Pot OddsThe pot odds are the ratio between possible winnings and the cost to have a chance at obtaining those winnings. Hence, they are the inverse cost/benefit ratio for a given bet.
The pot has $10
Player A bets $5.
There are 15$ in the pot. That is the possible profit. The cost for Player B, who follows A, is $5. Hence, he has pot odds of $15:$5 or 3:1.
Pot odds are useful when the question is whether a call is profitable in the long term, e.g. when playing draws. If after weighting by the probability, the cost is too high or the winnings too low, then the call is not worth making. In this case, you will not win a large enough sum often enough to make the investment profitable in the long term.
For example, if two players are in the final betting round and the first bets $2 in a pot of $10 while player B can only beat a bluff. Then player A must be bluffing in one of seven cases so that B can call without sustaining long term losses.
In this case, the pot odds were 10+2:2 or 6:1. Player B would therefore break even if his odds, or chances of winning were 6:1. He could lose six times (each time paying $2) and win once (winning $12). Hence, A must be bluffing 14% of the time for B to call.
Odds, Implied Odds, Equity, Expected Value