Cate Hall pledged to donate 100% of her profits from the Bellagio 5 diamond event in 2018. While that’s noble if she would’ve followed through, it’s worth noting that she claimed first place ($1.9 million) would’ve been roughly 10x her net worth. So her net worth in December 2017 was only ~190k. I can see how she went busto quickly playing 4K buy in tournies and HSNL and needed a stake for 5/10. And now she probably doesn’t even have 60k to pay back.

Cate should get her act together and just go back to lawyering for 500k/year. 30k will be chump change to pay back to Chad on that income.



https://mobile.twitter.com/catehall/...33968972759040

@catehall
Replying to
@HeadsUpGoalie
I don’t. First place would have been close to 10x my current net worth.


https://www.worldpokertour.com/event...018/#eventTab1

"I never found it difficult to make money" LOL. God this girl is a spoiled ****ing brat.

She seems like a narcissist with a desperate desire to be admired and seen as saintly and baller. She tried to present herself as this high stakes crusher , wanting to be seen playing big games, when in reality she sold 80% of herself (perhaps even more to someone other than Chad) in her Mike Dentale “grudge match” and needed a stake to play 5/10. I can’t help but doubt her evidence of making 500k/year. She’s proven to be deceptive about being staked. Scammers typically project an image of being wealthy and not caring about money to get people to invest in them.

Tl;DR

Cliffs
-I think make-up staking is exploitative and terrible
-I present a system I think is a lot better with a lot of boring math and discussion of incentives

I've staked 50+ people over 8+ years and I hope my learning experiences can be of use to the community.

Staking at make-up is terrible

Make-up staking is a system that sometimes works, but that badly mis-aligns the interests of horse and staker when deep in make-up. The misalignment of incentives creates a lot of negativity and pain. When deep in make-up, 100% of profits (at least on paper) go to the staker. What actually happens is that a staker will put a horse in a big game (or the horse hits a bad run, or plays very bad, etc) and the horse gets in so much make-up that they can't see daylight. The horse feels like they're a slave, and won't get any profit for months or years. If the staker is greedy, they'll apply psychological pressure and guilt in order to enforce the contract and receive 100% of their profits until makeup is cleared. If the staker is kinder, they'll reach a profit sharing agreement so that the horse can live a somewhat healthy lifestyle while they claw back to even. In some cases, the staker will forgive all or some of the makeup, and even pay the horse some profits while in makeup, so that the horse can continue to be motivated and play their best. In practice, there's always some kind of complex negotiation going on where strong emotions like guilt, fear and despair predominate for the horse, and greed, anger and guilt predominate for the staker, and both parties grow to resent each other.

Even though the staking with MU system is standard and often works, I've spent years avoiding it like the plague because it feels so bad. After much tinkering and reality testing, here's what I've come up with.

Alternative: Tiered action sharing with Mark-Up

Of all the systems I've experimented with, the only one that works reliably is what I'll call 'Tiered action sharing with mark-up', for brevity TASMU (which sounds like a brand of hair gel or something but **** it).

It works like this: say I'm backing a $2/$5 cash game player to play $5/$10 through $10/$20, and to take shots at an occasional soft $25/$50 game. As a baseline, I require that they take $5 big blind worth of their action at every stake- so they have 100% of themselves at $2/$5 (their current game), 50% at $5/$10, etc. Secondly, I increase their share of their own action at each increasing stake so perhaps they have 60% of themselves at $5/$10 ($6 big blind), 7/20th of themselves at $10/$20 ($7 big blind), and $8.50/$50 of themselves at $25/$50 ($8.50 big blind). The point of this is that if they're playing bigger on my money, then they're playing bigger on their own money. The rate of their own increasing action in TASMU is variable and takes skill on the part of the staker to set correctly.

Next, I set a decreasing mark-up as stakes increase on the portion of the action that I have. Elaborating on the previous example, if I have 40% of their action at $5/$10, and they have 60%, then I'll set some mark-up on the action such that they're incentivized to play $5/$10 and give me action even if a decent $2/$5 game is available. Perhaps this number is 2bb/100. So, the horse's total incentive structure at $5/$10 is 60% of their own action, and selling me 40% of their action at 2bb/100; in the case of a live game that gets 30 hands/hour, then that'd be $2.40/hour cash payment. Setting the size of the mark-up on the side action to align your interests with your horse's takes skill and attention to detail, and a knowledge of game conditions.

