Summary of "How Parlays Became the Biggest Bet in Sports" – The Journal

Release Date: February 7, 2025

Introduction: The Allure of Parlays

In the February 7, 2025 episode of The Journal, hosted by Ryan Knutson and Kate Linebaugh alongside Jessica Mendoza, the focus centers on the meteoric rise of parlays in the sports betting industry. Parlays, once a niche betting option, have surged to become the most significant form of wagering in sports, reshaping the landscape of gambling on athletic events.

Personal Narrative: Alex Haberkern’s High-Stakes Parlay

The episode opens with the story of Alex Haberkern (00:05), a 29-year-old casino bartender from Atlantic City who, despite her proximity to gambling, doesn't consider herself a heavy gambler. However, her affinity for football betting led her to place an ambitious 14-leg parlay using a $10 bonus from apps like FanDuel and DraftKings (00:31). Alex recounts her experience of stringing together multiple bets on player performances, aiming for a life-changing payout of nearly $22,000 (01:55).

Betsy ([Alex’s Bet Placements]00:18):

“I was like, this is so stupid. But sometimes you get lucky.” (02:23)

The Mechanics and Appeal of Parlays

Parlays involve combining multiple individual bets into one, requiring all selected outcomes to occur for the bettor to win. Alex’s parlay included diverse bets on player statistics, such as Justin Jefferson achieving 80 receiving yards and Ja'Marr Chase scoring a touchdown. The complexity and low probability of winning make parlays enticing due to their high potential payouts, despite their inherent risks.

Industry Insights: Challenges Faced by Betting Apps

Ryan Knutson (04:02) discusses the current state of the sports betting industry, highlighting the fierce competition among major players like DraftKings and FanDuel. These companies have invested heavily in marketing and bonus offers to attract and retain users. However, the latest NFL season has posed challenges, with betting apps reporting significant revenue shortfalls. Favorable outcomes for bettors, such as numerous favored teams winning, have led to customers outperforming the books (05:09).

DraftKings CEO Remarks (05:25):

"We've experienced the most customer-friendly stretch of NFL sport outcomes we have ever seen."

Reliance on VIPs and the Push for Responsible Gambling

A significant portion of revenue for betting companies comes from VIPs or "whales"—bettors who wager substantial amounts (06:13). These high-rollers receive exclusive perks to maintain their patronage. However, this reliance has drawn criticism from lawmakers and addiction advocates concerned about the ethical implications and potential for fostering gambling addictions.

Ryan Knutson (06:51):

“Companies are risking fueling addiction through these programs.”

In response, companies are pivoting towards attracting casual bettors who place smaller, more frequent bets, aiming for a sustainable and less risky customer base (07:10).

The Rise and Dominance of Parlays

Parlays have become central to this strategy, appealing to casual bettors like Alex who seek excitement and the allure of substantial payouts from manageable wagers. The introduction of same-game parlays by FanDuel in 2019 revolutionized the market by allowing bettors to combine multiple predictions within a single game (11:20). This innovation quickly gained popularity, leading competitors to adopt similar offerings.

Ryan Knutson (12:16):

“Same game parlays took off almost immediately.”

Cultural Impact and Social Media Buzz

The popularity of parlays has been amplified through social media, with influencers like former NBA star Charles Barkley and comedian Kevin Hart promoting them. Bettors frequently share their parlay successes and attempts online, creating a community-driven hype that fuels further engagement and participation (12:53).

Case Study: Alex’s Near-Miss and Industry Implications

As Alex’s parlay progressed, most of her bets hit, fostering hope and excitement. With only one bet—the performance of Cooper Kupp—remaining, the outcome of the entire parlay hung in the balance. Despite her meticulous tracking and numerous successes, Kupp failed to meet his yardage target, resulting in the loss of the potential $22,000 payout (15:11). This incident underscores the high-risk, high-reward nature of parlays and exemplifies why they remain profitable for betting companies.

Ryan Knutson (16:02):

“The implied probability of all those bets hitting is less than 6%.”

Economic and Mathematical Foundations of Parlays

Parlays present a lucrative model for sportsbooks due to the complexity of setting favorable odds. The intertwined nature of multiple bets means that sportsbooks can leverage correlations and sophisticated modeling to ensure long-term profitability despite occasional large payouts. In Illinois, New Jersey, and Colorado, parlays accounted for approximately 56% of sports betting revenue last year, highlighting their dominance in the market (17:35).

Future Outlook: Parlays as the Cornerstone of Sports Betting

With their substantial contribution to revenue and widespread appeal among casual bettors, parlays are poised to remain at the forefront of the sports betting industry. Companies continue to innovate and market parlays aggressively, recognizing them as the future of their business model (17:52).

Conclusion: The Persistent Allure of High-Stakes Betting

The episode concludes by reflecting on the delicate balance sportsbooks maintain between enticing bettors with high-reward options like parlays and managing the associated risks. Alex’s story serves as a microcosm of the broader dynamics at play, illustrating both the excitement and the pitfalls inherent in parlay betting.

Betsy (19:03):

“No. I mean, I'm upset. It's okay, Cooper. I forgive you, I guess. But, you know, little compensation for losing my bet would have been nice.”

Notable Quotes:

• Betsy on Her Parlay Experience (02:23):

  “I was like, this is so stupid. But sometimes you get lucky.”

• DraftKings CEO on NFL Outcomes (05:25):

  "We've experienced the most customer-friendly stretch of NFL sport outcomes we have ever seen."

• Ryan Knutson on Probability of Parlays (16:02):

  “The implied probability of all those bets hitting is less than 6%.”

• Betsy’s Reflection on Her Lost Bet (19:03):

  “No. I mean, I'm upset. It's okay, Cooper. I forgive you, I guess. But, you know, little compensation for losing my bet would have been nice.”

Key Takeaways:

• Parlays' Popularity: Parlays have surged to become the leading form of sports betting due to their high payout potential and appeal to both casual and high-stakes bettors.

• Industry Shifts: Sports betting companies are shifting focus from VIPs to a broader base of casual bettors, using parlays as a key tool to drive engagement and revenue.

• Economic Viability: Despite high losses in certain seasons, the mathematical structure of parlays ensures long-term profitability for sportsbooks.

• Cultural Influence: Social media and celebrity endorsements have significantly contributed to the widespread adoption and normalization of parlays in sports betting culture.

• Risk vs. Reward: The allure of large payouts continues to attract bettors, despite the low probability of success, highlighting the inherent risks associated with parlay betting.

End of Summary