Parlays are sucker bets....period.
With all due respect to the poster, that statement is 100% incorrect. While it is indeed true that an unadvantaged gambler will on average lose more quickly betting parlays, for the value bettor, parlays can be an extremely valuable tool.
First let's look at a non-advantage bettor betting at a -110 style shop paying 13/5 on 2-team parlays and 6/1 on 3-team parlays (fair parlays odds at a -110 shop are actually about 13.223/5 and 5.958/1 respectively -- but 13/5 and 6/1 are still pretty close). If the bettor's picks are no better than a coin flip then betting two or three teams straight, we of course know his expected profit or loss ("P&L") to be -4.545%. But what if instead the bettor bets a two team parlay? Well, (assuming that all bets are independent) we know his chances of winning the 2-team parlay are 25% (50% x 50%) and his chances of winning the 3-team parlay are 12.5% (50% x 50% x 50%). Which means his expected P&L on the 2-team:
Code:
= 25% x 13/5 - 75% x 1
= -10%
And his expected P&L on the 3-team
Code:
= 12.5% x 6 - 87.5% x 1
= -12.5%
Now that's pretty bad. Betting a 2-team parlay, the unadvantaged bettor lowers his expected P&L from -4.545% to -10%, and betting a 3-team parlay he lowers his P&L further down to -12.5%.
OK, so that about sums it up for your 50/50 bettor. Parlaying (independent) coin flip bets is always a bad idea from a pure expected P&L perspective (although for a risk-lover it could be a very good idea). But what about for the advantage bettor, say a bettor who is able to pick 55% winners? The expected P&L for the 55% bettor:
Code:
= 55% x 100/110 + 45% x -110/110
= 5%
And for a 2-team parlay (of independent bets):
Code:
= 55% x 55% x 13/5 + (1 - 55% x 55%) x -1
= 8.9%
And for the a 3-team parlay (independent):
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= 55% x 55% x 55% x 6 + (1 - 55% x 55% x 55%) x -1
= 16.463%
So that’s pretty dramatic. For a bettor able to consistently pick 55% winners, he can do much better on average (EV-wise) betting 2-team parlays than straight bets and better still on 3-team parlays (And it gets even better the more teams one parlays -- assuming that the book pays true parlay odds. Note however, that a book offering a 4-team parlay at just a 10/1 payout is not offering true parlay odds. True parlay odds for a 4-teamer at a -110 book are about 12.283/1.)
The downside of betting parlays, however, is that one drastically increases one’s risk, which in turn is detrimental to the long-term growth of one's bankroll To illustrate using an extreme example you'll note that while betting a 25-team parlay at a -110 book paying the fair parlay odds of 10,487,336/1 will yield the 55% bettor an expected P&L of a whopping +238.64%, one mustn't neglect the fact that such an outcome only occurs about 0.0000323% of the time. Now that’s not what I’d call a particularly likely occurrence. Not a good bet for the sufficiently risk-averse investor.
Now you may have noticed that I keep emphasizing that the parlayed bets need to be independent for the above to hold true. Well, what happens if the bets aren’t independent (i.e., correlated)? Well the answer is actually that betting correlated parlays will further increase expected P&L for both advantage bettors and (depending upon the degree of correlation) could even transform a parlay into a positive expectation bet for a nonadvantage bettor.