On Staking and the Potential for Collusion (And What to Do About It)

On Staking and the Potential for Collusion (And What to Do About It)

The growing prevalence of staking agreements in tournament poker brings up a possible issue — the increased potential for collusion among players. However, if the poker community acknowledges and openly talks about the proverbial Elephant in the Room, awareness improves and solutions can emerge.

There's life-changing money at the top of the biggest tournaments, but bankroll help is often needed to get there. Severely top-heavy payout structures put variance on steroids, motivating many serious players to seek out financial backers.

Crowd-funding platforms like YouStake and Stake Kings have brought poker staking arrangements into the mainstream, while privately negotiated deals continue to flourish. But what happens when these arrangements tempt players to cheat at key points during a tournament? What should happen?

The Ubiquity of Staking Agreements

To start a new business, some entrepreneurs borrow money from family, friends, or banks. Others form a corporation and sell shares of stock.

Many poker players combat variance by mimicking the tactics of entrepreneurs. Through staking arrangements, players raise money for tournament entry fees in exchange for a share of their profits (if any). Staking is the capitalist solution to variance.

Staking agreements take many forms. Backers might provide all of the funding over an extended time period in exchange for a share of the cumulative profits, or a portion of the buy-in for a single tournament for a share of that tournament's winnings with no makeup or ongoing funding obligations.

Alternatively, a player might raise a pool of money from multiple backers for a series of tournaments or stated time period, to be used at the player's discretion with accounting and settlement at the end. And multiple players may swap action with each other, creating a team approach with each agreeing to pay the others a percentage of their payouts.

Staking agreements provide working capital and risk mitigation for the player, and an investment opportunity for the backer.

Perverse Incentives

When one player has a financial interest in another player in the same tournament, perverse incentives can potentially arise when they are assigned seats at the same table.

What happens when staking agreements change a player's tactics or lead to outright cheating? Are players entitled to know when their opponents have backers?

I once heard a story about four players who appeared to be friends, all late registering for a tournament at the same time and being seated together at a newly created table. On the first hand, each of them went all-in blind. The winner of that hand quickly had four times the starting chip stack and a clear advantage over the remaining players. Does this look suspicious?

As most experienced players well know, there are many ways to collude or cheat in a tournament, such as:

  • Signaling - flashing hole cards or using a signal to reveal one's hand strength or betting intentions
  • Whipsawing - partners raising and reraising each other to trap players in between
  • Soft play - not raising a strong hand to avoid damaging the stack of another player
  • Chip dumping - transferring chips to a partner's stack by folding a potential winner when heads-up in a hand; this is the most prevalent form of collusion because it is the simplest, and least detectable

It's naive to expect human beings to resist every temptation when so much money is at stake. From information asymmetries to angle shooting, the problem is as old as Tantalus, the Greek God of Temptation.

It starts when we park at the outer reaches of the garage while wishing we could afford valet. Temptation makes us obsess over the top-heaviness of the payout schedule. Temptation perches like invisible fairies on our shoulders, whispering that the ends justify the means. And besides, everybody else is colluding (or so we might be tempted to suspect).

In Search of Transparency

The antidote for information asymmetry is transparency. We may never get full disclosure, but that's not an excuse not to try. Tournament organizers could ask — or require — players to disclose their backing and swapping arrangements when they register. Collecting this information would be a daunting task, but as a thought experiment let's consider it, anyway.

Table and seat assignment algorithms could assign players with shared financial interests to different tables.

Players could research the entangled relationships to understand who might have an incentive to collude.

For broadcast or streamed tournaments, commentators and analysts could share the backing details with viewers, explaining the intensity of a player's rail supporters or revealing secondary considerations that affect major decisions. In other sports, announcers often discuss athletes' and coaches' contract incentives. Why not in poker?

Penalties could be imposed for non-disclosure.

Tournament organizers should acknowledge that the growing use of staking agreements can lead to information asymmetry and perverse incentives. They should also show the courage and determination to do something about it.

David Bass mostly plays in live no-limit hold’em cash games and has been writing about poker since 2012. You can follow him on Twitter @KKingDavidPoker or enjoy his blog, They Always Have It, at https://kkingdavid.com/.

  • Considering potential issues arising from the prevalence of staking arrangements in tournament poker.

  • Are players entitled to know when their opponents have backers? Some thoughts about staking.

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