Imagine you are going to play a distance of 500 tournaments and your ROI mathematical expectation is 25%.

The probability of losing >-$10k is around 7% and the probability of making a loss is around 21%:


In case of staking somebody your ROI EV drops to 3-9% due to the mark-up (let me fix the ROI EV at the 5% level).

The probability of losing >-$10k is around 20% and the probability of making a loss is around 46%:


Unfortunately, buying 10% of $1k tournaments you meet much greater risks than in case of playing $100 tournaments.

Thank you guys!

Cool thread, thanks for sharing.

It is hard to talk about the saturation when the market itself is not healthy.

Current staking market is faulty: for instance, there are no effective tools for assessment of the quality of players. As I have mentioned before, the decisions are being made based on the general look of the player’s graph, which lacks the necessary precision (I’ll reiterate this more than once in the future).

If you have a fancy graph and friends in the community, you are going to sell out any tournament program with any mark up.

If you don’t have a graph and some friends, no one is buying from you.

We live in the XXI century, but to sell stakes, you need to claim that “this one” and “that one” know you and post an incomprehensible screenshot. This is ridiculous.

If you want to place a sports bet, you are not going to reason like “When my grandpa was born, Uruguay has won the soccer World Cup, so why don’t I bet on them”. However, this is exactly how the majority of backers thinks. It is not their fault, because the market has no tools for a proper analysis.

As a result, the market is flooded with players, who should be flipping burgers in McDonald’s, but still manage to sell any offer thanks to ancient victories.

At the same time, young and talented players from lower stakes are being sold poorly, because few know them, and $10,000 profit graph does not look so good.

Potential backers try either to bet on a rare favorite horse, or neglect purchasing stakes at all.


Thus, I consider that staking market currently amounts to 10-20% of the potential volume.

In addition, this 10-20% are not the best. This is why I don’t like to analyze saturation.

We should think of educating rational backers. Of giving low limits players an opportunity to sell stakes easily. To convey the idea of staking being a risk management tool, instead of charity, to players with solid bankrolls.

After some time, the market will evolve and we will talk about saturation.

P.S The figures I’m operating are actual, not made up. The launch of MTTMarket.com, a staking platform, featuring analytics tools, on decaying Russian-speaking market, has led to its rapid growth. 70-80% of our audience has never been staked before. Now backers are making profit – our players offers’ ROI is 15-20% versus 0% ROI of other staking services (not to advertise but to back my figures up).

№1. About the money leaks.

I’ll start from the basics.

What is mark-up?

For the player’s perspective it’s quite transparent – he secures his ROI from the part of his load at a certain level. If the player sells 50% of his action with a mark-up of 1,15, he tells us that he wants to get an ROI of 15% from the half of his load and put up for grabs the other half of it.

For the backer’s perspective everything is also obvious. In fact, he bets on whether the player scores higher than 15% ROI or not (using the figures from the previous example). If the player’s ROI exceeds 15%, the backer makes money; if it doesn’t, the backer loses.

What is mark-up from the market’s perspective?

Let us consider an example.

The player buys-in for $15,000 a month, selling 75% with a 1,15 mark-up.

Let’s say he scored a -20% ROI, that is $12,000 in prizes.

What does it mean for the player and his backers?

The backers bought 75% of $15,000 with a 1,15 mark-up, so they paid $12937,5.

They received $9,000 from the prize of $12,000.

This means that they lost $3937,5.

The player invested $3750 of the total buy-in, however, due to the mark-up built-in to the 75% stake sold, he actually paid $2062,5. He also received $3,000 of prize money.

This means that the player actually made $937,5.

What can we infer from this example? Even a really weak player (playing with -20% ROI) can earn about a $,1000 a month, playing with backers. Scantily, but steady. However, his backers lost almost $4,000.

I am not going to analyze this result in terms of abstract fairness of the relationship. It is important for me to consider different forms of staking in order to find out, which one is in the backers and profitable players best interests in the longest run.

