Tournament chips are not money. Doubling your stack does not double your equity, because the prize pool is fixed and finishing positions pay differently.
ICM estimates the cash value of a stack from the payout structure and the chip counts at the table. Its practical effect is to make chips you could lose worth more than chips you could win, which is why correct tournament play near a pay jump is far tighter than the raw pot odds suggest.
The pressure peaks on the bubble. A call that is comfortably profitable in chip terms can be clearly losing in ICM terms, and the players who understand that are the ones quietly accumulating while everyone else folds.
Three players, $1,000, worked out
Three players share 10,000 chips and the prize pool pays $500, $300 and $200. ICM gives each player a chance of finishing first equal to their share of the chips, then works down the ladder the same way for second and third.
| Player | Stack | Chip share | ICM equity | Per chip |
|---|---|---|---|---|
| Leader | 5,000 | 50% | $383.93 | 7.7 cents |
| Middle | 3,000 | 30% | $327.50 | 10.9 cents |
| Short | 2,000 | 20% | $288.57 | 14.4 cents |
Half the chips buy $383.93 of the $1,000, not $500, and the short stack's chips are worth nearly twice the leader's. Now let the leader and the short stack get all in on a coin flip for the short stack's 2,000 chips. If the leader wins, the stacks are 7,000 and 3,000 heads-up with $200 already paid to the short stack, worth $440.00, $360.00 and $200.00. If the leader loses, the stacks are 3,000, 3,000 and 4,000, worth $322.86, $322.86 and $354.29. The flip is even in chips, yet it costs both players money: averaged over the two outcomes the leader drops to $381.43 and the short stack to $277.14, $2.50 and $11.43 less than before the hand. The middle stack, who folded, gains the whole $13.93.
Where the numbers come from
Related terms in tournaments
- Bubble: The point at which the next player eliminated finishes just outside the money.
- Chop: An agreement among remaining players to split the prize pool rather than play it out.
- Guarantee: A minimum prize pool the organiser commits to regardless of entries.
- Overlay: The shortfall an organiser covers when entries do not reach the guarantee.
- Freeroll: A tournament with no entry fee, or a situation where you cannot lose but might win.
Where an entry quotes a number, that figure comes from the computed sections of this site rather than from another glossary, so the definition and the derivation cannot drift apart. Each entry links to the page where the number is worked out.