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Pot Odds

Pot odds are a good way to quickly calculate whether it is worth your while to pay to see the next card at any time after the flop. The theory is based around the odds of your hand being in a winning position and the number of cards there are in the deck that could improve your hand further - known as your 'Outs'. You then weigh up the odds of your hand being in the lead now, you increasing the strength of your hand with the next card and the percentage of the pot you have to bet to see that next card:

Let's start by explaining some of the terminology to be used below:

Draw - when you are aiming to make the best hand by making a straight or flush after the flop but you currently do not hold it
Outs - the number of cards that will turn your hand from a losing drawing hand to a winning hand eg you hold 23 and flop 459, Aces and 6s will improve your hand and there are up to 8 left in the deck so you have '8 outs'
Winning hand - when mentioned before the showdown, it is the hand that you hold that you expect to be in the lead at that point. It is also known as a 'made hand'
Better odds - if you deduce that you have a 10% chance of hitting your outs and the pot odds are 8% you have 'better' odds and will call

Pot odds explained

When the flop is dealt, either you will be winning or you need cards to improve your hand and make it the winning one eg you are on a draw. If you have a 'winning hand' eg you hold AQ with a Q64 flop, you should bet and try and win the pot right away because allowing more cards to be dealt can only help your opponents even if they help you too.

If you are on a draw, it is then that you use pot odds to determine if it is statistically worth calling a bet or whether you should simply fold. There are two stages at which you have a chance to improve your hand - directly after the flop and after the turn card has been dealt. To determine the statistics of you improving your hand, in these two situations you have to do two different calculations:

After the flop - take the number of outs you have and multiply by 4 (this is approximate, the percentage is plus or minus 1 from this number).

After the turn - take the number of outs you have, multiply by 2 and add 2 (approximate again but more accurate).

Once you figure out your chance of hitting a draw you then consider the percentage of the potential pot you could win after adding your calling bet. For example, if the bet is $50 and the pot is $200, the bet plus the pot is $250 so you need to have enough outs such that the odds of you hitting are better than the 20% addition you are putting in the pot (50/250). If you have 8 outs this means you have about a 32% (8*4) chance of hitting your card so thus you should call in this case. However, if the pot size were $200 and the call size $150, you should not call because your odds are about 32% while the pot odds are 43% (150/350).

Illustrative example

The game is No Limit Texas Holdem, blinds are $50 and $100.
You are dealt AKo and raise pre-flop to $400.
You get only one caller and neither of you were blinds.
The pot size after the flop is therefore $950 (50+100+400+400)
The flop comes JT5 rainbow

You are on an inside straight draw with 4 outs - the four Queens in the deck, making your odds about 16% (4x4)
You act first and check as you need cards to make a hand and free cards are good for you (we'll assume there is no bluffing here)

Scenario 1.
Your opponent bets $100 making the pot odds 9.5% (100/1050)
Statistically you should call as your odds exceed the pot odds

Scenario 2.
Your opponent bets $250 making the pot odds 20.8% (250/1200)
Statistically you should fold as your odds are lower than the pot odds

Scenario 3.
Let's say you were dealt KQo rather than AKo. You now have an up-and-down straight draw with 8 outs - the four Aces and the four 9s in the deck making your odds 32% (8x4)
Your opponent bets $100 making the pot odds 9.5% (100/1050)
Statistically you should call as your odds exceed the pot odds

Scenario 4.
Again using KQo rather than AKo and your odds of 32%:
Your opponent bets $500 making the pot odds 34.5% (500/1450)
Statistically you should fold as your odds are lower than the pot odds (although it is quite marginal here)

In these examples, 'you' raised to 4 times the big blind which is quite a considerable bet that your opponent called pre-flop so you would also have to consider what they may have called with. Against some flops, he may have (for example) made a full house which beats your straight or flush even if you go on to make it on the turn or river. Nevertheless, pot odds are a very good way to make decisions in poker and show the difference between a beginner and a more advanced player.

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