The Stakes: Selling Action

Selling action is an integral part of the poker industry, and it comes in three main forms: piece buying/selling, swapping of action, and long-term staking. In this article, I will focus on the ins and outs of buying and selling pieces. I will also discuss to a minor extent the practice of “action swapping” in the community, and explain why many players engage in it regularly.
Piece Buying/Selling

Buying or selling ‘pieces’ of yourself or others is the most common form of staking, because of how easy it is for players to exchange action in this manner.

Ryan LaplanteThe most common reason a good winning player might want to sell action is that there is an event, or series of events, they’d like to play that they feel is too much risk for their bankroll.

People who purchase pieces of a player do so because they feel that the player in question will achieve a significant enough ROI (Return On Investment) in the events they are selling for to warrant the premium (“mark-up”) they are charging, and the other risks involved.

Risks of Buying

There are a few risks involved with buying pieces of people in games. These same risks can often make buying action in someone a bad investment.

The most common risk involved is paying too high a premium for someone’s action. The reason this occurs often is due to a misjudgment of the player’s skill, a misjudgment of the difficulty of the game, or a failure to leave yourself enough of an edge to show a solid enough profit to warrant the risk.

Added to this, there is a lot of money to be made in the poker industry, which, naturally, attracts some questionable characters. While scamming investors isn’t commonplace, it does occur regularly enough to be a danger. If you do desire to invest in someone, make sure you do your due diligence and check thoroughly into their history – or suffer the consequences.

Determining Mark-up

Mark-up is set by players themselves, and can be determined by many different factors:

Player’s Perceived Skill and Reputation: This is written as ‘perceived’ because skill is difficult to accurately quantify. A player with a good reputation for behaving professionally and being skilled is going to have an easier time selling action than someone with a questionable reputation or no reputation at all.

Tournament Perceived Difficulty: Tournament difficulty is also something that is difficult to quantify; thus, how hard people expect a game to be will dictate the kind of edge they expect a skilled player to have in the field.

The Amount of Action Purchased/Sold: The larger of a piece of the action that is sold, the more likely it is the seller will give a better deal on the mark-up (it is much easier to deal with one buyer than many). Also, a player who decides to sell a lot of himself won’t be able to sell at as high of a premium.

Tournament Structure and Field Size: Structure and field size can determine the maximum possible ROI a player might run, and the amount of variance a tournament might have. The higher the possible ROI and the lower the variance, the higher the premium can be.

Friendliness Level of Player and Buyer: Friends might give each other better rates on mark-up. Also, if you have had previous history with them buying/selling action, they may be more apt to give you a better deal.

Overall Healthiness of the “Marketplace” and the Amount of Action Available: During larger series, like the WSOP, it can be difficult to sell a package at a higher mark-up due to the massive availability of options for buyers to buy action from. However, when there isn’t much action available, it can be easier to sell action and at a higher premium.

Where to Buy/Sell

Most commonly, people buy and sell their action online. It is the easiest way to reach a lot of people in a short frame of time, to show them what you desire to play, and, most importantly, explain why you are a good investment.

The best places to find action are: 2+2 Poker Forums, Pocket Fives, Part Time Poker, ChipMeUp, Twitter, and Facebook. All of these places have people selling action daily on it, and if you are patient and observant there are many good deals to be had.

Sample Package

It should be pretty clear as to why a player might want to sell action, especially if they can charge a high premium. However, it might be a bit harder to understand why a buyer might be willing to purchase action, especially with the amount of uncertainty and the risks involved.
To explain why, I am going to give an example of selling action, explain why a buyer would purchase, and how much they might expect to profit on it.

Let’s say that I wanted to play in the $10,000 WSOP Main Event, but didn’t have the bankroll required to stump up the full amount myself. It’s such a great value tournament I would sell action for it, and at a premium (with mark-up).

For this instance, we’ll say that I desired to have 50% of my own action, and to sell the other 50% at a 30% mark-up. If someone desired to purchase 10% of my action, they would have to pay $1,300. ($10,000 x 1.3 x 0.1 = $1,300).

In order for them to make a profit long run, they would have to expect for me to run an ROI of at least 30%. If I were to have an expected ROI of 60%, they would make an average profit of $300 each time I played the event and they invested 10%. Thus, they could make money from a poker tournament that they might not have an edge in. They can also buy action from many players at once, meaning that they have the potential to make more money over a short period of time than they could ever win themselves. This package would end up being a very profitable venture for all parties involved, and is a good example as to why players regularly buy and sell action.

Swapping Of Action

Swapping of action in games is another very common practice in the poker community. It is similar to selling action in that the player exchanges a percentage of themselves with another. Instead of changing it for money, however, they exchange it for a piece of another player in the same game.
Swapping is a good way for a player to lower their variance by spreading their action in a field yet also allowing themselves to not lose any value or action by selling.

Swapping is generally done for only small pieces (1%-20%) as it is frowned upon to swap for a larger piece due to the enticement to collude if you happen to play versus each other.

Things to Keep In Mind When Buying Action

If you desire to purchase action from someone make sure you keep the following things in mind:

Can I afford to lose this money? This is always the most important factor when determining to do anything poker/gambling related. Poker is a very high risk industry, it is important to always keep that in mind when making any financial related decision pertaining to poker.

Have I researched this player or know that they are reputable? If the person you desire to invest in hasn’t shown themselves to be a very trustworthy and reliable person, they likely aren’t someone you should trust with your money.

Have I judged field strength/difficulty and player ability well? You want to always make sure that the player has enough of an edge to warrant the mark-up they desire to charge. If you aren’t confident that it will make you money, you likely shouldn’t invest.

Closing Thoughts

I believe that, for both buyers and sellers, there is a lot of money yet to be made from investing into the poker industry. However, it is imperative that you do your research and invest your money wisely according to the points above.

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July 2014