How Parlay Bets are Making Betting Operators Rich

Are you a fan of parlay bets? If so, there's a good chance betting operators are a fan of you too. In New Jersey, parlays made up nearly $1.2 billion of the approximately $5.8 billion in total sportsbook handle for completed events from January to the end of June. Parlays are highly lucrative in states where sports betting has been legalized, and this has been the case since betting went live in the states.

The win rate this year for parlays in New Jersey was 16% at the end of June. Parlays are responsible for over 60% of the $308.9 million won by sportsbooks in the Garden State this year.

Bettors will likely be pushed even further towards parlays in the future. BetMGM's CPO, Jarrod Schwarz, said during an investor conference this year that the bookmaker's parlay handle had increased by over 140% year-over-year, and that 'bet count was up by more than 160%.'

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The Bottom Line

In 2019, FanDuel introduced the same-game parlay feature for NFL betting. Ever since, it has been riding the wave of heavy bettor demand for parlays. Other reputable sportsbooks have copied the concept - most industry analysts believe that parlays will continue to gain in popularity amongst gamblers and become a major source of profit for operators in the years to come.

With a hold rate of just 5.44% in May on all other wagers, FanDuel's parlay strategy definitely helps increase revenue in a year where sportsbooks profits continue to be affected by a focus on advertising and customer acquisition. Most operators are spending more than they are earning on acquiring new customers. Many operators now have sports betting apps for parlay betting making it even easier for customers to wager on the move.

Expansion and Plans for the Future

The expansion and early implementation of parlays is also helping FanDuel continue to dominate the market, having nearly a 38% edge over its closest competitor, DraftKings. DraftKings CEO Jason Robins is well aware of the need to generate additional revenue for his book in a market environment where profits - rather than market share - drive investors to part with their money.

Robins believes that one of the best ways to increase profits and earnings growth is to boost win rates by increasing the mix of parlay bets while also reducing sharp action.

"In an earlier stage environment, it is not the worst thing in the world to give people a couple of extra winning experiences, rather than trying to maximize how much margin we’re taking," Robins explained as he delivered a speech at a Goldman Sachs investor conference on June 6, which went viral afterward.

“What we’re not looking to do is take money from people by forcing them into bets they don’t want,” Robins said. “What we are trying to do is get smart at limiting the sharp action, and then also making sure that we have a high parlay mix because people like that. Every quarter, the parlay as a percentage of the total bet mix goes up."

According to research, Nevada betting operators had a 30.97% win rate on parlays  - compared to a 5.6% win rate on all other sports bets since 1984.

What's the Attraction for Bettors?

It's easy to see the attraction of parlay's. Ridiculous odds, moving pieces during the game and a slim chance of glory - what's not to like? On a parlay, you could turn $5 dollars into $500 if you get it right. Many new gamblers that fancy themselves as experts in their sports will be attracted to a parlay, regardless of the odds.

With the incredible sign-up offers that most operators have these days, the temptation to place a parlay is huge. Free money and a chance to win big? Who wouldn't be interested?

I (AKA CatBurg) have a lifelong passion for sports, especially football and basketball. I enjoy the thrill and excitement of sports betting and everything in between. My teams are (Packers #GoPackGo) and who I am betting on!