I was reflecting recently on a cruise I took with my family last Spring. They had a casino of course with a variety of games, but I was really only interested in poker. My dad and I signed up for a nine-man, winner take all tournament of Texas hold'em and I was truly baffled with the way the rest of the table was playing. Several older gentlemen were playing every single hand no matter what! So I thought I'd give some tips as well as slightly talk about the theory differences between these styles of the same game.
My first question is what is the difference between a tournament chip and a cash chip when you're sitting at the table?
A cash chip (for a cash game) is simply worth it's value. Nothing more, nothing less.
What about a tournament chip though? Let's say you enter a nine-main tournament (buy-in of $110) where the top three finishers get paid, and the casino starts you off with 1,500 chips. How much money would you say is sitting in front of you? What is the total value of your chips once the game starts?
Well the simple answer is $0. Sorry to tell you. Why?
Until you make it to at least 3rd place, you haven't made any money. The 4,5,6,7,8,9th finishes all walk away with nothing. So, until you can claim at least 3rd place in this particular tournament, you don't have any prize money value to attribute to your chips.
Example: (I'm going to assume if you're reading this you understand the game of Texas hold'em, how blinds work, etc)
Say you get dealt AA and are in middle position with $1000 in cash chips. The blinds are $5/$10 and someone in front of you raises it to $55. You re-raise to $200. It folds back around to him and he shoves all-in, you call, and your hand holds up. What was your profit here? $1000 my friend. Nice hand.
Now say you get the same hand and the same action follows except you are now in a tournament just like I described above, with top 3 getting paid. You each have $1000 in tournament chips and after the hand is over, you get his $1000. How much money or equity did you gain?
I said before the simple answer is $0, but the actual answer is it's not zero. In the poker community, the way to find out your equity in a given tournament is called an ICM calculation.
My next post will be all about ICM and if for some crazy chance this sparks some interest, I'll write a third post about how this affects optimal play at the table.