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Selling Action In Poker Tournaments: Daniel’s Unfortunate Event

Griffin Expains Why The Poker World Needs A Healthy Staking Marketplace

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Gavin GriffinI love writing about things that are positive in the poker world. Too often, the discourse around things in the poker is negative. We’re talking about sexism, scandals, debts owed, cheaters, sites that aren’t handling the money they’re trusted with, or casinos doing shady things to cover their guarantees.

This time, I get to write about someone who offered a cool promotion and then had to scramble to make up for some mistakes in execution. I’m referring, of course, to Daniel Negreanu, who did something I’ve never seen before and was unfortunate to have it backfire on him a bit.

In case you missed it, let me bring you up to speed. Daniel offered to sell pieces of himself in the upcoming World Series of Poker, which kicks off Wednesday. Opening up the opportunity for lots of poker fans to get themselves a piece of the action at the WSOP, Daniel sold, at no mark-up, 10 percent of his tournament action for $1,500 and lower tournaments, 25 percent of his action for buy-ins between $1,501 and $10,000, and 50 percent of his action for buy-ins $10,001 and higher. Again, at no mark-up!

Daniel, who recently parted ways with PokerStars after 12 years, sold those pieces through his website so there were small credit card fees, but he charged no premium to buy action. As the second-winningest tournament player of all time and one of the most recognizable faces in the industry, he could easily have charged gigantic mark-up and gotten just as much interest.

Daniel Negreanu at the WSOPSpeaking of interest, this is where the story takes a little turn. After it was announced that all packages sold out in about 30 minutes, I was a little bit confused, and disappointed to be honest. I let time get past me and didn’t think to buy a piece until it was about 12:15. I was out with my son and figured there was no chance I was getting any, presuming they were sold out in the first five minutes or so. As it turns out, I was actually right. Daniel’s site seemed to make some mistake with its database, and his packages oversold.

He had originally offered around $275,000 in action and actually took in about $1.8 million according to statistics he posted on Twitter. This left him holding the bag on refunds to thousands of people. After offering such a cool deal, he seemed to be devastated about having to turn people away that wanted action.

I believe in poker players selling action to tournaments. There’s almost no chance that poker tournaments would be as lucrative or well-populated as they are these days without access to a marketplace for staking and buying action. Daniel’s offer shows that there are plenty of people who want in on the action, especially for big name poker players.

However, this could easily be taken advantage of. The problem with current marketplaces is that there is no regulation, and people with Daniel’s profile (nobody actually has Daniel’s profile, so perhaps a tier or two below him), could very easily charge obscene mark-up for pieces sold. Phil Hellmuth sold at 1.8 mark-up for a $10,000 super turbo, and it sold out quickly. Those buyers need some protection, and the current sites that offer staking to the public aren’t bothering with that regulation or oversight.

I applaud Daniel for offering this deal at the price he did, and for the incredible way he’s making up for the mistakes that were made on his end. I’m not sure that there is a useful way, right now, to force the most high-profile players in the world to be held to accountable for price gouging the tournament-piece-buying-marketplace. I also see why the big poker crowdfunding sites want people like Hellmuth to sell pieces using their platform, because they bring in customers who might spend on other people as well. The less well-known sellers who are offering pieces have built-in price caps, because people don’t know them and they won’t generate as much interest.

Mike McDonald, the high-stakes crusher known as Timex, has offered to act as the other side of these sites by offering pieces of tournament players at rates that he thinks are fairer, to him at least. In a true, free market, and with the many people in the current market on forums and crowdfunding sites, this would be a natural extension. Someone could buy offered shares and sell them at a higher rate if they think the person was selling for too little, or they could offer action on someone at a lower rate and pay out the difference when that person cashes.

As is, it’s a seller’s dream to get their packages bought up on these sites. There is only upside. If you don’t sell all you want at the price you’re offering, just reduce the price and try again. Daniel didn’t take advantage of a very profitable situation for himself and got some good promotion for himself in the meantime. I would love to see what a healthy market for tournament piece buying would actually look like, but it’s unlikely we’ll get to a point where we see it anytime soon.

Gavin GriffinGavin Griffin was the first poker player to capture a World Series of Poker, European Poker Tour and World Poker Tour title and has amassed nearly $5 million in lifetime tournament winnings. You can follow him on Twitter @NHGG

 
 
 
 

Comments

NOEYECONTACT
over 1 year ago

There is no "price-gouging" in the tournament-piece-buying-marketplace, just a failure to set the price correctly at a market-clearing price. People who buy pieces of players at what seem to be "excessive mark-ups" are doing so at will and there for are establishing what the market price should be.
The Daniel situation ironically backfired by trying to help buyers out by not charging a mark-up. Buyers saw the huge discount that they were getting off of what would be the "true" price and overloaded the site trying to get the value. He would have helped out most buyers by setting the price more accurately, there by reducing the amount of people looking to take advantage of him by getting a cheap price on his action.
The common misconception in the poker community is that they view "buying a piece" as an investment. When many of the buyers are taking pieces for entertainment purposes of a sweat. Not some retirement plan of getting rich.

 
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Ray12345
over 1 year ago

The author seems to say that paying too much for a piece of a player's return is the "bad thing." This is fundamentally wrong. A person can pay whatever they would like to share in a player's winnings, and that doesn't amount to fraud or theft on the player's part. The only limit should be the amount of money any one player could win in the tournament.

We should not regulate that you can only make good staking decisions.

The thing that should be guarded against, is that investors are paid if the player wins. And the player plays as if it is his money.

As long as an investor has the opportunity to learn about the value of the investment, it is really up to them to decide if they want to spend their money.

To say there is such a thing as excessive mark-up is both hilarious in it's misunderstanding and, of course, wrong. It is literally impossible for a piece of any player to have a "true price." The price is what a willing informed buyer is willing to pay.

If I want to pay all of Phil Helmuth's buyins for the series, and pay triple his buy in for 100% of him, it's my money. And it would be totally cool sweating Phil and taking the money when he won.

The investor should be protected in two ways: First that he gets what he pays for in player effort, and second that he gets paid his portion when the player he backs wins. The protection the author suggests is really not a thing.

 
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NJCRUSHER
over 1 year ago

DOES SELLING A PART OF YOUR TOURNAMENT WINNINGS AMOUNT TO THE ILLEGAL SELLING OF A SECURITY UNDER FEDERAL LAW?

 
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NOEYECONTACT
over 1 year ago

No because the part of my action that is sold does not have a balance sheet associated to it.

 
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