Cheap At Half The Price

So this guy you all know is offering up his WSOP main event action... at a 30% markup. (Apparently he got the idea from Matt Matros, who one can only imagine commands a slightly higher premium.) About this specifically I have no comment. I'd like to say I'm following my mother's advice, but she always taught me to speak my mind. But the broader issues suggested by this kind of offer are what intrigue me - the effect of a player who doesn't actually need a stake but who asks for one anyway. Poker already works on a microeconomic scale - limit poker, especially. Every bet is an investment that you hope to recoup, either by having or making a superior hand, or by representing a hand strong enough to convince your opponent to fold. In no-limit we try to sell our good hands for as much as possible, and sometimes buy the pot when our cards won't win it outright. And it's no coincidence there are so many former boiler-room stockbrokers and other finance types burning up the tables - arbitrageurs make their money by seeking out and exploiting small edges, and it requires the kind of attention, fearlessness and aggression that makes for a winning no-limit tournament player. But it appears that poker might be moving into macroeconomics. I'm sure that what with crossbooks, last-longer bets, share swaps and backers, tournament poker already comprises a small but complex de facto market. But public offers for the sale of action are another step toward the formalization of that market. The maroon doesn't say whether or not his action is transferable, but what if it was? He's selling shares at $130 a pop. If he sells a hundred he can play the main event for free and pocket three grand. (Let's not get into what he could do if he sold two hundred shares, except to say that from the stories I've heard, it wouldn't be the first time in the history of poker.) But let's say instead that he sells fify shares - enough to get him into the main event at a steep discount (65%) while letting him keep fifty percent of his winnings. (Note that this isn't as +EV as a traditional staking agreement with a backer who covers the entire buy-in and takes a flat fifty percent - but I'm sure those are much more complex than I know, too.) The shares are offered at a fixed price, but if they're transferable, the value could fluctuate over time. Maroon gets bad-beat by some donkey early in the second day and loses half of his stack? Selling that $130 share for $110 might start to look awfully tempting to an investor. Maroon bad-beats some donkey and catapults into the chip lead? You might be able to unload MaroonCo at a substantial profit whether Maroon makes the money or not. Or if you know that someone is offering to buy MaroonCo shares at $120, and you happen to be in the right place when Maroon gets knocked out and you know the shares are only going to pay $105, you've got a relative profit-making opportunity. If the Maroon makes the final table, the vast escalation in prize monies for finishing 2nd instead of 4th means that the value of the share is in flux every minute. My point is that if the action is transferable, a market has been created, and someone with knowledge and information can identify +EV situations within that market, except that if they can other people can too, so the market will start to adjust itself... and then we're about all of five seconds away from publically-traded poker players who only get to keep ten percent of their winnings but are essentially playing for free anyway. All legalities aside, natch. I am neither an economist nor a financial expert of any stripe. Nor am I a mathematician. I am not going to be the one exploiting these edges or formalizing these markets. And it'll be nothing new when it happens - stock investments have always been a gamble, and if you don't believe me, ask your grandparents. I am, however, holding out the notion that maybe, just maybe, one day I'll buy a piece of somebody else. And maybe a little later, I'll sell it. For the right price.


Blogger StudioGlyphic said...

Ooh, buy me! Buy me!

6/28/2005 08:47:00 AM  

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