hello,

thought this might go ok here. sorry if not. I recently entered into a backing deal which seemed great at first but I'm starting to have second thoughts and can't exactly wrap my mind around all the numbers.

Not sure it matters but we have two similar arrangements across two stakes so I'll post both.

$2/$5

-We each put up half the money
-We settle after each session
-Losses split 50/50
-Wins as the backer I get 40% he gets 60%


$5/$10
-I put up 75% of money he puts up 25%
-We settle after each session
-Losses split at 75/25
-Wins I get 20% he gets 80%


some other necessary info, he is what I consider a winning player. I play in the bigger games that he's looking to break into and have confidence that he is a winner there as well.

My main apprehension of late is that we've now been doing this for a few weeks and I'm pretty sure that we've arrived at a point where he is a winner in the games overall and is therefore taking profit, however because of the nature of our deal (settling up after every session rather than basing each of our takes on our running total) I now owe money. not a huge amount, but one that made me realize I needed to understand things better.

I have several questions. is this just the premium that I pay? is this deal outrageous for either one of us? what might be a better deal? any direction toward further reading or information would also be much appreciated, thank you!

so you are buying 75% of his action but you get only 20% of his winnings ?

to calculate your EV you'd need to know how often he has a profitable or losing session and what's the average profit and loss for both cases.

for first situation, your EV = %profitable sessions / 100 * average profit *0.4 - %losing sessions / 100 * average loss * 0.5

his EV = %profitable sessions /100 * average profit * 0.6 - % losing sessions/100 * average loss * 0.5

your for second: %profitable sessions / 100 * average profit *0.2 - %losing sessions / 100 * average loss * 0.75

his: %profitable sessions / 100 * average profit *0.8 - %losing sessions / 100 * average loss * 0.25

you have to know these values to make the calculation. without calculating anything I'd say 2nd deal doesn't look so great for you.

thank you for your response

Im having trouble understanding why you think the second deal is worse. seems to me that both deals are very similar, he gets 25% markup on both. am I missing something where they are not the same deal? understandable if it's just that 5/10 rates to be harder. I failed to mention the 5/10 here is a one off game with three whales. it only goes once or twice a month and is almost certainly softer than any 2/5 line up.

also now that I'm writing it, the markup here seems outrageously high even for a consistent winner

you cover 75% of the losing amount when it's a losing session and only get 20% when he wins, if I'm understanding it correctly. if he's playing against whales it's a bit better and could be profitable for you. you have to run some numbers through these equations, at least some estimates to see how it works out.