Poker Hedge Fund
 

I was approached a while back to raise funds for the dudes taking on Mr Beal in his Bellagio matches. My background is inv bank trading and running hedge fund/s.

Post UIGEA, basically mid July 2007, depending on the govt actions (or lack thereof) my partners and I were considering the following, note I have done a soft raise of US$10M approx and am sure that will be there if there is no event risk....

Anyway, here is what I want to do

1. Fund online and cash pros on a % win basis to play for a fund much in the way my traders trade for hedge funds and CTAs

2. This part may or may not be legal or even moral but set up a group of bots to play lower limit and lower no limit online poker on various sites (I may set this up in BVI for safety). I would welcome moralistic thoughts on this. Note my own hedge fund trades as a bot using tradestation software and via online futures brokers etc (automated)..

3. A small portion of the fund will be for live tournament pros and online tourny pros.....I actually prefer just taking a chunk and funding some real top low variance pros (any thoughts on this)..say $400k per year for 1 or 2 top liners to play.

What size capital could be put to risk in the various poker segments (would $100M be too much), ie how many say 1/2, 2/4, 3/6, 5/10, 10/20 limit, no limit, PLO etc games could we fill out.

Any and all f/b welcomed including thoughts if this is just batshit crazy (I have reviewed many online pros equity curves and they are amazing, truly remarkable so I think as a fund concept aiming for a low variance ror it looks good).

I am based in NY but have partners in "safe jurisdictions" so we are expert in structuring offshore entities and tax haven stuff etc...

Re: Poker Hedge Fund
 

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set up a group of bots to play lower limit and lower no limit online poker on various sites

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yeah, no

Re: Poker Hedge Fund
 

I stopped reading after "set up a group of bots to play lower limit and lower no limit online poker on various sites."

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This was tryed before on never win and he scammed everyone

Post deleted by Mat Sklansky
 

Re: Poker Hedge Fund
 

I think it's pretty smart, especially for you. If you look on opr, the top tournament players have about a 100% roi over a large sample size. Backing 50 of the best would have extremely low variance, especially at the volume that most of these guys play.

I think it would also make sense to back cash games players and roll them for grinding a level below whatever they play. You can look up the costs for each level in terms of the roll required, but i think the variance will be very low for people that have already killed that level and have moved up.

Also you didn't mention sngs, but for the best, the variance is incredible low. sharkscope guys like tatta who essentially have a straight upward sloping line with no blips over thousands of games.

And I think that i once read that Scott Fischman's tourneys are staked by a hedge fund in NY, i might be wrong about that though. I would check around and see how that arrangement works. I don't think you would have any problem getting tourney and sng players to give a cut of their profits for zero risk.

Re: Poker Hedge Fund
 

I don't know your background at all, but figuring out who's a winning player from the outside is pretty hard.

Re: Poker Hedge Fund
 

you have a good idea but from the players point of view you are lacking any credible incentives...there is obviously an equilibrium where the players winnings meet his supposed "salary" here he is indifferent to playing for himself or working for you-the problem is (I find it hard to believe that you ignored) that this is also where you make zero profit from his employment

so why would anyone work for you when they could play for themselves and at the point that they would work for you why would you pay them>?

your only shot is to find good/winning players who are dry... giving these players the start up capital to play higher than they are currently rolled (but at a level where they are winnings) would be a good deal for both of you
-i however think that these players are VERY few and far between

Post deleted by Mat Sklansky
 

Re: Poker Hedge Fund
 

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Because my man if you have a bankroll of $500k and are making $250k per annum and someone gives you a deal where you can make more for ZERO risk it is a great deal..

this is how hedge funds work and why they get the best talent from the investment banks so when you say gee this guy makes $300k per year doing what he does and his mate plays for a fund and makes $1.5 M per year and runs his own show and has NO RISK.......too frickin easy

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if you have a bankroll of 500k you are making way way way more than 250k/year

Re: Poker Hedge Fund
 

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if you have a bankroll of 500k you are making way way way more than 250k/year

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What ROI are average guys putting up online, I am not interested in the superstars, egos etc, if one took a group of guys who were in the $100-200k per year group and provided them an opportunity to bank 2-3 times that with zero risk, is that a profile they would be interested in. AT the really high levels, say the Benyamine / Townsend level there is so much variance we would have zero interest but at lower levels yes ??