Let us look at another example.

The player scored a huge ROI of 200%.

The prizes were $45,000.

The backers bought 75% of $15,000 with a 1,15 mark-up, so they paid $12937,5.

They received $33,750 of the prizes.

This means that backers earned $20812,5.

The player invested $3750 of the total buy-in, however, due to the mark-up built-in to the 75% stake sold, he actually paid $2062,5. He also received $11,250 of the prize money.

This means that the player earned $9187,5.

In order to complete this example, let us calculate how the player’s prize share relates to his investment in total buy-in.

In fact, the player invested $2,062 of $15,000 (the remaining share of “his” 25% investment was supplied by the mark-up), i.e. 13,75%. This contribution corresponds to $6187,5 of the prize money received. That is, apart from his own investment, the player receives $5062,5 from the prize money, attributed to the backers’ investment in the buy-ins.

This is less than 20% of the profit (not of the prizes!), attributed to the backers’ investment in buy-ins.

In other words, if the player had played a “marathon” with the player receiving share of the profit (not mark-up), he would have received less than 20% share of the profit.

Let me remind you that in the first example, the player would receive same 20% (even 25%!), only… taken from the backer’s loss!

We could say that in the second case, the profit sharing is not fair, because there was a long and profitable run, and the player earned too little. However, this is just as unfair, as a losing player making a profit. A backer takes a lot from the winning players to cover the losses of losing ones, and… to provide the latter with some income, if they do not lose too much.

Consideration of these two ends of many possible outcomes brings us to a logical conclusion that the profit distribution at the mark-up staking market is dependent on the fact that losing players are receiving a significant share of money earned by the winning ones, using the funds of the backers.

This is a significant phenomenon. If we assume we are operating on a good market, where a player’s average ROI is 20% (actually, it’s not, but let’s not get ourselves depressed too soon), then at a mark-up of 1,15 the backers would receive 22% of the winnings (it’s only the profit, attributable to the backers’ share of BI). The profitable players would get 48% and the losing and break-even ones – 30%.

I do not want to overburden the thread with the probability calculations, but if you doubt the given figures, I will provide them for you.

This is not to say that staking with mark-up is bad. However, it is important to show the readers, both players and backers, how mark-up really works.

To be continued.

P.S. In the future, I will try to make it more concise. Please forgive me, my dear readers.

If you're a player who supplements his income investing in the marketplace, mathematically speaking buying in the marketplace usually just increases your variance. Investing huge sums of money into marketplace deals where your edge isn't sufficiently large is pretty foolish unless you're OK handling huge 5 figure swings chasing a few % ROI and any meaningful amount of supplemental income, assuming the stakee is actually +EV which many arent.

+1 to all this hardly any value in the marketplace now. The good regs don't need to sell to make a living (there are exceptions to this) looking at bparis and a few others.

Interesting you say this as a semi regular seller at 1.2+ yet i have never seen you buy any action ever.

I don't buy action on the marketplace because the best action is sold so quickly. You need to be on top of everything and get in on any sale early to get the good deals. That means it really isn't worth doing unless you have a large BR where you can put up a lot of volume or investing/sweating the MP is something you just enjoy doing. A lot of value is had on the live marketplace but that requires even a larger BR and more knowledge of the live circuit that I just don't have right now. Also, refreshing the marketplace is just a distraction while playing. So, right now it just isn't worth it for me. As OP said, a good longterm return from buying is around 5% ROI, which is great for such a short term investment, but is a lot lower than my own playing ROI. So why would I buy others action when I'm still working my way up to afford to pay my own?

I don't know why I felt the need to right so much, but, man, I cannot wait for the day where my BR is recovered and I don't need to sell on the MP anymore.

Back before BF when I had a large bankroll and ran a stable I bought action regularly.

№2. How much does the player actually invest?

Let us not be naïve. The player who sells 70% with a 1.2 mark-up contributes not 30%, but 16% of buy-ins, since 14% of that sum is supplied by the mark-up.

