Mission146
Posted by Mission146
Aug 08, 2019

Introduction

In my usual course of looking up gambling-related news, I stumbled upon the following article that comes to us courtesy of CardPlayer, “The Poker Authority.”

Let me just give them a nod and mention they are an excellent resource for the poker enthusiast. As many of you know, poker gets mentioned here and there on our sites, and I’ve written a few extensive articles, but Cardplayer is definitely more of a go-to source for poker news and other poker-related material.

According to Cardplayer and quoting from the article:

The U.K. poker pro finished in seventh place out of the field of 8,569 players, winning $1.525 million. Now, C Biscuit Poker Staking is looking for $152,500, which they say is their cut of the profits after making a deal for the stake in late May.

This refers to poker professional, Nick Marchington, and C. Biscuit Poker Staking is a group that stakes professional poker players for these and other tournaments.

What is Staking?

Simply put, professional poker players will often enter tournaments (or even sometimes cash games) and they will not be bankrolling themselves 100%. Formally, the act of, “Selling,” part of your action in a tournament, or taking a loan to enter a tournament in exchange for the loan-maker receiving a cut of the winnings is called, “Staking.” In many cases, no money is owed to the entity who stakes the player if the player fails to cash, but that can sometimes vary in the case of a straight-up loan.

Furthermore, individual players or groups of players will often strike up deals amongst themselves with varying degrees of complexity and/or formalization.

In this case, C Biscuit claims (and Marchington does not dispute) that they outright purchased a 10% share of Marchington’s action (often called, “A piece of him,” or, “A piece of the action”) at a 1.2 markup (this just means they paid him 120%) for $1,200.

The buy-in for the tournament is $10,000, so the 120% markup meant that the stakers (C. Biscuit) now had the rights to $1,000 worth of the tournament entry, (the stake) which entitles them to 10% of Marchington’s total winnings. In the event that Marchington failed to cash, C. Biscuit would be owed nothing.

Theoretically, Marchington could even sell 100% of his tournament entry at a markup to various stakers, thereby guaranteeing himself a profit regardless of his performance. That did not appear to happen in this case. Essentially, he would just be playing for someone else.

This stake indicates that C. Biscuit had confidence in Marchington’s abilities. If they felt the expected value of Marchington’s action was breakeven (that he would cash for $10,000 in the long run) then they would presumably buy the 10% of his action for $1,000. That happens sometimes, on occasion, a player will want to get into a tournament, but only wants to self-bankroll part of the entry fee, so they will sell part of themselves at no markup. It’s even possible that a player could be staked for 50% of the entry fees, but offer 60% of any winnings.

Again, all kinds of scenarios are possible with staking.

C. Biscuit and Marchington

If we assume that C. Biscuit has a goal of making money, which they likely do, then it was their belief that the expected value of Marchington’s performance would yield an expected result of more than $12,000 in winning, which would mean a profit for C. Biscuit.

Separately, C. Biscuit also purchased 10% of the action in a $5,000 max tournament at a 110% (1.1 markup) for $550.

In sum, C. Biscuit staked Marchington for a total of $1,750 for a total of $1,500 of his action across the two tournaments. Again, this aspect of the arrangement is undisputed.

What is in dispute is whether or not Marchington exited this arrangement in a legally valid way, hence the lawsuit. Here is the case information.

A week prior to the main event, Marchington texted these backers and informed them that the deal was off and that the money would be refunded to them. According to the CardPlayer article:

Ultimately, he entered the tournament on day 1b while texting C Biscuit: “I am playing the main event but unfortunately your piece is cancelled. I know this is bad practice but I have to do what’s best for myself since I lost on the trip. Will get back to you about your refund.”

Apparently, Marchington reportedly ended up playing the $5,000 event using C. Biscuit’s stake, despite originally saying he was going to cancel that. At some point, Marchington secured booking at 1.7 (170%) through another source for what would have otherwise been C. Biscuit’s stake.