Re: Poker Hedge Fund
 

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if you have a bankroll of 500k you are making way way way more than 250k/year

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What ROI are average guys putting up online, I am not interested in the superstars, egos etc, if one took a group of guys who were in the $100-200k per year group and provided them an opportunity to bank 2-3 times that with zero risk, is that a profile they would be interested in. AT the really high levels, say the Benyamine / Townsend level there is so much variance we would have zero interest but at lower levels yes ??

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It sounds like you don't really know what you're talking about.

Cash game profits typically aren't measured in ROI, but rather in $/100 hands. I'm not really sure what kind of standard deviation per hundred hands is normal, but to give you a rough idea of the numbers, most pretty good professionalish players at low/mid stakes make about 10 big blinds per hundred hands at NL and they require a bankroll of somewhere around 2,000 big blinds. In limit, they make about 2 big bets per hundred hands and require a bankroll of about 300. People who multitable get in like 400-1k hands/hour. People who are really good about double the numbers I gave for profit... probably a little less than that.

If you're really serious and legit about this, I'd be interested, both in playing and in helping you set this up. Obviously I really suspect this is a scam, so don't waste your time if you can't e-mail me from a hedge fund's e-mail.

Re: Poker Hedge Fund
 

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if you have a bankroll of 500k you are making way way way more than 250k/year

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What ROI are average guys putting up online, I am not interested in the superstars, egos etc, if one took a group of guys who were in the $100-200k per year group and provided them an opportunity to bank 2-3 times that with zero risk, is that a profile they would be interested in. AT the really high levels, say the Benyamine / Townsend level there is so much variance we would have zero interest but at lower levels yes ??

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yes, in theory, those type of players would jump at the chance. but the reason that they're not already making more is that these players simply aren't good enough, for various reasons (not just skill alone) to beat bigger levels. tilt, expenses, poor emotional control, etc and so on. if they had the means to play higher, they'd get eaten up by the already small player pool of very tough players playing 5/10 and 10/20 and 25/50nl.

i'd almost think your best bet would be to fund some guys who can play on the way easier to beat non-US sites. ROI would be way higher.

seems like something like this will be very very tough to manage from a logistics standpoint, though. and totally irrespective of the botting angle, of course, which would just destroy the whole idea

Re: Poker Hedge Fund
 

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if you have a bankroll of 500k you are making way way way more than 250k/year

[/ QUOTE ]

What ROI are average guys putting up online, I am not interested in the superstars, egos etc, if one took a group of guys who were in the $100-200k per year group and provided them an opportunity to bank 2-3 times that with zero risk, is that a profile they would be interested in. AT the really high levels, say the Benyamine / Townsend level there is so much variance we would have zero interest but at lower levels yes ??

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i think this is a yes but i feel confused...
how do you make money if you are paying people more than they are worth to you? (where their worth=what they make)

and if you are not paying them more than they are worth to you why would they do it?

Re: Poker Hedge Fund
 

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if you have a bankroll of 500k you are making way way way more than 250k/year

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What ROI are average guys putting up online, I am not interested in the superstars, egos etc, if one took a group of guys who were in the $100-200k per year group and provided them an opportunity to bank 2-3 times that with zero risk, is that a profile they would be interested in. AT the really high levels, say the Benyamine / Townsend level there is so much variance we would have zero interest but at lower levels yes ??

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sounds too good to be true, usually is?

ditto what Noah said though. id be interested in hearing specifics..

Re: Poker Hedge Fund
 

Thanks, no not a scam but certainly not a done deal.

The background to this is detailed and boring but I was approached to find backing for 3 name pros for WPT and WSOP events, took that a few steps further, changed plans and then decided as per risk goes this concept makes more sense but

<font color="blue"> Please PM me and you can then google my background etc
</font>

Note - I know most of the big names (3 very well) and many cash pros I can fund with this but am more interested in the law of large numbers and on-line world for which I know zero except about the event risk involved

ROI is obviously an investment term, the concept here is more what cut-off point do poker players (lets face it traders and hot shot poker players are an arrogant bunch) get past the ego point to the safety point,

That is how much per annum do they need to make doing things exactly the same way they are now except have their risk transferred to somoeone else.

