A piece of the action
It's the bottom of the ninth in the seventh game of the World Series -- the baseball version, not the poker one. The batter, a nervous young kid, steps into the box and chokes up on the bat. The pitcher, a wily veteran bound for the Hall of Fame, fingers the ball and prepares for his windup.
A classic matchup, you'd think; that's what makes baseball great. But what if you knew that for every dollar in playoff bonuses that the batter earned, he'd be sending 50 cents to the pitcher? How do you think that might affect what pitch came next?
For baseball, it's an absurd scenario -- or the plot line of a really bad Freddie Prinze Jr. movie. But situations like this arise in the poker world every single day -- not with the same drama, perhaps, but with the same principle at play.
Players take a financial interest in other players at virtually all levels of poker, from guys sliding their buddies an extra Hamilton at the monthly game to a benefactor paying a five-figure tourney buy-in for a poor-but-promising newcomer. At last year's WSOP main event, for instance, Erik Seidel and John Juanda backed Mike Matusow, who repaid their confidence by winning a million-dollar payday. Ed Moncada has served as both staker and stakee, and has seen success in both roles. Erick Lindgren has, at various times, backed Josh Arieh, Gavin Smith and Bill Edler.
Concerns about players taking a financial interest in other players break only two ways. To hard-line poker conservatives, players who back other players have the potential to undermine the game's entire ethical structure, plunging the poker world into the kind of suspicion of deceit that has plagued sports like boxing and Italian soccer.
On the other side of the coin -- or the felt, as it were -- are the players and backers who see staking merely as a means of investing in the game's future and a chance to make some cash. For players, getting staked is a chance to break into some big-time tournaments and gain some prestige; for backers, it's an opportunity to, let's say, diversify one's holdings.
The players-backing-players issue hits at the heart of the key financial aspect of 21st century poker. To wit: Can poker take the next step up the sporting ladder without removing the direct financial burden on its players? No other sport so directly requires players to pony up cash -- specifically, their own cash. Baseball players don't have to buy a ticket to their own games, and golfers don't pay Augusta National's greens fees on the weekend of the Masters.
The issue circumvents the buy-in dilemma by lowering or eliminating the financial bar that keeps many quality players on the rail. Nobody's going to argue that we need fewer players willing to donate chips to the poker tables of the world. The question is, how will those staked players play with someone else's money on the line?
The basic structure of a backing deal works like this: Player A gives Player B some or all of the buy-in to Tournament 1. After Player B wins enough to cover costs (entry fee and buy-in), he and Player A split the profits 50-50. Should Player B end up in the red on that tournament, the costs get added to a running "makeup" figure: a fee that Player B must pay off before getting his share of the profits, ensuring he doesn't soak his benefactor for thousands in buy-ins.
Of course, that's only the basic arrangement; from there, the deals are often far more complex.
"You've got guys who take 60, 70 percent of their own profits; guys who don't have a makeup," Matusow says. "Then you've got superstars like me, who have an even better deal than that."
For neophyte players, the benefits of taking another player's stake are obvious. Money is the grease of the poker world, and more money allows a player access to more profitable tables. Add up all the buy-ins for every serious poker tournament in the country, and you're talking hundreds of thousands in costs. With another player's support, young or talented but cash-poor players can start to build a bankroll of their own without necessarily worrying that they're going to be dining on Ramen noodles and tap water if they bust out of their next hand.
When he was getting staked, Moncada devised a system in which he spread the risk across multiple investors and multiple events. Rather than having a single investor stake him for one tournament, and risk losing that entire stake, Moncada developed a form of investment portfolio.
"I mapped out 20 events, then came up with a cumulative cost to enter all those events," he says. "Then I sold pieces to other pros at a certain rate. It's a hedge against bad runs and bad luck."
He ran multiple funds, virtually all of which were profitable.
"I didn't like getting staked for a single event," he says. "Individual events have such high volatility, and if you lose, you can really burn an individual investor."
But he wasn't just looking out for his backers; he says that by spreading himself around, he also avoided giving any one individual a sense of ownership over him and his game.
Some poker observers note that players could avoid feeling in hock to other players simply by piling their own stake. It's circular but, in a way, rational reasoning: If players are good enough to make money at poker, they should be able to come up with their own buy-ins. It's an argument that has merit; anecdotal evidence suggests that investing in a fellow player isn't exactly a guaranteed path to riches by proxy. All too often, the backer ends up out thousands of bucks, and the backee ends up thousands in debt to his benefactor.
