This caught my attention on Twitter today:
Use this link to see the full thread, which is worth reading. At a very high level, Cate Hall describes verbally entering into an arrangement to be staked in cash poker games by Chad Power. Chad would provide the money in exchange for 50% of Cate’s profits. If there are cumulative losses, they have to be made up before Cate is able to keep her 50% share of future profits. So far, this sounds like a typical staking arrangement.
It began to go off the rails, however, when (A) Cate’s losses reached $60,000, and (B) Cate (as self-described) “entered into a spiritual and mental health crisis… and have played little poker since,” and (C) as a by-product of A + B, Chad asked Cate how she wanted to handle a buyout of the $60K makeup amount if she left poker permanently. To which Cate says, Whoa there, that was never discussed and it should always be the backer’s risk if the player quits the game. Now she refuses to continue playing until this aspect of the arrangement is resolved.
So they agreed to an informal arbitration, whereby each would appoint a designee who agreed with their respective positions, and if the two designees then reached an agreement with each other as to how this should be resolved, each of them will accept that resolution.
The Twitter thread includes a copy of a text message from Chad to Cate, asking: “We have an agreement to say that any agreement between them is binding, correct?” And Cate’s reply: “Yes.”
Both “arbitrators” agreed that makeup obligations upon a player quitting poker entirely should be viewed differently from makeup obligations upon the player wanting to switch to a different backer or return to self-bankrolling. In the latter case, the makeup is due; you cannot abandon a willing backer while continuing to play as a way to escape from the makeup. In the former case, Chad’s designee says, “I think a fair solution would either be to come to some sort of agreed upon buyout between (sic) for Cate to pay Chad to be free and clear of this for good, or the makeup will just stand and Chad will have the first option of putting any action on the stake if he chooses if Cate were to ever come back and play poker again in the future, which seems likely at some point since nobody ever truly quits.”
Then it gets weird, as (predictably?) Chad doesn’t like the arbitrators’ answer.
Cate posted an email from Chad to a redacted 3rd party, with this: “If she wants to ‘stay on stake’ but never play, that wouldn’t be against the agreement, but it would be scummy and I would feel an obligation to out her for it to protect any future backers who might not feel like going the extra mile to record a phone call with her.”
That’s like saying… if I have to accept the decision of the arbitrators, despite previously saying I would, I’m going to make a public spectacle of ruining her reputation if I possibly can. Or, if you prefer this alternative, it’s like saying… I only agreed to accept the arbitrators’ decision when I thought they would side with me. Reminds me of somebody else who is in the news a lot…
I don’t have any personal relationship with either Cate Hall or Chad Power. But these aren’t rookies in the poker world; both are well known, veterans of the business. Cate was a lawyer before becoming a professional poker player. Chad has a long history of backing a multiple players at his home casino in Maryland. It’s amazingly sloppy not to have a written agreement – or at least a thorough outline – for a financial arrangement that reaches $60,000 or more.
I also don’t have a strong opinion about the merits of each side of the dispute. But once they agree on a dispute resolution procedure, and that procedure generates its output, it’s over. Done. Fini. Time to move on. I’m sorry somebody had to lose. But nobody likes a sore loser.
One other point. The player who is being staked is often referred to as the “horse.” I have some experience with horses, which I will summarize thusly: you continuously put more and more money into your horse, and most of what you get for that is more and more manure coming out the back end.
One other other point. I’m sure there is more to this story than I’ve seen so far on Twitter. Because there always is.
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