ICM poker is referring to the Independent Chip Model (ICM). What is ICM in poker? ICM is a mathematical equation that explains how not every chip in a poker tournament has the same value AND winning chips is worth less than losing them. Interesting right?
ICM is not perfect, there are things you should take away if you’re a tournament player, but here are also downsides to the model as well. Let’s look at how we should adjust and go from there.
The Fundamentals of ICM in Poker
In a cash game, 1 chip will always equal 1 dollar. So when you buy into a cash game for $100 and lose $10. You now have 90 chips. If you want to cash out, you will cash out 90 chips for $90.
In tournaments, that is different. Because you have to play out to the end of the tournament, we have to adjust our thinking for what our chips are actually worth. Tournaments have a payout structure, and so we need to think of how that changes the value of our chips.
Let’s look at an example of how this works.
Example of Poker ICM
Let’s say you buy into a tournament worth $1000 a person. Let's say there were 10 players so the total prize pool is $10,000.
You will have a determined prize pool structure at the start of the tournament. So the top 3 places get paid.
1st place gets 50% of the prize pool – $5,000
2nd place gets 30% of the prize pool – $3,000
3rd pl w gets 20% of the prize pool – $2,000
If you all start the tournament with 1000 chips as your starting stack, then technically your chip value is $1 per chip. Each chip is currently worth $1. But you can't just buy out of the tournament. You have to play it out.
So as the tournament progresses. The value of each chip will be reduced in value.
So currently 1 chip = $1
And 1000 chips = $1,000
But if you play the tournament to the end and win, you will end up with 10,000 chips.
The first place prize is $5,000. So at the end of the tournament 10,000 chips = $5,000. Which means 1000 chips is = to $500. And 1 chip = .50 cents.
In order to figure out what your chips are actually worth now, the independent Chip Model (ICM) comes into play.
ICM takes the stack sizes of each remaining player and adds a value to each stack size based on the payout structure and the probability for each player to get a certain place.