NOTE - we do not want to make more than 9-10% pa based on cash at around 6% globally (US$ terms), so the game we are playing is one of low variance..

PEOPLE paid on performance basis and management fee basis (as the fund is also paid this it is an easy concept to understand, you make X profit and you get paid a % of X)

and if anyone has done this before and been scammed then that is sad and shows the structure was probably very poor

Re: Poker Hedge Fund
 

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yes, in theory, those type of players would jump at the chance. but the reason that they're not already making more is that these players simply aren't good enough, for various reasons (not just skill alone) to beat bigger levels. tilt, expenses, poor emotional control, etc and so on. if they had the means to play higher, they'd get eaten up by the already small player pool of very tough players playing 5/10 and 10/20 and 25/50nl.


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FWIW, there is definitely a pretty biggish group of players playing crushing NL100-NL400 that could presumably do pretty well or even very well at 5/10 or 10/20 or whatever.

I agree with you that many of them may have trouble playing with larger amounts of money, and obviously it would be a total logistical nightmare to weed them out. Plus, like I said before, I think it's really hard for even good poker players to identify other good poker players without a good amount of information.

Re: Poker Hedge Fund
 

This would never work on a large scale. Too much opportunity for scamming, and virtually no incentive for winning players to take less money. IF you go public with this, you would get losing players and scammers on your team.

This is not to say there are no good opportunities for backing /staking. To make money like this, you need to identify a player who is +EV in a game, yet for lack of bankroll or risktolerance can't play in it on their own. These are hard to find, and if you aren't a pro poker player, you wouldn't spot one if it was right in front of you.

Post deleted by Mat Sklansky
 

Re: Poker Hedge Fund
 

1. I don't think you will find enough long-term winning players that will give up a chunk of their profits to investors.

2. How are you going to protect yourself against getting cheated (such as by chip-dumping)?

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Guys who play say 10/20 NLH and earn X would surely be interested in making 3X ??

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how does this work though?

if the guy plays 10/20 already, and now is taking less than 100% of his profits, then the only way he can make 3X is by playing 3X the stakes. then the question is, are there enough games with big enough edge to make that kind of money?

Re: Poker Hedge Fund
 

There is so much detail beyond what can be written and shown on this public forum. I know and trust many live cash pros and assuming we can manage online guys using risk control systems and the like is this a concept players would be interested in.........note my background is hedge funds so assume we have ways to check a lot of things... and it looks like you have looked through what we really want to do which is more online oriented.

Re: Poker Hedge Fund
 

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Guys who play say 10/20 NLH and earn X would surely be interested in making 3X ??

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how does this work though?

if the guy plays 10/20 already, and now is taking less than 100% of his profits, then the only way he can make 3X is by playing 3X the stakes. then the question is, are there enough games with big enough edge to make that kind of money?

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Apparently in NYC clubs there are.

And you wouldn't even need to move up from 10/20 to play for triple the stakes!

Re: Poker Hedge Fund
 

The main problem here is the event risk not the need to find capable players....event risk as in thieves, as in hacked online accounts, Neteller debacles etc but I assume you know that....If your real aim is to have a $100M fund making $9M pa after fees to investors you are really planning on making $12M approx pre fees and after paying players....

So really you are probably paying the players 50% of their profits, so fund needs to make 24-25% ROI = $25 M per year....100 players in the $250k pa area as a rough guess or probably a few hundred at lower levels and a few at higher levels, or a few bots playing at very low levels etc

Re: Poker Hedge Fund
 

im very curious dingo, would you please address my questions...