At $10/$20, (again elaborating on the previous example), the action is split 7/20th horse and 13/20th staker. To properly incentivize the horse to play $10/$20 over a good $5/$10 or $2/$5 game, I'll pay mark up on my 13/20th share. I have to pay less mark-up at $10/$20 than $5/$10 because the volume of marked up action is $13bb instead of $4 bb. Perhaps instead of 2bb/100, I pay 1.4 bb/100. Setting this second mark up in relation to the 0th and 1st takes skill and a knowledge of game conditions.

Finally at $25/$50 I might set a mark up of 1bb/100 on my $41.50 of the action. This results in an hourly of .3*$41.50= $12.45 for the horse in addition to the horse's $8.50/$50 of the action at face. Relating this markup to the prior ones takes skill and knowledge of game conditions.

Periodically, I renegotiate in good faith with my horse as their bankroll grows. At some point they become a $5/$10 player and I start getting action at $10/$20. That's to be expected, and that's the whole point.

What can go wrong?

The key variable to consider here as a staker is keeping the horse's EV generated from mark-up well balanced with their EV from their own action. In other words, if they choose to play bad and try to cash in on the mark-up money, then it's crucial that they lose even more of their own money so that they can't game the system. If they can't game the system, incentives are aligned.

This is most important at the highest stakes available in the deal, in our example, $25/$50 where the horse has $8.50 bb themselves and is paid 1bb/100 in markup. For simplicity, I'll ignore the hands/hour conversion and just use bb/100 for both winrates and mark ups.

There's a small window where the system can be gamed, and that's when the EV from mark up is greater than the horse's lossrate on their own action. In the example, horse is being paid 1bb/100 in mark up on 83% of the action, or $41.50/100. If the horse's piece of their own action plus their mark up payment is EV >=$0, the horse can gain while the staker loses. So, since horse has 17% of their own action, this ratio is 83/17, or ~4.88. In the limit then, horse's EV is 17%*-4.88bb/100*$50+$41.50MU=0, and staker's EV is (83%*-4.88bb/100*$50)-$41.50=-$244/100. The loss limit for the staker in this structure is then ~5bb/100 at $25/$50 in the example. The maximum value for the horse while the deal is still 0EV for the staker is also important to know because this value will represent the marginal value to the horse to play in a softer game which is likely more +EV for staker. This value is of course +1bb/100, and EVs at that winrate are [staker] (.83*1bb/100)-(.83*1bb/100)=0, and for [horse] (.17*1*50)+(.83*1*50)=+$50.

What protects the staker in these cases is that it is not a good hourly for the horse to play in low/negative winrate games that don't provide the horse a better hourly than an available alternative, and also that games falling in the misalignment window don't come around very often, and aren't usually that costly even when they happen and horse decides to play in them. In games where EVs are low and the horse is winning $50/hour and staker is winning $0/hour, the hope is that there are better games in the room such that the horse would never want to play in such a low winrate game. It can also be helpful to have a candid conversation between staker and horse, and to build the level of trust such that a horse won't play big in marginal games that are reasonably likely to fall in the misalignment window.

Be very careful setting the size of this window where horse can profit at staker's expense!

So, I think a skillful setting of mark-ups and exposures in TASMU can almost entirely align incentives for horse and staker, and avoid much of the pain of make-up staking. At least in the real world, where there's a scarcity of games and personal relationships can smooth over the perverse incentives falling in the misalignment window.

I've so far ignored the massive topic of non financial incentives that come into play. It's entirely possible a horse simply enjoys playing bigger games, and will play big for fun, losing both their money and their staker's money. It's also entirely possible the horse or staker (or both) are bad at rationally predicting winrates in varying game conditions, and will come to an agreement that's exploitative due to a lack of skill at predicting winrates, exposures and markups. There are tons of ways this can go wrong besides the cut and dry world of financial incentives which I can't possibly list here. Staking is very tricky and dangerous for both parties, trust and communication are always important, and I caution anyone from engaging in these practices without very careful consideration.

