I wish I had a dollar for every time I’ve heard myself say “there are no secrets…” to myself, Mrs., our offspring, friends, business associates or anyone else who will listen. Heck, while I’m being wishful, I wish I had a million dollars for every time…
Because, if you always conduct yourself with this mantra in mind, life is a lot simpler. Especially with stuff that everybody else already knows anyway. Trying to keep secrets increases the risk of ending up like the fairy tale emperor, strutting down the street naked while believing everyone else thinks you’re wearing an amazing new suit. Who wants to be like that emperor?
This thought crossed my mind during an email exchange with one of the co-founders of the poker crowd funding site YouStake. The subject was the impact of players negotiating prize pool chops near the end of poker tournaments, a continuation from my previous post.
But first, for purposes of this blog, a quick glossary:
Backer – anyone who puts up a portion of someone else’s buy-in for a poker tournament or series of tournaments, as an investment to be paid via a share of the winnings, if any. This practice is known as Staking.
Chop – a negotiated agreement by two or more players near the end of a poker tournament to divide up the remaining prize pool differently from the prize schedule published by the tournament organizer. Chops must be agreed upon by all remaining players, and may divide the remaining money equally or unequally. Example: there are three players remaining, and the published payout is $8,800 for 1st place, $5,000 for 2nd place and $3,800 for 3rd place, for a combined total of $17,600. The players negotiate that each will receive $5,600 (total of $16,800) with the remaining $800 going to the eventual winner. Under this agreement, all three players are now assured of receiving more than the published 2nd place payout. Chop deals are very common.
Horse – the player being Staked by one or more Backers, and who is actually playing in the tournament(s).
Organizer – the fine folks running the poker tournaments, such as the WSOP, WPT, HPT, MSPT, individual casinos, online poker rooms or others.
If you are a Backer, a Chop affects your return on the investment. If the Organizer doesn’t report Chop payouts, how do you know if you are getting your full share of your Horse’s earnings?
My friends at YouStake said it “would be much better if (Organizers) took off their blinders and officially recognized Chops.” Most Organizers don’t. Part of the premise behind YouStake is that they are creating investment opportunities in regulated and reported events. If Chops never happened, the published payouts would serve the reporting needs of Backers.
But Chops do happen, and they happen a lot. Consider the example above, and imagine you are a Backer of the Horse who finishes in 3rd place. You can look on the Organizer’s website and see that your Horse won $3,800. But he (or she) actually collected $5,600. If your Stake is 20%, you should get $5,600 x 20% = $1,120. But if neither the Horse nor the Organizer discloses the Chop, you only get $3,800 x 20% = $760. You’re at risk of being short-changed by $360. Ouch!
To the non-poker player, these Chops may come across as unseemly. Last weekend was the British Open golf tournament. If the final twosome were tied for the lead and while walking down the 18th fairway one of them said to the other, “I’m nervous as hell and really need the money, so why don’t we Chop the prize money equally and simply play for the Claret Jug,” the golfing world would go totally batshit crazy. (I think that would be awesome!) At the end of a poker tournament, this would be perfectly normal.
Some Organizers want nothing to do with Chops. They officially forbid it, walking around in a state of naked-Emperor denial. Meanwhile, the prohibition doesn’t stop players from negotiating Chops any more than marijuana laws have stopped people from lighting up. Or a constitutional amendment stopped Americans from consuming alcohol. And don’t get me started on stopping teenagers from having sex.
Other Organizers acknowledge that Chops are taking place but refuse to facilitate the revised payouts. Once I was part of a five player Chop at the end of a tournament at a casino. The supervisor came over and said the only way to do this was if everybody goes all-in, then each player other than the chip leader mucks our cards. The dealer would then award all of the chips to that player, ending the tournament. The cashier would pay each player according to the published prize pool, with 1st place money going to the chip leader, 2nd pace going to whoever started that last hand with the 2nd most chips and so on. Then all five of us would have to go off to a corner somewhere and redistribute the money amongst ourselves however we wanted. Of course, stories abound of this kind of thing happening and then the “winner” runs off with the 1st place money and doesn’t honor the Chop.
Even worse, if the winnings are large enough to require the issuance of income tax reporting forms (Form 1099-G), the amounts reported to the guv’ment won’t match the reality.
Still other Organizers will let all of the players involved in a Chop sign a form indicating their agreement with the revised payouts, and allow their cashiers to distribute the money based on those agreements, and report for tax purposes accordingly. This is much cleaner, although most still don’t publicly report the Chop on their website or to sites like The Hendon Mob that publish annual or career winnings.
Newsflash to Organizers… it ain’t a secret! Chops happen. Don’t be Emperors. It really shouldn’t trouble you so much to report the results as actually paid, or simply show the published payouts alongside of the negotiated Chop amounts. Doing so would serve the game well, and increase the attractiveness of Staking opportunities for wider audience.
In televised live streamed events, the commentators should be able to speak openly and candidly about the Chop negotiations as they are happening, as one more set of interesting decisions being made by the remaining players.
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