"No way am I staking anybody," Matusow says with a bitter laugh. "I'm already out something like $2 million."
And you just hope he's kidding.
Moncada does invest in his fellow players, but now that he's the one putting up the cash, he doesn't mind being the sole backer.
"When I was doing the funds, it was a tremendous amount of paperwork, of e-mails back and forth," he says. "I don't want that kind of headache anymore. Now I've got a stable of about eight guys that I'm backing by myself."
But if you're looking to get backed by Moncada -- or pretty much anyone else short of an easily fooled heiress -- don't expect to buy him a couple drinks and walk away with a five-figure stake. There are a few factors that go into the decision to stake someone, Moncada says.
"First, they've got to be winning players," he said. "They're good, but they may be playing at a level above their bankroll, so it's just a matter of time before they're broke.
"Second, they've got to understand the reasons why they're close to broke. They've got to really know the game. But most important, I've got to have a long-standing relationship with them. There should be no indication that they can't be trusted. Believe it or not, that eliminates most guys right there."
But for the lucky players who do get staked, there's more than just potential financial reward; backing can bestow a measure of prestige on the backed player.
"There are players who might not need backing, but want to get backed by, say, Phil Ivey," Moncada says. "It's a status thing. Doors will open with that relationship. It puts you in a different category when you've got Phil Ivey backing you."
But once a player has that staked cash in hand, the troubles can begin. The greatest concern is whether backing compromises a player's play in any way. Suppose an "investor" and the player he's backing end up at the same table. Or suppose two players backed by the same individual find themselves at the same final table. It's not hard to envision a dozen chip-dump scenarios where one player soft plays, or takes an outright dive, for the greater "good" of the investor.
Players scoff at such scenarios for a wide variety of reasons. For starters, anybody who's caught laying down at a tournament risks a lifetime expulsion from poker events.
"Are you so greedy that the little edge you'd get from collusion is worth being banned for life?" Moncada says. "I don't see the benefit."
From a tournament perspective, the appearance of impropriety is often every bit as damaging as wrongdoing itself for the simple reason that poker cannot afford to be slagged off as an inherently corrupt game. Sure, poker is one of the fastest-growing sports in the country, but one need only look at hockey -- once a dominant North American sport, now a virtual media afterthought -- for an object lesson in how a game can go from boom to bust in a very short time.
As a result, tournament directors are under intense pressure to ensure that all their games are blemish-free, and that includes undue influence on players from their financial backers.
"It's one of those things that I've always been concerned about and always looked out for," says Matt Savage, a tournament director whose résumé includes several World Series of Poker events. "But with the money that's out there, players these days are playing to win. What I've seen out there has been pretty much across the board -- players are playing their own hands."
Savage is one of many who advocates making stake relationships public knowledge, which would eliminate suspicion of impropriety by establishing at least the interest, if not the exact percentage, that exists between two players.
Some players and analysts have also suggested that poker could have a panel made up of knowledgeable individuals to vet and, if necessary, take action regarding player-to-player financial arrangements.
"That's a possibility," Savage says. "Jesse Jones at the World Poker Association has been working to get something done just like that. That could be something down the road for future tournaments, for sure."
But Savage questions whether the time invested in trying to root out suspected cheaters would be worth the likely result.
"When you've got these huge tournaments, the odds that two players who are financially involved are going to come across each other are just astronomical," he says.
And the likelihood of a complete ban on players staking other players is slim indeed, and even if one existed, it would be about as enforceable as a ban on NCAA tourney office pools.
As Moncada notes, "A lot of these things are done by handshake in a bathroom somewhere. And if you quit allowing backing, you'd risk losing a decent chunk of your players, and also a decent chunk of your prize money. "
Plus, at the heart of it all, you're talking about poker players, who are some of the most competitive human beings on the planet. You'd have a better chance of keeping them away from the table for a year than getting them to lay down once they're there. That's not to say collusion and corruption isn't happening -- every poker player can tell you stories to curl your toenails -- but at the game's highest levels, there's far too much potential money floating around for anybody to give up his seat at the table, and his image.
"It's a matter of my reputation," Moncada says. "It's cut and dried for me. I'd never put myself in a position where anybody could think I'm doing anything wrong."
Matusow goes a step further: "I don't care who you are, when you sit down at the table with me, I'm going to do everything I can to beat you. And if I beat you with your own money, that's just tough."