While Marchington himself admits that what he did was, ‘Bad practice,’ C. Biscuit did not secure their $1,200 refund until after the beginning of the tournament, therefore, they take the position that their $1,200 stake in the tournament was live and they are entitled to the 10% of Marchington’s winnings, which were 1.525 million dollars. Ergo, C. Biscuit states that it is entitled to $152,500.

When is a Refund a Refund?

It seems that there are other poker players on both sides of this issue. Some of the poker players maintain that C. Biscuit is attempting to freeroll Marchington’s action because they accepted the refund. Most (if not all) agree that Marchington’s cancellation was, “Bad practice,” from an ethical standpoint, but that the refund offer was accepted and is valid.

Ultimately, the question for the courts (absent an out of court settlement for, presumably, an amount less than the $152,500) is when the refund becomes valid.

Is the refund valid at the point where both sides agree to the refund? Is the refund valid at the time that the refunded funds are actually received? These are the questions that the court will need to answer.

Application to Other Advantage Play

This is particularly interesting because it is quite possible that Marchington could have just fully staked himself, and then we wouldn’t have this mess. It would seem that Marchington was, “Selling,” rather than, “Borrowing,” but how would an arrangement like this compare to other arrangements?

One comparison that I can think of is perhaps going after a must-hit that is presumed to be positive, even though one may not be bankrolled to hit it. This could be handled in two different ways:

1.) After conversation and agreement between the parties that the must-hit likely has a positive expected outcome, the second party could get money to the person who found the play in exchange for a percentage of the results. Both sides would determine what their percentage stakes are in the must-hit, and then each would be entitled to that percentage, regardless of what happens.

OR:

2.) The first person could straight up borrow the money with a promise to pay the money back, as well as a premium (basically interest) regardless of the results.

From my perspective, Marchington’s argument and offer of a refund is basically the same as saying, “I never touched your money for this tournament, therefore, you are entitled to only your money back.”

Imagine if our hypothetical must-hit player accepted the backing under either of the two conditions outlined above, but that player then called someone else and was offered a more favorable deal. The person then contacts the initial backer and says, “Sorry, our deal is cancelled, I’ll get your money back to you, but you are not part of this play.”

It’s very likely that the first backer would refuse to ever deal with that person again and might even encourage others not to deal with that person. Again, it’s pretty bad form to accept a deal, get the funds associated with that deal from the backer, and then cancel on the backer.

We could also imagine that our must-hit player receives the funds, but then the must-hit jackpot hits on the first $100 of cash he puts in. Could you imagine our must-hit player calling and making this argument, “I’m going to send you your money back, but you’re not entitled to any of the winnings because I did not end up using any of your money, only my own or money that I received from other sources.”?

In my opinion, the argument could be made that the must-hit player freerolled the money that he was sent in either case. Similarly, I think the argument could be made that Marchington was freerolling on the initial backers, rather than the opposite.

For one thing, Marchington accepted the deal that the stakers offered him, but then accepted a different deal from somebody else. Both Marchington and C. Biscuit agree that Marchington initially accepted the deal, and even after suggesting that he was going to cancel the entire thing, Marchington would ultimately play the $5,000 tournament partially with the funds offered to him by C. Biscuit.

Who is to say that, had Marchington busted out of the tournament, he would not have made the argument to C. Biscuit, “No, I know I said I was going to refund it, but your money ended up being live. If I would have cashed in the tournament, I would have paid you the 10% of the winnings, unfortunately, I lost.”

People can assume that Marchington would not have done this and would have ultimately refunded the $1,200 regardless of the final results, and maybe that is true, but we don’t really know because the actual refund had not been completed prior to the tournament getting underway.

Was Marchington attempting to freeroll on C. Biscuit?

Was C. Biscuit attempting to freeroll on Marchington?

Were both parties attempting to freeroll on the other?

We have no idea.

In the Future

The one thing that we do know is that, in the future, any parties entering into such a staking agreement would do well to directly enter into a written agreement that stipulates the necessary time and method for a refund to be received.

