Posted this on Player's Talk but should have come here

[jellobiafra]

I'm trying to figure out the fairness of payouts in a point spread pool I'm entering:

It's a $120 entry fee. Everyone picks 8 selected games vs. the point spread each week. You must win ALL 8 games to win any money for an individual week. It happens about once a year in this pool. The overall percentage leader at the end of the season wins an allotted percentage of the total remaining pool entry (obviously larger if nobody has an 8-0 week). I think there are nominal payouts for 2nd and 3rd as well.

I'm mostly concerned with the fairness of the 8 team parlay payout. My friend hit it last year and he won $1300. He tells me there are more people in the pool this year so the payouts will be higher.

Can anyone tell me what a fair payout for an 8 team parlay would be here? I guess the weekly wager amount is a little over $7 (120/17). I guess it's actually 17 shots at an 8 team parlay for $120. Actually I don't really know how to look at it, hence the post and questions. I'm going to play because I already told him I would, but I'm wondering how this payout structure compares to that of an actual book.

[reno cool]

1 in 256. True odds for 8-0

[maxdalury]

so 17 chances at the parlay gives and expected chance of .066 and 1300 payout yields an expected value of $86.

[jellobiafra]

so 17 chances at the parlay gives and expected chance of .066 and 1300 payout yields an expected value of $86.

Thanks guys. Does the above mean that a fair cost for this pool assuming a $1300 payout for 8-0 is $86? Sorry, my math skills are pretty remedial. Well, I passed college calculus but that was a long time ago and I don't remember anything practical.

[maxdalury]

well it depends on the total prize pool, if the prize pool ran out then you wouldn't really have 17 chances so the fair price would be less.

But as long as all the money being put in, is paid out in some form, then the expected value = 0 and the fair price is $120

[MrX]

Thanks guys. Does the above mean that a fair cost for this pool assuming a $1300 payout for 8-0 is $86? Sorry, my math skills are pretty remedial. Well, I passed college calculus but that was a long time ago and I don't remember anything practical.

If they're not taking any money out of the pool (it sounds like they're giving away any remainder to the overall leaders) then the "fair cost" is exactly the entry fee. There's really no point worrying about the parlay odds if they're giving away 100% of the pool.

But, if you do want to worry about the parlay odds, $1300 is a more than you'll generally get in a sportsbook on a $7.06 bet (Vegas would pay about $1060 (150 / 1), true odds at -110 pricing would pay about $1235).

[jellobiafra]

Cool. Thanks again guys. Sounds like the payout is more than fair for hitting the parlay and if nobody hits then it's a nice prize at the end for overall leader(s). Seems like a solid pool to me. You've assuaged my doubts.