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Parlays worth the risk?

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Profitable Parlays: Fact or Fiction?

There are countless ‘handicapping services’ in the business of providing people with parlays. They will tout win rates similar to some of the most impressive straight wager cappers. Of course, you will see that they refer to money line parlays as “safe” bets. On many of these sites you may even have the privilege of working with some sort of royalty in the field of parlay wagering. Regrettably, thousands will be fooled by this fiction again this football season.

The fact is that exotic wagers keep sports books in business. Next time you are in Vegas take a look at the discarded tickets you see spread all over the place. It’s safe to assume that you will find the majority of these losers are made up of such bets placed on both sports and racing. Of all the sucker bets available to sports bettors, the parlay is king. Bettors are lured in by the promise of a huge payout while disregarding the fact that there is no reasonable expectation of any return on the investment.

The house edge on a standard straight wager at -110 is 4.5%. Compared with many table games this is actually a fairly high percentage. A lot of table games and slots offer a better value for the average bettor placing a random wager. However, we all know that betting on sports isn’t anything like throwing a pair of dice at the back wall.

Chance plays a role in everything the house has to offer. There are also steps that can be taken to reduce the edge in just about every game. Nowhere in the casino are elements such as skill and preparation more useful than the sports book. The edge on a straight wager can be reversed in the bettors favor by utilizing statistics and expertise in a sport. However, a double digit house edge can never be overcome in the long run.

# of Teams Actual Odds Typical Payout House Edge
# of Teams Actual Odds Typical Payout House Edge
2 3/1 2.6/1 10.00%
3 7/1 6/1 12.50%
4 15/1 10/1 31.25%
5 31/1 20/1 34.38%
6 63/1 40/1 35.94%
7 127/1 75/1 40.63%
8 255/1 150/1 41.02%
9 511/1 300/1 41.21%
10 1027/1 700/1 31.54%

As you can see every parlay you can possibly bet comes with a whopping 10% house edge or better. Such casino advantages are more in line with keno, and they are equally impossible to overcome in the long run. There is no mystery surrounding the world of parlays. Bettors are attracted to risking a small amount of money for large payouts. The games that are most often played in the casino are slot machines that offer thousands or even millions in progressive jackpots. The mentality of these bettors is “Go big, or go home.” The casino is clearly happy to oblige as millions of bettors go home with nothing in their pockets every year.

It is fair to assume that the largest number of losing bets that a book accepts are exotic wagers of equal to or double the house minimum. This is because most bettors do not have a meaningful bankroll set aside for sports betting. Since they don’t believe they can make any real money by placing $25-50 on a few games per week they continue taking parlays for $20 or less. By doing this they essentially ensure a significant loss by the end of the season. Meanwhile, if they only placed straight wagers at that same level they would limit their potential losses to a few units at most.

Many bettors assume that because they are keeping the size of their bets low they are not taking on a significant risk. This analysis is flawed because it ignores several factors. Most importantly, it is my experience that most bettors do not place just one parlay per week. In football this means a minimum of 34 parlays are placed during the regular season. In baseball that number can easily exceed 100. With a low unit bet this is still a dangerous number of wagers to place with such a high house edge. For example, if you are placing only 5 team parlays your expectation should be to lose about $35 for every $100 you wager. As the number of bets you place increases it is inevitable that you will hit that $100 mark several times over.

Using parlays as a side bet will usually result in increasing your losses or erasing any profits you managed to make on straight wagers. In 2009, I had a client who broke even after increasing his bankroll by 45% using my picks. He managed to do this by placing “small” side bets including parlays, reverses, and teasers. This is an expensive lesson to learn especially when you consider I issued a similar warning to him.

If you are going to follow his lead and continue using parlays I have a few pointers that will help you in the long run. First of all, the best value of all parlays is clearly the three team parlay. The difference between the house edge on a 2 & 3 teamer is insignificant, but the payout is more than twice as much. If you take a look at the graph you should understand why I would never bet a parlay of 4 teams or more. However, if you are going to make such an investment here are two useful tips:

1. If you are going to bet a 4 or 5 team parlay, always make it 6 or even 10. The difference between the house edge to add 1 or 2 more teams is within 5 percentage points and the payout is significantly higher for both options. The house edge on a 10 teamer is virtually the same as a 4 team parlay, but the actual odds of hitting it are over 1,000 to 1.

2. If you are going to throw your money away chasing huge payouts on 7, 8, and 9 team parlays then just bet the 10 teamer. The House edge is about 10 points lower than all three of those bets and it typically pays about 700/1.

Setting reasonable goals and being patient while working to achieve them is the sign of a profitable professional bettor. Greed must be kept in check in order to be successful. In this regard, every bettor has two options. You can chase high returns while assuming a huge amount of unnecessary risk. Or you can minimize your exposure to a few units while maintaining a reasonable expectation to increase your bankroll by 50%… The choice is yours.

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