Selling action seems like a simple thing – people give you money and they get part of your winnings in a tournament – but if it’s not done correctly from the start you can run into some tough spots where either your bankroll, or your reputation, will suffer unnecessarily. If you do things right, selling action can keep you in the game and making money for the long run.
Start off by being very clear with your offer. I’ll use my WSoP package from this year as an example throughout this article. Here is how I offered the package of tournaments for investors.
I am selling action in a $50,000 package of tournaments for this year’s WSoP. Markup is 1.2, so every 1% costs $600. Unplayed tournaments will be refunded. I must have the money before the start of the first event.”
Something like this will prevent a lot of confusion. The reason that unplayed tournaments are refunded is that an unscrupulous player could either dilute or concentrate his investor’s percentage by skipping tournaments or playing extra tournaments. Once you sell for a specific set of tournaments, you should only be playing those tournaments with that money and refunding the investments for any tournament you don’t play. I recommend keeping the funds in a separate bank account and never using them for anything but their intended purpose.
You should always get the money before you play the tournaments because it can be unpleasant to collect from an investor after they have lost money investing in you. You don’t want anything unpleasant about the experience for your investors, or they may not invest again. It feels a lot better to gamble and lose money that is already out of your hands, than to lose and have to pay.
Make sure everyone knows how much they are getting. If someone gave me $1,200 to invest in my WSoP this summer, they knew they were getting 2% of all of my winnings in any tournament that was part of the package.
Make sure any deals that are made are public knowledge so that you can justify things to your investors. This summer during the HORSE event, we cut a very minor deal among the final five. We each agreed to it, which I recorded on my phone, and there were multiple reliable witnesses. If I did not have proof, some of my investors would have been uncertain about the fact that I had to pay $38,000 to another player and that I didn’t win quite as much as was reported by the WSoP news feed.
When you are done playing, pay your investors promptly and pay them the full amount. Make sure they know that a 1099 is coming from the IRS as is standard practice, and use a site like filetaxes.com or have your accountant send the forms. If you take taxes out first, then they may have to pay taxes on the money again if the IRS gets wind of their income.
Make Them Happy
Once everything is done, make people happy they invested with you. A thank you card or email can be a nice touch and insure that they invest with you again in the future. When I was lucky enough to win a bracelet at the WSoP this year, my investors not only made a nice profit, but they got a little something special. Each investor received a special card I had made from etsy.com and a tiny piece of the bracelet left over from when I had it sized.
Do you think those investors will buy a piece again? Absolutely. And happy investors means job security and freedom to play what I want when I want without stress. And that should be your goal, build your own bankroll and make your investors happy so that you don’t need them often, but they are excited to invest with you when you do need them.
When you first start selling action, you may not have a lot of people interested. Get a following on Twitter and Facebook, get to know people in the poker community in your area, and get the word out any way you can. It can help to sell action in long packages of small buy-in tournament series’ where you are likely to make a profit, even if that isn’t really what you want to be playing. If people make money investing in you, they will be eager to invest in bigger events next time.