I often play $1/$3 NLHE and I usually ask for 20% profit on any winnings I make when a friend stakes me a buyin. So if I turn $300 into $1000, then I keep $140 and give $860 back to my friend.

Do you think that this is a fair stake? Or is one of us getting ripped off?

One buyin only? And your friend loses 100% if you lose?

He's getting ripped off and you're a bad person for doing it. Anyone who thinks otherwise is stupid and a terrible person.

You should get 35% to 50% of the winnings. That is the standard horse contract.

You’re freerolling him, so any % you can keep is great for you.

I wouldn’t say you’re ripping him off, but he should consider that he is basically giving you money since you’re not taking on any risk yourself. It’s okay for friends to do this depending on your relationship, but make sure you give back to him in some other way.

If you are a winning player it is possible to have a situation which is +EV for both of you. It depends on how much you are winning and you’re playstule. For example if you play very wild and attempt to run up the $300 or lose it all then that is good for you but bad for him.

Probably like 10% is reasonably fair if you play normally.

Standard cash game stakes aren't on a buyin by buyin basis, usually longer term with some form of makeup agreement in place.

LOL. So you are the authority and anyone who disagrees is stupid? Count me in as stupid then.

If a known winning player needs to be staked for whatever reason, I will stake him for a lot worse deal than this one. I know lots of players who I know for a fact are solid winning players. If I dont have to do any work whatsoever, I will stake them 100% for 50% of their winnings and I would feel like I am ripping THEM off.

If they are playing 1/3 and average $20/hr which is good but not earth shattering, then they will average $100 per 5 hour session. Of course they might lose today, but over time they will win $100 per 5 hour session. If they play 100 hours this month, they will win $2000 and I will get $1000 for doing absolutely nothing except risking my money. I wouldnt stake them with 1 buy in, but I could stake them with $3000 (10 buy ins) and on average I would make $1000 return on my $3000. That's a 33% return and as long as the player is a long term winner Im taking a lot less risk than any other reasonable investment I could make with my $3K.

There is no way in hell I would play for only 20% of my winnings, but then Im a consistent winning player.

If you think this deal is such a ripoff for the staker, then you clearly arent a solid winning player. Whether or not you are stupid is unknown.

I have a friend who is a limit reg. He came for a visit and I took him to a NL room. I gave him $120 with no real conversation .. just that I 'had his back' tonight. He turned it into $300 and I gladly handed over $120 when I cashed out. He was elated.

I had a great night myself so I'm not sure if I might've gone 50-50 otherwise.

There are no 'standard' rules for staking ... You agree to something ahead of time and live with it. If you wouldn't have played that night without the stake, then anything put in your pocket should be appreciated .. hopefully he bought your beer as well. GL

Weird post imo. Can you, like, say something constructive? How is he a bad person if he doesn't know what's fair? What would be fair to you if not 20%?

Literally any amount of information on top of what you wrote would be nice.

20% sounds more than fair to me, personally, presuming I am understanding this right.

If you lose.....the person who does the staking loses the money.
If you win, the person who staked the money gets a majority, since he/she is the one who had skin in the game.

If that person can get a better deal...have at it. I mean, if it this such a good chance at winning...then why does the person even need to be staked?

If he has such a bad chance to win, why would you stake him?

So if the guy is a proven 50bb/100 winner in that game, this deal would rip off his friend? Lol..

A winning player needing to be staked. Feels like a paradox to me.

If I know a winning player that's broke I'm probably not giving them any money if they were unable to manage their finances.

Sure, in that 1 out of 100,000 case that they're broke because their family member/wife/etc had emergency surgery for stage 4 cancer, then maybe I'll re-think my position.

Otherwise, if someone's broke because of bad bankroll management and lost their money playing at stakes they shouldn't have, the last thing I'm going to do is give them my money to be bad at handling money yet again.

While I more or less agree with your overall point, the math in this paragraph is atrocious.

Imagine an unfair coin where you're twice as likely to flip heads than tails. If you stake someone taking 50% of their winnings and 100% of your losses, your EV is actually 0.

Just because they expect to win $20/hr in the long run doesn't mean you expect to win $10/hr in the long run as a staker. It's less, and the shorter the time period you're staking them, the more less it is (and potentially negative!) because of variance.

If you stake them for a 100 hour block, their SD is 600-800 bb for that block (sqrt(100)*hourlySD), with a winrate of 500-1000 bb (100*hourlyWR). That means there's a 1-sigma (15-20%) probability they don't win over that time (and you eat their entire loss). That has to be subtracted from your EV.

Just as you can calculate a Certainty Equivalent for their play, you can calculate CE for your stake. I think it's called alpha in the investing world but the concept is similar - risk adjusted earnings. It's lower than ROR and even with a horse with a huge skill edge, I think you're going to have a tough time beating traditional investing benchmarks unless you offer them a very stingy deal or commit to a long contract.

Well, yeah, that's what I'm saying. I wouldn't stake him, laugh. Not precisely sure what you think I meant.

I presume people will stake others because they are friends or something.

Math is useful to put some numbers on this.

To establish yourself as a solid winner, you have to reach statistical significance that you're a winner. One such model is n0 (n zero), the minimum amount you'd have to play at a given winrate and standard deviation to disprove the null hypothesis (that you're a breakeven player who got lucky). n0 = (z*SD/WR)^2 and usually scientists use a z-score of 2, which corresponds to 95% certainty.

A solid winning NL player will have an SD/WR of 8-15 and n0 of 300-900 hours. Over that time period, the player will have won n0*WR, or 1,500-9,000 bb - high thousands to low ten thousands of dollars.

They will have either had to spend all that money (plus whatever bankroll they started with), or alternatively they won't have the statistics to say they're a solid winner.

