Parlay betting can be exciting, but is it a smart bet? The simple answer is that it’s irrelevant. Parlay betting essentially multiplies your action. This means that if you’re a winning player, you’ll win more and if you’re a losing player, you’ll lose more. It does increase the standard of deviation which makes it a riskier bet but potentially more lucrative. Over the long haul it won’t make a winner lose and it won’t make a losing player win.
The simplest way to envision how parlay betting multiplies your action is to imagine a two event parlay where you lay ten dollars down. The casino sees this as one certain bet and one conditional bet. If the first event goes in your favor, you lay $19 down on the second event. If the 1st event doesn’t go in your favor, you do not bet on the 2nd event.
Again simplifying, suppose you win the 1st event 50% of the time. On average you will lay $9.50 down on the 2nd event. This means that your $10 bet got $19.50 worth of action. A three team parlay would get $28.53 in action, four teams would get $37.10, etc.
If you are winning 50% of your bets, this increase in action increases your losses. A 10% juice casino could expect to earn $0.50 off a single $10 wager with you. A four team parlay would give them $1.85.
On the other hand, if you are a winning player, increasing your action can increase your win rate (but also increases the variability). If you are winning 57% of your wagers, a $10 straight bet has a positive expectation of $0.83. A $10 four-team parlay would give you an expectation of $3.76.
It might seem then that you’d always take really deep parlay bets if you’re a winning player. The problem with that is that the standard of deviation will often see you broke before you hit. Bankroll management and appetite for risk are key considerations when considering parlay betting.
That notwithstanding, it can be a nice way to increase action without laying out too much cash up front. Were I able to bet I’d probably take a lot of two & three team parlays.
http://www.bestofblog.net/nfl_picks_2009/2009_YTD_nfl_analysis.html
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As an excercise, I compared ROI and Odds of losing with and without parlay betting on the Week 4 games.
ReplyDeleteWith straight betting per the ( http://www.bestofblog.net/nfl_picks_2009/week_four_picks.html ) week 4 picks the ROI was 114% and the odds of losing were 28.9%.
By spicing it up with some Parlay betting, I was able to increase ROI to 143% - but odds of a losing week increased to 59.4%. Contact me if you want to see the details on the probability distribution and how parlay betting affects it.