ICM (Independent Chip Model)
ICM, the Independent Chip Model, converts a tournament chip stack into an estimate of real money equity using the prize pool and every stack still left in the field.
ICM, the Independent Chip Model, prices a tournament stack in real dollars by combining the payout structure with every stack still in the field, rather than treating chips as cash. It exists because tournament chips cannot be cashed out directly, only a finishing position can, and payouts are almost always top heavy.
ICM equity = sum over each finishing position of (probability of that finish x that position's payout)
Worked example. Two players remain with 80 and 20 chips out of 100 in play, for a pool that pays 600 for first and 400 for second. Treating chips as a straight share of the pool would value the stacks at 800 and 200. ICM instead prices the big stack's chance of first at 80 percent and the short stack's at 20 percent:
Big stack: 0.8 x 600 + 0.2 x 400 = 560
Short stack: 0.2 x 600 + 0.8 x 400 = 440
The short stack's guaranteed 400 props its equity up above its chip count, while the big stack's extra chips buy less than face value because second place still pays well. This gap is the source of ICM pressure: shoves that profit in chips can lose money once ICM converts the result into dollars, which is why medium stacks tighten up near the bubble and final table pay jumps.