How Parlays Became the Biggest Bet in Sports

0:05Alex 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. 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 I wouldn't say that gambling would be my favorite thing just because I see it every day. 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.

0:45It 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 started stringing together a complicated sequence of bets. 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 Jamar Chase and Najee Harris would find the end zone. 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.

1:22Jalen Hurts had to score. Kyron Williams had to score. And then, of course, Cooper Cup needed 70 yards. 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. Let me see the exact payout. Hold on. It was$21 ,921. Almost$22 ,000 off a free$10 bonus bet. That's like life-changing money to me. I'm planning a wedding. We're looking to build a house.

2:09Like, that could do a lot for me. So I was like, it's a free bet. We'll risk it.

2:17So when you make this bet, how were you thinking about it? Were you like, this is silly? A hundred percent. A hundred percent. I was like, this is so stupid. And like, I tell my fiance my bets 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. 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.

2:57Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Friday, February 7th.

3:10Coming up on the show, how parlays became the biggest bet in sports.

3:29How long have you been covering the gambling industry now? A little. Well, I've been covering it for five and a half years. Changed a lot during that time. It has, for sure. That's our colleague Catherine 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? Sports betting is still a relatively new industry in the U.S. 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.

4:12And so they are under pressure to become profitable. Despite this 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. 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' bettors were beating the books this season. 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.

5:04As the DraftKings CEO put it, the company had, quote, experienced the most customer-friendly stretch of NFL sport outcomes we have ever seen. 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.

5:29Another 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. 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. The problem with VIPs, though, is that some of them are spending way more money than they can afford to lose.

6:16And gambling companies are required to have responsible gambling practices. 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. DraftKings and FanDuel have said they're committed to promoting responsible gambling and protecting consumers. So the companies really want to expand that casual bettor base, get people who bet less, but bet regularly, and more of those people to create that less risky customer base. Rather than rely so heavily on VIPs, sports betting companies are trying to court more customers like Alex.

7:01I think I do at max like$5 for a parley, maybe$10 if I'm feeling like generous or I just won or something. 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. I think it was the end of the Steelers-Bengals game. And a catch! Jamar Chase got his 80 yards. Beautiful grab by Jamar Chase. That's when I was like, okay, this might happen.

7:48And 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 had needed the Texans' Nico Collins to get 70 receiving yards. He did. And here's Nico Collins with a catch. She needed Jamar Chase to get a touchdown. Step up, deliver. And he did too. Touchdown, Jamar Chase. 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. I had talked to my regulars about, like, the bet. So they were keeping me updated if I was, like, busy doing little things.

8:27So they'd be like, oh, so-and-so just scored. High, one-handed, and that's a touchdown for Mike Evans. And I think little by little, I was like, okay, wait, maybe this has a chance. How were you feeling when you thought you could possibly win this much money? 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 got this, like, covered. We're good.

8:57Things were looking up for Alex. With only a few bets left in her parlay, it seemed like she was going to score. What happened next is after halftime.

9:29Parlays 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. So FanDuel's parent company, Flutter, has a sports betting brand in Australia called SportsBet. 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.

10:13They got to work on it and they figured it out and started offering 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? Same-game parlays took off almost immediately. As soon as Fandle put these out, the companies could tell it was taking off.

10:54the competitors all quickly followed. Now, ads for parlays are everywhere. Same-game parlays on FanDuel are the best way to bet on your favorite players. 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 one touchdown parlay. You're welcome. But the hype isn't just coming from paid spokespeople. Parleys have taken off in social media. Finally, we hit a parlay! We hit a parlay! 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.

11:38It'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.

12:02By 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. Jo 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 L.A. Rams took the field.

12:26Alex needed running back Kyron Williams to get a touchdown, which he did. And she needed wide receiver Cooper Cup to get 70 receiving yards, which was one leg of her bet that actually had pretty good odds. 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. Former Super Bowl MVP Cooper Cup. 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. 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.

13:12And 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. And he's normally a receiver that catches a lot of passes. Normally, yeah. And at that point, 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. Cup never had another catch. It was his second worst game of the season.

13:46By 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.

14:06Alex had beaten the odds, but not enough to win. And that's what betting apps are betting on. 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. If all that happens, someone who bet$10 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 odds of that are a nearly 55 % chance of winning.

14:55That's a big difference. It's huge. It's huge. And you would think gamblers might shy away from that, but apparently they're not. I know that generally with gambling, the odds favor the house. But did the odds favor the house more with parlays? 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.

15:40So 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. 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 revenue last year.

16:22So it's clear that the companies see this as the future of the business.

16:29So are you making any bets for the Super Bowl this weekend? 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, let's place a couple just to make it interesting for myself because I don't really care about who wins. And do you think that you'll do a parlay bet? Yes, always. I'm never going to pick one side. I always have to do the parlay. It makes them more interesting. 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.

17:03I 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 is 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 that Cooper Cup, blah, blah, blah. He's like, I haven't placed a bet on him since that day. So it gets brought up a couple of times. Is there anything that you'd like to say to Cooper Cup here on the podcast who did not meet his target? No. I mean, I'm upset. It's okay, Cooper. I forgive you, I guess. But, you know, a little compensation for losing my bet would have been nice.

17:49That'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.

18:28The show is made by 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 Singapak, Griffin Tanner, So Wiley, and Blue Dot Sessions. Fact-checking by Mary Mathis, Kate Gallagher, and Najwa Jamal. Thanks for listening. See you Monday.