Here's an example from Texas hold'em: Angie holds K♣ 10♣, and Burt holds K♥ 10♥. After round three, the board is A♣ Q♠ J♥ 4♣. Both players have an ace-high straight, the current nut hand, and so they will most likely split the pot. But if the final card happens to be a club, Burt's straight will lose to Angie's flush. There is no other possible final card that will give Burt more than a split; only Angie can improve, so she is freerolling Burt.
If a player knows he has a freeroll, he can raise the pot with impunity, and often a less-skilled opponent with a good hand who does not realize that he is on the wrong end of the freeroll will continue to put in raises with no possible hope of gain.
In Hold'em, it is possible to know you have a freeroll without seeing your opponents cards. After the turn if the board has two aces and two kings all of separate suits, and you hold AK, you are guaranteed a minimum of a split. However, there is a possibility of you getting the nuts, with a guaranteed winning hand, if an Ace or a King hits on the river.
The term is also used to describe a tournament with no entry fee.
Categories: Poker gameplay and terminology