A Calcutta in golf, also referred to as a "Calcutta sweepstakes" or a "Calcutta auction," is a form of tournament betting. The rules of each tournament can vary, but these are the standards.
As a bidder you pick the player of the team you believe will end up winning the tournament, if your bid is the highest you have bought them successfully. All the money raised throughout the auction goes into the pot, and the winner will receive a part of the pot. The simplest and most common format is that the winning team receives 70% of the pot, and second place gets 30%. Some tournaments have even gone as far, as the winner receiving the entire pot.
It is also very common that these styles of tournaments are used as charity events. Instead of having the winner receive a majority of the pot, a portion of each bid is donating to a charity of the tournament's choice.