Strategy & Theory: Parlay Analysis

Sports bettors have been lured for years by the high payouts of parlays.  These enticing types of wagers can make for a lot of excitement and a lot of money.  But their risk is substantially higher due to needing to win every “leg” of the bet.  The sportsbooks have made a fortune of these types of bets over the years due to their low win rate.  And the higher the number of teams in the parlay, the lower the probability your ticket is a winner.

Is there a place for this type of action in your betting arsenal?  We think so, but before we get into that, lets have a quick review of a 2-team and 3-team parlay and how they compares to similar flat bets:

First, a 2-team parlay: if you win a 2-team parlay, the standard payout is 2.6x of the bet.  So a $100 bettor would win $260.  But what if you placed flat bets instead?  Assuming standard -110, you would need to win 3 consecutive flat bets (total return of $273) to roughly equal what your 2-team parlay would payout.  In this case, you’d be risking $300 for the same approximate payout as $100 of risk on your 2-team parlay.

Now, a 3-team parlay: If you win a 3-team parlay, the standard payout is 6x of the bet.  So a $100 bettor would win $600.  If you placed flat bets, you would need to win 7 consecutive bets (total return of $637) to roughly equal what your 3-team parlay would pay out, but you’d be risking $700 compared to risking $100 on the parlay.

With this analysis, why don’t sports bettors play more parlays?  The answer comes back to the gold standard in sports betting.  Remember that roughly 53% is the target win percentage to break even, 55% is considered good, and 60% will land you in the sports betting hall of fame.  If you multiply the win probability (50%) across multiple bets in a parlay, you see the odds of winning go down considerably.  For a 2-team it is 50% x 50% = 25% chance of winning.  For a 3-team parlay, it is 50% x 50% x 50% = 12.5% chance.  This is why the sportsbooks entice bettors with the large payouts... because the probability of holding a winning ticket is low.

But we said there was a place for these types of bets in your plays, right?  The way to best utilize these types of bets is as a hedge.  Let’s assume you are looking to place a standard bet size of $100 on 2 different games.  With these flat bets, you can A) win both and net $182, B) lose both and lose $200, or C) split and lose $9.  

However, if you use a 2-team parlay as a hedge, betting against both of your flat bets for $80, the outcome options are as follows: A) win both flats, lose the hedge, and net $102, B) lose both flats, win the hedge, and net $8, or C) split the flats, lose the hedge, and lose $89.

Not using a parlay hedge has 2/3 outcomes as losses.  Using the parlay hedge has 2/3 outcomes as wins.  And, the expected probability average for not hedging is a $27 loss.  The expected probability average for using the hedge is plus $21.  Parlays can be helpful as a hedge, but not as a sole strategy.

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PSA: Professionals Bet Numbers, Not Teams

Professional bettors bet numbers, not teams.  No matter how many times we hear this, it still rings true.  But why do we need a constant reminder and why the distinction of saying “professional” bettors?  Why not just say “sports bettors”?

Experience in the business will teach you that a team is never as good as they looked last game, nor are they as bad as they looked last game.  A team may look fantastic one week, and lay an egg the next.  But to the professionals, they only care about the number.  They don’t see a team name, a player, or a coach.  They see the number.  

How does this number shape the way a professional bettor looks at a game? The answer lies in power rankings.  If you look at websites like ESPN, etc you can find power rankings based on what a handful of analysts think, or worse, what fan bases think.  This is not what we are talking about.  

Power rankings is a list of how teams rank, in order, combining things like offense, defense, efficiency, 3rd down conversions, takeaways, rebounds, FG%, bullpen ERA, etc.  The list begins every season and changes frequently.  Professional bettors have their own list and watch as many games as they can.  Then, they update the list frequently based upon statistics, injuries, etc.  They then compare this list with the lines posted for games. This is where the “betting numbers” part comes in to play.  Have you ever seen a top 25 team playing at home be an underdog to an unranked team?  The reason is because the sports books also have their own rankings, and often times it doesn’t matter what the AP rankings are, etc.  

Ultimately, fine tuning this list frequently is what allows a professional bettor to take advantage of mis-priced lines.  You can find the bet count percentage from most books.  If something doesn’t make sense to you, such as the top 25 team be a home dog to an unranked team, you’ll know the dog has a higher power ranking to the books and the pros.  And often times there will be heavy action on the dog, driving the line further.  