Re: Poker Hedge Fund
 

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you have a good idea but from the players point of view you are lacking any credible incentives...there is obviously an equilibrium where the players winnings meet his supposed "salary" here he is indifferent to playing for himself or working for you-the problem is (I find it hard to believe that you ignored) that this is also where you make zero profit from his employment

so why would anyone work for you when they could play for themselves and at the point that they would work for you why would you pay them&gt;?

your only shot is to find good/winning players who are dry... giving these players the start up capital to play higher than they are currently rolled (but at a level where they are winnings) would be a good deal for both of you
-i however think that these players are VERY few and far between

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The incentives are simple and without boring you with all the financial math and crap, talented people will be able to

1. take <font color="red"> more risk to make more money </font> whilst transferring the risk to someone else (this is why the hedge fund community is so huge)...ie play for free in weaker spots maybe at higher limits (eg Party Poker is now booming again buit in Europe and Asia while FT games here in USA get tougher and tougher, there are fund structures offshore where we can FINANCE USA based guys to play offshore......(does that make sense)

2. combining various groups of players with differing styles and variances (even those that lose or are even busto) in money management terms can produce a very nice P/L curve for a fund

3. I am a player but would NOT be running the selection etc of players, I can find brilliant people to do that etc

4. I have set up investment bank/s and hedge funds from scratch so have people willing to risk money to take on my ideas

5. The poker economy is tiny but growing at a booming rate, there will be opportunities that will provide even avg players with the chance to make big incomes

6. We fully expect to fund some/many busto players (remember some people like me have kids at private schools etc and may be winning players but do not have the capital to play at suitable limits, we transfer that risk to someone willing to fund that risk0 so it is not a simplistic concept that person A is broke because of poker etc....eg I can name 5 guys I would fund tomorrow who are brialliant and who I trust who are on the bones of their ass who this concept basically came from

7. Players would be contracted with bonus levels etc but we envisage paying players 50% of profits on a monthly basis with a high watermark..

8. With enough capital and spread of risk we can pop players up levels (I know that sounds spastic but there are some reasons for it)

etc etc

Re: Poker Hedge Fund
 

this is already being done on a smaller scale by people i know involved with badbeat.com - however it mainly seems to be low limit players with limited or shot bankrolls, Im not sure why higher limit players with a lot of $$$ behind them would be interested. For example if a number of hsnl players are making 500k a year on their own they might be willing to accept 450k with zero risk, but taking a lot less would be pointless - what do you see as the % return of winnings to already sucessful players?

Re: Poker Hedge Fund
 

if the players are generating all of the funds profits and getting paid 50% of that then why would they not play on their own and get 100% of the profits?

1. they do not have enough $$ to be adequately bank rolled
2. they dont want to play X game/style etc bc they cant handle the variance

for people in category 1-id say this idea works but there are practically none of these people

for those in category 2 the trade off between 0 risk and half of their profits does not seem reasonable and most people willing to who feel this way probably arnt substantial winning players

beyond this your idea sounds like introducing high level talent into an easy market (eg FT players to Europe so they can play on Party)...
1. are you aware of the proposed legislation legalizing online gambling? how long do you think online poker will remain effectively illegal in the US?
2. if these players wanted to play on party then they would go on their own and if not then working for your fund should not change their mind

*i think you have a good idea but i dont know if the talent will come (i will agree that the ROIs for good players are incredible compared to a typical investment) ... your best bet is to find these good players who lack the start up capital to play successfully but still want to play, i know that personally i would not trade playing for myself to work for your fund unless my salary was very near my current winnings which once again i dont see how that kind of arrangement would be profitable for you...

but good luck and keep us updated,

rand

Re: Poker Hedge Fund
 

Thanks all of you for your intelligent comments

I will keep you posted on how or if we proceed

All the best
Dingo

Re: Poker Hedge Fund
 

The problem is that bankroll requirements are actually relatively low - it seems the good players win a new bankroll for their current level every two months or so. This provides a large incentive to finance your own play, in exchange for increased EV. [censored] the variance, for the kind of money you should be able to deal with it.

Think about it: 100% of 5/10 winnings is almost always going to be more than 50% of 10/20 winnings. Sure, no variance is nice, but at SOME point the player is going to have a big enough bankroll that variance becomes much less of an issue. Say I beat 10/20 and have the skill to beat 25/50. Someone stakes me for a flat rate. This is really really sweet until I make enough that I could finance my own play, and be comfortable with the swings (low ROforcedtomoveown).

