Parlays are essentially the lottery of sports betting, which is why sportsbooks and bettors adore them. Parlays are popular among sports gamblers because they can increase the value of small wagers. Parlays are popular with sportsbooks because they generate more revenue from them than single-game bets do.
Legal sportsbooks have developed a clever strategy to entice punters to place more parlays bets since sports gamblers choose a wager type that generates the highest revenue for sportsbooks: parlay insurance.
Before we discuss what a parlay is, how parlay insurance functions, and how much parlay insurance lessens the sportsbooks' advantage on parlays in the sections below.
What Is A Parlay?
A single sports wager called a parlay combines two or more independent wagers into a single stake. A leg refers to each individual wager in a parlay. A parlay must have a winning wager on each leg in order to win.
A parlay transfers your initial bet and any wins from your first leg to the subsequent leg. For instance, if you bet $11 and your initial wager wins $10, the second leg of the parlay would need a bet of $21.
A parlay offers a greater reward than a single-game gamble, but the risk is higher. Your profit if you win for an $11 wager on a -110 single-game spread is a mere $10. However, your net profit on an $11 stake on a four-leg -110 spread parlay is $136.12.
- Leg 1: Bet $11, Get $21
- Leg 2: Bet $21, Get $40.09
- Leg 3: Bet $40.09, Get $76.54
- Leg 4: Bet $76.54, Get $146.12
What Is Parlay Insurance?
Coming close to winning is what encourages bettors who lose on parlays to keep placing wagers because of how lucrative parlays are. A bettor starts to think they are due for a win when they hit three of the four legs of a parlay.
Sportsbooks provide parlay insurance to entice bettors who come close to winning on parlays to place another wager. The way parlay insurance operates is that you receive a refund if all legs of your parlay win save one.
Cash-back insurance and free bet insurance are the two varieties of parlay insurance. If all but one of your parlay legs win, you can purchase cash-back parlay insurance, which adds your initial wager amount to your account balance. Instead of receiving your initial wager back in cash when you get free bet insurance, you receive a free bet payment equivalent to your parlay wager.
The ideal choice for you as a bettor is cash back because you can do whatever you want with it. Cashback is preferable to a free bet because you only get your money back if you win the bet you place with the free bet.
Another disadvantage of free bets is that you only receive your gains from successful wagers, not your initial investment. For instance, if you utilize a $25 free bet on a -250 favourite, you will only receive $10 instead of $10 plus your $25 stake back if the favourite wins.
It is crucial to read the terms and conditions because bookmakers do not sell parlays based on whether they are cash-back or free bet parlays.
Parlay ROI Without Insurance?
Parlays can be used with bets of any payout, but for the purposes of this post, I will exclusively use -110 spreads to determine parlay odds. Spread bets, which have a 50% chance of winning, are the most popular sort of wager.
We must first compute the advantage bookmakers have over clients who place parlays in order to determine the impact of parlay insurance. Betting firms enjoy a 4.55% advantage when they give bettors -110 odds on both sides for single-game spread wagers.
The house enjoys a bigger edge in parlays. This is due to the fact that placing multiple bets in a parlay multiplies the house edge on each wager. The greater the number of legs in a parlay, the greater the edge a bookmaker has.
You have a 25% probability of winning your wager, for instance, on a two-leg spread parlay (50% of 50% is 25%). Therefore, +300 should be the break-even odds for a two-leg spread parlay. However, the payout is +264, which is a breakeven rate of 27.5%, due to the -110 vigorish on spreads. The house enjoys a 9% advantage on two-leg spread parlays thanks to a breakeven percentage that is far higher than the genuine odds.
The sportsbooks' edge on parlays rises to 13% for three-leg parlays and to 17% for four-leg parlays. Most significantly, the house has a 20.8% advantage in five-leg parlays. Because their advantage grows with each additional leg, betting sites promote parlays with as many legs as feasible.
Longshot parlay bets may need a hefty payout, but in the long run, this is how betting sites generate the most money. In actuality, New Jersey bookmakers reported a 17.8% profit margin on parlays as of the end of June 2021.
The question is whether parlay insurance lowers the house edge sufficiently to make the wager worthwhile given that parlays are worse for sports bettors than single-game bets.
Is Using Parlay Insurance Worth It?
Parlays typically aren't a good idea if there is no parlay insurance. Because you are increasing the house advantage on single-game bets against additional single-game bets that also have a negative expected value, the payoff may be higher, but the house advantage is larger (EV).
However, your ROI for parlay insurance is typically the same as your ROI for single-game bets. Cash-back parlay insurance with five legs or fewer and free bet parlay insurance with four legs or less are both worthwhile investments if your primary motivation for sports betting is enjoyment.
I would only advise novice or intermediate-level bettors to stay away from parlays without insurance. This is due to the fact that these bets will eventually deplete your bankroll and are also very volatile.
If you are given a chance to increase your parlay profits, there is another situation in which you would choose to bet parlays. This subject will be covered in a subsequent article.