in my city there was a game running for several years, I never played in it but my uncle and my buddy both had played this game. The guy who ran it had two tables set up in his garage or something, and occasionally ran fairly high stakes. He was making money off the game

I have always wondered how game-runners make a profit off of staking systems where multiple players are staked in the same game.

That is my question: how does this arrangement work where the 'owner' of a private game is staking multiple players in the same games/lineup? is this a common practice among people who run serious games?

The people he stakes are winning players. Or at least winning players in the lineup he invites.

I have a small sample size but I would say not common

First, the obvious math part:

You have a poker game with 10 players. 5 of those players lose $1000/session on average, the other 5 win $1000/session on average. If you collect 50% of the profits of those 5 winning players, you end the session up $2500.

In theory, you can have 9 winning players at a table if the 10th guy loses enough.

That said, I don’t think it’s very common that half the table is staked by the same person. At least not in a cash game. (Super) high roller tournaments are a different species.

Especially not by the same person who runs the game. That might create some serious trust issues that could kill the game if other players found out. Nobody wants to basically play against the house. And with each additional staked player, that risk increases.

One thing that I was always told about private games in a (semi) professional setup with dealers and rake: if there are a couple big winners in the game, it’s at least somewhat likely that they have to pay the house to be able to play in that game. Personally, I played in a couple private games where I did relatively well and was never approached by the host to pay them. Only thing that happened a couple of times was that the bigger winners were encouraged to tip the dealers at the end of the night.

So if a backer has multiple stakes and they are playing at the same table is he/she essentially just guaranteed to win because he is casting a wider net? If 3/6 of the players at a table are staked that still presents significant risk for the backer right?

It’s gambling, you’re never guaranteed a win. You can guarantee breakeven if you back everyone (at the same %) in a non-raked game.

If we’re just talking maximizing EV in a theoretical setting, the backer wants to have 100% of every winning player and 0% of every losing player. “Casting a wider net” doesn’t really help in a game that has 1 winning and 9 losing players, unless you don’t know who that one winning player is. But knowing that is the whole skill of backing/staking or even investing in general.

I have been told of a game where there was one whale and the house backed everyone else. It went great for a while but the guy running it was a moron and bad with money.

One day the whale ran like God and stacked everyone. The host didn't bring any money to the game and couldn't pay the whale his money. That was end of that game.