With the start of football season came the annual debate in sports betting circles: just how bad are parlays? Adding fuel to the fire were reports of an unnamed bettor who plunked down a $25 free bet on a 16-leg NFL parlay, trying to pick the winners of every Week 2 game. To make matters worse, he inexplicably picked the Lions over the Packers on Monday night! Miraculously, he won the first 15 legs, and then suddenly everyone on gambling Twitter was either screaming at him to hedge (because he probably had $600,000 laying around and a local book who was willing to take that much action on the Packers), or admonishing him for betting a 16-leg parlay in the first place. Why didn’t he just bet the first 15 games instead? Then he would already have won!!
That extreme case notwithstanding, parlays are in fact a double-edged sword. They amplify the hold for the books when you have no edge, because you’re essentially forced into betting larger and larger amounts as one winning bet rolls over into the next leg. On the other hand, when you have an edge on all the legs, your edges add together (approximately) to create a larger overall edge on the parlay. But with greater edge, comes longer odds….. and greater risk. How should you deal with that optimally? Of course, you can simply bet less, according to the simple Kelly Criterion (or a fraction thereof, if you’re smart). But a better way to play is to plan ahead for hedging out of the last leg, assuming you can reliably get low vig lines on that game if you’ve won the first (or first couple) legs. You will usually end up gaining more profit (and greater EG) by taking advantage of your edge on the last leg up front, even if you have to give back some of it to hedge out later. I call this technique the “Neutral Hedge Gambit.”
Originally published in the March, 2021 issue of the TwoPlusTwo magazine, here is my first article explaining why it works and how to do it: