For nearly two decades ESPN broadcasts
and an account named Moneymaker have given rise to a generation
of poker players dreaming of turning professional and earning millions. I think everybody is just chasing
those big six figure seven figure scores. But poker is a game of high risk - It's worse than the stock market to
a very significant degree. - and high reward. I took home about
seven hundred thousand dollars. That money was won despite
never entering a casino. Poker is for sure. Not always what it seems. It makes it sexier when you think
that a player's taking home you know 10 million dollars. In reality a lot of these players
aren't taking home even half that sometimes. Apparently some players. Agree to sell a part of their
winnings in return for guaranteed cash up front. So how did you do that and how
much of that what is it eight almost nine million dollars will you
actually keep after tax. It's called staking poker staking is
having someone put up money for another poker player to use normally
to enter a poker tournament. I did sell some pieces to some
friends just to just to give them swats. Pretty much everybody I know that is
in poker is at least selling action or swapping action or
is staked full time. I really don't know anybody who doesn't
do it once in a while. Backing and staking are the financial
lifeblood of tournament poker. For years it took place
between poker professionals, but today entrepreneurial players hope to open
it to the world. We wanted to make it really simple
for both the pros, the players, and the people the fans to get in
on some action or sell some action whatever side you're on with
more access comes regulation and uncertainty. It was an investigation trying to
figure out this business model from fans to amateurs to pros staking is
the most common method of success and survival in poker. Playing poker for a
living is incredibly tricky. Lot of people come out to
Los Vegas with absolutely bright eyed dreams and leave on
a Greyhound bus. Not that many years later realizing
that couldn't come to pass. The amount of variance involved
in tournaments is astronomical. It's honestly it's worse in
the stock market to a very significant degree. So a lot of professional poker players sit
back and say OK I know I can make money if I enter
as many poker tournament as possible because the law of large numbers is
then on my side and having the financial wherewithal to withstand
that can be difficult. Whether online or at a casino. Players must put up a buy-in, the
minimum amount to sit at a table Buy-ins can range from a few dollars
to thousands or even a million. The higher the buy-in
the bigger the payout. Let's say you're a professional living in
Las Vegas and you play in a mostly three hundred thousand dollar buy-in tournament and you ran like a five hundred
dollar average buy-in. I would say to be comfortably rolled
for those games you need about a hundred thousand dollar poker specific
bankroll and then you should also have about a year's living
expenses as well saved up. You know if you're living like
a normal middle class lifestyle in Vegas am I running about four grand
a month so you would need 150 thousand dollars total bankroll. This is where staking comes in. Poker
staking is having someone put up money for another poker player to
use normally to enter a poker tournament. In return they receive
part of your upside. So by way of example someone would
enter the World Series of Poker for ten thousand dollars. They may say all right I'm gonna
put up four thousand dollars of my own money and I'm gonna go
raise six thousand dollars from backers. Backers love it because it gives
them an opportunity to have an interest in the outcome
of a poker event. And some of these poker tournaments,
especially up top, pay exponential returns. You can make 250 300 times
the money you give your stakes poker player if he or she does
well, Stake poker players got a bigger bankroll they can play more tournament
they can make more money over the long run, pros need it to
give themselves the exposure to enter as many tournaments as they can. Semi-pros often need it to
help make the next step up. There's just something about not having
that pressure and not having to risk any of your own money
ever it's it's just very freeing To understand the
popularity of poker, you have to go back two decades. This was 2003 the Internet and hit
1998 movie "Rounders" paved the way for Chris Moneymaker's World
Series of Poker win. He'd earned a seat at the table
by playing online poker on a site called PokerStars an accountant
one day and 2.5 million dollars richer the next. This fairy tale story launched
poker into the mainstream, becoming known as the Moneymaker Effect. Like a lot of people in poker I
got in when Chris Moneymaker won the World Series of Poker in 2003. I deposited some money in an online
poker site and pretty much fell in love with it right away. I was playing poker around 13, 14
years old at a soccer camp. A friend of mine brought in
plastic chips and we just started playing. We saw it on TV it's
around the Moneymaker time 2003 and ESPN was on and we started playing
just with a group of guys. I first got into poker much
like most people my age. I just watched it on TV. Growing up Chris Moneymaker with his
amazing last name won the World Series main event and he was just
this amateur player and kind of gave a lot of just average people like me the idea
that I could be playing poker just like these guys on TV. The World Series of Poker became must
see TV on ESPN. The entries for the ten thousand dollar buy-in Main
Event tripled in the year after Moneymaker won, doubled in 2005, and reached
a new height in 2006. And it grew and grew and grew
and people would enjoy playing poker online. They'd go to their local casino
and that meant more casinos kept coming because there is a financial demand
for it and the fields for live poker tournaments, live poker cash
games got bigger and bigger. Increased popularity meant more players with
dreams of turning pro and a demand for financial backers. Unless playing tournament poker is your retirement strategy or what you want
to do with a trust fund or some well-placed inheritance or
your spouse's income. If that's the only way you're looking
to make money in the poker world being backed is almost essential.
