Something Borrowed: A Look at Poker’s Lending Problem

Steve Ruddock : February 25th, 2016


Last night Shaun Deeb went on David Tuchman’s Under the Gun Podcast to “name names.”

On the podcast Deeb outed three players who allegedly owe him money – I’m not going to name the players here as I want this column to be more about the broader issue of lending money in poker, if you’re interested you can click the link and watch the podcast.

Deeb’s revelations, along with Phil Galfond’s recent op-ed on PokerNews, has peeled back this layer of the poker world, in much the same way tournament staking and backers were exposed to the general public several years back when the first Big One for One Drop occurred, and the idea of selling pieces and backers was really pushed to the forefront.

It now appears the same thing is going to occur when it comes to the practice of loaning money in cash games.

You’re not lending; you’re giving

David Tuchman started the podcast with the top line assessment that [paraphrasing], “If you lend someone money in poker you’re not really lending them money, you’re giving them money. If you get it back that’s just a plus.” This was a theme Tuchman revisited throughout.

And this statement pretty well sums it up.

So when Shaun Deeb came on and started talking about lending people (some who he’d never met before and may not even know their last name) hundreds of thousands, and even millions of dollars, or when I read Phil Galfond’s account of loaning someone $250k, my eyes rolled back in my head.

Their reasoning behind these loans, which makes a lot of sense, is that in high stakes players don’t want to carry insane amounts of money around (a good idea), and nobody anticipates losing, so they never bring enough money to cover a big loss.

But this is why banks vet the hell out of every mortgage application, and why they insist on having ways of collecting (at least partially) if you can’t pay, as there is always some form of collateral, i.e. the house.

Furthermore, as Deeb explained on the podcast, and Galfond alluded to in his PokerNews piece, the reason high stakes poker players are so quick to loan some people money isn’t because they altruistic and trying to help lift someone up. It’s because they feel they have an edge over them, which makes it an exploitative situation, and more akin to a predatory loan. They’re loaning these people money so they can continue to bleed them dry.

These people still obligated to pay it back mind you, but you’re really rolling the dice when you loan anyone money, and when you do it under these types of circumstances, your odds of getting paid back diminish.

Let me also say that I feel bad for anyone who has lent someone else money in good faith and that money hasn’t been paid back. Both Galfond and Deeb deserve to be paid what they’re owed. But we seem to have a situation where people are making bad loans and then getting mad when they’re not paid back, so in the words of Clint Eastwood, “deserves got nothing to do with it.”

While not repaying a loan is a super scummy thing to do, some of the blame for the situation also needs to fall on the shoulders of the people who are making bad decisions when it comes who they’re going to lend money to.

During the housing bubble, when so many people failed to repay their mortgage and saw their houses go into foreclosure they were certainly at fault for taking loans they couldn’t (or might have issue) repaying. But a lot of fingers were also pointed at the banks for loaning some people the money in the first place.

The proverbial catch-22

This need to keep the games going through lending, which, as the amount lent goes up, increases the chances of players not being able to, or willing to, pay that money back. This leaves poker players in a sort of catch-22 situation. For the games to run the players often have to lend money (or feel they do), but the amounts of money being loaned can quickly reach a point where they become impossible for some people to pay back.

As Deeb noted on Tuchman’s podcast, there really isn’t a good way to deal with this paradox. It’s unreasonable to expect someone to travel with $100,000 on a daily basis, and it’s also not good for business to ask a potential fish to show up with that kind of coin as they start thinking they’re going to get cleaned out.

So what’s the answer? Perhaps its along the lines of the ultra high-stakes home games where people either leave money on deposit with someone or somewhere, or someone in the game is on the hook for certain people’s unpaid debts, or perhaps it’s a situation where the only people allowed to play are the ones who are trustworthy enough to settle up every month, or three months, or even every year.

Chances are nothing will change. High stakes poker players will continue to make bad loans, and they’ll occasionally out someone who doesn’t pay. But by and large the system will remain unchanged, and nonpayment will just be another price of doing business, much like getting robbed or cheated was a part of the game for 100 years.

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