Is it unethical to overcharge markup?
Do free market rules apply or should the poker community be policing staking offers that are poor value?
Last weekend a big debate took place on Twitter when YouTuber Johnnie Vibes sold a WSOP package at 1.38 markup, a premium most considered too high considering he was not a seasoned tournament player.
Not cool Deeb, Johnnie is an excellent tournament player (He talks about it in his vlog all the time). If he wants to sell at 1.38 on 43k worth of buyins, investors are getting a deal!
He has a proven track record in tournaments, lets just let the numbers speak for themselves. pic.twitter.com/r9P0wamUwP
— Hug Polk #Positivity (@DougPolkPoker) April 12, 2019
If you don’t know what markup is in the staking context I explained it last year when this same debate was taking place around Phil Hellmuth. It’s essentially a premium the horse adds because they believe they are such a good investment, the market will pay a favourable price.
Shaun Deeb and Doug Polk led the charge against what they saw as unethical markup. Their argument was essentially that it’s a bad deal when better tournament players charge lower markups. Deeb even went as far as to use the word ‘scam’ he felt so strongly the package was overpriced.
Staking is a free market
Few people who came to the defence of Vibes argued that his valuation of himself was warranted, instead they made the free market case. If you are a savvy enough backer you would know to avoid this investment, and if you chose to invest you either are a fool or just staking for a fun sweat. These people would rather we live in a world where bad investments can be offered compared to one where a central body prohibits certain offers (in this case the poker community policing staking deals).
A similar argument in favour of Vibes was made to the effect of ‘poker is a game of maximising EV and that is all he is doing’. Of course he is entitled to charge what he wants, just as the backer is entitled to not put up their money.
I largely fall on the free market side of things, but Ryan Daut (who gave away a free book on staking) made a very compelling argument the other way, one which cut through a lot of the name calling and got right to the heart of why people feel so strongly about this:
When someone sits at a table vs me, makes a sports bet vs me, races me in a mile for money, makes a prop bet about other people racing in a mile, etc, they are my opponent. We are taking opposite sides of a bet where both of us like our chances, and one of us has the wrong side.
— Ryan Daut (@rcdaut) April 13, 2019
Win-Win partnerships
This is ultimately the crux of the problem. A good mantra in life is to always try and create win-win relationships with people you work with. We all know what it’s like to enter into a deal and discover you have been overcharged or underpaid by somebody, it leaves a bad taste in the mouth. There is often a misguided view of business out there that it is cutthroat, however in my own limited experience and after reading biographies of successful entrepreneurs, it does seem the people who get to the top do so by making lots of mutually beneficial partnerships.
I still agree with the free market approach, people should be allowed to charge whatever they want. However, that also means that others should be allowed to have their say on whether it’s a good deal. More importantly what Ryan Daut said about creating win-win situations between business partners is the ideal that backer and horses should both strive for.
We don’t need to use language like ‘scam’ though, as it is often usually an error in judgement or overestimation of ability, not something malicious. I certainly don't think Vibes did anything morally wrong, just perhaps misguided.
Is it unethical to charge too high a markup for a staking package? Let us know in the comments:
