcome, we can plot an indifference curve utilizing the x-axis as cashing amount and the y-axis as the variable holdback amount. This will give you the indifference points/curve to what the holdback amounts need to be related to the finite payouts.