Let's say that you just paid $22 to enter a 6-max sit ‘n’ go at your favorite online poker site, with $20 going to the prize pool, and $2 for the house take. You get $1500 in chips to start and as soon as the cards are dealt, the site freezes and goes offline for the next two hours. When you finally log back in and check the cashier, you will see that all your money has been refunded. In effect, the $1500 in sit ‘n’ go chips you bought were worth exactly the amount of the buy-in.
You buy back in to the same $22 sit ‘n’ go to get your daily poker fix and you fight your way down to the final three players, with the top two spots getting paid. You are dealt aces on the button, but as soon as you go to click the "Raise" button, the wind blows too hard in Antigua and the site goes dark again.
Now what happens? Three guys busted, so surely they aren't entitled to get anything back, right? And you had aces!
While there's no hope for your pre-flop monster (which is good news if you had 72o on the big blind!), you will get your fair share of the prize pool once the site servers dry off from the storm surge. But how much, exactly?
This is where ICM comes into play.
ICM is a measure of your fair share, aka "equity", in the prize pool. It is calculated by the number of players remaining, the number of chips they hold, and how these two factors play together to predict your chances of finishing in each position: first, second, or as the empty-handed schmuck with a lame bad beat story.
As an introductory article on the subject, I don't want to risk losing your interest with a bunch of boring math formulas, so I'll just give a few quick examples of how ICM determines your sit ‘n’ go (or tournament!) equity, based on a 6-max table with $1,500 in starting chips.
With 6 players, that means that there are $9,000 chips in total. The payout in our hypothetical sit ‘n’ go is 70% to first and 30% to second. That is $84 and $36, respectively.
If the blackout happened when you had half of the chips in play ($4500), with your remaining opponents each possessing $2250, your equity is $54. That's fantastic, since that's significantly better than second place money. Your opponents each have $33 in equity. That's slightly less than second, since of course, someone has to lose...and that can't be you, right?
Now let's say you have $4500, and the next highest stack is $4000, and the sorry sap trailing only has $500. Your equity in this situation is $57. That's a modest improvement, because now you are almost dead even with the second guy, whose equity is $54 - the same amount you had in the first scenario. Why are they so close? That's because player three is practically destined to lose here, and his lousy equity of $8 reflects this.
Understanding these first two examples should make it very clear why if the final three players each have $3000 in chips, the prize pool equity for each player is a chop at $40 each.
ICM goes far beyond explaining how to estimate your prize pool equity or negotiating deals.
It can be used strategically as a weapon by players who know how to wield this information to avoid unnecessary risk, as well as apply maximum pressure on their opponents into making fatal mistakes. We will take a closer look at this in the next article as we delve into how you can put the concepts of ICM to work for you in your game.