It is the financial currency that keeps the poker world afloat. Staking works in one of two ways. The short term agreement is buying and selling action. Action is another term for just
buying a piece or buying a percentage or buying shares
in a poker player. And usually for a markup. Think of it as a service fee. If the player wins or cashes. The buyer receives a percentage of
the winnings pro-rata to the investment. If the player
loses the buyer loses. If I see a player posting about having
action for sale and I know that they're pretty good and they have
you know a reasonable markup on that yeah I'll just buy it. The most I've won from buying a piece of a tournament was
from one of my good friends Jake Balsiger in the
World Series main event. He ended up getting third place for
about three and a half million dollars and I had about
17 percent of him. I took home about
seven hundred thousand dollars. A friend of mine Thomas Cannuli and I
had I think five other guys who we bought. We split up a piece with, and
I just remember when he made that final table. It was so exciting because I guaranteed
a million I had around 15 percent. You're talking about a
fifteen hundred dollar investment roughly who is guaranteed
a million now. It was it was very, very fun. Alternately, a player can agree to a
long term backing deal, which means a backer, or the investor fronts all
of the money for the games a player enters. Revenue is split 50/50. Lisa Costello is part of a stable
or a group of poker players backed by one or more people. Each poker player in the
stable is called a horse. At this point in time I had been
playing full time for about a year and a good friend of mine who I've
known most of my life offered to stake me full time so I
said yeah let's do it. The terms of that staking were
pretty standard, which is 50/50 split with a make up. The biggest difference between buying action and a long term backing agreement:
player must pay back debt before taking a cut of the revenue. If a player is in the
red they are in makeup. If I play 10 grand in tournaments
and I bust through all of them my next tournament score that 10 grand
has to be paid back to that backer. Prior to splitting those profits
in a 50/50 fashion. The tournament I typically play run anywhere
from four hundred to sixteen hundred bucks per tournament. But then in the summer I'll play
a few bigger buy-ins including the ten thousand dollar main event. Ryan Laplante is a 2016 World Series of Poker winner earning him
a coveted bracelet. It's like a boxing belt. He's part of a stable
called Team 6-5-1. I've been with my
current backers since 2015. I've been with them
for four years now. I don't really have a
set bankroll with them. I essentially just say hey guys
I want to play this event. They're like Okay. Sweet. That's it. A lot of backers are willing
to sort of train their stables give their stables insight, go over
hand histories with their stables and that not only gives them the
financial wherewithal to make it as a poker pro, but it gives
them some coaching on the side. Definitely would not be the player
I am today without their backing and coaching and mentoring I wont
have my bracelet I wouldn't be playing high stakes right now so
you know finding someone like that to really help grow me as a
player has been you know ridiculously powerful and just so so profitable
for me and for them. Despite the freedom of playing
with someone else's money. Players carry the weight of debt. I've ironically had my worst year of
poker ever which is crazy because during that time I was getting
coached and studying a ton. So right now I'm in make-up for about fifty thousand. The deepest I've ever been in
make-up was ninety thousand dollars and in order to get out I had
to face my mindset really work hard on my game stopped tilting and I needed to
run well and it all kind of came together and I made like a
hundred and twenty grand over the next like six weeks and cleaned out
a make-up and got a good profit chop and all that kind of stuff. When you have that much make-up
it definitely sucks but obviously you want to get out of it. So you're definitely not
going to stop playing. Having said that I try to be
responsible in choosing my tournaments so I'm not just going to go and
fire away at twenty five hundred dollar buy-ins and get it even
higher than it already is. As difficult as it can be to
turn a profit in poker, backing arrangements do pay off. Under them I've
probably cashed for two and a half million dollars. I've had a bracelet, four World Series
of Poker final tables, I've won hundreds and hundreds of
thousand dollars online. The last two and a half years
alone I'm probably profiting around a million dollars pure profit. The tables so it's been a very good
you know deal for both of us. If I had the opportunity I don't
think it mattered how much I made in poker. I would love to always be staked. For other players with cash to invest full time backing and running
a stable becomes a business. Over the last few years playing
poker and buying pieces in tournaments have been the most lucrative for
me and I would say those are about equal. Full time backing so