Therefore, this player risks only 16% of buy-ins, getting 30% of the prizes. Do you realize that, in order to actually lose his own money, the given player should be playing with a -50% ROI?

Do you realize that having a -30% ROI (I guess that would be about the ROI of the RNG), this player will be earning money? Moreover, he will be earning a 30% return on his initial investment. You don’t believe me, do you? I will show you a proof a bit later.

In the meantime, here is a spreadsheet with the player’s actual investment in BI for a given mark-up and his “announced” contribution to the BI.



The border between gray and pink areas is where the game is turning into a freeroll for a player.

To be continued.

This is extremely interesting---

I have thoughts on many of the issues brought up so far in this thread, but one theme that has been touched on is really the core issue in the difficulty of staking, which is simply the difficulty in assessing the expected roi of the players.

As it has been mentioned many times, looking at results is tricky, dangerous, misleading etc---what is really required is a full analysis of how a player plays, knowledge of how that level of play rates to perform in the tournaments the stakee is seeking. Even this is not the end of the story, as there are other things besides ability that drives results----psychological makeup, risk of theft, among others.

To perform due diligence on a player to the extent necessary to make an educated assessment of his value is very hard, and people who just troll the marketplace buying all sorts of players based on name recognition, old results, among other things, are really just guessing.

When a player would come to me for a full backing deal I would do a lot of work in this regard-----but the reality is that people who put up shares for sale in the marketplace are not going to subject themselves to such due diligence by everyone looking to buy 1% etc.

I honestly believe that selective piece buying would be extremely profitable IF THE BUYER REALLY DID HIS HOMEWORK ON THE INVESTMENT----and the problem is that there is not enough information made available to the buyer regarding a player's actual ability.

Again, this is just the tip of the iceberg regarding the issues brought up in this thread, and in staking in general, but I think the core of it really is a lot like investing in anything----with bad or unreliable information the investor is just doomed.

Thnks for this. Do you plan on calculating the profits of some breakeven mtters in the marketplace? I did some rough calcs with somebody else and iirc one guy makes 100k+ yearly, while breaking even in the games.

Very nice thread. I've always been of the opinion that the market is allowing players to sell at too high of a markup.

Why should players get a guaranteed return on a portion of the buyin when the investor is in most cases allowing the player to play events they would not be able to normally play while taking on all the variance.

didn't read the rest of the thread yet but this is over simplified, this largely depends on the standard deviation (or how high variance the tournaments are, basically). to give an extreme example if i am playing 500 hu sngs against someone who i have 25% roi against, the chance of losing in this sample is negligible

"being backed is the nut low" (quoting legend mtter - obv not myself)

and

"whatever you do don't get staked again"!!!!!

№3. How a losing player can make good money.

In the previous post, I made a bold statement, which needs a proof.

Selling 70% with a 1.2 mark-up, the player would earn money even if he has a -30% ROI. Moreover, his profit will equate to +30% of his own investment!

We’ll take a look at three cases:
1. The “distance” (or a particular offer) with the result of a negative 50% ROI
2. The “distance” (offer) was played with the result of a negative 30% ROI
3. The “distance” (offer) was played with the result of a negative 10% ROI

For every example, I will create two spreadsheets.

The first one will represent the player’s income relative to the offer’s total BI (or the total BI of all his offers); the second one will represent the player’s personal ROI relative to his actual money investment. The values will depend on the selling stake size and mark-up.

We are going to have 6 spreadsheets. In each of them, a segment, corresponding to the gray segment of the first spreadsheet, will be blacked out, since I hope that it is impossible for a player to receive more than his offer’s total BI from backers nowadays.

Let’s go.

So the “distance” (or a particular offer) played with a negative 50% ROI

Here are the spreadsheets.





The first one reflects the player’s income relative to the offer/distance total BI.
The second one represents the player’s personal ROI in reference to his actual money investment.

