Bloggers On The Rail - Guest Post: Riggstad

Posted by AlCantHang | Filed under Bloggers on the Rail

This week’s series of guest posts begin with one from Riggstad dealing with a touchy subject: live tournament chops. Nobody wants to talk about what goes on behind the scenes and it’s something to think about when you find yourself sitting at a major final table.

Live Tournament Chops
by Riggstad

If you’ve ever played a tournament in a live setting and made it to the last few players, chances are you were involved with a chop. No? What are chops you say? You don’t know? Well, simply stated, a chop is when the remaining players take the entire prize pool not already awarded, and divide it between those players in an equitable way agreed upon by all those involved. Basically, you’re guaranteeing yourself, and everyone else, a better payoff.

I know, I know, all of you out there saying, “I would never chop!” Fact is, you will. What usually escapes most people is how the environment of the tournament progresses. Usually you’ve been playing for an extended amount of time. You’ve avoided running AA into KK, you’ve won races. You have survived all-ins, suck-outs, and bad beats. You are nearing the end of the tournament and are exhausted. You have spoken to friends on the cell about the possibilities of what might be if you happen to win that first-place prize of $250k, after only buying in for $1k.

But what inevitably happens is somewhere along the way, someone, at some point, will mention chop. Usually it starts at around 50 players left. It might seem like a joke, or that he is being funny, but make no mistake. He probably isn’t. Somewhere around 20 left the talks get serious. It won’t happen, but there are a few guys talking seriously about it. They gather allies. They form a frontal attack and try to show how much sense it makes to at least consider a chop. It wears both mentally, and physically on those opposed, and the group in favor notices that. They are relentless. All the while people are being eliminated. And by the time it gets to the final table, you are ready to listen to a serious offer.

It’s not a question of IF, but when you will chop. But what I want to explain in this post is how they are made, more so then why or when to determine if they should be made. I’ll save that for another post.

Each states gaming commission has rules about Casinos being involved with deal making. For the most part, they are not allowed to be involved. Most casinos will give you one shot to work a deal. Maybe they will give you a 15 minute break or so to discuss your business, but after that, play continues. Meaning they will continue to run the clock. They will make you post your blinds and antes, and they will not have anything to do with awarding prize money based on your deal. They will make everyone sign for whichever place they go out in. There is no stoppage of play once the deal is made. Most will make you finish the tournament, even if it entails shoving all in between the two players who are supposed to win, and go out in the next spot. Once everyone has signed out in their agreed upon places and the tournament is officially over, each player will go collect their prize money, THEN split it up as the deal was made, usually in the back of the poker room.

Some of the ways I have seen this happen is where the chip leader decides to take second-place money and sign for 5th, and the other players, based on chip stacks take a cut according to those sizes. Another way is where the players decide at some point to guarantee everyone a certain level of money. This is a more confusing way of doing things, but it allows at least the play of the tournament to move forward, and leaves a portion of the prize pool still up for grabs for the eventual winner. In the least, it keeps the competition alive.

For example: If the prize pool is lets say 100k, and there are 5 players left, someone may suggest that each player is guaranteed 15k. That would leave an additional $25k leftover. The chip leader at that point may have an additional deal where he is guaranteed 30k and the next largest stack at 20k, and everyone else at 15k. The additional money (5k) would go to the eventual winner. What’s important to remember is that everything is negotiable, and should be negotiated before the entire deal is agreed upon.

What else is there? Well, maybe there is a bracelet to be awarded. The dealer toke from each stack. The player taking the least amount of money might ask that he is exempt from paying that toke, and putting it on another player, etc.

One last thing, but ultimately is the most important thing in chops, and usually the one thing that determines how smoothly these negotiations go is the tax implication.

Who wants to earn 15k and sign for a first place prize of 100k? If that was the case you would lose money. The casinos have to issue you a tax form that states how much they pay you. As I stated before they will not get involved with deal making and if you sign for first, they will issue you a tax form for that amount, regardless if they know you took less. The IRS also makes them take 25% out of any winnings over $5k. This may be good or bad, depending on your own personal tax bracket. Think of it as withholding. You may be entitled to a return. But the IRS has also made provisions for chops as well. Not specifically, but it works out in your favor.

Form 5750 enables you to claim exactly what you earned from any tournament, regardless of what the Casino reports. This includes any payments to backers that you might have had. So let’s say you signed for 2nd place, which awarded $75k. However, you chopped and only made $20k. Plus you had a backer and had to give him his cut of 50%. You really only netted $10k (minus your buy-in) and are on the hook for $75k as far as the IRS is concerned. This form will allow you to claim the $10k alone, but you will need help. You will need the signatures of other players, your backer, and an official witness from the tournament floor.

This seems like a very complicated process, and it is. It gets a little convoluted when you are on the 18th hour of day three and just want to get your money and go home. Be careful, and make sure that everything works out the way the deal was originally set. Take measures to understand everything that goes into a deal, and be clear of what is being offered and what you want.

We play and love this game for the competition, the excitement, the feeling of accomplishment, the money! But as in life, anything and everything that involves money should be treated like a business. These are some of the things that you need to be aware of before playing in poker tournaments.

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