ICM Basics: Why Chips Are Not Worth Cash
How the Independent Chip Model turns tournament stacks into prize equity, with a three-player example and what it means for your decisions.
Chips and prizes are different things
In a tournament, prizes are paid by finishing place, not by chips. Doubling your stack does not double your prize equity, and busting costs you everything you could still win. That gap is what the Independent Chip Model, ICM, measures.
The chips you win are worth less than the chips you lose. This effect grows near the bubble and at the final table, where pay jumps are large.
How the model works
ICM assumes your chance of winning is your stack divided by all chips. To find the chance of finishing second, it removes the winner and repeats with the remaining stacks, and so on down the payouts. Then each place chance is multiplied by its prize.
It is a simplification: it ignores skill, position and blinds. It is still the standard way to compare decisions late in a tournament.
A three-player example
Three players remain with 5,000, 3,000 and 2,000 chips, and the prizes are 50%, 30% and 20% of the pool. By chips they hold 50%, 30% and 20%. By ICM their equity is about 38.4%, 32.8% and 28.9%.
The big stack's equity is well below its chip share, and the short stack's is well above. The short stack can fold its way up for a while because the leader cannot easily take its seat.
What it changes at the table
Calls that look fine by pot odds can lose money under ICM, because busting out costs more than the chips gained are worth. Chip leaders can pressure medium stacks who fear busting before the next pay jump, while short stacks need to take chances earlier.
In a winner-take-all game or a satellite with equal prizes the effects are different, and with a flat payout ICM pressure is smaller. Early in a tournament chips are worth close to their face value, so ICM matters little.
Questions
- What does ICM stand for in poker?
- Independent Chip Model, a formula that converts tournament chip stacks into estimated prize-money equity.
- Does ICM apply to cash games?
- No. In cash games chips are worth their face value, so only pot odds and equity matter.