Is my parlay cashout too low?

OPENING LINE

Good morning sharps! I hope you had a great weekend betting and overall.

In this week’s edition, we’ll walk you through cashing out parlays. We’ll also give you an overview of what’s going on in the sports betting world, give you some tips that will help you for the week, and cover some of the news in the industry.

Please do give your feedback at the bottom and we’ll make any necessary changes.

Best of luck this week!

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THE STRAIGHT BET
Is my parlay cashout too low?

You’ve won 5 of 6 legs of your parlay, took a look at the cashout, and it’s super low! We’ve all experienced it, or, at least we’ve seen the b*tching on social media.

It’s actually not as low as you think, but still low. We’ll calculate how much a cashout should be, why the books offer suboptimal cashouts, how to decide to cashout, and alternatives to cashing out.

📈How much should my cashout be?

Let’s use the above parlay as our example, which FanDuel posted a week ago on social media. The first thought from everyone is that the payout is disrespectful. This parlay already won two legs! He’s halfway there. His cashout should be a few grand at least! $219 is BS!

But, cashouts aren’t determined by how many legs you’ve won. They’re based off of the current implied probability of the remaining legs. Currently, on FanDuel, the Phillies are +480 to win the World Series, and the Texans are +1600 to win the Super Bowl. To calculate the implied probability for positive odds, the formula is 100/(100+odds), or 100/(100+480) for the Phillies, and 100/(100+1600) for the Texans. For reference, for negative odds, the formula is -Odds/(100+(-odds)), so a -160 favorite has a implied probability of 160/(100+160).

Moving back to our Phillies and Texans example. The implied probability for the Phillies is 17.2% and for the Texans it is 5.8%. The probability of the parlay hitting is 17.2%*5.8%, or 1%. The parlay only has a 1% probability of hitting!

Now that we have that probability, we need to calculate the fair value of the parlay. We have to multiply the probability by the total payout. That fair value is then 1% of $49,780.25, or $497.80. The parlay itself is only worth ~$500 right now!

So, whenever you have a parlay, look at the probabilities of the legs that haven’t hit yet, and use that to calculate the fair value. If anything else, it helps set expectations. You can also get an idea of what your fair value might if additional legs hit or the odds change. For example, if the Phillies win the World Series, the fair value would jump up to around $3K. If that happens and the Texans move to +1000, the fair value would be around $5K. Also, if you want to sell it (such as on a platform like PropSwap), you now know how much to sell it for.

🎰 Books are still screwing me over! It’s less than fair value!

You might not have noticed the cashout is well below fair value. Only $219. That amount below fair value will vary based on book and the situation. It should always be below fair value with a couple exceptions. Why is that?

It’s all psychological. The book is offering you a guaranteed return. Would you take it? Or risk it? Remember, most bettors have no idea how much their bet/parlay is worth at the time (now you do!). So, the books are going to take advantage of that situation. Some bettors will see that $$ and decide not to risk it. It’s also a big $$ driver for the books. Sometimes, a cashout might be $7K on a parlay worth $10K. The book just saved $3K in that situation. All of that adds up.

Sometimes, the books would offer a cashout higher than fair value. There’s certain situations where you might have an advantage, or maybe it’s close to cashing, and the books are hoping you’d bite so they don’t need to pay the full amount. Or, maybe they’d want you to have that liquidity in order to bet more with them (most bettors don’t withdraw funds).

In general, the books aren’t offering cashouts to benefit the bettor and many bettors make extremely poor cashout decisions.

🤔 How to decide to cashout?

Before we get into some numbers, just know that cashing out is an extremely personal decision. Sometimes, it really comes down to how much the $$ means to you. For some, cashing out $100K now means they can pay off student loans. For others, $100K doesn’t mean anything and they’ll let it ride!

Speaking about letting it ride, many bettors let their machismo take over and let a parlay ride or bet more than they should. Books know this too. Cashing out isn’t weak. Sometimes it’s smart, and let’s walk through a few methods.

25% Rule. Whenever a cashout reduces by 25% from it’s peak (or pick your number—maybe it’s 40%?, 50%? Decide what works for you), then look to cashout. For example, in the above parlay, if that value reduces by 25% (aka, to $164) then cashout. The original wager was $10. The original cashout would have been $9. If it reduces to $6.75, then cashout. This gives you some breathing room to let it ride, but also allows to you get out at a profit (or to limit your losses) if it goes south.

You might ask, well, it can always come back. Yes, that might be true, and depending on how early or late it is you can quickly rebuild a new parlay. But, remember this adage…you will never go broke taking a profit.

Risk Amount. If you have an exit planned (i.e.) a cashout, instead of betting $10, you could bet $50. Aka, you’re staking $50 instead of $10. However, you can still get out if your parlay reduces by $10 in the beginning. You’re still risking the same amount ($10), but your upside is much greater. We’ll dig deeper into this in a forthcoming newsletter.

Prior to volatility. End of games, regardless of sport, tend to get volatile. You can win or lose your entire parlay on a last second shot, walk-off, etc. So, if there’s that potential (i.e. its not a blowout), then, make it a hard rule to just cashout before crunch time. Especially if you’re doing the Risk Amount method. You don’t want to lose your entire $50 when you only intended to risk $10. Also, sometimes, as it gets later, the books freeze lines, or make your cashout unavailable, which means you have no exit.

