The TDA received the following very fundamental question regarding button placement if the big blind is busted, it is reposted here for benefit of all:
Subject: Blinds, button, dead players
If in hand #1 the player in big blind is knocked out where in the rules does it define how the blind and button moves. I play a local club league and the guy that runs it claims that the button moves one position (which I agree with) but that the blind end up moving two positions so instead of having a dead small, the player that would have been the next big blind skips big blind and becomes small blind... D.
Reply from TDA Founding Member Dave Lamb:
D,
I suspect you are using a forward moving button method where the button always gets moved at the end of each hand..
TDA members all use the dead button method as follows:
Each player posts the big blind and the small blind once per rotation of the button,
The button may remain in the same position (seat) more than one hand to allow each person to pay both blinds.
The same player may have the button and be last action more than once in this situation (button is dead).