Parlay EV

by Betrics Co. Author Sal Cacciatore

Are parlays worth it?

Parlays can be a lot of fun and an easy way to turn a small amount of money into a large amount.

But are they actually smart bets to make?

The answer is complicated.

Consider a $100 bet on a basic two-team parlay, where both teams have -110 odds. A win typically pays out $260. This is more than you would have if you won two separate $50 bets (which would net you $90.90), but since you need to win both bets, the odds you are getting are not reflective of the risks that you are taking.

Assuming both sides have a 50% chance of winning, you have a 25% chance of winning the parlay.

If we plug this into the expected value formula, we see that this bet would lose an average of $10 in the long run and is, therefore, negative-EV (.25 x $260 - .75 x $100 = -$10).

However, this does not necessarily mean all parlays are negative EV; if instead, you know that both sides have a 55% chance of winning (meaning the bet has a 30.3% chance of cashing), this parlay has a positive expected value (you would want to have at least a 27.8% chance of winning to make a bet worthwhile; this roughly equates to having two legs with a 52.4% win expectancy, which is about the breakeven point for a single bet at -110).

This means parlays can be worth it, like regular bets, if the expected win probability exceeds the implied win probability.

However, you may not always get a fair price for larger parlays. Some books, for example, offer +2000 odds for five-team parlays. The breakeven point here is 4.8%, meaning five bets with a win expectancy of 52.4% would not cut it.

We would need to find five bets with an average win expectancy of 54.5%, which is much easier said than done.

Players should therefore be cognizant of whether or not they are getting fair odds before playing large parlays.