Staking such people can be rational so long as the staker understands that. There were stakeable people after Black Friday when Internet millionaires who crushed 100/200 online suddenly found themselves playing 1/2 live. Some people run into family emergencies and spend money on their kid's brain cancer surgery. And sometimes a staker could have insight into someone's game so they have higher than statistical confidence that the stakee is a winner, the most obvious example being a coach staking a trainee. But the general case of someone claiming they have won 10x what they're asking you to stake them for should be treated with skepticism.

Don't know what's fair for cash games but an 80/20 backer/horse split is standard for 100% stakes in tournaments, even with no makeup provision (for short term stakes deals, at least). A well-known staking site doesn't even allow worse than a 70/30 split and it's not uncommon to see 85/15 or even 90/10. If this is a regular thing, it's a pretty bad deal for your friend if you don't have a makeup provision. Imagine you loose $300 3 nights in a row then on the 4th night you win $300. Under a makeup deal, the staker would get the full $300 in profit, so you'd be net $0 profit and staker would be -$600. But without makeup, you'd now be up $60 with staker -$660, so you're up even though you're a net loser. That's not very fair.

Most people live on a budget. If someone is married with kids they might not be able to afford to lose $200+ in a session. Or most college kids for that matter usually can't afford to have a bankroll, let alone bust off a few buy-ins.

None of what your describing would typically reflect a winning player. It sounds like you're describing a rec player.

If someone I know is asking me to stake them in 1/3, for them to make $6 or $8 per hour best case taking 20% net, then I should probably consider whether I'm making a responsible investment.

A person who's broke by unforeseen circumstance is one thing. A person who's broke because they aren't earning enough in poker and is willing to play on my stake for $6-8 per hour means they probably need to work on a new career field.

If someone wanted to stake a low-stakes 1/3 grinding college kid into 2/5 and/or 5/10 and take 90% of their net, that makes a lot more sense. It would take years to build a sustainable bankroll for that kid to move up without the staker and you might be capitalizing on their potential. Staking a person at the lowest level at a live casino? I'd rather buy penny stocks.

I defer to your math knowledge and stipulate that you know a hell of a lot more than I do with regards to these formulas. Having said that, I dont know what you are trying to say.

You're making it way too complicated. I only have to commit to a long term contract if I want to increase my odds of getting closer to the $10/hr (half of his expected win rate). Obviously if I stake him for 100 hours, I could make more or less than $1000. If I stake him for 1000 hours I have a better chance of ending up close to the $10/hr.

That's no different than investing in the Sp500 which I know returns about 9% long term, but if I invest in it for 12 months I may make more or less than 9%.

If I stake this guy with $3000, I may lose money after 100 hours or I may make $2000+ after 100 hours, but I like my odds. If he has an average 100 hour month, I get a 33% return. How many other investments can have an average performance and get a 33% return in a month?

The point of my example was to show that the staker taking 80% of profits is WAY too high, unless the player is not a known winner in which case he shouldnt be staking him in the first place.

Pretty good chance you are not worth the 20% if you are having friends buy you in for 1/3, plus no makeup or discussion of multiple buy-ins etc.

Your EV when you stake him for less than infinity hours is less than $10/hr. You may make more or less than EV but your EV itself is lowered.

Think of the extreme - you stake him for one hand. If he loses you eat the loss, if he wins you get half. That's an awful deal and in the long run your EV is probably negative. If you plot the EV as a function 9f contract length, it will start negative and slope up, and then level off at your inifinite-time EV (which is the horse's winrate times your percentage).

So at 100-ish hours where 80-85% of the time you get less than 33% ROR and 15-20% of the time you get a negative ROR, you're doing much worse than the ideal. Of course, even if you had a 10-20% ROR, that's really good. So I'm not arguing this is a bad deal, only that it's nowhere close to the 33% yield you imply. On the low end, it's probably only competitive with an index fund (which is still very good).

<mathematical sidetrack>

I don't think that's right.

Your EV is constant (assuming the player and competition all stay at the same skill level) over time, and assuming you control for position and all those factors.

Your variance certainly decreases over time.

The CE/utility probably acts asymptotically, as you you describe though.

The EV of the staker-stakee team is constant because it depends on the stakee's edge over the external players.

But the split of that EV is differwnt depending on the length of the contract. Essentially there is partial makeup for the length of the contract. So if the stakee plays a single hand and cashes out, there is zero makeup. If the stakee plays a whole session and then settles up, there is makeup for that session. If the stakee plays multiple sessions, there is makeup for that block.

Only in the infinite contract scenario does the staker's EV approach 0.5*teamEV.

Well, your original post didn't say anything about make-up.

And I don't think you have a single session calculated right either, because make-up is usually calculated as a result of session results, not hand results. So if you finish your first session down $X, and don't play another session, there won't be any make-up, just like if you only played a single hand and lost $X.

But I will otherwise agree that if you're talking about asymmetrical sharing of risk, and including make-up, then the staker's EV approaches the share of stakee's EV only as time goes to infinity.

That's my main point. The agreements that people make can't be evaluated as fair without some sort of nitty mathematical analysis (even if mine specifically is wrong).

In the OP, it sounds like a pretty short term agreement. Someone stakes a buyin, staker takes all the loss if the horse loses and 80% of the win if the horse wins. Depending on what the horse's edge is and how long the session is, that could be grossly skewed in favor of the horse oe the staker. Like if someone offered to stake me on those terms I would make out like a bandit - I play really short sessions (like 45-60 min) and I'm pretty LAGgy so they would be subsidizing my frequent, deep losses. But for someone who plays 36 hour sessions and maintains a tight play style for the whole session, it would be skewed the other way.