If you haven’t had experience making a list, start with an upcoming season by doing research.  One of the best that we have seen is Phil Steele’s magazine.  He publishes his power rankings in his annual college football magazine each season prior to the start.  As a long time reader, I can tell you that Phil is usually very accurate in these rankings.  As the weeks go on, update the rankings based upon what you observe, what stats you feel are important, etc.  The professionals didn’t become professionals in one season.  This takes years to fine tune, and one season carries over to the next.  This skill will serve you well if you plan to be in this business for the long run.

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Bank Roll Management: Dollar Cost Averaging

With all of the hype on Championship games such as the Super Bowl, College Football Playoff, March Madness Final Four, World Series, Stanley Cup Final, etc. it is easy to focus on a specific event or game.  Often times bettors will put a little extra effort into their strategy and theory for games like these.  While it can be natural to do this with the national attention, we think the same focus should be placed as often as possible on all of your action.

The importance of strategy and theory for not only the bets you make, but when you make them, cannot be overstated.  If can often mean the difference between a profitable and unprofitable event.  Jim Cramer, the host of Mad Money on CNBC often recommends buying stocks in multiple purchases to allow you to get a better price if the stock goes down.  In the investing world, this is called Dollar Cost Averaging.  

The same strategy can help you maximize profit and hedge downside risk in sports betting.  A while back, we detailed our plays on the College Football National Championship game between LSU and Clemson.  We recommended 75% of action on LSU moneyline, 15% action on LSU ATS, and save the final 10% for in-game action in the event that Clemson scored first.

The staggered action allowed for a profitable game if LSU won.  Additionally, it allowed for taking more risk/reward to cover, and ultimately + money options if Clemson scored first.  What happened?  Clemson scored first, LSU came back to not only win, but cover.  The ROI on the event was 61%.  By using a strategy to the game, we minimized risk while still being very profitable.  

The point is this: when looking at a game, develop a plan, and even a backup plan that allow you to minimize risk and maximize reward.  Don’t jump in all at once.  Allow yourself an option of Dollar Cost Averaging.  Rely on your research and allow for in-game action, especially when the game goes against you early.  You can often get + money with most of the game left.

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Strategy & Theory: Inclement Weather

There are several variables to consider when looking at placing action.  Then teams, coaches, power rankings compared to the lines, and so on.  One of the things that is often not accounted for enough is weather, specifically wind and rain.  It is clear the weather doesn’t have an impact on basketball and hockey.  Baseball and football, on the other hand, are mostly played outdoors.  The difficult part about analyzing the impact of weather on a baseball game is two fold.  First, wind can change direction over the course of a three hour game.  A fly ball with the wind in the first inning may be aided into a home run.  The same fly ball against the wind in the seventh inning may be an out in the middle of the infield.  Second, while rain can impact a baseball game, often times if it there is too much of it, the game is suspended.  For these reasons, we tend to stay away from baseball games with inclement weather.

Football, however, can have entire game plans change because of the weather.  The most notable way this can change betting lines is on the over/under, typically driving the number down. Both high wind and rain will favor an offense that can run the ball well and favor a defense that can stop the run because the passing game is severely limited with down the field attempts.  

There are other reasons why the wind and rain can impact football.  Field goal attempts become more difficult in swirling wind.  Now that extra points have been moved back, they too become more difficult.  Both of these play well towards the under.

Become familiar with weather patterns and their impacts on these games.  Think about which stadiums and cities can have this kind of impact as well.  For example, Seattle gets a lot of rain.  Cleveland is right off a lake.  Chicago is known as the Windy City for a reason.  Sports bettors should use some down time to get an education in weather.  Basically, they should become junior meteorologists.  Check the 10 and 7 day forecasts for the cities that are impacted the most by inclement weather.  Understanding the weather patterns progressing over time can give you a huge advantage on the early lines before the forecast becomes a noteworthy item on game day.  Typically, if the wind is blowing > 10mph, it will have an impact on the game.  Also, rain and thunderstorms as well.  Take advantage of this often overlooked information.  A little research and education can go a long way to increasing your bankroll.

Thanks for reading. Please follow us on this blog and also stay up to date with our current posts on Twitter @scccllc and @moneylineshow. Shirts now available in our eBay store at ...  https://www.ebay.com/str/steelcityclothingcompanyllcKeep checking back! 

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