As I wrote in response to Tom's original post, a backer earning even a 1% ROI with zero correlation to markets over a couple days time is an unbelievably good investment that people would kill for in financial markets. The hard part is determining the ROI. If I *KNEW* you were winning at 1.5, then paying 1.49 is still a fantastic deal for the investor.
The problem is, we are both just guessing your win rate, and unless I am the most knowledgeable and plugged-in poker player on the planet, there is very strong adverse selection - the only deals that are available to me are the ones that the smarter investors have already passed on.
The question is much more about what the ROI is and what the range of plausible error is in our estimate than it is about the backer/player split.
For example, if somebody has played a million spin-n-gos, we can have a very tight estimate on their ROI, and all of a sudden if they're playing one for a ton of money, I think that ROI is probably a floor (opponents might play worse than normal), so I would very willingly invest at 1% discount to estimated ROI.
But, again this is a market. Just because I would be *willing* to take only 1% of the EV doesn't mean that's what I will settle for. If time is short, and other backers are limited, then I will extract as much value as I reasonably can.
In tournament backing, many people are willing to pay a premium to gamble because sweats are fun (thus prices are artificially high), information is very opaque, there is a counterparty risk, there is adverse selection, and there isn't any ability to short, which would drive bad prices down.
This is a lot of words to basically say: The backer/player split is more about creating a cushion for ROI estimation error than it is about allocating actual known EV.
I think whenever you sell action for tournament an important thing to do before setting markup is determining the backer/horse profit split. If you're winning at 10% ROI, what's a fair MU to sell at?