🤑 Alternatives to cashing out

As we’ve covered, cashouts are usually suboptimal, but, not as suboptimal as you think. However, there are a few alternatives to cashing out.

Selling. As mentioned earlier, you can sell a parlay on PropSwap or another alternative. These are usually more reserved for futures parlays since it’s extremely hard to move a parlay in a single day.

Hedging. The odds on a hedge are much better than cashouts. So, I would look to hedge instead of cashing out. There’s a few good reasons for this. #1, the live lines aren’t locked as much as cashouts, and #2, you aren’t tied to one book. You can shop around for the best lines at other books.

Hedging works best if you are able to isolate your last leg (i.e. if no other legs are being played simultaneously) and if you can make it a moneyline. Sometimes, deliberately switch from a spread to a moneyline (especially if its a short favorite) in order to give yourself that hedging option.

However, if your last leg is a spread/total, and in the money, you can hedge the other side, and look for a middle. For example, if let’s say you bet $10 on a 10-1 parlay, with the last leg being Chiefs -3 in the Ravens-Chiefs TNF game. If the Chiefs are now -10 -110, with the Ravens being +10 -110, you can bet $57.62 on the Ravens +10 to guarantee a profit of $42.38, while keeping a 7 point middle. This only works if you’re in the money. Let’s say the Ravens are now -3. You can’t hedge that. There’s a possibility you might lose both bets.

Cashing out is the only alternative in some situations. For example, if you have multiple legs happening simultaneously, or, if the last legs are spreads or totals that aren’t in the money The books usually won’t give you live line at the opening line (with different odds), but exchanges do. So, look to that if possible.

You also might need to just take a cashout if you don’t have the liquidity to hedge (books know that too!).

Wrap Up

It might seem like the books are screwing you on cashouts. They are trying to get their take and entice you to cashout at suboptimal odds, but, it’s not usually too far below the fair value. Make sure to always calculate that.

Cashout your parlays once the value reduces by 25% from the peak, if it reaches your risk amount, or if it gets too late in the game.

Instead of cashing out, look to selling your parlays, especially futures, or, look to hedge them.

Most importantly, before you even put together your parlays, decide your exit plan. Timely exits will increase your ROI in the long run, further adding to your profits.

If you have any questions, be sure to reply to this email! Best of luck!

ON THE BOARD
This Week in Sports Betting

⚾️ All week: Regular season is in full swing. The MLB regular season is continuing with its last week before the All-Star Break.
⚽️ Sunday: Euro 2024 Final. The Euros conclude with the Final in Berlin. The two midweek semifinals are Spain-France and England-Netherlands. Spain are now the favorites at +195. The books are rooting against England (+250) as they are the only major liability left. The only sharp side left is the Netherlands at +450. France is +275.
⚽️ Sunday: Copa America Final. Copa America concludes with the Final in Miami. The two midweek semifinals are Argentina-Canada and Uruguay-Colombia. Argentina is still favored to repeat at -120. They are a very small liability. The major ones (USA and Mexico) were eliminated. The only sharp team left is Uruguay at +300. Colombia are +325, and longshot Canada is +2200 to win.
🎾 All week: Wimbledon. Wimbledon’s continues with the later rounds concluding with the Finals this weekend. The books will be rooting for some upsets on the Men’s side. The Women’s side has had enough upsets for them now. The sharps are still on #12 Tommy Paul on the Men’s side. There’s now nothing that they’re on the Women’s side.
🎰 Wednesday-Friday: All American Sports Betting Summit. This three-day conference will bring together stakeholders from all over the industry, such as operators, affiliates, and regulators. Amongst the items being discussed are anti-money laundering enforcement, AI Innovations, and whether the industry will adopt FINRA regulations.

TAKING THE POINTS
3 Quick Tips to help you find your Edge

• Just a reminder on soccer as we’re into the second week of soccer knockouts. Most bets (except those that are “to advance”) are graded after 90 minutes+injury time. Extra time and penalties are NOT counted.

• When betting NRFI’s in baseball, look to actually bet the “1st inning tie” instead. The juice is pretty similar (maybe 10-20 cents different), and it serves as some insurance if the visiting team scores in the top half of the first. For example, Sunday’s Diamondbacks-Padres game ended 1-1 after the 1st.

• Separate your betting emotion from your team fandom to eliminate any bias. For example, if you’re a Yankees fan, lay off betting them if you’re doing it out of your fandom.

KEY NUMBERS
News from around the betting world

🇺🇸 63%. Donald Trump’s odds are now at 63% on Polymarket. Biden is now at 20%, and Kamala Harris is at 9%. The main story is still on the Democratic side with all the uncertainty and volatility there. Biden is still the favorite to win the nomination over Kamala Harris (70-20). Those numbers were almost flipped a few days ago.
🏀$1.1M. Jontay Porter, who was banned from the NBA for life for betting, is now facing federal felony charges connected to his betting. One of his bets was an $80K parlay to win $1.1M. It lost. His salary was $400K last season.
🎰 57%. The State of New Jersey introduced a bill to allow bettors to wager on in-state colleges (which is currently prohibited). It will be put up to vote in November. A similar bill was rejected in 2021 with 57% of the votes against.

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