How Parlays Became the Biggest Bet in Sports

Summary

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

Release Date: February 7, 2025

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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.”

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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.

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End of Summary

Transcript

[Alex Haberkern]

Alex Haberkern is 29 years old. She tends bar at a casino in Atlantic City. And despite being surrounded by gambling or maybe because of it, she doesn't consider herself a big gambler.

[Betsy]

When you work in the industry, it's kind of hard to want to go back and just like be there casually too. Like, I do go to the casino occasionally, but. But I wouldn't say that gambling would be my favorite thing just because I see it every day.

[Alex Haberkern]

There is one thing she really loves betting on, though. Football games. Using apps like FanDuel and DraftKings. And one Sunday last December, Alex made a particularly wild bet.

[Betsy]

It was before I was going to work and I had like a free $10 bonus. It was like a last minute thing that I was like, it expired if you didn't use it. So I was like, okay.

[Alex Haberkern]

Alex started stringing together a complicated. She bet that Justin Jefferson of the Minnesota vikings would get 80 receiving yards, that James Cook of the Buffalo Bills would score a touchdown in the Steelers Bengals game. She bet that both Ja'marr Chase and Najee Harris would find the end zone.

[Betsy]

And then the rest just kind of kept going. Most of them were just scorers. Derrick Henry needed 80 yards. Saquon Barkley needed 80 yards. Jalen Hurts had to score. Kyron Williams had to score. And then of course, Cooper cup needed 70 yards.

[Alex Haberkern]

Alex wasn't just betting that these things would happen individually. She was making a bet called a parlay. For Alex to get a payout, all 14 of those things needed to happen. And the odds of all of those things happening were long. Very, very long. Like 66 yard field goal long. But if the parlay worked, the payout would be massive.

[Betsy]

Let me see the exact payout. Hold on. It was $21,920.

[Alex Haberkern]

Almost $22,000 off a free $10 bonus bet.

[Betsy]

That's like life changing money to me. I'm planning a wedding. We're looking to build a house. Like, that's. That could do a lot for me. So I was like, it's a free bet. We'll risk it.

[Alex Haberkern]

So when you make this bet, how were you thinking about it? Were you like, this is silly or 100%?

[Betsy]

100%. I was like, this is so stupid. And like I tell my fiance, my Betsy every week when I place them because he puts a couple things together, but it's like very small. Like he does very realistic things. And I'm like, oh, you want to hear the like stupidity I have going today? And that's basically how it is. But sometimes you get lucky.

[Alex Haberkern]

That dream of getting lucky has propelled parlays to the very center of the sports betting world. And these long shot bets are solving some big business problems for the gambling industry. Welcome to the Journal, our show about money, business and power. I'm Ryan knudsen. It's Friday, February 7th. Coming up on the show, how parlays became the biggest bet in sports.

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[Alex Haberkern]

How long have you been covering the gambling industry now?

[Ryan Knudson]

A little. Well, I've been covering it for five and a half years.

[Alex Haberkern]

Changed a lot during that time.

[Ryan Knudson]

It has for sure.

[Alex Haberkern]

That's our colleague Katherine Sayre and she says that lately the sports betting industry has been going through some growing pains. How's business for sports betting apps right now?

[Ryan Knudson]

Sports betting is still a relatively new industry in the US so it's been a fierce competitive landscape. DraftKings, FanDuel, these other competitors have just poured money into their marketing, advertising, giving away these bonus bets as they call it, credits you can use when you sign up. And so they are under pressure to.

[Alex Haberkern]

Become profitable despite the saying the house can in fact lose. And this past NFL season betting apps have been losing and gamblers have been on a hot streak. That's because people are more likely to bet on the teams that are favored to win. And there have been fewer upsets in the NFL this year.

[Ryan Knudson]

Yeah. So FanDuel and DraftKings had to report to investors that they're going to get less revenue than they were expecting because so many favorites won in the NFL season that customers betters were beating the books this season.

[Alex Haberkern]

Combined, DraftKings and FanDuel expect to make hundreds of millions of dollars less this year than previously thought because so many customers have been winning. As the DraftKings CEO put it, the company had, quote, experienced the most customer friendly stretch of NFL sport outcomes we have ever seen.

[Ryan Knudson]

You know we're talking about gambling no one can really predict the future. The sportsbook's going to do their best, but, you know, what plays out on the field is out of their control.

[Alex Haberkern]

Another problem for the gambling industry has to do with its reputation. Companies have faced criticism from lawmakers and gambling addiction advocates for relying on heavy gamblers for much of their business, or as the industry calls them, VIPs.

[Ryan Knudson]

VIPs are sometimes known as whales. These are the bettors who are placing huge sums of money on games. So $10,000, $20,000, and these are the most profitable bettors for these companies. So the companies have focused on them giving them freebies, betting credits, tickets to games, just that VIP treatment that will keep them spending.

[Alex Haberkern]

The problem with VIPs though, is, is that some of them are spending way more money than they can afford to lose. And gambling companies are required to have responsible gambling practices.

[Ryan Knudson]

You're talking about people who are spending tens of thousands of dollars, hundreds of thousands of dollars in some cases. You know, companies are risking fueling addiction through these programs.