I also haven't discussed the term, or termination conditions, of a TASMU deal. What's important in this context is that they aren't “until you quit poker,” as is the case in make-up deals. I've found 6months to 2 years is a useful guideline, depending on the situation. Early termination conditions for the horse might include some small lump sum payment, or might occur only on certain conditions stipulated in an agreement.

I've also ignored how to stake a player who is flat broke. TASMU won't help with this.

At bottom though, I've found TASMU is a much better way of structuring workable staking deals that provide value to both parties, with a lower potential for exploitation. I have been both a horse and a staker in TASMU deals, and have felt OK on both ends. I hope others can make use of this system, and that it helps some avoid repetitions of the sort of situation described in this thread, or at least lessens the pain of extricating oneself from a staking deal gone bad.

Excellent post. Excellent system.

Mod Edit: No need to quote the entire post right above yours for a four word reply. See the example above.

Well now I have no idea what Cate wants. If she wants to keep playing, what was "the dispute" that needed to be resolved in the first place?

Sounds like it just to skip the 60k makeup?

I generally feel how DNges feels about contracts with these situations. He talks about it at 40:00
https://datpodcast.libsyn.com/

I bought her action before stake. She owes nothing from me buying her action. That's the risk of buying action. Instead of risking her own money, she came to me about a full stake to replace me buying her action. I went from buying large pieces and only owing that same percentage of the loss to - on stake - I take 100% of the loss and 50% (eventually 33%) of the profit. This massive paycut and money up front from me doesn't come for nothing, it essentially comes with a promise from the horse that they aren't going to do exactly what Cate is doing - run up a huge tab and bail. That's why I tell her in the email, if she wanted to walk away, she shouldn't have asked me for a stake, she should have kept selling action.

I've also done very very well with people in bigger games, but that aside, she was more or less ignoring the stake and not playing 5/10 anymore at this time.

Buying action:
she buys in $10,000
I have 60%
I give her $6k for my 60%
She wins, I get 60% of the win + my $6k back
She loses she doesn't pay back the $6k (if she loses the full $10k) or she pays back 60% of what number she has left.

Staking:
She buys in $10k
I give her $10k
I have 50% of her action... I think I can stop right here and it can be obviously seen how extremely different these two things are.

For those saying I'm freerolling, I have tons of freeroll debt for you to buy up. Don't worry, it's a freeroll, you can't lose.

You don't see the irony in the

and then wanting to recoup 100% of your loss, reducing your deal to 0% risk 66/50% of the profit?

I suggested this and she declined. I also suggested 3 arbitrators and majority decision was binding. She declined. I suggested different arbitrators that were impartial and had no knowledge of the situation, and she declined. This was pretty much my only shot. It was likely my freeroll that I was being freerolled on - by that I mean, freeroll because she wasn't paying anything, but getting freerolled because she potentially chose someone that I don't know that would never be sympathetic to my side.

I remember reading this post a looong time ago. All the respect in the world to you Ben, but this wouldn't work for me because well over half of the horses who play for me are broke when they get on stake.

Sure, there is some there, but I'm talking about immediate loss. Having $60,000 tied up for two years has value.

The point is, why would I put up more money and take a bigger loss for nothing when I could just keep buying action?

Dneg's view on written contracts is pretty ridiculous, see 42:30 as to why. You'd be in a much better spot if you had it in writing, seems pretty simple. As I said in my post: even if it's not legally enforacable it's important to have. Someone you trust can turn into someone you don't trust when they are stuck large amounts of money; there's no way to tell until it happens.

88 Oh yeah you're right it's different from buying a piece.

So if you had 50% of Kate she owes you 30k to buy out and keep playing poker correct? Unless there's a contract agreed upon prior that says otherwise

It is a line of credit, which is a drawable loan. Anyone who can’t see that has never worked in finance.

