The Ethical Challenges of Staking and Tournament Side Bets
When an amateur enters a tournament, he or she is typically playing a simple game with straightforward and transparent payouts: the buy-in is paid up-front, the tournament is played, and then the player receives money depending on their own finish position, according to a publicly-available payout structure. The reality for tournament pros is considerably more complicated. Almost invariably, some of their winnings will be going to, and sometimes coming from other people based on privately-negotiated arrangements. The buying and selling of action and making of side bets has become as much a part of the game as anything that happens at the table, but most of it happens behind the scenes.
Here’s a partial list of the ways players bet on themselves and others:
- Staking: The player sells part of their action, usually at a markup. For instance, an investor might pay $2200 in return for 20% of the take in a $10,000 buy-in event, the extra $200 on $2000 being referred to as a “1.1 markup.” With these sorts of deals, the player is effectively betting against himself, although it’s not usually thought of in these terms. Rather, it’s seen as a way of hedging against variance; players are expected to keep at least some of their own action, but hypothetically, a player selling 100% of their action at a markup would simply be receiving a fixed fee to play on others’ behalf and suffer no variance at all.
- Action Swaps: Two or more players who see themselves as about equally skilled agree to pay the others a certain percentage of their winnings. This is equivalent to each player staking the other for the same amount, at the same markup. As with staking deals, action swaps are a way for players to reduce the magnitude of their swings, which is critical in the high-variance world of live tournament poker.
- Crossbooking: This is the opposite of action swapping, a competitive agreement between two players who each believe themselves to be better than the other. Rather than each paying the other a certain percentage of winnings, they each collect an additional percentage from the other on top of their regular payout.
- Last Longer: Two or more players make a wager on who will run deeper into a tournament.
- Bracelet Bets: A player bets that she will will a title within a given series – for instance, the World Series of Poker, or a single season of the World Poker Tour. She lays odds for herself to do so, and others can choose to take her up on the bet if they think she overestimates her chances.
- Fantasy Draft: Similar to fantasy sports, participants enter a group wager in which each drafts a pool of players who will be participating in a series of tournaments. Points are awarded for cashes, deep runs and wins according to some agreed-upon system in a similar fashion to Player of the Year standings. The participants who drafted the best teams then receive payouts from the prize pool. For instance, this is the fifth year running that several top pros have entered into a $25,000 buy-in fantasy draft for the WSOP.
All of these can be problematic in one of two ways: they can incentivize collusion, and they can produce information asymmetries at the table. This is even when you assume that the deals being made are fair to the parties directly involved; on top of those problems, there is also the issue of deliberately unfair deals and scams, but those are beyond the scope of this article.
Before we get into the specifics of how these problems arise, let’s be clear about one thing: the staking and side-bet metagame is never going to go away. In fact, proposition bets have been a standard and accepted part of cash game play since the earliest days of the game. The rules are typically stricter when it comes to tournament play, but poker players are gamblers by definition and gamblers will gamble anywhere they think they have an edge. Deals are typically struck before a tournament begins, and even if a given tournament series or card room officially banned such arrangements, they would still happen, but even more privately. Far from fixing the problems, this would only make them worse. The best partial solution would be full transparency, with all players having the right to know about the deals made by the others in a tournament, but this could never be enforced, either. Ultimately, all we can do is to be aware of what goes on and how it can affect play, and for players to take it upon themselves to avoid making deals which are likely to put them in ethically difficult situations.
That said, let’s get into how these deals can create unfair situations at the table.
This problem is pretty easy to understand, in that an action swap or equivalent deal is a necessary pre-requisite for all the classic collusion schemes, be it hole card signalling, whipsawing, chip dumping or anything else. The game of poker is predicated on the idea that every player is seeking to maximize his or her own profits; so long as this is the case, collusion is much more difficult. Game theory tells us that there are likely mutually beneficial pairs of strategies that players could adopt to the detriment of others even without sharing of profits, but these are harder to find and are in fact a valid part of the game so long as they arise naturally at the table and aren’t arranged beforehand.
As soon as a player stands to share in the profits of another player at her table, the danger of collusion increases. Even if the player or players involved see themselves as honest and attempt to play as if this is not the case, it’s quite difficult to avoid letting it affect the play at all. After all, if someone flashes you their cards, you can tell yourself that you’re going to play the hand as if you hadn’t seen, but actually being able to do so is another story. Similarly, when one player knows that she stands to benefit from another’s success, it may be hard for her to play as if this weren’t the case and to know whether she’s really doing so or not.
For instance, imagine a final table situation in which five players remain and the 2nd and 3rd place players are close in stack size and are each holding 20% of the other’s action. One of them opens from the button and the other is contemplating a light 3-bet from the big blind. Straightforward ICM thinking would tend to suggest a fold, to minimize the risk of busting while waiting for the 4th and 5th place players to go out. On the other hand, both players are in the same boat, so it’s also also a common strategy to raise and make ICM the other player’s problem, hoping that they’ll make a tight fold instead. The downside to such a plan is that if all the chips do end up in the middle, the resulting race is a net negative for both of these players and a positive for the short stacks, who stand to receive a pay jump.
