Investing in staking
Staking is not an investment!
If you think staking is an investment, you misunderstand the relationship between player and staker.
Money flows from a winning player to his staker. The staker shares in the player's profit with no investment required. On the other hand, when you back a losing player, money flows from the staker to the losing player. That's a loss, not an investment!
A player and his (or her) staker are partners, sharing in profits and losses. Having a staking partner to share profits and losses reduces the risk of ruin due to variance, allowing the player to move up in stakes.
In this forum, I see staking stables offering to "invest" in players. I think what they mean is that they're going to invest time and money in coaching players to win. Are they proposing to recruit losers and turn them into winners? That seems delusional. Surely it's simpler and better to recruit a winner and then just let him do his winning thing? Sit back and collect a share of profit.
But stables seem to want to recruit winners and turn them into bigger winners. I can see that a winning player could be curious to see what he could learn from a new coach, and I can see why a winning player would want a staker. But isn't it hubristic for a stable to think that their coaching is so advanced that they can improve a winning player by such a great margin that they can see a return on their investment in coaching? Alternative advanced resources are available online at little cost. And then, once the player has taken whatever benefit he can from the coaching, why would he continue to share his profits with a stable? (No, I don't think a contract can be enforced.) Anyway, that's called "coaching for profit", not staking. And once the player has improved from being a 10bb/100 winner to a 20bb/100 winner, won't he command a higher percentage?
Maybe I just don't get it. Seriously, please explain it to me!
3 Replies
"Money flows from a winning player to his staker. The staker shares in the player's profit with no investment required. On the other hand, when you back a losing player, money flows from the staker to the losing player. That's a loss, not an investment!"
Money can flow in either direction. The staker needs to have a substantial investment, either a minimum number of buyins he is willing to spend, or if they want to do it properly, enough buyins to withstand 2 - 2.5 std dev downswings. 20+ buyin downswings are not unheard of for professional gamblers, even those with a high winrate. In certain marginal games 50+ buyin downswings are possible by players who are beating the game.
50 buy-ins is a good number for a theoretical bankroll. That's a theoretical number because there's no need for a staker to hand over an entire bankroll to a player. From the staker's point of view, it would be absurd to hand over such a substantial sum of money to the player, who could be hit by a bus tomorrow.
The player never needs to hold more than a "playing fund" required to play for a couple of sessions, say 10 buy-ins or less. If he loses, then the staker can decide whether to top up the playing fund or end the relationship.
No sane staker would support a losing player indefinitely. He would pull the plug long before the player has lost 50 buy-ins so that capital is completely unnecessary.
As a player, I don't need "sit down money" and I don't need a staker to hand me a bankroll. The player needs a staking partner to underwrite him. The staker is not an investor, he is an insurer. He insures against losses in exchange for profits.
When an insurance company insures you against some adverse event, does it invest in you? Of course not.
