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Pinnacle Pulse
The inside line from PinnacleSports.com by Simon Noble
9/13/06
Every once in a while, despite the best bookmaking and balancing of positions, sportsbook
managers find a surprise in their daily summaries, like a player hitting a $1
million 8-team parlay. Though the occasional player hitting a home-run on a
parlay should be expected, when a big one hits, it can catch sportsbooks off
guard. Parlays are one of the most misunderstood tools in the betting industry,
which is why books offer them. Like the familiar proverb, give a player enough
rope, and…… well, you know the rest.
There are two common ways parlays are played that guarantee the book a long-term
profit. Many recreational players are focused on the “big win” like hitting
eight plays at -110, to win $100,000 from a $66 stake. While it can be a blast
when the first three legs hit, I’ve seen people nearly go into cardiac arrest
after winning the first seven, leaving one play pending on Monday night for an
all-or-nothing life changing win. Sweaty and stressed, these parlay junkies
invariably end up cracking and trying to hedge out the parlay.
The fundamental problem with playing parlays is that risk management is
impossible. Assume our friend who was betting $66 tickets had a bankroll of
$10,000. By Monday night, this parlay bettor is risking $51,200 (in equity) to
win $48,800. They’re now risking more than five-sixths of their bankroll on one
play. For recreational gambling this is fine, but for a professional, this kind
of tactic would make Kelly roll over in his grave.
Another common play is parlaying a lot of favorites that “can’t lose” to
generate a payout close to even money. One parlay for college football I saw
included: Va. Tech -535, Rutgers -405, NC State -405 and Purdue -1070. In this
parlay, the player risked $100 to win $101.80. This common strategy of parlaying
favorites is a classic case of mathematical denial. The player FEELS like all
the sure things will win, and the thought is reinforced by seeing many of the
selections succeed with the occasional parlay paying off. The mathematical
certainty however, is that every parlay selection added increases the “juice”
paid. Parlaying big favorites like this (without sophisticated handicapping)
will NOT make money in the long run.
If this is the case, then why do wise guys play parlays? One reason sharps play
parlays is that they may find a correlation. Correlated parlays are the “holy
grail” of sports betting – finding and betting these almost guarantees a win.
These are so dangerous that even small correlations (e.g. in MLB, playing the
visitor with the over or the home team with the under) can gradually destroy a
sportsbook. Sharp players identify these correlations and hoard the information
along with the names of sportsbooks known to take action on these correlated
bets. If you try to make a parlay at Pinnacle Sportsbook and our software
rejects the play, there’s a good chance the play is correlated.
There’s another type of parlay that sharps use which called an “action” parlay.
Many times, a player wants to bet more than a book’s limit. This is especially
prevalent against overnight lines or smaller markets like Tennis and NASCAR.
Assume you see an opening line that is badly off e.g. +150 when the fair line is
+100. When discovering these huge edges, bettors logically want to bet as much
as they can.
One way to do this would be to play the +150 selection parlayed with 10 random
games at -110. If you win and lose exactly five of these selections, you’ve
effectively bet five times as much on the +150 selection, but lowered the payoff
(since you paid more juice with the random selections). This isn’t a good idea
if you have a normal 53% play versus -110, but it’s a tool to remember when
there’s a monster play in a small market. At Pinnacle Sportsbetting we’ve
customized the software to defend against this type of strategy, but there may
be less astute sportsbooks out there that haven’t.
Another way sharps use this strategy is to play two or three-team parlays with
one open leg. They’ll do their usual plays for the early legs, and close them
out with the monsters. For example, they’ll risk $1,000 on a three-team parlay
and after winning the first two legs, they can effectively risk $3300 to win
$3000 by closing that last leg.
If you play a lot of parlays (or even teasers, which are just modified parlays),
you need to spend significantly more time on risk management. Not only could you
be overexposed on a game (like the 8-team parlay discussed earlier), but you
could be underexposed as well.
If the first leg of a two-team teaser/parlay has lost, you have no action on the
second leg. Sharper players will routinely evaluate their positions at the
conclusion of each leg, and make additional bets to ensure they have an adequate
position on each game they like.
What are our players betting this week?
Michigan (+5.5 +100) v. Notre Dame
In one of the most heavily bet college games, all the money has been on the
Wolverines. We opened the Fighting Irish as 7.5-point favorites, but the public
favored Michigan by a three-to-one ratio. To this point the sharps have been
curiously absent on this game.
Oakland (+11.5 -101) v. Baltimore
We opened Baltimore as an 8-point favorite against the Raiders, who were routed
27-0 by San Diego Monday night. A few sharps played Oakland at the open, but
they were swamped by public money. Public backers of Baltimore have five times
as many wagers as Raider backers. It’s very common to see public bettors fade a
team that looks terrible in the first week, even though more often than not,
teams revert to the mean after an “Oaklandish” performance. A few early sharps
agreed by backing the Raiders before the early runaway line. Expect the other
sharps to back Oakland hard once the line stabilizes.
Super Featherweight Championship: Barrera -150 v. Juarez +140
These two fighters battled out to an apparent draw on May 21st earlier this
year. Thirty minutes after a draw was announced, the judges came back and
declared Barrera the winner due to a corrected scorecard error. How do you
handle something like that? Rematch! Barrera opened as a -200 favorite. Although
twice as many bettors have backed Barrera, the sharps are on Juarez, and have
driven the price down.