Understanding Parlays

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Every once in a while, despite the best bookmaking and balancing of positions, sportsbook managers find a surprise in their daily summaries, like a player hitting a $1 million 8-team parlay. Though the occasional player hitting a home-run on a parlay should be expected, when a big one hits, it can catch sportsbooks off guard. Parlays are one of the most misunderstood tools in the betting industry, which is why books offer them. Like the familiar proverb, give a player enough rope, and...well, you know the rest.

There are two common ways parlays are played that guarantee the book a long-term profit. Many recreational players are focused on the "big win" like hitting eight plays at -110, to win $100,000 from a $66 stake. While it can be a blast when the first three legs hit, I've seen people nearly go into cardiac arrest after winning the first seven, leaving one play pending on Monday night for an all-or-nothing life changing win. Sweaty and stressed, these parlay junkies invariably end up cracking and trying to hedge out the parlay.

The fundamental problem with playing parlays is that risk management is impossible. Assume our friend who was betting $66 tickets had a bankroll of $10,000. By Monday night, this parlay bettor is risking $51,200 (in equity) to win $48,800. They're now risking more than five-sixths of their bankroll on one play. For recreational gambling this is fine, but for a professional, this kind of tactic would make Kelly roll over in his grave.

Another common play is parlaying a lot of favorites that "can't lose" to generate a payout close to even money. One parlay for college football I saw included: Va. Tech -535, Rutgers -405, NC State -405 and Purdue -1070. In this parlay, the player risked $100 to win $101.80. This common strategy of parlaying favorites is a classic case of mathematical denial. The player FEELS like all the sure things will win, and the thought is reinforced by seeing many of the selections succeed with the occasional parlay paying off. The mathematical certainty however, is that every parlay selection added increases the "juice" paid. Parlaying big favorites like this (without sophisticated handicapping) will NOT make money in the long run.

If this is the case, then why do wise guys play parlays? One reason sharps play parlays is that they may find a correlation. Correlated parlays are the "holy grail" of sports betting - finding and betting these almost guarantees a win. These are so dangerous that even small correlations (e.g. in MLB, playing the visitor with the over or the home team with the under) can gradually destroy a sportsbook. Sharp players identify these correlations and hoard the information along with the names of sportsbooks known to take action on these correlated bets. If you try to make a parlay at Pinnacle Sportsbook and our software rejects the play, there's a good chance the play is correlated.

There's another type of parlay that sharps use which called an "action" parlay. Many times, a player wants to bet more than a book's limit. This is especially prevalent against overnight lines or smaller markets like Tennis and NASCAR. Assume you see an opening line that is badly off e.g. +150 when the fair line is +100. When discovering these huge edges, bettors logically want to bet as much as they can.

One way to do this would be to play the +150 selection parlayed with 10 random games at -110. If you win and lose exactly five of these selections, you've effectively bet five times as much on the +150 selection, but lowered the payoff (since you paid more juice with the random selections). This isn't a good idea if you have a normal 53% play versus -110, but it's a tool to remember when there's a monster play in a small market. At Pinnacle Sportsbetting we've customized the software to defend against this type of strategy, but there may be less astute sportsbooks out there that haven't.

Another way sharps use this strategy is to play two or three-team parlays with one open leg. They'll do their usual plays for the early legs, and close them out with the monsters. For example, they'll risk $1,000 on a three-team parlay and after winning the first two legs, they can effectively risk $3300 to win $3000 by closing that last leg.

If you play a lot of parlays (or even teasers, which are just modified parlays), you need to spend significantly more time on risk management. Not only could you be overexposed on a game (like the 8-team parlay discussed earlier), but you could be underexposed as well.

If the first leg of a two-team teaser/parlay has lost, you have no action on the second leg. Sharper players will routinely evaluate their positions at the conclusion of each leg, and make additional bets to ensure they have an adequate position on each game they like.

The Inside Wagering Line From Pinnacle Sports By Simon Noble

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