[Alex Haberkern]

DraftKings and FanDuel have said they're committed to promoting responsible gambling and protecting consumers.

[Ryan Knudson]

So the companies really want to expand that casual, better base, get people who bet less but bet regularly and more of those people to create that less.

[Alex Haberkern]

Risky customer base rather than rely so heavily on VIPs. Sports betting companies are trying to court more customers like Alex.

[Betsy]

I think I do at max, like $5 for a parlay, maybe 10 if I'm feeling like generous or I just won or something.

[Alex Haberkern]

Customers that don't bet a ton but keep coming back for a good time and the possibility of that dream payout. Alex had no expectation of winning her 14 leg parlay. Her elaborate bet was just for fun. But as she was getting ready to go to work that Sunday afternoon, she said she started to notice something. Some of her bets were hitting for Pittsburgh.

[Betsy]

I think it was the end of the Steelers Bengals game.

[Commentator]

And a catch.

[Betsy]

Ja'Marr Chase got his 80 yards.

[Commentator]

Beautiful grab by Ja'Marr Chase.

[Betsy]

That's when I was like, okay, this might happen. And I go to work. We have all the TVs at work, so I was watching everything. And little by little throughout my shift, things were happening.

[Alex Haberkern]

Alex had needed the Texans Nico Collins to get 70 receiving yards. He did. And here's Nico Collins with a catch. She needed Ja'Marr Chase to get a touchdown.

[Commentator]

Step up, deliver.

[Alex Haberkern]

And he did, too.

[Commentator]

Touchdown, Jamar Chase.

[Alex Haberkern]

Alex was starting to feel hopeful. And she wasn't the only one. All around her bar at the poker table. The excitement was building.

[Betsy]

I had talked to my regulars about, like, the bet, so they were keeping me updated. If I was, like, busy doing little things, so they'd be like, oh, so and so. Just scored high, one handed, hauled in.

[Commentator]

And that's a touchdown for Mike Evans. Hits off.

[Betsy]

And I think little by little, I was like, okay, wait, maybe this has a chance.

[Alex Haberkern]

How were you feeling when you thought you could possibly win this much money?

[Betsy]

Oh, I was texting my fiance. I was like, oh, we are paying for our wedding. We're going on vacation. We're doing this. I have our honeymoon. Like, I was just creating plans in my head. I was like, we. We got this, like, covered. We're good.

[Alex Haberkern]

Things were looking up for Alex. With only a few bets left in her parlay, it seemed like she was gonna score. What happened next is after halftime.

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[Alex Haberkern]

Parlays and Sports betting have been around for a long time, but historically, the only kind of parlay you could do was to string games together, like betting that the Patriots, the Jets, and the Raiders would all win on the same day, which this NFL season was extremely unlikely. But a few years ago, FanDuel got an idea.

[Ryan Knudson]

So FanDuel's parent company, Flutter, has a sports betting brand in Australia called Sports Bet. And they heard from a gambler who was like, hey, I know I can make a parlay bet on different games, but why can't I make some predictions within one game and bet on that? And so the math behind that's complicated. They got to work on it, and they figured it out and started offering.

[Alex Haberkern]

It the same game. Parlay was born, and FanDuel brought it to the US in 2019. Now, you could string together a bunch of bets about what would happen in a single game like that. Patrick Mahomes and Jalen Hurts would both throw a touchdown pass, which during this weekend's super bowl is extremely likely. When did you start to see it really kind of take off? Like, when did you start to see consumers really responding to them?

[Ryan Knudson]

Same game parlays took off almost immediately. As soon as fanduel put these out, the companies could tell it was taking off. The competitors all quickly followed.

[Alex Haberkern]

Now ads for parlays are everywhere.

[Katherine Sayre]

Same game parlays on FanDuel are the best way to bet on your favorite players.

[Alex Haberkern]

Former NBA star Charles Barkley pitches his same game Barclay. And comedian Kevin Hart shares his picks on social media. Sponsored by DraftKings. That is my Week 1 touchdown parlay.

[Katherine Sayre]

You're welcome.

[Alex Haberkern]

But the hype isn't just coming from paid spokespeople.

[Ryan Knudson]

Parlays have taken off in social media.

[Alex Haberkern]

Finally, we hit a parlay. We hit a parlay.

[Ryan Knudson]

Monday's bet hit, Last night's bet hit. Did the Sixers make us sweat it a little bit? Yeah, but of course that's what they do. It's become its own little ecosystem doing the marketing for these companies, right? So people who are touting their big wins, they're posting their bet slips, which is, you know, shows their parlays. They say, follow along with me, tail me, which means make the same bet. Let's see if we can win this.

[Alex Haberkern]

By the time the 4 o'clock games were kicking off, Alex was starting to think that she could win her bet. Each leg kept hitting. Joe Mixon had scored a touchdown and Mike Evans got one, too. Her bet went from looking like a ridiculous long shot to something that could actually happen. And then the LA Rams took the field.

[Commentator]

Off play action, pass is court.

