David Baker: Markup At The World Series Of Poker ‘Is Not The Devil’Poker Pro Defends Selling Action At Markup |
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Shortly before the start of the 2016 World Series of Poker, bracelet winner David “ODB” Baker posted on his social media that he was willing to buy his own action at 1.4:1. It was less about him being able to play the smaller buy-in tournaments with much more on the line than it was trying to demonstrate that markup is fair.
Markup is when a player charges a percentage of the buy-in for their time and expertise. It’s a way for people who sell pieces to events they don’t want to pay full price to enter to get value for their abilities. To use 1:4:1 as an example, it means that you get $1.40 for every $1 you put into tournaments over the long run. If you sell $10,000 worth of your action for a group of tournaments, you are getting paid $4,000 from your investors to play and try to make them, and yourself, money.
According to Baker, some people in poker think that markup should be confined to a range of 1.1:1 to 1.3:1. Baker basically said that he is worth well more than 1.4:1. Instead of selling action, he’d do precisely the opposite. It’s not an ego thing for Baker, who admits that there are some no-limit hold’em players who are definitely on a higher level than him.
He said that he’d buy his own action for all events he plays under $5,000. For example, if Baker invested $25,000 into the cheaper events at the WSOP, he would owe or collect $35,000 (1.4 multiplied by the investment) minus the amount he cashed for in those tournaments. If he bricks all the events, he’d pay out $35,000, which is what you would want if you were betting against him. The risk, of course, is Baker having a seven-figure score and you essentially doubling his payout.
It wasn’t an offer he really expected anyone to bite on. It would take someone with really deep pockets. But Baker really wants to show that higher markup at the WSOP for the game’s top players is fair. It’s just like paying commission to a stockbroker, he said.
Card Player had the chance to speak with Baker about this “touchy subject” in poker.
Brian Pempus: What was your motivation for offering this?
David Baker: It was two fold. The first thing was that markup has been highly discussed for a long time. There are certain people who are very vocal who don’t understand markup. As a poker community in general, a lot of people don’t totally understand what people are worth. It was my way of telling them that they are wrong. Markup is not the devil. It’s not as awful as they want to make it seem. Some people are worth markup. There has kind of been a prevailing opinion that either markup is bad or that everyone needs to be in this small window of 1.1 to 1.3. I don’t really believe that’s how markup works. The range is so much larger. People fall within 0.5:1, which means that they have negative expectation in the tournament, all the way to as high as maybe 3:1, which means that they are going to get $3 out for every $1 they put into the tournament. Obviously it’s very hard to quantify this. There are so many factors that go into a tournament, and we are never going to have a sample size big enough. I think I could sell a lot higher than 1.4, and I do in some instances, and [the buyer] could still make a profit. Not only do I think I am profitable at 1.4, I am willing to buy my own action at that price to show that I’m not just saying it. I am willing to back it up with my own money. I would love to get more money on myself in those [under $5,000] tournaments. I put my money where my mouth is.
BP: What is the highest markup you’ve ever paid for anybody and who are they?
DB: I don’t want to comment on who, but the way the market is set now, you don’t have to pay high markup. I have paid 2:1 for people in the main event before…My comments are really directed at people who are always flaming markup. Most people are very confined to that small range. When you have people selling their $10Ks at 1:1 and their $1,500s at 1.25, I think they are falling into a narrative that has been set forth in poker that all your markups have to be between X and X. I think there is a larger gap between players than people want to believe. Obviously there is luck in poker, and lesser-skilled players win a lot in our game, but when you are looking at return on investment…that’s when the difference comes in.
BP: I talked to a few elite players a few summers ago and there was a consensus that Phil Ivey could be worth as much as 4:1 in the main event. Do you agree that someone could be worth that much?
DB: Yes. I usually buy a lot of main event action. In the main event, your top end reward is so high that paying a little bit more for someone who you are comfortable with when the field gets down to 1,000, 500, 100, 50, 27, 9 players, is worth it. Let’s use myself as an example. If I play the main event for a decade that would be $100,000 worth of investment. If I sell myself at 2:1 that’s $200,000. Do you think I make $200,000 in 10 years playing the main event? The answer to that is most likely not. But over that 10-year period I am most likely going to lose a small amount. I would likely cash for $100,000 to $150,000. So I might lose $50,000 to $100,000 over that period. But there is a chance I win $2 million. You are only giving up a small amount on the bottom end to win a large amount on the top end. In the main event you can take those small losses and just pile them up in a corner because if you buy enough people you’ll have that one person who breaks through over that larger time frame and hits one score. It only takes one score to cover a long time of playing in the main event, even at a high markup.
BP: You mentioned that people who do well in the later stages of an event being more valuable, but do you also put a premium on people who are good at coming back from a short stack, who don’t give up and fight until their last chip is gone?
DB: For sure. That’s an important factor, and that’s one of the things I feel like I bring to the table. I never give up. I have battled back many times. Even though all the tournaments aren’t going to end with the huge successes that we want, I also want to be buying pieces of people who have small wins out of tournaments that typically end in zeros. Being able to cash and ladder are all factors. Those are things that make up good players.
BP: I saw some people commenting that it would be really difficult to cover the situation where you win a huge tournament like the Millionaire Maker. Do you think that makes people betting against you more difficult?
DB: Yeah, someone being able to cover on the top end is the biggest factor in buying your own action. My thought process was that I felt like if someone was going to buy it for a large amount it would be someone [with a big bankroll] and who has done this in the past. I felt there might be someone who would take advantage of it. I also thought there might be some people who might want to cross-book it at like 20 percent. So they don’t have to take 100 percent of the action. Just like when you buy a piece of someone, you can do the same thing for me.
BP: Have you gotten anyone to respond and negotiate with you?
DB: No, I had one person who said they’d get back to me. But I am not real optimistic that anything is going to happen. Another person who I thought would talk with me said there’s no way he’d do it.
BP: The fact that no one has taken you up on this offer is validation of your position on markup, right?
DB: Yeah, a little bit. I think this has put a stop to some of the markup detractors. Markup and selling action is a touchy subject because it opens up places for scammers and just not good people in our industry, which we do have, to take advantage of people. But, for the most part, it gives an opportunity to skilled players who don’t have the bankroll to play events that are bigger. You know, you are paying them a fee to use their skills and their time to put money to work. We pay commission to stockbrokers, and same thing in the poker world.
BP: There has to be some endurance factor for a long WSOP grind when selling a package of tournaments at markup.
DB: Yeah, you have to take everything into account when deciding whether to pay markup for someone or not. I have sold a package every year I’ve come to the WSOP. How much I sell is dependent on how I am doing financially. There is a lot more to winning in poker than knowing your shove charts. Mindset and confidence, bankroll comfort level, all are big factors.
BP: For the people who think no one is worth more than 1.4, isn’t that a really pessimistic look at the state of poker? That implies that the fields are super tough. In contrast, you’re saying that the WSOP is still a great place to play and make money over the long run, that poker is alive and well.
DB: Yeah, I feel like there are a lot of pessimistic players in poker. To say that everyone in poker is capped to a certain extent…is very pessimistic. You also can’t always take results and say that’s indicative of skill level. Poker isn’t like basketball, you can’t just say scoreboard. It just doesn’t work that way.
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