What Are Parlay Odds and How Do They Work
A parlay is a type of sports wager where you combine multiple individual bets into one larger bet. Instead of placing separate bets on different games or outcomes, you link them together. The key feature of a parlay is that all of your selections must win for you to receive a payout. If even one selection loses, the entire parlay loses, and you lose your original stake.
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Parlay odds multiply together in a way that creates potentially higher payouts than if you placed the same bets individually. For example, if you bet $100 on Team A at -110 odds and separately bet $100 on Team B at -110 odds, you're risking $200 total. With a parlay combining both bets, you only risk $100, but the potential payout is larger because the odds compound.
The mathematical relationship works like this: when odds are combined in a parlay, the sportsbook calculates the decimal value of each selection and multiplies them together. This multiplication effect is what makes parlays attractive to bettors—the potential return grows significantly compared to single bets. However, this also means the risk increases because every single selection must win.
Sportsbooks offer parlay betting as a standard wagering option because it appeals to bettors seeking larger payouts from smaller initial investments. Major sportsbooks including DraftKings, FanDuel, BetMGM, and Caesars Sportsbook all feature parlay options with varying structures and bonus incentives.
Practical Takeaway: Before placing any parlay wager, understand that a parlay requires all selections to win. One loss means losing the entire bet. This is fundamentally different from placing individual bets where each one stands on its own merits.
Understanding Decimal Odds and How They Multiply
To calculate parlay payouts, you need to understand decimal odds, which represent the total amount you receive back for every dollar wagered (including your original stake). American odds (-110, -120, +200) must first be converted to decimal format to perform parlay calculations.
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The conversion formula from American odds to decimal odds is different depending on whether the odds are negative or positive. For negative American odds (the favorite), divide 100 by the absolute value of the odds and add 1. For example, -110 odds convert to 1.91 in decimal format (100 ÷ 110 + 1 = 1.909, rounded to 1.91). For positive American odds (the underdog), divide the odds by 100 and add 1. So +200 odds convert to 3.00 (200 ÷ 100 + 1 = 3.00).
Once you have decimal odds for each selection in your parlay, multiply them together. For a two-bet parlay with selections at 1.91 and 1.91 decimal odds, multiply: 1.91 × 1.91 = 3.6481. This means your parlay odds are 3.65 in decimal format. If you wagered $100, the total payout would be $364.81 (including your original stake). Your profit would be $264.81.
Here's a practical example with different odds. Imagine a three-team parlay with these American odds: Team A at -110, Team B at +150, and Team C at -120. Convert each: Team A becomes 1.91, Team B becomes 2.50, and Team C becomes 1.833. Multiply all three: 1.91 × 2.50 × 1.833 = 8.76 in decimal odds. A $50 parlay at 8.76 odds pays $438, representing a $388 profit.
Practical Takeaway: Master the conversion from American to decimal odds. This single skill allows you to manually verify parlay calculations and understand exactly what payout you're receiving for your wager.
Two-Team Parlays and Correlation Risk
Two-team parlays are the most common type of parlay bet. They combine just two selections, making them easier to evaluate than larger parlays. A typical two-team parlay might combine two NFL games, two NBA games, or a mix of different sports and leagues.
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The payout structure for two-team parlays is straightforward. If both selections win, you receive your payout based on the multiplied odds. The minimum typical payout for a two-team parlay at standard -110 odds is 2.6 to 1 (meaning a $100 bet returns $260). Some sportsbooks offer slightly better odds, returning 2.7 to 1 or higher, though this varies by location and book.
An important consideration with two-team parlays is correlation risk. This refers to situations where the two selections you're combining are not truly independent events. For example, if you parlay the Denver Broncos to win a game with the over on total points in that same game, these outcomes are correlated—if Denver wins decisively, the total points are more likely to go over. Sportsbooks are aware of this correlation and may adjust the parlay odds they offer, reducing the payout compared to what it would be if the events were completely independent.
Some sportsbooks restrict certain correlated parlays entirely. For instance, you might not be able to parlay the same team to win the game and that team's player to score over a certain number of points. These restrictions exist because the outcomes influence each other, and sportsbooks protect their margins by preventing bettors from exploiting correlated scenarios.
Practical Takeaway: When building two-team parlays, evaluate whether your selections are independent or correlated. If they're correlated, the odds offered may be less favorable than they appear, and you might be better served placing the bets separately.
Three-Team Parlays and Payout Calculations
Three-team parlays increase the potential payout significantly but require all three selections to win. This is where parlay complexity increases noticeably. With three independent selections at standard -110 odds each, the parlay odds equal approximately 8.1 to 1. This means a $100 wager returns around $810, a substantial jump from a two-team parlay.
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Let's work through a real calculation. Suppose you create a three-team parlay: Kansas City Chiefs -110, Los Angeles Lakers -110, and Dallas Cowboys -110. Convert each to decimal: 1.91, 1.91, and 1.91. Multiply: 1.91 × 1.91 × 1.91 = 6.967. A $100 parlay at 6.967 odds pays $696.70 total, representing a $596.70 profit if all three teams win.
But consider what happens if one selection loses. Your entire $100 is lost. This is the critical trade-off—the potential payout nearly doubles compared to a two-team parlay, but your probability of winning decreases significantly. If each selection has a 50% independent chance of winning (which is roughly true for many -110 bets), your odds of hitting all three are 0.5 × 0.5 × 0.5 = 0.125, or just 12.5%. The actual probability is even lower because most bettors don't hit exactly 50% of their picks.
Three-team parlays become more attractive when you include selections with better odds of winning. For instance, combining a -200 favorite, a -110 selection, and a +150 underdog might give you better overall win probability while still offering substantial payout potential. The key is balancing realistic win probability against the payout multiplier.
Practical Takeaway: Three-team parlays require realistic assessment of your ability to pick winners. The payout is tempting, but the mathematical probability of all three selections winning is significantly lower than most bettors intuitively believe.
Larger Parlays: Four Teams or More
Parlays with four or more selections create exponentially higher payouts but dramatically lower win probability. A four-team parlay at standard -110 odds creates roughly 12 to 1 payout odds. A five-team parlay at similar odds reaches approximately 25 to 1. These numbers are why larger parlays attract bettors seeking significant payouts