The difference from traditional banking is the inverted payback, schedule, where a bank line has payments go up as the borrower makes draws, and in poker the payments go up the less the line is needed. Payments go down respectively as the line is drawn via losses.

The use of either instrument is predicated on the borrower’s want to reduce variance, either in gambling by a player, or cash flow timing as a business.




Sent from my iPhone using Tapatalk

My terms are that she would owe 100% as per agreed upon in our conversation, but since she said she had no recollection of this conversation - even though all my other horses have the same terms - and because I have no recording of our conversation, I offered to let her buy out for half makeup ($30k). She would also have to return her full bankroll - which she claimed to be willing to do (it's $1,300) but I've got nothing.

Yeah the bankroll keeping seems like straightup theft to me?

And it does seem like you abusing desperate or clueless/ overly optimistic guys with the 100% of losses and half of wins, I mean you do make the terms take or leave it but so do loan sharks.
I'm surprised you don't have many guys feeling that way and experiencing buyers remorse after getting themselves into that and stuck in make up.

So either she now pays you 1.3k, never plays a hand of poker, or continues under the stake with the fair 50% of her MU payable if she quits that you offered her later.

Or she simply sends you the 31k and is off the hook, case closed?

She must be flat broke now if she can't even send the 1.3k there shouldn't be even any disputes about
I guess that's the big issue here

I can see how it might seem that way, but essentially I look at it like this:
If you want to come on stake you're essentially telling me that you're going to take care of and work hard with my money. You're going to do your best to turn a profit. If you're doing your best, but your best isn't good enough, eventually I will cut someone off and terminate the deal. They will owe me what's left of their bankroll and we will part ways with no makeup coming back to me. That happens. In fact, it has happened plenty of times. I don't look at that as a form of abuse, and I don't view the people approaching me for a stake as desperate (in most cases).

People with integrity get into makeup and then just grind their way out, and if they aren't capable of grinding their way out, then I cut them loose and they owe nothing.

What I got from Cate was close to zero effort to rectify her makeup situation. In fact, she ignored me for months - which, if you lost $60k of someones money and you are a person of integrity, the right thing to do would be to respond to them.

A staking deal has some similar characteristics to a Delayed Draw Term Loan but the key difference is that the latter although it may pay some "dividends" to the borrower in the sense of initial lending rates being lowered if certain criteria are met by the borrower in accordance with the details set out in its agreed structure, such dividends never exceed the total amount borrowed (the principle plus interest), they only serve to lower the interest rate paid and accelerate how quickly the loan is paid off and usually prevent the total amount borrowed from increasing.

I wrote this post today. I've wrote on 2p2 in the past about other non makeup staking models. These didn't work and cost me lots of money, but the one I'm suggesting here has worked and has made me (and the people I stake) a lot of money. It also seems to avoid the disputes described well in this thread IME.

With no written contract she likely doesn't owe anything, but if anything this post shines a light on her character which should have been obvious for anyone who follows her Twitter. She is a morally bankrupt SJW who hides behind large scale macro political issues to seem virtuous. She should not take a few shots at big games if she isnt willing to grind smaller to recoup the loses. Even though she has some mental illness issues she still should have kept in communication with her backer so that he knows what's going on. Entitled cat ladys gonna shriek about how everyone else should live their lives. I predictably guessed she was a fraud several years ago when she first came onto the scene.

It's not right of her not to return the 1300 or whatever it is but its been made more than clear that she apparently has a drug problem(which is probaly where it went) and obv needs immediate help, hopefully somebody steers her in the direction of getting it!

The future value of owning their market? In Cate's case - perhaps access to games none of the other horses could gain?

I tend to agree with KyddDynamite. The stakee wants a stake because it provides them with a huge opportunity value. They may be only getting 50% to 67% and be capped at 67% indefinitely but they also have the chance of moving up to much higher stakes and if achieving that can leave the stake with a nice little warchest to play non backed lower.

If they get into makeup it's reasonable to ask them to make a genuine effort to dig themselves and the backer out of it rather than give up straight away because it's convenient for them.

She also adopted a cat and then later returned it. Probably to erase a witness. Where is that cat and what does it know?