In other words, it would become a contract with an, “Opt-Out,” clause. The opt-out clause would stipulate that, if the contract is to be cancelled, it must be cancelled more than x days prior to the beginning of the tournament and the refund must be received by the stakers within x days of the cancellation, otherwise, the terms of the contract will continue to be valid and enforceable.

If that had happened in this case, then it’s unlikely that the parties would have to be hashing this out in court right now (or that the court would have an easy job) because the opt-out terms laid out by the contract were either strictly adhered to or not.

The problem with concepts such as, “The spirit of the agreement,” “Good practices,” or, “Ethical considerations,” is that those concepts only work until they no longer work and the result is a legal dispute of this nature. Rather than concern ourselves with the, “Spirit of the agreement,” or “Good practices,” the entire thing could have been formalized to begin with.

Where I Stand

In my opinion, a refund is not a refund until the funds are received by the entity who is being refunded. Until that happens, all that exists is an intent to give a refund. An intent to give a refund and $5 will get you a coffee drink at your local Starbucks.

When it comes to credit card or cash transactions, if I have an issue, I don’t personally look at a refund as having taken place until I actually receive my money. An entity can say that it is going to refund me, drag the process of getting the refund out for months and at no point have I actually been refunded.

The CardPlayer article again states:

Ultimately, he entered the tournament on day 1b while texting C Biscuit: “I am playing the main event but unfortunately your piece is cancelled. I know this is bad practice but I have to do what’s best for myself since I lost on the trip. Will get back to you about your refund.”

After some delay with the refund while searching for a third-party collector, C Biscuit received their $1,200 stake for the main event.

Marchington had this to say on Twitter:

Initially I offered to refund with Pokerstars (how the piece was paid) then PayPal. Finally we settled on cash. My efforts to refund began BEFORE the Main Event; the refund got collected before my day 2 of the Main Event.

Ultimately, Marchington seems to state that he accepted the better staking deal because, to that point, he was down for the trip. Obviously, Marchington is no longer down for the trip, at least, I would hope not after winning well over a million bucks.

Marchington also points out, on Twitter, that the two separate tournaments were also separate financial arrangements with C. Biscuit, rather than a package deal.

According to the article, Marchington texted the backers prior to the beginning of the tournament, though on the same day of his entry. Marchington states on Twitter that he began the efforts to get the refund to C. Biscuit prior to the actual start of the tournament.

What is being argued by some is that, since Marchington attempted to get the refund back to C. Biscuit prior to the start of the tournament, that C. Biscuit may have unnecessarily delayed the receipt of the refund in order to claim they still had a stake in the tournament and were, thereby, attempting to freeroll Marchington’s action for 10%.

Once again, this could all have been solved with a written arrangement that would stipulate the terms of a refund. If the opt-out clause had verbiage such as:

“Nick Marchington may opt-out of this deal as long as it is more than three (3) days prior to the start of the Main Event. Notice that he is opting out must be provided by text message to (phone number). After giving notice, Nick Marchington shall have 24 hours to return the stake to C. Biscuit by way of (refund method). If Marchington fails to opt out more than three days from the beginning of the tournament, or fails to get the money to C. Biscuit by way of the proscribed method within 24 hours of opting out, then the refund may be accepted at C. Biscuit’s discretion, or in the alternative, C. Biscuit has the right to hold Marchington to the original terms of the deal outlined above.”

That verbiage specifies two very important things:

1.) It specifies that there is a period during which Marchington can opt out of the contract and the contract will no longer be valid. It also specifies a period of time that Marchington can request to opt-out of the contract and C. Biscuit can either accept or decline that request.

AND:

2.) It specifies that Marchington must get the funds to C. Biscuit within 24 hours of the text saying he is opting out. More than that, it agrees ahead of time to the means by which Marchington will get the refund to C. Biscuit.

If these things had happened, then it becomes a simple case of breach of contract on one side or the other.

Even though I’m kind of on the side of C. Biscuit, I also see Marchington’s point: C. Biscuit should have refused the refund and instead insisted that they had a 10% stake in Marchington for the tournament because his cancellation of the deal was invalid. I think that things would look better for the stakers had they not accepted the refund, at any point, and demanded the 10% of any winnings instead.