[Alex Haberkern]

Alex needed running back Kyron Williams to get a touchdown, which he did. And she needed wide receiver Cooper Kupp to get 70 receiving yards, which was one leg of her bet that actually had pretty good odds.

[Betsy]

So I think it was around halftime of the Rams game and I had checked the stats because I wasn't really paying attention because I had gotten busy. And Cooper cup had 17 yards.

[Alex Haberkern]

Former Super Bowl MVP Cooper Kupp, a little more than halfway through the game. He was more than 50 yards short of what Alex needed. Still, it wasn't over yet.

[Betsy]

So I was like, okay, it's okay, possibly. And then I think the third quarter happened and I was on break and we have a TV in the break room. And he still, he wasn't even getting the ball. Like there wasn't even targets. There was nothing. Like he basically was just dead to the Rams team.

[Alex Haberkern]

And he's normally a receiver that catches a lot of passes.

[Betsy]

Normally. Yeah. And at that point I even, I stopped looking. I didn't want to know. I didn't because I was like, I don't care how many yards he has at this point. Like he, it's going to lose. So I think by the third quarter I just called it quits and I was like, maybe I'll just get lucky. Open my phone and my balance will say $22,000.

[Alex Haberkern]

Kupp never had another catch. It was his second worst game of the season. By the end of the day, every single one of Alex's other bets hit 13 out of 14. Cooper cup was the only player who didn't deliver. Alex's $22,000 dream had disappeared. Alex had beaten the odds, but not enough to win. And that's what betting apps are betting on.

[Ryan Knudson]

Bettors just lose more on parlays. The odds are so long. So for example, FanDuel is offering a four leg, same game parlay on the super bowl this weekend where you're going to bet that Saquon Barkley, Xavier Worthy, Kareem Hunt and Jalen Hurts will all score a touchdown in the game.

[Alex Haberkern]

If all that happens, someone who bet 10 bucks would win $170 as of Friday morning. But the implied probability of all those bets hitting is less than 6%. By comparison, someone making a standard bet like that, the Chiefs will win the super bowl. According to one betting app, the implied.

[Ryan Knudson]

Odds of that are a nearly 55% chance of winning.

[Alex Haberkern]

That's a big difference.

[Ryan Knudson]

It's huge. It's huge. And you would think gamblers might shy away from that, but apparently they're not.

[Alex Haberkern]

I know that generally with gambling, the odds favor the house. But did the odds favor the house more with parlays?

[Ryan Knudson]

Sportsbooks are trying to protect their bottom line. How they set the odds are critical to their business. With parlays, the setting of odds gets really complicated because what you're betting on, those events, how a quarterback performs and how a tight end performs, they're tied together. So if the quarterback's having a terrible game, good chances are the tight end won't be having a great game either. So they use lots of math, modeling, looking at what's happening in sports news to set these odds. But they're going to figure out what they think are the actual odds of that parlay and then they're going to set the odds even more in their favor to protect their bottom lines. And to a certain extent, it's sort of a mystery about how they're doing this.

[Alex Haberkern]

However they're doing it, it's working today. Parlays represent a huge chunk of the sports betting business in Illinois, New Jersey and Colorado states that break out this data, parlays accounted for about 56% of sports betting re last year.

[Ryan Knudson]

So it's clear that the companies see this as the future of the business.

[Alex Haberkern]

So are you making any bets for the super bowl this weekend?

[Betsy]

I haven't even looked, honestly. I'll tell myself I won't do it and then I'll probably pull it up Sunday morning right before I go to work and be like, you know what? Like, let's place a couple just. Just to make it interesting for myself, because I don't really care about who wins.

[Alex Haberkern]

And do you think that you'll do a parlay bet?

[Betsy]

Yes, always. I'm never gonna pick one side. I always have to do the parlay. It makes it more interesting.

[Alex Haberkern]

Back at the casino where Alex works, her close call on that 14 leg parlay has become a bit of a legend. Her regulars still bring it up.

[Betsy]

I still have some come in. They're like, oh, do you remember, like, the day we were all sitting here and you were supposed to win, but like, I had a guy that I was, his name's Mike, he was sitting at the bar with me on Sunday because I work Sunday nights. And he's like, I still can't believe that Cooper cup, blah, blah, blah. He's like, I haven't placed a bet on him since that day. Like, so it's, it gets brought up a couple times.

[Alex Haberkern]

Is there anything that you'd like to say to Cooper cup here on the podcast who did not meet his target?

[Betsy]

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.

[Alex Haberkern]

That's all for today. Friday, February 7th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Isabella Simonetti. The show is made by Catherine Brewer, Pia Gadkari, Rachel Humphries, Sophie Codner, Jessica Mendoza, Matt Kwong, Kait Linebaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez Espinosa, Heather Rogers, Pier Singh, Jeevika Verma, Lisa Wang, Catherine Whalen, Tatiana Samis and me, Ryan Knudson with help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapak and Peter Leonard. Our theme music is by so Wiley. Additional music this week by Katherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapach, Griffin Tanner, so Wiley and Blue Dot Sessions. Fact checking by Mary Mathis, Kate Gallagher and Najwa Jamal. Thanks for listening. See you Monday.