Understanding American Odds
I placed a bet on the Super Bowl, which I share below, that raises an interesting question about probability. To see what’s interesting about it requires an understanding of American odds notation, so here’s a quick explanation, for those unfamiliar with it.
- Favorites have a ‘–’ symbol attached. The more negative (the higher the absolute value of the number), the better the chance the bet will win. For example, a -300 favorite has a better chance to win than a -150 favorite.
- Underdogs have a ‘+’ symbol attached. The higher the number, the larger the underdog. So a +300 underdog has a better chance of winning than a +500 underdog.
- American odds also indicate the potential payout, assuming a $100 bet. For favorites, they indicate how much you need to bet to win $100. For a -300 favorite, you’d need to bet $300 to win $100 (you’d get your initial $300 stake back of course too if you win). For underdogs, the odds indicate how much you can win with a $100 bet. So, for example, if a +300 underdog wins, you would collect $300 in addition to your $100 stake.
A Super Bowl Same Game Parlay
One other term to get out of the way is same game parlays. A parlay is simply a bet on multiple events all happening, so a traditional parlay is a bet on multiple teams winning their respective games. A same game parlay is a bet on multiple events happening during the same game. Here is my same game parlay on today’s Super Bowl. It shows the odds for the whole parlay at the top: +650 +1300 (the initial +650 odds were boosted by 100%; more on that below).
The screen captures above from the DraftKings, Inc. (DKNG) betting app don’t show the odds of each of the ten legs, but you see them when you select them. For example, the last leg above, “Over 17.5 PHI Eagles Total Points” had odds of -425. Remember, the more negative the number, the bigger the favorite, so this is considered to be a likely outcome.
Taken together, the odds of all 10 legs happening were +650. As part of a “Stepped Up Same Game Parlay” promotion, DraftKings is boosting the odds of these parlays for each additional leg you add up to 10, where you get the maximum 100% boost. That’s how this got odds of +1300.
A Seeming Loss-Leader For The House
Although +650 odds are still a relative longshot, there are few aspects of this promotion that make it seem like a loss-leader for DraftKings.
- That they’re offering the stepped-up same game parlay boost at all. They had stopped offering these for other sports recently.
- That they’ve raised the maximum dollar amount you can bet on these to $50 from $10 (I bet $10 assuming that was still the maximum, before reviewing the terms).
- That they lowered the minimum odds per leg back to -500 from -300 (prior to phasing out stepped-up parlays before this Super Bowl promotion, they had raised the minimum odds per leg up -300 from -500). That gets to the interesting probability question.
The Probability Question
The more negative the odds per leg (i.e., the more likely the outcome of each leg), the more legs you need to get the same overall odds per parlay. So, a 10-leg parlay with minimum odds of -500 per leg might have the same odds as a 7-leg parlay with minimum odds of -300 per leg. Let’s say both parlays have overall odds of +1000. In theory, that means both have the same probability of winning (1 in 10). In reality though, I suspect that’s not case. The 10-leg parlay with minimum odds of -500 per leg seems more likely to win.
That has been my experience anecdotally, and I suspect that’s why DraftKings started requiring minimum odds of -300 per leg before phasing out its non-Super Bowl same game parlays. When there’s a gap between your experience and the implied probability of winning, that’s often a good starting point for looking for an edge, whether in betting or investing. In this case, if you’re betting this promotion, I would aim for 10 legs with odds as close to -500 as you can get for each leg. That’s what I tried to do above. If you don’t already have an account with DraftKings, here is a referral link for a free bet there.
Good luck, and enjoy the game.
