I started my career as a poker player just over 15 years ago, and my career as a staker a few years later. My motivation wasn’t entirely financial. It came out of a conversation I had with my oldest son Paddy in Vegas. Paddy is someone who is very socially conscious and keen to have a positive impact on the planet (at the time he was in his eco warrior phase).
When I expressed concern about the lack of positive contribution to humanity I was making in my own latest phase, the poker pro one, he shrugged and suggested that perhaps there was some way I could use my success to help others.
At the time post economic collapse and IMF bailout, Ireland was in the grips of deep recession and austerity, depriving younger people of many of the economic opportunities we had taken for granted only a few years earlier. Online poker was, however, still booming, and in it I saw the opportunity to provide a way out for young talent.
I decided to look around the local live scene in Ireland before eventually my gaze fell on a young low stakes cash grinder called Daragh Davey. Daragh also dabbled in tournaments both online and live. At this point he was grinding out a meagre living and had no really notable successes. As such, when I told people I’d decided to start staking him, the universal reaction was one of surprise.
“Why him? He’s done nothing special. Player X just got a big score in live tourney Y”
My primary reasons for choosing Daragh were his even temperament and his lack of ego which I felt would combine to make him hard working, disciplined, and possible to coach. His game wasn’t quite there yet as I quickly learned when I sent his hand histories to my new best friend David Lappin. At the time I did no coaching but David was already an experienced coach, so it was to him I turned to potentially coach Daragh.
After reviewing the hand histories, David rang me during the night (he didn’t think it could wait till morning) with his assessment:
“Stop staking him now before he loses another cent of your money. He plays like a coward”
Actually coward was not the word he used, but it’s probably best to leave it to you the reader to guess (clue: it rhymes with “fussy”). I stuck to my guns, hiring David to coach him, which was one of the best decisions I ever made. Over the next 18 months Daragh made us so much money he not only no longer needed staking, but had enough to become a staker himself in partnership with David and I as we expanded our operations into a collective, we called “the Firm”, staking about a dozen players.
While my initial foray into staking (Daragh) was an unqualified success, the same cannot be said for the Firm. There was no shortage of individual successes, and overall, we all made money (albeit probably not enough to justify the time we sank into it, and the stress it induced), but there were also heartbreaking cases of being stolen from by people we considered as friends, and players who just lost and lost no matter how much we coached them. Ultimately, we all quit staking as something not worth the time and hassle. In this article I want to look back at what I think were the most important lessons we learned
You have to trust your horses
I’ll start with this one because I think it’s the most important. It’s essentially the staking equivalent of Doyle Brandon’s first law of poker (don’t play in a game where you’re not sure you’ll be paid if you win). It doesn’t matter how good someone is or how much they will win in the long term: variance in poker is massive (that’s why winning players need staking in the first place).
The swings are much bigger than most people intuitively expect, and tournament players in particular spend 99.9% of their lives on a downswing. It’s not unusual for a player who wins 100k a year but to be 200k in the hole and 200k up at some point during that same year. If he does a runner with the money after the 200k bink, or disappears or can’t be motivated to keep plugging away when he’s 200k in the hole, you have a massive 200k problem as his staker.
One player I knew who already some experience as a staker expressed this as “You need people who will fight for you”. What he meant by this is you need players who will treat your money with the same respect they give to their own, rather than a freeroll to gamble with and shoot for the fences.
Most poker players are fundamentally decent honest people who won’t deliberately scam you, so you have less to worry about the guy who just won 200k disappearing than the guy buried in makeup just giving up or switching to a gamble-gamble approach. But obviously there are a few bad eggs who will deliberately steal from you, so don’t stake anyone you don’t trust on that front.
Coachability trumps talent
As I said my decision to start with Daragh was less based on where his game was at the time (there were many other young players in Ireland well ahead of him on that front at the time) but where it could go. He impressed me as somebody who could be coached. This was a very accurate assessment but one I didn’t fully realise the importance of at the time.
Later on, I encountered many players both in my staking business and my coaching one who simply can’t be coached (at least by me). I’m considerably better at spotting them these days than I was back then.
Here are the primary signs:
- Ego: Often the most naturally talented players are the most difficult to coach. This may be because their natural talent blinds them to their failings, and causes them to underestimate what they can learn from other less talented but more experienced or studious players
- Impatience: Ambition is good, but not when it tips over into impatience. An ambitious player wants to be the best they can be and achieve success within a certain time frame. An impatient player wants all that and more if not today then tomorrow.
- Bad Beats: any player who tells you endless bad beats and complains about their bad luck or variance is focusing on the wrong part of poker. The whole point of poker is that it is the variance that obscures the fact that it is the player with the superior strategy who will win in the long term, by allowing players with inferior strategies to win in the short term (encouraging them and others to keep playing). There’s a reason rich amateurs won’t play chess against grandmasters for money but will play poker or backgammon against strategically superior players.
