Parlays have become the go-to bet type for millions of sports bettors around the country, and operators are loving it. So why is it just about everyone’s favorite bet type? Let’s get into that, and why parlays may not be eliciting the type of value many think.  

What are parlays in sports betting? 

A parlay is an increasingly popular type of sports bet that consists of multiple wagers (2+ picks, or “legs,” minimum) and is only successful when every leg of the bet hits. Standard parlays are composed of bets from different events/games. For example, a standard NFL parlay could consist of the Kansas City Chiefs money line against the Denver Broncos, the Philadelphia Eagles point spread against the New York Giants, and the over on the point total in the Green Bay Packers vs Chicago Bears game.

If you build a three-leg parlay and two of the three wagers hit, you still lose. Whether it’s game spreads, money lines, game totals, game props or player props, most major sportsbooks now allow bettors to parlay a mix of any betting markets they desire.

Parlays are naturally attractive because the odds of hitting multiple selections in one are typically longer than hitting a straight bet (or multiple of them), meaning people can generally risk less and win more. The more legs you add, the higher the payout but the more difficult it is to win the parlay. Some people enjoy the high-risk, high-reward chase and tend to believe one big parlay win can change everything.

What are Same Game Parlays? 

In September 2019, Same Game Parlays (SGPs) were introduced by FanDuel Sportsbook (and then others) for the NFL season, allowing users to combine multiple outcomes within one game. Sticking with the NFL as an example, Same Game Parlays can allow users to bet Patrick Mahomes passing yards, Chiefs money line, Travis Kelce receiving yards and the Broncos team total under points in a four-leg “SGP” between the Chiefs and Broncos. 

Same Game Parlays maintain the thrill of needing to be correct with multiple picks for one substantial payout, but instead of having to monitor multiple games, a bettor can lock in one and cheer for each leg to hit by the final whistle.  

With SGPs exploding in popularity shortly after their introduction, almost all of the industry-leading sportsbooks have added SGPs to their offering. With professional sport broadcasts advertising SGP builds before and during national events, SGPs continue to elevate parlay betting in popularity above other bet types. 

Why shouldn’t I bet parlays?

The truth of parlay betting is that it is incredibly difficult to turn a profit betting them. Plus, they can therefore be dangerous over time, especially if a bettor is reliant on or frequently betting parlays. It’s not as simple as the lower probability that comes with parlay betting equates to less winning over time, either. People can be smart and risk little on every parlay they bet. Parlay betting is truly difficult – and risky – because of the significant house edge (odds given vs. true odds) that exists with this type of betting. 

The odds provided by American sportsbooks never reflect the true probability of a selected outcome. There is always a profit margin built into odds to ensure the house is very likely to profit, regardless of the outcome. Implied odds of an outcome always add up to 100% with true probability, but at American sportsbooks, implied odds exceed 100%, typically by 4.5-5.0% – the house edge. The closer the house edge is to 0%, the more advantageous it is to bet. 

For example, sportsbooks usually price a standard straight bet that has true odds of 50% at -110, meaning you earn 91 cents for every dollar bet on these odds. Over time, if you only bet standard straight bets, you have to win around 52.4% of the time to just break even. 

Applying this base knowledge of the house edge on standard straight bets to parlays, we uncover strikingly minimal expected value over time.

American sportsbook two-leg parlays, built on two wagers at -110 odds, payout at a 13/5 (2.6-to-1) rate, three-leg parlays payout at a 6/1 rate, four-leg parlays payout at a 10/1 rate and five-leg parlays payout at a 20/1 rate. Using true probability, a two-leg parlay, built on two wagers at -110 odds, should pay out at 3/1 odds, three-leg parlays should pay at 7/1, four-leg parlays should pay at 15/1 and five-legs should pay at 31/1. 

Just by placing a two-leg parlay built on two legs at -110, the house increases its standard edge from 4.5-5% to about 10%. By the time you are up to a five-leg parlay, the house hits a 35% edge. 

Why are parlays dangerous?

Sure, the bigger the odds from the more legs you add to a parlay, the greater the potential payout. However, the price for a bigger payout is a worse expected value over time than if you’d bet your picks as straight bets. 

Sportsbooks are marketing parlays, especially Same Game Parlays, more and more as they profit immensely off bettors who continue to pursue action on the bet type. Sportsbooks like FanDuel and DraftKings, who dominate betting handles across the country, place pre-built SGPs and parlays on their homepage, often tied to a popular athlete, team, media member or theme. But for novice bettors, it’s incredibly difficult to see how much of a house edge is baked into the odds.

To put into perspective how profitable parlays have become for sportsbooks, consider Illinois’ 2023 sports betting data. 194,657,909 parlays were placed across eight mobile Illinois sportsbooks in 2023, resulting in $580, 492,589 in sportsbook revenue. Parlays had a 17.74% success rate in the state, resulting in an 18.2% sportsbook hold. Compare that 18.2% parlay hold to a 4.9% sportsbook hold in the state on straight bets, and you can gather why sportsbooks around the country make parlay betting a focal point of their marketing schemes. 

It’s already hard enough to overcome the typical house edge and consistently win straight bets over time, so why deflate your chances with parlays? The sad truth is that thousands of bettors love the idea of holding a lottery ticket. Even if their 15-leg $10 parlay should actually pay out $1.6 million, they’d be more than happy with a $1.1 million payout if it hits. But it all comes back to the basic math, where for almost all bettors it does not make sense to be betting parlays due to the massive disadvantage they have when betting them. Just as with the actual lottery, the large majority of bettors lose. And of course, only the winners get highlighted and glamorized. 

Gambling Addiction resources & treatment

Now that you’ve learned the dark truth behind the high-risk, high-reward nature of parlay betting, it’s important to also equip yourself with the knowledge of where to turn if you or someone you know may be dealing with a gambling problem. If it’s a struggle to keep gambling in check, particularly parlay betting with sportsbooks, there are resources with specialized treatment options. If you or someone you know could benefit from learning more about gambling addiction treatment from the comfort of home, Birches Health is worthy of your consideration. 

Birches employs licensed counselors with decades of combined problem gambling care experience under their belt, and they can work to create a customized plan tailored to your needs. With $0-out-of-pocket costs for many patients, Birches ensures 100% confidentially, security and convenience. 

Sources:

Sports Handle 

Gaming Today

Betting Pros

Investopedia