How are Parlay Odds Calculated?

A parlay is a single bet that is placed on two or more different games. As a general rule, all games in the parlay must be winners (or at least end in a tie) for the parlay bet to win. The odds on a parlay are based on how many different teams you play. A 3 team fixed odds parlay might pay 6 to 1 while a 12 team fixed odds parlay could pay 600 to 1. Take a look at the following example of fixed odds parlay payouts from one of the leading online sportsbooks;

Parlay size:	Fixed odds:
2-team	2.6/1
3-team	6/1
4-team	12/1
5-team	25/1
6-team	35/1
7-team	75/1
8-team	100/1
9-team	150/1
10-team	300/1
11-team	450/1
12-team	600/1

The first thing that you need to know when looking at parlay odds is whether the betting line for each individual game in the parlay contains standard odds or not. As we have discussed before in the article titled “How do Sportsbooks Make Money on the Moneyline”, the standard odds for sports betting are (-110), meaning that you must wager $110 for the chance to win $100.

If, and only if each and every team in your parlay has a betting line containing standard odds, then the fixed odds table shown above will apply. In that case it is simply a matter of looking at the table to determine the payout based on the number of teams you bet on with your parlay and the amount of your bet. If you placed a $100 bet on an 8 team parlay and won, you would get a payout of $10,000 in addition to having your original $100 bet returned to you.

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You could assume that there is no real calculation required to determine the parlay odds since the odds are set by the sportsbook based on the number of teams in the parlay, but in fact the calculation does exist. It’s just a very simple one. A $100 payout is 91% of a $110 wager, and the return of your original wager represents a 100% return on that wager. The total then is 191% or 1.91 as a multiplier. To get your payout for a 2 team parlay simply multiply $110 by 1.91 squared. For a 3 team parlay it’s $110 times 1.91 cubed. For a 5 team parlay it’s $110 times 1.91 to the fifth power. And so on.

But if the betting line on one or more games in the parlay is anything other than the standard odds, a slightly more complex calculation must be performed to determine the final parlay payout. Once again, we will mention that these odds are almost always calculated by the sportsbook when you place your bet, and a calculation on your part is therefore not really necessary. The purpose of explaining how to calculate the payouts on these non-standard odds is to give you a more in-depth understanding of what’s behind the sportsbooks calculations. Take a look at the following 3 team parlay example where the betting lines for the 3 teams respectively are (-160), (+130) and (+110);

Moneyline:	Multiplier:
-160	1.625
+130	2.3
+110	2.1

Just like the fixed odds, for every moneyline there is a multiplier which describes how much money you will receive as a payout if your bet wins. The payout for a bet on (-160) is $100 for every $160 that you wager. The $100 winnings is 62.5% of the $160 that you risked. Additionally your original $160 bet is returned to you, and $160 is 100% of the money you risked. Therefore the total payout including the return of your original bet is 162.5% of your original bet. We divide that by 100 to get the multiplier, which in this case would be 1.625. Now when the betting line is positive such as (+130), your winnings are more than 100% of the amount you risked, 130% in fact. Adding the original bet which again is 100% of your original bet because it is your original bet gives you 230% payout or a 2.3 multiplier.

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Finally, you can now calculate your payout from the multipliers you have created. The payout would be the original wager multiplied by all of the multipliers in the parlay. Assume for a moment that in the above example you wagered $100. Your payout would be $100 x 1.625 x 2.3 x 2.1 or $784.88, and $684.88 would be winnings while $100 of that would be your original wager. You can easily see from this illustration that when the betting lines are positive the payout more than doubles for each team you add to the parlay.

It’s been correctly pointed out by various authors that the actual chances of hitting a multi team parlay are a lot lower than the fixed odds would suggest. The real odds of hitting a 5 team parlay for example are more like 31 to 1 while the payout for fixed odds is only 25 to 1. It’s good to understand this relationship between true odds and the fixed odds payouts you would receive from a sportsbook, but it’s not really that relevant.

The fact is that by picking underdogs you can increase the payoff for multi team parlays well above that which you would get for fixed odds. And even if you do decide to go with the standard odds, parlays can still yield a huge payout for relatively little investment. Hitting a 4 team parlay with a $100 bet doesn’t get you the $1500 payout that you would get if the sportsbook offered true odds in their fixed odds table, but $1200 is still a pretty darn good payoff for that $100 bet.

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