Poker Hedge Fund

[greg nice]

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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?

[The Dingo]

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.

[creedofhubris]

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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!

[skylar]

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

[rand]

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

[The Dingo]

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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>?

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

[Jackal69]

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?

[rand]

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

[The Dingo]

Thanks all of you for your intelligent comments

I will keep you posted on how or if we proceed

All the best
Dingo

[Dale Dough]

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.