Every once in a while, despite the best bookmaking and balancing of positions, sportsbook managers find a surprise in their daily summaries, like a player hitting a $1 million 8-team parlay. Though the occasional player hitting a home-run on a parlay should be expected, when a big one hits, it can catch sportsbooks off guard. Parlays are one of the most misunderstood tools in the betting industry, which is why books offer them. Like the familiar proverb, give a player enough rope, and…… well, you know the rest.

There are two common ways parlays are played that guarantee the book a long-term profit. Many recreational players are focused on the "big win" like hitting eight plays at -110, to win $100,000 from a $66 stake. While it can be a blast when the first three legs hit, I've seen people nearly go into cardiac arrest after winning the first seven, leaving one play pending on Monday night for an all-or-nothing life changing win. Sweaty and stressed, these parlay junkies invariably end up cracking and trying to hedge out the parlay.

The fundamental problem with playing parlays is that risk management is impossible. Assume our friend who was betting $66 tickets had a bankroll of $10,000. By Monday night, this parlay bettor is risking $51,200 (in equity) to win $48,800. They're now risking more than five-sixths of their bankroll on one play. For recreational gambling this is fine, but for a professional, this kind of tactic would make Kelly roll over in his grave.

Another common play is parlaying a lot of favorites that "can't lose" to generate a payout close to even money. One parlay for college football I saw included: Va. Tech -535, Rutgers -405, NC State -405 and Purdue -1070. In this parlay, the player risked $100 to win $101.80. This common strategy of parlaying favorites is a classic case of mathematical denial. The player FEELS like all the sure things will win, and the thought is reinforced by seeing many of the selections succeed with the occasional parlay paying off. The mathematical certainty however, is that every parlay selection added increases the "juice" paid. Parlaying big favorites like this (without sophisticated handicapping) will NOT make money in the long run.

If this is the case, then why do wise guys play parlays? One reason sharps play parlays is that they may find a correlation. Correlated parlays are the "holy grail" of sports betting - finding and betting these almost guarantees a win. These are so dangerous that even small correlations (e.g. in MLB, playing the visitor with the over or the home team with the under) can gradually destroy a sportsbook. Sharp players identify these correlations and hoard the information along with the names of sportsbooks known to take action on these correlated bets. If you try to make a parlay at Pinnacle Sportsbook and our software rejects the play, there's a good chance the play is correlated.

There's another type of parlay that sharps use which called an "action" parlay. Many times, a player wants to bet more than a book's limit. This is especially prevalent against overnight lines or smaller markets like Tennis and NASCAR. Assume you see an opening line that is badly off e.g. +150 when the fair line is +100. When discovering these huge edges, bettors logically want to bet as much as they can.

One way to do this would be to play the +150 selection parlayed with 10 random games at -110. If you win and lose exactly five of these selections, you've effectively bet five times as much on the +150 selection, but lowered the payoff (since you paid more juice with the random selections). This isn't a good idea if you have a normal 53% play versus -110, but it's a tool to remember when there's a monster play in a small market. At Pinnacle Sportsbetting we've customized the software to defend against this type of strategy, but there may be less astute sportsbooks out there that haven't.

Another way sharps use this strategy is to play two or three-team parlays with one open leg. They'll do their usual plays for the early legs, and close them out with the monsters. For example, they'll risk $1,000 on a three-team parlay and after winning the first two legs, they can effectively risk $3300 to win $3000 by closing that last leg.

If you play a lot of parlays (or even teasers, which are just modified parlays), you need to spend significantly more time on risk management. Not only could you be overexposed on a game (like the 8-team parlay discussed earlier), but you could be underexposed as well.

If the first leg of a two-team teaser/parlay has lost, you have no action on the second leg. Sharper players will routinely evaluate their positions at the conclusion of each leg, and make additional bets to ensure they have an adequate position on each game they like.

What are our players betting this week?

Michigan (+5.5 +100) v. Notre Dame

In one of the most heavily bet college games, all the money has been on the Wolverines. We opened the Fighting Irish as 7.5-point favorites, but the public favored Michigan by a three-to-one ratio. To this point the sharps have been curiously absent on this game.

Oakland (+11.5 -101) v. Baltimore

We opened Baltimore as an 8-point favorite against the Raiders, who were routed 27-0 by San Diego Monday night. A few sharps played Oakland at the open, but they were swamped by public money. Public backers of Baltimore have five times as many wagers as Raider backers. It's very common to see public bettors fade a team that looks terrible in the first week, even though more often than not, teams revert to the mean after an "Oaklandish" performance. A few early sharps agreed by backing the Raiders before the early runaway line. Expect the other sharps to back Oakland hard once the line stabilizes.

Super Featherweight Championship: Barrera -150 v. Juarez +140

These two fighters battled out to an apparent draw on May 21st earlier this year. Thirty minutes after a draw was announced, the judges came back and declared Barrera the winner due to a corrected scorecard error. How do you handle something like that? Rematch! Barrera opened as a -200 favorite. Although twice as many bettors have backed Barrera, the sharps are on Juarez, and have driven the price down.