When you buy into a poker tournament, you are given a set amount of tournament chips. For example, when you buy into a $10,000 tournament, you typically get 30,000 in chips. These chips can only be used in that tournament. You cannot cash them out for money. Everyone plays poker until one person has all the chips, which can take from a few hours to several days, depending on the structure of the tournament.
The blinds are gradually increased to induce action, which reduces the field over time. For example, a tournament may start with 10,000 chips and 25/50 blinds but after a few hours, you may be playing 500/1,000 blinds, turning the event into a crapshoot. Once 90 percent or so of the players have been knocked out, prize money is paid to everyone once they lose their last chip, usually with the majority of the money going to the top three finishers. For example, in large tournaments with 10,000 people, 1,000 people will usually walk away with some money.
Note that 1,000th place may get 0.02 percent of the prize pool, whereas first place might take 25 percent. When I sit down to play a poker tournament, my goal is to win. It is not to survive for a few hours or recover my buy-in. I play to win because most of the prize money goes to the top few finishers. All the biggest winners in tournament poker play to win. To win, you have to play an aggressive style of poker.
If you are tight, you won’t make it. Your chips constantly change in value. If you are running low on chips, you need to get your last few chips in the pot with a decent amount of equity. If you have a huge amount of chips, they lose value because a person can only go all-in for the amount of chips they have in front of them.
Those extra chips above what the 2nd highest person at your table has are not worth nearly as much as the chips that equal that player’s stack. Suppose you are down to nine players in a tournament and everyone has 100 chips except you, with 100,000 chips. First place pays $100, 2nd pays $70, 3rd pays $50, 4th pays $30, and the rest of the spots pay $10, for a total prize pool of $100 + $70 + $50 + $30 + (5)($10) = $300.
In this extreme situation, your 100,000 chips will almost certainly win you the tournament, but you don’t need nearly that many to win. By the same note, all the players with 100 chips have a huge amount of equity compared to the large stack. In fact, one of the 100-chip stacks will end up having almost the same value as the 100,000-chip stack by the end of the tournament, as the large stack will get $100 and a stack of 100 will get $70.
Consider the prize money that will go to first place versus that going to everyone else in proportion to their stacks. The 100,000-chip stack will win $100, so each of his chips is worth $100/100,000 = $.001, whereas the chips of the other eight players are worth ($300 – $100)/9 = $0.22 each. As you can see, once you have a huge stack compared to everyone else, those extra chips greatly diminish in value