What would be my incentive to keep playing for you? You'll put me in a 50/100? If yes, where does it end? At some point a player reaches his limit. And, assuming - this is of course hypothetical - he will always be able to beat game X for $Y, he won't - or shouldn't - give a damn about the swings, because that is already taken into account when determining the correct bankroll size.

Say I make 100 to 200 a year now. You guarantee me half a mil. How? How on earth can you know that I'm good enough for that, despite the fact that I haven't yet managed to actually win in those higher games? And to prove that I can win, I'd have to have enough hands that if I didn't have a BR before, I certainly do now.

That said, definitely not uninterested [img]/images/graemlins/smile.gif[/img] eagerly awaiting more details. Although I suspect someone above me is right, blah blah too good to be true. I'm pretty sure there just has to be something in that deal that would make me somehow not want to do it.


Cliff notes: the more cash a player accumulates, the less % he is willing to give up in exchange for no swings. Good players will reach a point where they no longer have incentive to play.


Either way, I'm still interested in how this develops.



EDIT Also, I'm pretty sure if you bring in an army of good players with a 100M combined roll, the games might just dry up a little.

Post deleted by Mat Sklansky
 

Re: Poker Hedge Fund
 

Your comparison of a poker bot army to a computerized trading strategy is totally spurious and makes it clear that you have no concern for the ethics of poker or for the longevity of the online game. At best you are painfully ignorant and at worst calculating scum.

Re: Poker Hedge Fund
 

i wrote a business plan for a final project on an almost identical concept dealing solely with live tournament pros, which i think would be far easier logistically than cash game players and even using a pool of players that I trusted in ability and integrity there were some very tough obstacles.

I think the biggest problem you will run into however is that once these staked players of yours win good money(which in cash games could be a matter of weeks) they will want to drop the backing arrangement and play their own money. The basic premise behind the success of such an idea produces a high turnover rate that will make a decent player base unsustainable. You want to back great players. Great players will inevitably win and want to play their own money. There is not a big enough pool of great players to keep replacing those that want to play on their own money after success at being staked.

Re: Poker Hedge Fund
 

Dingo,

I think this is a very interesting concept and something I have thought of myself, but on a smaller scale. I think the thing that a lot of guys who're saying "why would anyone be interested?" are ignoring is that variance breeds variance, ie I know some excellent players with a ton of raw talent but worse emotional control and zero [censored] bankroll management that are always broke. Those types of players, if you stick them into an organized fund and force them to play smart, I think would become hugely winning players once you offset their individual weakness... since the weakness is not in their game but in other areas.

Also, what wolffund says fully applies - being a part of a successful enterprise is usually more profitable in the long run (provided you're at the top of the enterprise, obviously) than going at it the self-employed way.

I also think, to a point, you might be looking at it backwards. Why take a player killing 5/10nl and stick him into 3/6 for lower variance? It's a waste of skill and his time. Instead, take the same player and put him in 10/20, and start grooming him for 25/50. He obviously has the talent, and with an infinite bankroll of a hedge fund behind him, he can play the type of aggressive, fearless poker that is tougher to do when you're playing on your own money, and is a total BITCH to play against (look up Farha vs Rugby thread). Can you even imagine the havoc a bunch of young, aggressive, talented poker players can cause if their sole incentive is to perform with zero risk of going broke in the game? - but perhaps get moved down to smaller games if they lose too much at a level (and for a typical competitive poker player, that's a huge incentive to NOT lose).

In all, I think it's an extremely interesting concept, and I look forward to hearing updates about it as and if things develop.

It's also stupid to ignore that 100 people working towards a single goal is &gt;&gt;&gt;&gt;&gt; 1 person doing same.

Kirk

Re: Poker Hedge Fund
 

Also, how do you deal with the collusion aspect? Now, five pros can sit and try to fleece one fish. Can you still do that if you're on the same bankroll?