I marked the “nightmare” area with dark pink. It is the area where the player extracts a profit, having achieved a catastrophic -50% ROI.
For example, this happens when he sells the 80% stake with a 1.15 mark-up; or the 75% stake with a 1.19 mark-up.

Light pink is the area where the player’s loss is significantly less than the loss of the backers. “Significantly less” means player’s losses, relative to his investment in BIs, are two or more times as little as the total ROI.

For example, selling 70% with a 1.16 mark-up, the player would lose noticeably less than backers, namely, mere 20% of his investment.

To be continued.

yes but the player also makes way less than his backers if he wins lol

It seems like this thread should be retitltled the theory of selling action rather then the theory of backing since op is kinda getting off the pont. Seilling action at markup has completely different outcomes to being backed by a player where u cut 50/50 and go into makeup if you lose.

I'm going to say what doggz will probalby say tomorrow, the marketplace is like the stockmarket in a sense, people analyse a persons ability and decide if they want to invest, in a sense its a gamble, if they don't do their homework, they are most likely to lose off staking or backing in the long run.

I think one point that hasn't been brought up in this thread is that people charge markup because they are the ones putting in the hours, energy and mental effort so if they sell 50% for eg and play they deserve a bit extra because of those extra things.

The issue lies in people getting away with selling at high markup consistently and selling between 60-80% of their action and being able to profit 5 figures a year doing so. Imo, alot of people when they fist start selling packs look at other mp sellers who charge 1.1 -1.2 and figure well even if its my first package i can sell at 1l1 since i have a 20% roi. its not like people go out of their way to make money off markup.

however, people like random crayon, who sell at 1.2 like 4-5 days a week, and put in stuff like 2.75 deepstacks while leaving out decetn tournteys after they run good in last pack do make their money off markup even if they break even, esp when they sell 80% lolz,

shippity dpp that super tueseday so i sell at 1.2 for a 1.10 1k

following

Good read, keep it coming

how do you proceed to settle by the stake site or transfer into the poker client?

Hello everyone!

Let me answer your questions next week. My hand has not fully recovered from the surgery yet (http://en.wikipedia.org/wiki/Latarjet_procedure) so now I'll just post some texts written before and I'll be happy to reply to your private messages and comments in this thread within a few days.

№4. How a losing player can make good money (Part II).

Now let us review a more realistic case – the player has scored an ROI of negative 30%.

I call it more realistic because even bad players usually reach -30% in a long run, and we are interested, precisely, in the result over a long, instead of a single offer.




It is noticeable that the red and pink areas have notably increased compared to the previous set of spreadsheets.

Playing with a -30% ROI, a lot more players with a variety of selling terms can regularly make profit!

Let us peek in their pocket:
The player, selling 75% with a 1.13 mark-up is going to make modest, but steady 15% of his investment. If he manages to sell such a big offer with a 1.15 mark-up, his profitability will soar to 27%. The player, selling 70% stake with a 1.19 mark-up will make the same (of course, he will win more in a dollar terms).

Now let us move to the players, scoring -10% ROI over a long run.





These happy people can make money, operating on a wide range of terms.
For instance, they can sell just 55% with 1.15 mark-up and receive 10% on their investment.
In addition, if someone buys 70% with a 1.2 mark-up, the player gets 70% on his investment in a total BI. Let me remind you that all of this happens when he played out with a -10% ROI.

Colleagues, I am not writing to tell you how unfair the world is. Staking with a mark-up provides a nice opportunity to make money for both backers and strong players.

However, when you buy stakes, you should realize that choosing the horse incorrectly will lead you to losing money, paying a salary to a weak player.

Next time I will post similar spreadsheets for profitable players. Then we are going to move on to the issue of offer evaluation.

i want more of this, you are doing good work
best thread on this site

Nice work OP. Most of stuff is easy to think of, but I never really sit down to find the exact numbers. Looking forward for the next post!