Short explanation
Pot odds is about comparing how much you can win to the cost for playing.
Pot odds example
Let's say we're on the flop. There's $80 in the pot and your opponent moves all in with his last $10. It costs you $10 to call and you can win $90. Your pot odds are 90 to 10, or 9 to 1, which is the same.
This can also be expressed as 9:1. Or 1:9 - the order doesn't matter, you just need to know what you're talking about.
Remember: To get the pot odds, compare all the money already in the middle with the amount you need to pay to win it.
Comparing pot odds to winning odds
But just knowing the pot odds is of no use to us. The brilliant idea here is to compare the pot odds to your winning odds.
This is the key to many decisions at the poker table.
Continued example
In the above case, the pot odds are 9:1. Your winning odds need to be better than 9:1 for your call to be correct. If your winning odds are worse, you will lose money by calling - in the long run.
How does this work?
What does this mean? Winning odds of 9 to 1 means that for each time you win the hand, you'll lose nine times (if you replay the situation many times.)
Each time you lose, you lose $10. Each time you win, you win $90. In the long run things even out, you're at breakeven. Your call is okay, it won't cost you anything. (Of course, folding has the same average result when you're exactly at breakeven.)
If you feel unsure of this, have a look at this article on pot odds calculations.
Going from odds to probability
How do winning odds of 9 to 1 compare to the percentage numbers you're used to see in poker television and odds calculators?
Well, if you win once and lose nine times, you win one time out of ten. Thus, your winning chances are 10%.
Clue: To get a probability, divide one odds number with the sum of both odds numbers. For example, 1 / (9+1) = 1/10.
If your winning odds are 1:1, you divide 1 by 2 and arrive at 50%. With winning odds at 2:1, divide 2 by 3 and you get 67% winning chances.
Going from probability to odds
If you're a 60% favorite to win a hand, you'll win 60 times and lose 40, so your winning odds are 60 to 40 or, shorter, 3:2.
As an 80% favorite your winning odds are 8 to 2, or 4:1. When you're a 30-70 underdog, your winning odds is 3 to 7.
Remember: You must realize that the money you put in the pot on earlier streets are no longer yours. Those are chips that you can win but not lose. This may seem weird to you, since you did put in some of them. But it gives you the correct numbers for your poker decision.
Continued example
With pot odds at 9:1, you need winning odds 9:1 or better for your call to be profitable in the long run, as we saw above.
We arrive at a percentage by dividing 1 by 9+1 and get 1/10. If your winning chances are 10% or better, you can call your opponent's all in bet with an expected profit, in this example.
Winning chances of 10% is not much. Basically, your opponent's occasional bluff is enough for this call to be correct. This leads to a very important insight.
Insight: You often need to call small bets on the river, even if you think you're beaten! Otherwise you're giving awway chips.
Further complications
This is the smplest example we could think of. In reality, things usually get more complicated, as always. Read our article with more theory about pot odds.
/Charlie River
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