Re: Poker Hedge Fund
 

OP,

I think you are vastly overestimating the number of players who would win tons more money if they just had a bigger bankroll. a player who is in reality a winning 100/200 player but magically only has a $5,000 bankroll could probably go from 1/2-100/200 in a year.

Re: Poker Hedge Fund
 

I don't know why anyone is giving this arsehole the time of day. He's just interested in taking money out of the poker community to line his own pockets, and none of us can benefit from that. Shame on anyone who wants to associate with him.

As to whether scamming lower limit players out of money using bots is legal or moral, the answer is of course no on both counts, and I sincerely hope any attempt fails miserably.

Re: Poker Hedge Fund
 

a person that doesn't make enough money to move from 5/10 to 25/50 won't be a player that automatically beats 25/50 after increasing his bankroll.

Secondly, once he is happy he is crushing 25/50 I am sure he would just leave the hedge.

Also, you apparently think you are going to increase someones earn / year by 2 or 3x with no variance whilst also only giving them 50% of their profits.

This means moving them up 4-6x the game and hoping they have the same edge, or moving them up 8-12 the stakes and hoping their winrate is half of what it was in the lower games.

This is ridiculously unrealistic.

Re: Poker Hedge Fund
 

I am just an average human being and at poker claim only to be "just a player," regardless of my actual skill level or true identity (Part of the reason I don't post here much is that a lot of 2p2 has devolved into name-calling, personal pejoration, and insecure-type dk-swinging to see who can come up w/ the most sarcastic and edgy responses to sh.t, which is all just a waste of time and nobody cares about it.). Having said that and with the qualification that I openly confess to know nothing about the hedge-fund/ big banking industry (I probably don't know too much about poker, either), I see way WAY more opportunities/upside in this thing than negatives, and I think those who don't are being narrow-minded.
Some def. kinks have been brought up, and they will need to be addressed exhaustively if success is to be achieved, but follow this evolution: OP succeeds in securing capital in excess of $100M after a 1-2 yr. trial period at a smaller scale during which all possible problem scenarios are redundantly examined, isolated, and counteracted, and actually realizes a 20% ROI on average for the next 2 years. The possibility of legitimacy, zero risk and big reward ultimately serve to bring throngs of new players into the game, hungry for their own opportunities to be "contracted" and "play for a fund". This on top of the still escalating Poker Boom. Well, the recreational players on the sites are wising up and being driven away, but it doesn't matter because the new players coming in that I just mentioned are actually becoming the new fish (and let's face it, most losing players are completely aware that they are losing players and they still continue to play-- the easy, recreational fish pool will never completely dry up, at any stakes, imo). So there's this whole renaissance of poker happening, ON TOP OF the renaissance that was ALREADY happening. Pretty soon somebody else is gonna start ANOTHER fund. All the while the WSOP and WPT are finally drawing legit advertisers and sponsors such as, say, Lowe's (Planters I think I saw in another thread lol).... Well, sooner or later somebody even BIGGER is gonna say "Why don't we just start a professional league like the NFL? Hell, Lowe's is already sponsoring half these events..." etc, etc. You can see and have "nocturnal emissions" about where it goes from there.
Yes, I fully agree with the logistical concerns voiced in almost every objection I've read, and I think they should be the first concern of anybody starting something like this. But think about how, if successful, it could elevate the game... The permutations are effectively infinite. In my small view, anyway. We might look back at the days when the top guys banked $5 mil a year and laugh, as we do now looking back at our posts from years passed.
Kudos to the vanguard. I say proceed, but with care and circumspection. $.02

Re: Poker Hedge Fund
 

This concept may pay off for those who can put it together fast, but as others jump in the ROE will quickly get squashed.

What you end up with is legions of hedge-fund-backed players playing in a higher stakes bracket where they play each other to a large extent, killing any advantage they initially had.

As the other poster points out, you're not going to get anyone good to play for you at his current levels -- trading all his upside for a salaried job.

Bots only make sense for play at low levels. Real poker-playing bots are a long ways off. All there is for now and on the horizon is pattern-watchers that pick people off. One nice pattern to pick off is another bot's pattern. Problem isn't nearly as bad as I described above, but still pretty bad.