Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Hedging Their Bets: How The Pros Diversify Their Poker Portfolios


You know, being a professional poker player is not the most stable way to make a living. Even the best players can go on these costly losing streaks from time to time. Keith Romer from our Planet Money podcast talks to one poker pro about one way he manages all the risk that comes with his job.

KEITH ROMER, BYLINE: Derek Wolters paid a $10,000 to enter the 2012 World Series of Poker main event. So he wasn't happy when he got knocked out.

DEREK WOLTERS: You lose the last of your chips and just, like, do the walk of shame out of the poker room.

ROMER: Derek had lost chance to win the eight-and-a-half-million-dollar top prize. But he knew that even the best poker players will lose most of the tournaments they enter. So before this one had even started, Derek, like a lot of pros, took steps to diversify his poker portfolio. First step, he bought tiny shares in other players, like they were stocks. He would pay 5 percent of their buy-in plus a small markup, and they would give him 5 percent of whatever they won. Some of these were his friend. Some he had just met online. These are screen names.

WOLTERS: Acidknight, 5 percent, chip chucker, 5 percent, jumanji board, 5 percent, kswell, 5 percent, manchild, 5 percent, zack vac, 5 percent...

ROMER: ...All of these handshake deals, no contracts. In the end, Derek bought shares of 12 players in all - one of those players, his 21-year-old friend Jake Balsiger who was crashing on Derek's couch. Jake couldn't afford to enter a $10,000 tournament. But Derek and some of their friends offered to buy him in.

Did, like, he pass a hat and people would just be like, oh, I'll put in 1,500 bucks? Like, how did that actually work?

JAKE BALSIGER: Yeah, I mean, pretty much though. I don't know who first said it, but one of them was like, yeah, you know, I'll take, like, 10 percent. And we all said, like, yeah, I'll take, you know, 10 or 15.

ROMER: And before long, Jake had his entire tournament paid for. In addition to buying shares, his investor friend Derek also traded shares with other players - 5 percent of Derek for 5 percent of the other player. This is called swapping, and Derek was not the only one doing it.

WOLTERS: So if you look at a big tournament. I would say basically every professional is swapping.

ROMER: Because of all his share-buying and swapping, even once Derek was officially knocked out of the tournament, he was still very much alive. He still had 16 chances to win a lot of money. But one by one, his army of players got knocked out of the tournament. By the middle of day four, Derek had just four players left. Then chip chucker and manchild went down. On day five, kswell went down. And that left just one guy, Jake, the 21-year-old who couldn't afford the entry fee - Jake, the guy who was sleeping on Derek's couch. But if somebody owns 15 percent of what you win, and you are winning, there are perks.

BALSIGER: They let me move into the master bedroom from the couch.


BALSIGER: So that was pretty cool, you know, definitely moved up in the world.

ROMER: From the more than 6,000 players who started the tournament, Jake made it all the way to the final table of nine players. He ended up finishing in third place, winning almost $4 million. But, of course, that wasn't really his money. Jake walked away with a little under 700,000. The rest went to his investors - Derek's share, almost 600,000 bucks. These days, Derek Wolters still plays tournaments. But more and more, he's investing.

Are you a better and investor or a better poker player?

WOLTERS: I'm definitely a better investor, I think. There's a lot of really good poker players. But there's not that many people who do as much investing as me.

ROMER: For Derek Wolters, the odds are best when he's betting on the other players instead of only on himself. Keith Romer, NPR News. Transcript provided by NPR, Copyright NPR.

Keith Romer has been a contributing reporter for Planet Money since 2015. He has reported stories on risk-pooling among poker players, whether it's legal to write a spin-off of the children's book Goodnight Moon and the time one man cornered the American market in onions. Sometimes on the show, he sings.