- Argumentative: Debate is healthy but when you’re coaching someone you don’t want them arguing every single point. The best players I know are also the most unsure, the most prone to self-doubt and self-criticism, and most of the worst players I know seem supremely confident they never ever make a mistake.
Discipline and routines are vital
When I was staking Daragh, a friend of his told me he stopped going out and drinking on Saturdays, in preparation for Sunday, the most lucrative online grind of the week. That’s the sort of attitude you want your horses to have rather than “it’s not my money so who cares?” It’s important to educate anyone you do stake that in a very real sense it is their money because anything they lose goes on the makeup pile that has to be cleared before they get anything. The players need to be disciplined and have good routines, but the staked and stable need to have good processes too.
Know when to cut your losses
When I started the Firm with David Lappin, he brought up a concern: that the most profitable horses would make enough to go it alone (as had happened with Daragh) but the less profitable ones would require staking forever. This, he argued, meant that over time the average profitability of the players we staked would drop and we’d inevitably be left with the least profitable ones.
While it’s a good point and it’s certainly true it’s hard to maintain standards as the best players tend to leave and the worst to stay, it overlooks a number of factors. First, not all players who win enough to go it alone want to, for the same reason many people choose to stay employed rather than go for self-employment even when that’s clearly a more lucrative option (something I learned in my days in the tech sector when I was a contractor earnings multiple of the amounts the full-time employees I worked with).
Some people prioritize security and find it hard to sleep at night without it, and some players struggle with the reality of downswings when it’s their own money even if they intellectually understand they will win in the long run. Second, you can keep recruiting new players and guiding them to profitability. Third, and perhaps most importantly of all, you can cut your losses any time you want.
This third part is the part most stakers struggle the most with, and I include myself and my partners in that, for a couple of reasons. First, there’s a strong financial incentive to stick with your horses who are deep in makeup. If a horse who is out of makeup wins 100k, you get half of that (or whatever the agreed split is). If he’s 100k in makeup, you get it all. If you drop a horse in 100k of makeup, that 100k of your money that he lost is gone forever.
The second reason is a purely human one: it’s very hard to tell someone you don’t think they’re a profitable proposition anymore and you’re dropping them. It often spells the end of their dreams to be a professional player. However, it’s ultimately a lot kinder than prolonging the inevitable, keeping someone on the hook well past the point where there’s any likelihood, they’ll ever make a significant amount of money for themselves or their backers.
My biggest regret when I look back at my time as a staker is I didn’t recognize this at the time. Pretty much every player who lost us significant amounts of money were kept well past the point we all knew deep down it wasn’t happening for them.
The human mind very much hates accepting a loss. Any successful investor will tell you that the important question when deciding whether to sell is not “how much will I have made or lost if I sell now?” but rather “would I buy now at this price?” The poker staking equivalent is “Would I start staking this player right now if I wasn’t already?” If the answer is no, it’s time to cut your losses
Staking is not just taking
Most of us who started staking in the early days went into it naively thinking it was free money. We were all big winning players ourselves, so all we had to do was tell our horses what we knew and when they did what we did we’d all win. That was the theory: in practice everyone is different.
The biggest mistake poker players at every level tend to make is to think that everyone thinks the same as they do. Being a staker isn’t just a case of finding a potentially profitable player and then taking half the profit: you have to be able and willing to provide them with the individualized coaching and support they need to be successful.
Most of us who tried staking found it was not the gravy train we hoped for. Some like me were profitable but ultimately decided it wasn’t worth the time, effort and stress. Several top players I know but won’t name to spare their blushes bankrupted themselves chasing the gravy train. The stables that remain to this day like Team Xploit, Pocarr and BBZ are the ones who were the most professional in their approach and treated it as a business from day one rather than a side hustle or interesting sweat.
There’s variance but not just variance
Ultimately, I quit staking not just because I felt it had stopped being profitable enough to justify the effort and stress but also, I became concerned that it effectively ramped up my own variance. I observed that most former professional poker players had to go broke before they realized they weren’t beating the game anymore. There’s always the threat that the game will become unbeatable, at least online. If that happens when you’re not only bankrolling yourself but lots of other players too, the damage is multiplied.
These days I’m a lot more optimistic about the state of online poker, but the fact remains that if you’re stalking others, you’ll need to realize when the game is up that much faster to avoid going broke. The stables that have ridden out the variance best are the ones that put the most work into things like game selection (tracking which games on which sites are the most profitable), hand history reviews (to identify any leaks their horses might have) and mass data analysis (to identify leaks in different player pools that can be exploited).
In our group Daragh Davey was the only one to put much work into these, and ultimately the failure of the rest of us to do our fair share cost us all. Stables who do this work are not only more profitable for their owners, but also do a bigger service to their horses giving them the best chance to maximize their own earnings.