Ordinarily, the player would choose between these two strategies with some probability of doing either, based on the relative value of the chips accumulated through the resteal and the ICM dangers of a race. When the players have swapped action, however, the value of the chips stolen is decreased (since they hold some value to each player regardless of whose stack they’re in) while the ICM cost of a race is compounded. The player may believe she’s still 3-betting as often as she would otherwise, but basic psychology tells you that the chances are that these considerations are causing her to lay down her hand at least a little more often in borderline spots. Since a raising war would have been beneficial to the 4th and 5th place players, the player’s decision to avoid engaging in one is detrimental to them.
This sort of unconscious soft play is essentially impossible to detect, since the sample size is too small for statistical analysis, and the players themselves may very well be unaware that they’re even doing it.
This problem is much subtler and more complicated, but can arise regardless of the type of deal, so long as some players at the table are aware of the deal and others are not. As above, the basic issue is that modifying a player’s effective payout scheme through side deals will tend to incentivize them to play differently, whether they’re conscious of it or not. But whereas collusion is only really an issue when two players can play to their mutual benefit, information asymmetries can benefit other players at the table in unpredictable ways, depending on the nature of the deal and who knows about it. If one players knows about a deal which is likely to cause another player to adjust her play, then he can anticipate that adjustment and exploit it, giving him an advantage over others who are not party to the same information.
For instance, imagine that Players A and B have a substantial last-longer bet negotiated between them, and that at the current moment, Player B holds a significant chip advantage. If he eliminates Player A, he will win the bet immediately, so the situation for him somewhat resembles a bounty tournament, in that the value to him of busting Player A is greater than the value of A’s chips alone.
Now imagine that Player A is in the cutoff, Player B is in the big blind, and Players C and D are in the button and small blind respectively, both holding marginal hands. Player A opens the betting for a standard raise, and now C and D have to decide whether or not to call. Knowing about the bet between A and B is important information here, as B may be more likely to 3-bet against A given the additional value he reaps from getting him all-in. If C knows about the deal and folds, while D calls and gets squeezed, it’s clear that C has benefitted from information which was outside the strict context of the poker game itself.
This is an even trickier issue than unintentional collusion, for two reasons. For one thing, the players directly involved in the deal aren’t necessarily the ones benefitting, and so may not be taking as much care to avoid letting the bet affect their play – they may not even see the need to do so. For another, unlike collusion or soft play, there isn’t anything going on which is even technically against the rules – in fact, I suspect that many readers of this article won’t even feel that it’s a problem at all. However, the fact of the matter is that those who are deeply involved in the poker community have more access to the grapevine and therefore to this kind of information than the typical amateur; thus, knowledge of other players’ side bets and action swaps is just another small, invisible edge potentially enjoyed by professionals over amateurs outside of the parameters of the game as strictly defined.
Keeping the problem small
As I said before, there’s no way that these deals could ever be banned, at least not enforceably, nor are they ever going to cease to be an important part of how pros make their living. And as long as the deals themselves are fairly small relative to the top payouts for the tournaments, the problem is pretty trivial, outweighed by skill edge and lost in the noise of regular variance. Swapping small pieces of action between colleagues or making modest crossbooking or last-longer bets with a rival is not going to change very much, even if the players in question find themselves at the same final table.
Bigger side bets do happen, though, sometimes much bigger. At last year’s World Series of Poker, for instance, Daniel Negreanu famously offered an open-to-all-takers, even-money bet that either he or Phil Ivey would win a bracelet during the series. People flocked to take him up on the offer and although it’s unknown exactly how much was wagered in the end, it is generally assumed that it was in the millions, and therefore much greater than the 1st place prize for most of the events being played.
As it turns out, Negreanu won the bet when Ivey took down Event #50, towards the end of the series, and here’s the thing: Negreanu himself ran deep in that same event, so there was at one point a strong chance that he and Ivey would have been sitting together short-handed at the final table. As it turns out, Negreanu busted in 9th, so there was never any issue, but what would have happened if he hadn’t?
Imagine if the final three players had consisted of Negreanu, Ivey and one other opponent. If you were in the third player in that hypothetical situation, knowing that 1st place was $167,332, but an Ivey win was worth millions to Negreanu… how confident would you feel that the game was fair to you, and that Negreanu was truly focusing on winning the tournament for himself, rather than on making sure you didn’t?
Of course, that bet was a great story and made the series way more exciting both for those involved and those just following the drama. In that sense, it’s great for poker that it happened. But at the same time, it’s probably quite fortunate that Negreanu did bust Event #50 prior to the final table, and that this hypothetical scenario didn’t come to pass. If it had, even one weird move by Negreanu could have set off a firestorm of controversy. In the end, it’s up to each player to decide for him or herself just how much ethical ambiguity they’re willing to take on. But a good rule of thumb to keep in mind is that the bigger the bets are relative to the tournament payouts, the muddier the waters can become.
Alex Weldon (@benefactumgames) is a freelance writer, game designer and semipro poker player from Montreal, Quebec, Canada.