far has not been very profitable but I'm hoping to make it
the most profitable in the future. Derrick Walters has backed roughly 20 players over
the last four years and backs five currently. I think what first got me into
banking was just this magical idea that I could make passive income just with
the extra poker money that I made that I have nothing to do
with like owning a rental property or maybe owning some stocks. Now I kind of see it as
a more all encompassing like partnership where I'm just trying to make these
guys like the best humans that they can be. And then a side effect is that
they're going to have success in poker. Some agreements are on paper
while others are a handshake. There's a lot of
trust between both parties. So no one runs off with the money. Derek only works with people he's
known for at least a year. I will have anywhere from fifty thousand two hundred thousand invested
at once so the players will be holding that amount of money or
even more of that will be in make-up. An agreement can end anytime. However if the backer ends the agreement
and the player is in make-up the backer forfeits the debt. If the player decides to end the
agreement and is in make-up usually he or she will quit poker. For the guys I back, I would say if they're living up to their potential doing their
best I think these guys can make between fifty thousand and a
hundred thousand dollars playing poker a year for each of them. I would be able to make half
of that or less for the better performing players because I'll have to
give them a higher percentage of the profit for
their good performance. What If I told you, that this, is not, a dream This isn't fantasy as usual... It's better The fan and the pros have never had
a way for them to connect besides like through social media
and things like that. But there'd be no way really for
Antonio Esfandiari as an example to sell action to some
random person in Denmark. State Kings invites professional poker
players to sell action in upcoming tournaments. Fans can buy the action for a markup
and if the player wins the fan wins it makes it really simple for
our users to buy action and anybody they want on the platform. Once a package closes for a
pro the money is automatically transferred to that pros cashier and then
from there the pro can cash out to their bank. Pay Pal whatever it may be then
it just makes the process seamless and really simple but
also really safe. State Kings has close to 50 thousand
users and over one hundred fifty poker pros listing action including
Antonio Esfandiari, Brian Rast and Jeff Gross. Here we are boys the ones. A site like Stake Kings is just right
place right time. It's really for me I use it for
an engagement tool where on my site on my twitch stream people always
ask me I get messages Twitter messages DMs hey can I buy a piece
or I'll stake you or can you do this well on this platform instead of
having to text 10 friends or two friends even because they're, I'll be honest the annoying part of staking is the accounting because it's like you
have to keep track you've got pieces you gotta collect you've
got to give all that. So it's a little bit of a
a little bit of a work right. You don't want to. You'd rather do it at the one or
two guys and 10 people well Stake Kings handles all that. Players like Jeff Gross are driving
millions of dollars in buying and selling action In 2018 we sold a
total of six million dollars in total action that we sold on
our platform and we'll usually take around a 10
percent transaction fee. Some of those are promotional packages where
we won't take any fee at all. Take 5 percent fees. So our revenue overall is going to
be between that you know three hundred to six hundred thousand and
revenue on the six million in sales. There's also YouStake. Founded in October 2013 it
takes an open approach. YouStake is an online platform
that allows fans from across the world to go ahead and back Poker players. And it's for any poker player. We don't just have pros we have
pros we have semi-pros we have recreational players. So basically gives anybody a chance to
try to raise money to play in events. It's really allowing folks
to safely and securely and transparently back somebody and know
what's happening and know they're going to get paid. Backers and players come from 109 different countries. Despite a
smaller user base, YouStake also attracts top players
to sell action including Greg Raymer, Todd Brunson, Phil Helmuth, Johnny Chan and Mike Matusow. I can give some numbers It's a private company so I can't do
all but I can tell you that we've got well over fourteen thousand
users on our system today. We've been growing that about
4x year over year. Our revenue has been going up. We've been pretty much doubling almost
every year staking may not have been new for the poker community
but it was for the mainstream. And with any new
concept problems can arise. Not long after I became general counsel
to YouStake and we were taking care to sort of button up
all of its affairs and make sure everything was squeaky clean in case prying eyes ever looked
at its books we discovered that prying eyes were in fact going
