This is a development of five-card stud and generally produces a livelier game. In seven-card stud, the players start with three cards each, two down and one up. Then there is a betting round. Thereafter a further three cards are dealt face up, with a betting round after each. The seventh and last card is dealt face down, and is followed by the final betting round. Players who stay to the last card will have three down cards and four up cards. Seven-card stud has five betting rounds and as a result the pots can be quite large. Rather than playing this game for pot-limit stakes, it is not a bad idea to change to half-pot limit.
In seven-card stud, players use the best five cards, from the seven they are dealt, to make their hand (remember, all poker hands contain only five cards). This means, for example, that a hand containing six hearts would only use the highest five to make the flush. A six-card flush does not beat a five-card flush. Similarly, there is no such hand as three pair. Thus J-J-10-10-4-4-2 would lose to K-K-6-6-Q-7-3.
I also suggest you read our article(s) on Five-Card Stud Poker for more information.