In any event, the result of this case will at least set a precedent for how these matters are to be conducted in the future.

Conclusion

It remains to be seen whether what we have here is an ethical faux pas and a violation of good practices, or an actual legal tort committed by Marchington. For the time being, these funds are being held in escrow pending the conclusion of the case.

In any event, you have good practices and you have, “Best practices.” The potential winnings for Marchington, as we have seen, are substantial. With that, “Best practices,” would be to handle this by way of a written contract that specifies the terms for any possible opt-out, or makes opting out of the contract not an option to begin with. Best practices would also stipulate a time during which the refund would be provided.

Again, less formal arrangements work until they don’t, and it’s unfortunate to see this come into the court system when Marchington should be busier with enjoying his excellent finish in the tournament.

Whose side are you on? Who do you think will win in court? Do you think there will be an out-of-court settlement for a lesser amount? Leave a comment below!

Comments

PokerGrinder
PokerGrinder Aug 08, 2019

There is almost never going to be a written contract for selling a ďpieceĒ. Iíve personally never seen a piece sold where it wasnít a text, a phone call or done in person and I have seen or been part of probably thousands of these deals. This is completely scummy of Marchington to cancel the ďpieceĒ after accepting the agreed upon sea but as long as he cancelled the action AND started the refund process before the first hand of the tournament was dealt he doesnít owe the stakers anything. If Iím the backers Iím telling everyone about this to ruin his reputation and make it harder for him to sell ďpiecesĒ in the future.

DRich
DRich Aug 08, 2019

My only issue is the player selling the same piece to someone else after he already sold it. What a low class move.

Mission146
Mission146 Aug 08, 2019

PokerGrinder,

I guess my question is this: Why not? You wouldn't have to write a completely new contract every single time, it could just be a fill-in-the-blank type of prewritten deal.

To the second part: Marchington has a few more than a million reasons not to care right now, but you know how it goes, here today, gone tomorrow. Of course, the backers don't come out of this smelling like roses, either, even if they prevail in court.

DRich,

I agree with that! It would be like selling a used car as a private party, getting the money (or deposit), setting a delivery date and then calling the person to tell them, "No sale," because someone offered you more.

Although, it might become relevant in court that he was shopping it around after he had already sold. The court might suggest that Marchington was the first to act in bad faith.

PokerGrinder
PokerGrinder Aug 10, 2019

Have you ever met a poker player? They arenít the contract type lol. Also most people are just decent human beings who care more about their reputation in the poker community than screwing someone over. Once your rep in the community is trash, news travels fast. I have only ever heard of one deal gone bad with all my friends and their friends (cause Iíd hear about that too).

I actually donít think the backers did anything wrong. They think they were wronged and are seeking what they view is theirs. I donít think they should get anything because all Marchington did was show that heís scum.

Mission146
Mission146 Aug 10, 2019

I agree with that, in general terms, but it might be worth thinking about when sums of money potentially in the hundreds of thousands are involved. As far as laws and contracts, that's why they are there, just in case there is any confusion or anyone not inclined to keep a deal.

As far as Marchington goes, I don't know that I agree with calling him scum. He's a young guy who may just not realize exactly how much of a faux pas such a thing is in the poker community. He certainly seems to acknowledge that what he did was, at best, in extremely poor taste.

PokerGrinder
PokerGrinder Aug 10, 2019

Maybe scum is too harsh but I assume he has been around poker for a bit and knows how selling works. Once sold you donít resell or back out of a deal this late. Itís just common sense really. Heís wrecked his reputation.

Mission146
Mission146 Aug 10, 2019

I agree 100% on reselling. Absent a contract to the contrary and with advance notice, I don't know whether or not I have such a strong stand against backing out. Certainly bad practice, and don't make a habit of it, but it might not be so bad just to decide to book all of your own action on rare occasion.

beachbumbabs
beachbumbabs Aug 19, 2019

What about stakehorse.com? They have preset terms, or they did. Haven't looked at them in years.

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