Hedge fund managers have been accused this week of turning the stock market into a casino, but one trader is taking the opposite approach: turning casinos into markets.
Manro Haydan, a London proprietary trading business, is
betting it can make money from online poker by putting up the stakes for an army of more than 150 freelance “traders” to gamble over the internet.
The privately owned company, which invests for its own account, believes that by applying the sophisticated risk management techniques used in money management to poker it can shift the odds in its favour.
An increasing number of hedge funds and similar “alternative investments” have been looking for ways to make money that are unrelated to equity or bond markets, with funds set up to invest in musical instruments, football players and photographs.
One other hedge fund manager has been trying to raise money to set up a poker fund, but it remains unclear whether it will succeed in setting up as a competitor to Manro.
Chris Smith, head of Manro, said the model was not that far from the business of employing traders – for a cut of profits – to make money from futures, options or foreign exchange.
One major difference, though, is that poker players typically prefer to fund their own hands rather than give up a share of winnings to a backer.
“There aren’t enough players that would accept our terms because 99 per cent of them want to fund it themselves,” he said. “It is a quite different mindset.”
Manro has set up BadBeat to recruit players, putting up their funding and imposing tight controls on their betting levels. BadBeat covers all losses and takes half of any wins – leaving poker players on a much better deal than ordinary traders.
