The Basics: How Do Parlays Work?
Do you ever find yourself wondering “what is a parlay bet?” I am here to explain the parlay meaning and how this betting construct can be used advantageously.
Simply put, a parlay bet is any single sports wager that combines two or more bets. Image this scenario: the Knicks are playing the Nets and the Celtics are playing the Magic tonight. You believe the Knicks and Celtics will win their respective games. So, you look to bet the moneyline for both teams to win. Since you are bubbling with confidence that both outcomes are likely, instead of placing individual bets on each, you combine them into a single wager. This wager is known as the parlay.
In this scenario, you are not just betting on each team to hopefully win, but betting on both outcomes. But why would you risk combining two bets, instead of spreading your risk amongst the two (or more) bets to give yourself more chances to win?
What is the Parlay Meaning?
The main benefit behind parlays are the larger payouts that come with a hit. With larger payouts though, obviously comes higher risk since instead of it being a single outcome you must hope for, its two outcomes.
For easy understanding, let’s go back to the NBA example. Say the games are what are known as a “pick ‘em”, where there is even payout for either team winning, denoting a 50/50 chance either team will win. A common pick ‘em line is -110/-110, so we will stick with that. You know you want to bet on both the Knicks and the Celtics, so you have two options to construct this bet. Here are your decisions:
Decision 1: Two Single Bets - You can place two individual $110 bets on both games
Decision 2: A Single Parlay Bet - You can create a $220 parlay, picking those results to both occur
Decision 1 can play out in essentially 3 ways (really 4). We will begin with the best outcome, where both bets hit and you win a total of $200 (your $220 in total, less the $10 dollar hold percentage on each bet), nice job! The second outcome is the most neutral where one team you picked wins and the other loses (this could play out in the Knicks winning and Celtics losing or vice versa, hence the theoretical 4 scenarios). In this case you lost a net of $10 (the house’s hold) on the night, not bad for betting a total of $220. The worst case outcome is where both teams lose and you lose your entire exposure of $220.
Now let’s look at Decision 2. There are only two possible outcomes since you are making a moneyline bet (a point spread bet would introduce the possibility of a pushed bet). In the first outcome, both teams win so your parlay hits, and you win $581.82. To calculate this, multiply the percentages of the odds given and convert back to your preferred odds. In this case, -110 odds converts to 52.4%. 0.524 * 0.524 = .275. This converted back to American odds is +264 which multiplied to that $220 bet, yields a profit of $581.82.
In the second outcome, either (or both) of your picks lose and you are out the entire parlay bet of $220.
Why to Consider the Parlay Bet
Let’s do some simple calculations to demonstrate why a bettor might want to consider a parlay. When evaluating risk surrounding probabilities, it is common to find the expected value, or how much money you’re going to make on average if you repeat this process over and over again.
For straight bets in Decision 1, we calculate the expected value by multiplying the probability that each team will win by the amount of money made in each scenario. Since each game is considered a 50/50, there is a 25% chance both the teams you picked win, a 50% chance one of them wins, and a 25% chance both lose. Using basic math, we find the expected value to be -$10, so you are expected to lose $10. This makes sense, since the betting organization has a hold percentage which refers to the percentage of money that the sports book keeps for every dollar wagered, regardless of outcome. If you continuously make “pick ‘em” bets at -110, you will lose and that’s a tricky but necessary way for the sports books to make money.
The parlay bet in Decision 2 is an all-or-nothing case. There is a 25% chance you win $581.82 and a 75% chance you lose $220. After rounding to the nearest whole dollar, the expected value is -$20. So, in the average scenario, if you continued to do this you would actually lose more money.
It can be demonstrated quite intuitively here as well, but the standard deviation of each outcome is a viable way to determine risk. Decision 1 yields a standard deviation of $148.50 while decision 2 yields $347.20. The higher standard deviation for Decision 2 demonstrates higher risk, obviously, but also higher reward.
Should You Bet the Parlay?
So that’s the parlay meaning: a combination of single bets that can yield higher payout, but with added risk and less long-game incentive. But should you make a parlay bet? Some experts say never to bet the parlay, but that’s not a hard and fast rule (and completely ignores the fact that parlay bets are fun!). Like any other sports betting decision, if value is presented in some way, it can play in your favor.
It is important to note there is the catch that bets placed into a parlay must be independent events from one another. This is put into effect to protect the sports book from outrageous payouts for simultaneous placed bets where if one hits, the other is likely to as well. An example of this would be trying to parlay the first bet of Manchester City to beat Chelsea and the second bet of Manchester City to keep a clean sheet against Chelsea. If one happens, there is a good chance the other will as well, and would not make sense for books to offer.
I think it also interesting to note that singular bets often hold parlay characteristics. Let’s say you want to bet that the Chicago White Sox will beat the Kansas City Royals and there will be over 8.5 total runs scored in the game. In this case you are betting two things:, Indians moneyline and the total runs being over 8.5. Heck, even think about something as simple as the spread, you are betting moneyline one way and a point differential. I point this out because while dependent events cannot be bet on in official parlay format, there may be instances where you can find what you are looking for in a single bet.
I hope this helped you understand the parlay meaning. While the odds aren’t always going to be in your favor, the payouts can be worth the risk. Plus, parlay bets are fun to make and can be one of the more exciting sports bets you can make. And hey, if your first few legs hit, you can always hedge your bet! So long as you keep in mind that your risk of losing is higher, you can make smart decisions about betting the parlay and have more fun betting on sports.
