Value of Tournament Chips

One very common misconception about a chip stack in poker tournaments is the value of each individual chip. It is crucial for a player to know what his chips are worth so he knows exactly what he is risking when he puts chips into the pot. The ICM model is something all players should know.

ICM stands for Independent Chip Model and it determines what each individual chips in a stack is worth in dollar value. Depending on a chips value, players must adjust strategy.

A player buys into a tournament for $10,000 and receives a starting stack of 10,000 chips. The ICM model says that each chip is therefore worth $1 each. If a player was to sell his chip stack, he should not sell for under $10,000. Now, what happens if he wins 2000 chips the first hand? What is the value of his chip stack now?

More Chips, Less Value

This is where players get confused. Players often then think that if the chip stack grows by 2000 to 12000 chips total, it must then be worth $12,000. This, of course, is very wrong.

To make an example of this, think about the opposite scenario. What would happen if the player lost every one of his chips except 1? What is that chip worth? Well, he has a seat in a $10,000 buy in tournament and has 1 chip, so that 1 chip is worth $10,000. This shows that as a chip stack decreases, the value of individual chips goes up.

On the other hand, when a chip stack goes up, the value of each individual chip goes down. This is the main basis of the idea that larger chip stacks can take more risks and make looser calls. This is because even though the deeper stack is putting in the same amount of chips at risk, he is not risking his entire stack in doing so.

Now go back to the opposite scenario to see why the 1 chip is worth $10,000 at least. Imagine players were on the money bubble and there was a player with 1 chip, but somebody else, maybe more than 1 person, were already all in. Now that 1 chip is worth at least the minimum payout, which is surely over $10,000.

At the same table as the 1 chip stack player sits a 100,000 chip stack. Is each chip worth at least $10,000 in that monster stack? Definitely not, as there will not even be that much money in the total prize pool. This is how chip values change depending on the size of a chip stack. The short stack’s lone poker chip is worth more than any single chip in a deep stack player’s stack. Thus, the fewer chips one holds, the more each chip is worth.