to be looking at books. YouStake received a subpoena from
the United States Securities and Exchange Commission, which would launch
an investigation into its activities It was a investigation by the S.E.C. into YouStake and the business. And the S.E.C.was basically looking into whether or not YouStake was involved in the purchase and sale of securities
because people are buying pieces of poker players and those poker players
are going to go make or lose money for their backer based on what
happens in a game. Up to that point we had gotten quite a bit of press
so I don't know if that's what draws their attention to it. YouStake was ready for this scrutiny
because it was a squeaky clean operation that was
doing everything aboveboard. So the first thing we did was
assess the scope of the subpoena produce documents and every time
the S.E.C. said jump, We said how high. We turned over I believe tens
of thousands of pages of documents. Long story short it took forever. So then we finally
said you know what, You know there's a couple
outcomes that come from this. So let us put an
application in to FINRA. and FINRA being the licensing
arm basically of the S.E.C.. So we put an application in for
a crowdfunding license And I got a phone call from FINRA a couple
weeks later saying please withdraw your application and my jaw sort of
hits the ground and I don't really know why they do this. I press the guy and said why is it. Well it's not really a
security and I'm thinking myself. All right. That's strange. So look at the guy from FINRA on
the phone I said hold on one second. Call my associate. Tell her to come into the room
and I say sir please repeat that. And he says we don't think it's
a security because you can't fill out a balance sheet. And that's true. You're not buying and selling a piece
of an entity a poker player doesn't have a balance sheet a poker
player cannot go on the New York Stock Exchange. Right. Like if a poker player had
to list his or her assets we're pretty much talking about kidneys and
other vital organs which I'm fairly confident you can't sell in
the United States anyway. To show good faith we went dark. The site was still there, people could still post but we did
no overt advertising at all no social nothing. We just went quiet. YouStake wasn't getting answers in
a timely fashion and losing money. That's when their attorney made
a decision that was unprecedented. I said all right we want
to bring an end to this. Let's file a lawsuit
against the S.E.C. seeking a declaratory judgment which
is a judicial decree basically that staking is not the purchase
or sale of a security. And I think this caught a lot of
people off guard because it's always the S.E.C. that's going out and suing someone. We started going through that process
and that's when the S.E.C. came back and said no it's OK. We were dropping everything. You're good to go. And we reached an agreement that
we would dismiss the case. So no precedent was made. Investigations over. And it is the S.E.C. stated position as sought in discovery
in federal court that YouStake was not
dealing in securities. From the year before to the area went
dark we dropped 2x in revenue. From the time we went back live up we
went up 5x from the year that we were dark. It had a massive effect on us absolutely. There's no judicial decrease saying
we won but we won. The dream of playing poker professionally
and taking home stacks of money on live TV draws many to Las
Vegas and staking is one way to ensure you never lose
all of your chips. I think you can run much higher
edges and in buying pieces and action and people than you can in pretty
much any other industry when it comes to investing and buying actually
real estate you name it. I think poker run some
of the highest edges. I'm proud of you know being backed. I mean that means that there is a
you know person who has faith in my skill and that you know thinks that
I'm capable of doing very well. If you wanted to look at the
guys the top top players are now professionals there's a lot of work there's
a lot of stuff you can do to get better and you know it's
it's really easy to learn but the master does take a long time and
I'm still learning every day and that's part of why I love it.
This might be the most accurate poker reporting I've seen from a mainstream journalism entity.
Begin segment by asserting that staking is where the real money is in poker, then spend the back half advertising for Youstake and Stake kings, now that the viewer is buttered up and wants to get in on the staking action. Nice.
TLDR?
Super well done overall, which is rare for mainstream media on gambling topics (last decent thing I heard was the NPR Planet Money staking segment). Ryan is a great ambassador
Haven't even clicked it but did they really let "They Money Behind Pro Poker" get off the editing room floor for a CNBC production? Also the house/rake obv answer
Wow this is a huge ad, damn.
Reddits own /u/protential, I remember when you first one that bracelet! Nice vid mate.
Interesting. Nothing I wasn't already aware of, but still learned a few things. Didn't know what a stable was. Nice to see that the SEC dropped their investigation into YouStake.
They money...