Parlays

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Parlays have been a popular sports betting product for a while now. People like them because they give you a lot of leeway to manipulate the risk profile of bets. If you want to bet a small amount and have a shot for a big score, you can do that with a parlay. If you want to bet big favorites but don’t want to lay a lot to win peanuts, you can do that with a parlay. If you want to have a chance to be in action all weekend with just one or two bets, you can do that as well.

In this article I will talk about the nuts and bolts of parlays and later I will bust some myths surrounding parlays and give you some tips on how parlays can be a good tool in your betting toolbox.

Sportsbooks don’t treat all parlay bets alike. It’s important to understand the house rules surrounding parlays, because they are always different between operators. In general, however, here’s what you should look for.

First, there are off the board, true odds parlays. Let’s say you want to bet on who will win four different NHL hockey games. Instead of betting each game separately, you either want a huge payoff if all four win, or you want nothing. The teams you want to bet on have the following prices:

-170, -220, +110, and +135

How do you figure out how much this parlay should pay on a $100 bet?

Well, one way is to pretend like you are rolling your winnings over from each bet and find out how much you have at the end.

So, you bet $100 at -170 and if you win you collect $158.82 (your original $100 plus $58.82 in winnings).

Then you bet $158.82 at -220 and if you win you collect $231.01.

Then you bet $231.01 at +110 and if you win you collect $485.12.

Finally, you bet $485.12 at +135 and if you win you collect $1140.04.

Whew. So you’re betting $100 to collect $1140.04. Or $100 to win $1040.04. The price of the parlay should be +1040.

There’s a somewhat easier way to get the same answer. First, you convert all the bets to their break-even percentages. Then you just multiply the percentages together and convert back to odds.

That’s 0.630 * 0.688 *0.476 * 0.426 = 0.0879

Convert to decimal odds by taking the reciprocal (which is 11.38) and then back to American Odds if you like which would be +1038. (The difference between the two answers is a rounding error.)

The key idea here is that the off the board, true odds parlay pays the break-even percentages of all the bets multiplied together.

What is the hold of this parlay? Well it depends on the hold of each of the individual bets. For the sake of simplicity, assume that there’s about a 4 percent hold on each of the bets.

Or, rather, let’s assume that each bet will actually win about 2 percent less than the break-even percentage. For instance, the first bet has a break-even percentage of 63 percent. Let’s assume that bet actually will win about 61 percent of the time. (The difference between the two being the edge the sportsbook has—they pay you like it wins 63 percent of the time, but it only actually wins 61 percent of the time.)

So just for the sake of this argument to get a ballpark figure for how much this parlay will hold, let’s assume the four bets will win 61.0%, 66.8%, 45.6%, and 40.6% of the time.

That means you expect to win the parlay 0.610 * 0.668 * 0.456 * 0.406 = 0.0754
You’re getting paid like your bet wins 8.79 percent of the time, but it only actually wins 7.54 percent of the time. How much do you lose on average if you bet $100 on this then?

EV = 0.0754 * 1040 – 0.9246 * 100 = -$14.04

On average you lose $14 for every $100 you bet on this parlay.

That’s a lot.

In previous articles when talking about individual bets, we were talking about bets with 2 to 8 percent holds. This parlay bet has a 14 percent hold.

Parlays have huge holds. The more legs in the parlay, the bigger the hold.

And this is just about the most generous sportsbooks get with parlays—the reason I kept saying “true odds” above when describing this parlay is that books often like to pay short odds on parlays, especially when you parlay a number of 50/50 type bets (like point spread or total bets).

For example, it’s common for sportsbooks to pay 11:1 on a four-team parlay. That’s four games, each if you bet them individually would be at -110, paying out +1100.

Let’s run the math real quick and see what this four teamer “should” pay—that is what it would pay if you just bet each game individually at -110 and rolled over your winnings.

The break-even percentage at -110 is 0.524 so we just want 0.524 to the fourth power which is 0.0753.

Take the reciprocal and you get 13.28 in decimal odds or +1228 in American odds.
That’s what the four-teamer should pay—and what it would pay if you did the parlay manually by rolling bets over from game to game.

But the sportsbook only wants to pay +1100.

If the hold was 14 percent on a true odds parlay, guess what it is on this short odds parlay? It’s easy to figure. Since we have four 50/50 bets, the chance you win all four is 0.5 to the fourth power or 0.0625. The expected loss on a $100 bet then is
EV = 0.0625 * 1100 – 0.9375 * 100 = -$25

You expect to lose $25 on every $100 you bet on this four-team parlay.

So that’s some hold.

The more legs you add, the bigger the hold.

Final Thoughts

If you read enough about sports betting, you will come across someone who says stuff like, “parlays are just bets for suckers” and “real professionals never bet parlays.”
Having done the math above, you can see where they’re coming from. Bets that hold 15, 25, or even larger a percentage of your bet will beat you real fast if you bet them a lot and don’t have an edge.

But anyone who says “real pros never bet parlays” doesn’t have a clue. Pros bet parlays all the time.

How can that be?

There are multiple reasons a winning sports bettor would bet parlays, but the simplest one comes straight from the above math. What parlays do really is they increase your average betting volume.

When you bet a $100 parlay, you’re not really just betting $100. Say you bet that MLB parlay from the example and win the first three games. You’ve effectively bet $100 plus $158.82 plus $231.01 plus $485.12 or nearly $1,000.

If the sportsbook has the edge on the bets you make, more volume means bigger losses.
If you have the edge on the bets you make, more volume means bigger wins. ♠

Miller’s latest book, The Course: Serious Hold ‘Em Strategy For Smart Players is available now at his website. You can also find original articles and instructional videos by Miller at the training site Red Chip Poker.