Crowdfunded poker is starting to become more popular after the conclusion of the 2016 World Series of Poker (WSOP) festival. The concept of crowdfunding is very simple as it involves financial backers chipping in either a part or the full buy-in amount of a poker player and should they go on to cash-out in that tournament, these financial backers get to share an agreed percentage of the winnings.
Crowdfunding has been around for quite a while and websites such as Stakekings and Youstake have made it easy for poker players and financial backers to connect. A number of poker players were active on these crowdfunding websites before the start of the 2016 as the buy-ins for the month and a half long tournament were extremely high. There are different types of poker players who sign up on these websites and there is a certain amount of risk involved for both financial backers and players.
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Some poker players go down the crowdfunding route because they have no money to enter tournaments. Other poker players have done well on the circuit, have the money but prefer not to invest all their money and absorb 100% of the risk and hence rely on financial backers. Poker Player Brian Rast was one of these players who succeeded in finding financial backers who staked him for the $50,000 buy-in fee for the Poker Players Championship (6-handed).
Rast eventually went on to defeat 90 poker players and win the event and in doing so won over $1.2 million which he had to share with all of his financial backers since they staked him. One of Rast’s financial backers was software developer and ex-semi poker pro Nate Meyvis who lives in Boston. Meyvis used StakeKings to give $60 to Rast and in return he received $1,200. Some of these financial backers and poker players develop long term relationships that turn out to be profitable.
Poker pro Andrew Barber has had a financial backer who has put down close to $35,000 during the last three years. The return on investment came suddenly in 2015 when Barber won a tournament that awarded him $1.5 million. Barber was happy to pay his long time backer $100,000 for sticking with him during tough times.
In a statement, Frank DeGeorge, CEO of YouStake said “Many backers really don’t care about a return on investment. They really are looking more for interaction, and the ability to sweat”. This also opens the door for crowdfunding to be misused as one poker player decided to blow his crowdfunded buy-in for the $111,111 One Drop High Roller event at the 2016 WSOP.