Parlay Betting

Parlay Betting
Johnny Demp as "Captain Jack Sparrow"

Parlays are one of the most popular bet types around. They are loved by both the bettors and the books.

But before we get into that, let us first define the term "parlay".

In the simplest definition, a parlay bet is the combination of multiple wagers into one singular chance. The singular bet thus needs each component, or "leg" of the parlay to win for the whole bet to be graded a winner. Whether it is a two-leg parlay, or a sixteen-leg parlay, for a bettor to win their bet they would need to get every component correct to win.

Let's take this example from Fanduel sportsbook.


If a bettor believes that the Philadelphia Sixers will cover a -6.5 spread against the Indiana Pacers, they can bet it at -110 odds. Likewise, if the same bettor saw value in the game total going over 234.5, they could also bet that at -110. These two bets would return $90.91 each if they were to win. A Sixers win by at least seven points and the game scoring more than two hundred and five points then yields $181.82 profit. However, if one of these bets were to lose, then the bettor will only lose $9.09 on this game.

A parlay bet of these two bets for the game would be $264 profit if both outcomes were correct. That is $80 more than the $181.82 won if someone were to bet both of these bet types straight. The parlay bettor in that scenario wins 45% more than they would have by betting both singularly.

Here lays the appeal of parlays. But, as mentioned earlier, both the bettor and the books love parlays. It is not as simple as just increasing your winnings with ease.

Why Bettors love Parlays

Bettors are so popular in the betting community for the exact reason stated above, larger payouts, lower risk, and more fun. It is natural for people to root for the long shot. People love sweating out smaller bets that could win them big money. I mean, who doesn't like the idea that if done right, the price of a Starbucks coffee could win you enough for a new car? It's the same reason the lottery is so popular as well.

According to Fanduel odds, assuming each leg of the parlay is -110, the odds for a bettor's parlay would be:

2 legs +264
3 legs +595
4 legs +1228
5 legs +2435
6 legs +4740
7 legs +9100
8 legs +17540
9 legs +33580
10 legs +64200
11 legs +122670
12 legs +234300
13 legs +448300
14 legs +854000
15 legs +1630700

So, on a typical NFL Sunday (14 games) a bettor could put $10 on a parlay with one leg from each game and make $85,000 dollars just like that. This idea, this dream of "why not me" is strong with bettors. More experienced bettors typically limit these types of plays, but that does not mean they don't use small wagers or free bets, to indulge in longshot parlay bets. Experienced bettors typically limit even short odds, or few leg parlays as well. But once again, this does not mean they completely ward off the occasional parlay bet.

Novice and more casual bettors tend to flock to parlays. A lot of pro gamblers or more seasoned bettors understand bankroll management and have a comfortable bankroll set up for their wagers. Many new bettors search for the lottery dream more than anyone. A freshly turned 21-year-old college kid doesn't want to wager $110 dollars to win $100. They want to bet their lunch money for a chance to off their student loans.

Why Sportsbooks Love Parlays

The reason sportsbooks love parlays bet on their books is shown in the data from the University of Nevada’s Center for Gaming Research. The state of Nevada in 2021 reported average earnings of 5.7 cents on each dollar wagered on football. For basketball, the sportsbooks earned 5.5 cents on each dollar bet. Finally, they profited 4.8 cents on each dollar from baseball bettors.

For parlays? These Nevada sportsbooks made 32.1 cents on the dollar on parlays. A difference of five and thirty-two earned per dollar is over 500% of an increase in profit being made by the books.

This is why we see so much of the advertising dedicated to parlays. It is not just the commercials or billboards, or ad reads from these legalized sportsbooks, the majority of marketing incentives we see revolve around parlay betting. Have you ever logged into Fanduel, DraftKings, Caesers, or any betting app to see boosted odds or promos on straight bets? It does not happen often. The books often offer boost solely for parlays, making the requirement to get the boosted odds "a minimal of four or more legs" to qualify.

Fanduels "NBA on TNT" Promo

This is where sportsbooks make their money, literally. The 30 cents on the dollar profit does not happen by accident, hence the push for more parlay bettors. On a typical "minimal four-leg parlay" to qualify for these targeted promos, the likelihood of winning is not reflected by the odds offered. Newer bettors get tied up in looking at the legs. individually, failing to reason the combined probability of each leg winning collectively.

In our four-leg example, let's say a bettor wants to qualify for the said promo. They may "play it safe" and make a parlay at or close to +400 to qualify for the promo. To reach the +400 minimal odds it would require four legs at -200 odds each. A -200 prop has an implied probability of 67%, which bettors get caught up in. Let's say they select four legs at -200, and they feel confident since each player prop selected has won that -200 in seven of their last ten games.

When combining multiple 67% probabilities, the chances of the parlay winning no longer needs that one 70% chance, it needs the legs to win collectively. Multiple legs adds more variance, more chances for injuries to occur, and lowers the possibility to win your bet. While four legs at -200 give you +400 odds, which is four times your wagered amount, it only carries a win probability of 19.5%.  

When you factor in the large volume of parlay bettors each day, each game, and each promo, you can see why sportsbooks love them. In the given example, the books were holding a 6% edge on the four-leg parlay compared to the odds being paid out to the bettor. Well, the discrepancy odds in relation to the true probability only increases in favor of the oddsmakers are more legs are added.

Parlay betting is attractive and fun for the bettor, but more profit for the books they are bet on. Here at Pikkit, we are not saying do not bet parlays, we enjoy fun as much as anyone else. We are just suggesting keeping them light and fun. It is important to understand why they are marketed as much as they are by sportsbooks.