Cashing out at home games

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Agreed, money should stay on the table unless a player cashes out everything. Some home games let a big stack sell some of his chips when someone new buys in, which I do not think is unreasonable in a friendly game. But ratholing such as the OP described should never be allowed as it kills the game and is just generally retarded.

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In terms of selling off the big stack's chips, I think this should only be permitted when there is no other way for the buying player to obtain new chips. We used to use beer caps for $5 chips in our $20 buy-in game.