Longshot Parlays in US Sports Betting: Probability, Payout Psychology, and Market Reality

This is the longshot parlay cycle. It shows more about how people think than about the actual chances of winning. 

Longshot parlays, where you have to win all games to get paid, are very popular at US sportsbooks. FanDuel and DraftKings have easy-to-use tools for these bets on their main pages, and same-game parlays are becoming more common in betting. ^[1] Simple idea, bet $10 and win hundreds, maybe. But the maths says no.

How the Pricing Actually Works

For a normal NFL spread bet, it’s generally -110 for both teams. This means that each team has a roughly 52.4% chance of winning after fees. If you take 4 of these bets and parlay them together, your chance of winning drops to about 7.5%.  Most US sportsbooks will pay approximately +1100 on a four-leg -110 parlay. So this basically means you could win $110 on a $10 bet. ^[2]

That sounds good, right? But it's not really. The actual odds on four independent 52.4% events would be closer to +1228. The hold is the difference between the payout sportsbooks offer and the implied odds. This hold increases with each added leg. And this is why sportsbooks make more money from parlays than from single-game bets. ^[3]

Same game parlays make this difference even bigger. So, if you put a bet on the Chiefs moneyline, then a bet on Patrick Mahomes over passing yards, and then you put Kansas City’s team total in one game, those bets are linked. The more yards Mahomes throws for, the better it is for the Chiefs, and they’re likely going to win. Sportsbooks factor in this connection, but most bettors don’t.

Why Bettors Believe the Payout Is Worth It

If you ask somebody why they bet on five-leg parlays, they might say, "If I'm risking $20, I want to win big." This clearly shows how folks think big payouts for small bets. According to research, people often think they have a better chance of winning big prizes (like in the lottery). ^[4] A $10 parlay that pays out a lot seems smarter than a lottery ticket. And this is because it involves sports, where bettors think their knowledge helps them win.

This feeling is more acute when someone wins. If a bettor wins on three teams like the Chiefs, Lakers, and Yankees in a weekend, they might think they can do it again. But it was not skill that won them; it was luck. Good luck can look like skill, especially on social media, where people mostly post their wins.

Where the Logic Breaks Down

A bettor puts $50 on a six-part NFL bet at +8000 with the hope that if all six parts win, the bettor will win $4,050. Sounds good. 

There is about a 3.8% chance that all six parts will win. The actual payout should be about +2,535%, but the sportsbook sets it lower because of fees. The fees on six-part bets can be over 30%. But this depends on how the sportsbook pays out.

That $50 bet is probably going to lose value before a game is even played. There’s excitement in the chance to win, but the odds are against you.

In addition, changes to the spread can influence the probability of winning a bet. If a spread goes from -3 to -4.5, it changes the win chance for that part. Gamblers rarely delve into where the queue came from and why it moved.

Industry Context

US sportsbooks are focusing on parlays because they are profitable. Parlays make more money than regular bets.

And this is mostly because they are easier to manage and keep bettors interested in several games all at once. Regulated NFL sportsbooks  provide better odds and parlay insurance to get more people to bet this type of bet.

Same-game parlays have exploded in popularity since 2019, and they explicitly show what sportsbooks want and what bettors want. These bets are meant to be fun, visually appealing, and easy to create on a mobile device.