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It is a bit confusing, and really, no one thus far has explained it completely.
He spots his tell, but as he says "The rule is that when you spot a man's tell, you don't say a word" and that he could go on reading Teddy 'until the cows come home' but he doesn't have enough time to do that, he only has until morning.
So instead, he lets Teddy know that he knows his tell, and is reading him like a book, by showing his top 2 pair lay down. Doing so puts Teddy on tilt.
By putting Teddy on tilt Mike feels that he has a better chance of finishing him off quicker, before morning when he has to pay up, instead of paying attention to his tell.
Of course... this is completely dramatic, and using his so-called tell, instead of telling him, and putting him on tilt, would have been much more useful.
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