Used to describe a "bad luck" hand in which a player with a strong hand unfortunately clashes with an opponent holding something even better. In hold’em, getting all in preflop with pocket kings only to run into pocket aces is a common example of a "cooler."
The term derives from the term "cold deck," a reference to a deck that has been stacked by a cheater to produce certain hands when dealt resulting in a big loss to cheater’s intended victim (e.g., aces versus kings). Such a prepared deck would be introduced into the game and thus would the cards be cold to the touch when compared to the cards already in play.
Today a "cooler" doesn’t usually refer to a player being cheated, but feeling similarly after having experienced a hand in which he or she could not avoid losing.