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Pot Odds Calculation
Pot odds can be calculated in real time by comparing the size of the bet to the size of the pot. The total size of the pot should include the current bet. So if the pot is $150 and a player bets $50, the total pot would be $200. In this case, you would be receiving pot odds of 200:50, which reduces to 4:1 pot odds. In practice, it is not necessary to get pot odds figured out the nearest decimal. A close approximation is good enough. If the pot is $123 and a player bets $37, you don't need to do any long division. Just think to yourself that the pot is about $120 and the bet is about $40. The pot odds in this case would be 160:40, which reduces to 4:1.

Purpose of Pot Odds
Pot odds are used to determine the profitability of making a call or bet. In most cases, this is used to tell you whether or not it makes sense to chase a draw. Every draw has a chance to hit, and that chance is often expressed as a ratio. For example, the odds of a flush draw completing on the next card are about 4:1. By comparing the pot odds to your drawing odds, you can figure out if it makes sense to chase a draw. In the case of a flush draw, you would need to be getting pot odds of 4:1 or greater to call profitably. If the pot odds are something like 5:1 or 6:1, you can make the call and expect to see a profit over the long term.

Pot Odds Example
Let's say you're playing in a $0.50/$1.00 no limit cash game. You're sitting on the turn with a nut flush draw. The pot is sitting at $19.52 and your opponent bets $5.00. Should you call this bet? The current pot plus the opponent's bet adds up to about $25. You have to call $5.00 to stay in. That comes out to pot odds of about 5:1. Since you were smart and memorized the odds of the most common draws in Texas Holdem, you know that the odds of a flush completing with one card to go are about 4:1. Since the pot odds are greater than the drawing odds, you can call this bet and profit. Here's why this works out in the long term: You will miss this draw and lose $5.00 four times out of five for a total loss of $20. One time out of five, you will hit this draw and win $25. That works out to a total of $5.00 in profit per five instances. In other words, your expected value is $1.00 every time you make this call.