Markup

Overview

Markup (also called "MU") is a common practice in poker staking, particularly in tournaments. When a player sells a percentage of their action (e.g., 50% of their tournament entry fee) to investors, they may charge a markup—an extra fee on top of the actual buy-in. For example, if a $1,000 tournament has a 1.2 markup, the investor pays $1,200 for 100% of the buy-in, or $600 for 50% (since 50% of $1,200 = $600). The additional $200 represents the player's expected edge.

How Markup Works

Markup is typically expressed as a multiplier (e.g., 1.2x) or a percentage (e.g., 20% markup). The formula for the investor's cost per percentage point is:

Investor Cost = (Buy-in × Markup) × Percentage Bought

For example, in a $1,000 buy-in with 1.25 markup:

• Buying 50% costs ($1,000 × 1.25) × 0.5 = $625.
• The player receives $125 above the actual $500 share of the buy-in.

Why Markup Exists

Markup compensates the player for their higher expected return (ROI) compared to the average field. Players with proven track records (e.g., consistent ITM finishes or high ROI) can command higher markups. It aligns incentives: the player’s profit from markup provides immediate income, while the investor still benefits if the player overperforms.

Common Practices

• Market Rate: Markups vary widely. A well-known professional might charge 1.2–1.5x, while elite players in high-stakes events may charge 1.5–2.0x. Beginners or unproven players may sell at 1.0x (no markup).
• Package Deals: Players often sell shares in a package of multiple tournaments, applying a single markup to the total buy-ins (e.g., 10 events at $1,000 each with 1.2 MU = $12,000 total package cost).
• Staking Arrangements: In backing deals, a backer covers a player’s buy-in in exchange for a percentage of profits, often with makeup (debt repayment) and no upfront markup. Markup is distinct as it is a fixed premium paid regardless of results.

Pros and Cons

For the Player: Immediate cash flow without debt risk; reduces variance since investors share losses; can sell action to focus on larger events. For the Investor: Exposure to a player’s skill at a known cost; potential profit if the player cashes; risk of losing the entire investment if the player busts.

Criticism: Markup can be controversial. Investors argue it overpays players for future results; players counter that it reflects market value. Some staking platforms standardize markups based on historical data.

Related Terms

• Staking: A broader arrangement where a backer funds a player in exchange for a share of profits (often with makeup).
• Sell Action: The act of offering shares to investors, which may include markup.
• Makeup: Debt a player owes to a backer before splitting profits (common in staking, not markup).
• Horse: The player being staked.
• Backer: The investor providing funds.

Markup is a fundamental concept in modern poker economics, enabling players to manage bankrolls while investors gain access to skilled participants.