In my last post, I coined the phrase “Bonomo bucks” after my successful investment in Justin Bonomo’s entry in the WSOP’s Big One for One Drop tournament.
Now I find out the payout will be reduced because Justin agreed to a partial chop of the prize money when he was heads up with Fedor Holz. I’ll unpack that here, after summarizing the back story:
- The Big One for One Drop tournament had a buy-in of $1,000,000 and limited of 48 entrants. $80,000 from each entry is donated to One Drop, a charity started by Guy Laliberte (founder of Cirque de Soleil) that works to ensure communities in impoverished regions of the world have sustainable access to clean water
- Bonomo offered to sell up to 9% of his action at a 1.05 markup on the poker crowd-funding site YouStake, further declaring that he would contribute all of the markup dollars to charity
- I put up $200, becoming one of 235 backers investing in Bonomo
- The tournament ended up with 27 entries this year, with first place paying $10 million and 2nd place paying $6 million
- Bonomo won the tournament, coming from behind to beat Fedor Holz. Looks like I’ll get a 10x return on my $200 (Woot woot!)
Two days ago, Bonomo tweeted a message for his YouStake backers, disclosing his chop arrangement with Holz, resulting in a final share for first place of $8,751,111. So I’ll get 8.75x return on my $200 instead of 10x. Since the combined prize money for 1st and 2nd place was $16,000,000, that implies Holz ended up with $7,248,889 for 2nd place.
This led to some interesting Twitter chatter, including questions about YouStake’s obligations and disclosures when chops are involved.
We’ll look at YouStake’s Terms of Service soon, but first I’ll give my answer to these questions. Does YouStake have to pay out based on the (stated) top prize? The answer should be NO. If not, why not? Over the course of a poker tournament, a player makes many, many decisions at the table. Each hand involves decisions to check, bet, raise or fold. Each bet or raise involves bet-sizing decisions. When negotiations take place about chopping the prize money differently from the official distribution published by tournament organizers, these are simply more decisions that have to be made at the table. A player can participate in the negotiation, decline, or defer. If he or she declines, the subject of chopping may come up again later, requiring more decisions to be made. At the table. When we invest in a staking deal, we yield all at-the-table decision making to the player. It would be ludicrous for a player to crowd-source for help in making a check/bet/raise/fold decision in real time. It would be equally ludicrous to ask backers for guidance on prize pool chopping decisions. So I responded via Twitter thusly:
YouStake’s Terms of Service describe the site as a “fully integrated sports staking platform (the ‘Platform’) that allows the masses to invest in skilled sports players for entry in regulated and reported events” (my emphasis added). “Regulated and reported” events, however, may or may not report the effect of negotiated chops just prior to the conclusion of a poker tournament.
The more difficult question is what happens if a player gets extra money as a result of a negotiated chop. For example, suppose Fedor Holz had won the One Drop tournament and Bonomo finished 2nd. The stated payout was $6,000,000, but the chop increased the value of 2nd place to $7,248,889. What would prevent Bonomo from sending YouStake the proportionate share of $6,000,000 to distribute to his backers, and keep the difference? Bonomo is such an honorable person, this is virtually unthinkable.
But what if it was a lesser known player involved in a lower profile tournament? Not every tournament facilitates or reports the outcome of chops.
Later in YouStake’s terms: “The Service contains information, advice, text, materials, and services (collectively, the “Content”) that are provided for your convenience and entertainment. Third parties also provide some of the Content. You should be aware that the Content might contain errors, omissions, inaccuracies, outdated information, and inadequacies and that the Content may be subject to terms and conditions of third parties not directly under the control of YouStake. We make no representations or warranties as to the completeness, accuracy, adequacy, currency or reliability of any Content and will not be liable for any lack of the foregoing.” This appears to be YouStake’s way of taking itself off the hook, at least for now.
YouStake’s official Twitter account “liked” a number of tweets on the subject, supporting improved reporting and transparency by poker tournament operators, but didn’t weigh into the discussion with any direct comments. YouStake should find a way to have winning players certify that the winnings transferred to YouStake includes any benefits resulting from prize pool chopping arrangements.
Hopefully the major poker tours will improve their reporting on staking arrangements and chop deals. The best practice would be to accept the fact that many poker players have backers and frequently negotiate deals near the end of tournaments, whether the operators like it or not, whether they allow it or not, whether they report it or not. It’s clear that major poker tours will benefit from the success of sites like YouStake, which make it easier for more players to obtain backers, which in turn should increase entries in higher buy-in events. And more backers will watch more TV or livestream coverage.
I understand the sexiness of final table announcers gushing over the large differences between 1st, 2nd and 3rd place money to dramatize the pressure the players might be feeling. This creates an incentive to deny any acknowledgement that players have hedged their risk by taking on backers or negotiating chops right there at the table. But staking and chopping are part of the game, so don’t pretend they aren’t.
With free and open discussion of these realities, more poker enthusiasts will learn about sites like YouStake, and participation should grow. With more transparency in the reporting of results, all stakeholders will be protected.
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Well written and reasoned argument. Thanks for your time pondering this. I only asked the question as a what if? scenario and your response addresses everything I was wondering.
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