Parlays

A parlay is a combination bet where all the bets fall under a single wager. Each bet must cover to win the wager. For example, a three team parlay involves three bets and if all three cover, the bettor collects six times the wager amount. Sounds good except for the fact it only takes one bet to lose and the total wager amount is lost. Important to note is that depending on the book, a push in a parlay results either in a no bet situation, or the bet is pushed down to fewer games. Under the push down rule, a push in a three team parlay converts the bet into a two team parlay and a push in a two team parlay would become a straight bet.

The inevitable question arises to whether a parlay bet is a sound investment strategy. In order to answer this question, the important number to consider is the projected success rate for picking pointspread winners. If a bettor is picking less than 52.38% winners, straight bets are better than parlays as the straight bets will lose at a slower rate than the parlays. The consolation for making straight bets would be the bankroll won’t be wiped out as fast. The bottom line is that both straight bets and parlays will be losing propositions for failure to pick consistent winners. If you cannot pick consistent winners, why are you betting anyway?

For the situation where the bettor can pick consistent winners, let’s use some statistical mathematics to crunch the probability numbers. Let’s use a two team parlay where we will back Team A and Team B. The first step is to determine all the possible outcomes for each of the two bets.

There is one combination of two wins. (Team A and Team B cover).
There are two combinations of one win and one loss. (Team A covers and Team B losses). (Team B covers and Team A losses).
There is one combination of two losses. (Team A and Team B both lose).

Thus, there are a total of four win-loss combinations, assuming there are no pushes. If a bettor picks 54% winners over a season, the individual game bet success rate is 0.54 and the individual game bet failure rate is 0.46. Applying the success and failure rates to the four possible combinations shows the following:

The probability of two winners is: 0.54 x 0.54 x 1 combination = 0.291 (29.1%)
The probability of one winner and one loser is: 0.54 x 0.46 x 2 combinations = 0.497 (49.7%)
The probability of two losers is: 0.46 x 0.46 x 1 combination = 0.212 (21.2%)

Since a winning two team parlay pays 13/5 odds, this means a successful parlay will pay out 2.6 times the wager amount. The 13/5 odds also show that 5 out of 18 (27.8%) two team parlays are required to win to break even. For a $110 parlay wager, a winning parlay will pay out $286 and if any game loses, the $110 wager will be lost. If 54% ATS winners over time are anticipated, the expected rate of return on the two team parlay bet is computed as follows:

0.291 x $286 = $83.23 (bettor has a 29.1% chance of winning $286 on successful parlay)
0.497 x -$110 = -$54.67 (bettor has a 49.7% chance of splitting the games and losing $110)
0.212 x -$110 = -$23.32 (bettor has a 21.2% chance of losing both games and losing $110)

Summing the three returns (83.23-54.67-23.32) yields an expected profit of $5.24 per parlay bet. If a bettor played 150 two team parlays at $110 each (gross risk = $16,500), the expected profit would be $786.00.

Would the bettor make more money playing straight bets? If the bettor chose straight bets for the same games, there would be 300 single wagers at $55 each (gross risk = $16,500) and 54% winners would show 162 winning bets and 138 losing bets. With a 10% juice, the profit would compute to (24 – 13.8) x $55 = $561.00. This calculation shows that at 54% winners, a two team parlay has a higher expected rate of return than straight bets.

Actually, 52.7% ATS winners are the breakeven point for two team parlay bets as compared to 52.38% ATS winners for straight bets at 10% juice. In other words, if a bettor can win more than 52.7% of the plays, the two team parlay has a higher expected rate of return than straight bets. And, three team parlays are even better.

Beware, before everyone forsakes straight bets to play all parlays, extreme words of caution need to be expressed. First of all, there is no guarantee that 54% winners will directly translate into winning 29.1% of the two team parlay bets as shown above. It is mathematically possible to only win 16 parlays out of 100 while still picking 54% winners. This worst case scenario translates into $4,664 in losses with a $110 per parlay wager. Ouch! It clearly shows that 29 parlay winners are in no way guaranteed while picking 54% winners in the individual games. Parlays are a high risk venture.

The second reason for not falling in love with parlays is that it can compel bettors to force the action. If only one game stands out on the day’s card, the bettor is likely to force another selection to generate the parlay. This is never a good idea and can quickly accelerate a losing agenda.

Parlays should be an occasional wager and only when the bettor is operating in the profit mode and has two solid plays for that day. If each straight play is worth 5% of the starting bankroll, I advise a two team parlay bet should be 2.5% at most of the starting bankroll amount, and only on occasion.