On PTP the backers are paying the whole buyin i think where makeup is the horse selling his own action at a premium since he feels he is a favorite against the field and im not all the familiar with PTP but isnt the 80 backers cut for 100% of the buyin covered where in most cases the horse has a piece of himself in a markup system
When horses apply for a stake on PTP yes, normally all the action is owned by 1 backer. However, if a horse runs a BAP he/she can choose to sell any amount of action they choose.
The horse pockets 100% of whatever shares they own. The backer receives the percentage of the cut on the value of their shares only, based on profit/bankroll, not winnings, less stakeback and mu/cake.
Ex.
Horse runs a $100 BAP
Shares $1 each with 80/20 backers cut.
Horse cashes for $1000
1 share is worth $9. 1% of $900 bankroll. ($1000 winnings - $100 buy-in)
An investor with 1 share would be paid:
{[ $9-$1(stakeback)- any makeup (I’ll say $0)] x 80%} + $1 (stakeback) + $0(makeup)
[$8 x 80% ] + $1 + $0
$6.40 + $1 = $7.40
The remaining 20% of the $8 (profit after stakeback and makup) goes to the horse. $1.60
In this example which is supposed to be equal to a 1.25 markup the horse earns $1.60 per share. Still not getting markup=1/backers cut.
I am aware this shows the ptp method as favouring the horse and is opposite of what I said in my last post. My brain hurts. Lol
Guess each system has its advantages/disadvantages depending if you are a horse or investor, expected ROI, etc. Not sure how to compare them.
Do any stakers or horses have any input why they prefer one system to another?