For the moment in the legal US sports betting landscape, it seems regulators have some big fish to fry. However, whether a certain fish is big is relative to how it compares to others. After gambling regulators finish frying their catches of the current day, they could very well prep their pans for the next pescatarian delight.
For regulated sportsbooks in the United States, that currently medium-sized matter that might take the spotlight is their promotion of parlay bets. Like with many other matters, the operators of those books have a chance right now to avoid such scrutiny. Doing so would require a reversal of current trends, however.
US sports betting regulation focused on other issues currently
For now, legislators and regulators are focusing their energies elsewhere. Recent news on the regulatory front consists of:
- Kentucky outlawing “skill games”
- Pennsylvania regulators banned certain phrases in gambling ads
- Maryland lawmakers are considering restricting promotional deals between colleges and sportsbooks
- Maine regulators could dictate when sportsbooks could advertise themselves on television
Other recent issues that have come up in regulatory meetings in various states with legal sportsbooks have included the tax deduction of promotional credits and compliance with official data mandates. However, discussion about parlays at sportsbooks has surfaced.
Last week, Massachusetts regulators opened an inquiry into whether language around the promotion of parlays violates state law. To be clear, the regulators aren’t questioning the legality of the parlay bets. The issue is how the sportsbooks are promoting them.
Parlays can appeal to bettors due to their potential. There’s more potential risk than is readily apparent, however.
How do sports betting parlays work?
Parlay wagers are by and large completely legal in US states that have licensed sportsbooks. They are popular among bettors for one reason; they allow bettors to take a relatively meager stake and make a solid profit. That’s if the parlay pays off, however.
The catch in that situation is that the vast majority of parlays do not pay off. Still, many bettors see them as more attractive because the payout can be so superior and if they miss, they have only donated a few dollars to the sportsbook.
Using an example from BetMGM Sportsbook on Monday, BetMGM is promoting an NBA parlay in which the bettor would need the Indiana Pacers, New York Knicks, and Philadelphia 76ers all to win their Monday games outright for the bet to pay off.
BetMGM is offering +190 odds on that wager. Thus, a $12 wager on that market could almost triple that money, paying $22.80 in profit. In comparison, betting $4 on each of those teams on the moneylines individually has a potential profit of $5.36.
At the same time, the chance of winning the parlay versus the individual straight bet are far more friendly to the sportsbook. Odds of +190 imply a probability of 34.48%. That means just based on the hard math, the sportsbook has a likelihood of 65.52% in terms of keeping your $12.
By comparison, a -350 straight moneyline bet on the Knicks to win Monday night has an implied probability of 77.78% on the bettor’s behalf. The problem is that this understanding requires a level of experience and knowledge that many bettors might not have.
The problem with promoting parlays
The issues come down to bettor literacy and responsible gambling. Parlays appeal to bettors on a premise that can teeter into creating problem gambling habits in that their draw is all about using sports betting as a way to make money.
The most responsible approach to betting on sporting events is quite the opposite; viewing it as an entertainment cost akin to attending a concert or sporting event. While many of the sportsbooks do have guides that explain how parlay bets work, they require bettors to seek them out.
There is little if any proactive effort on the part of ensuring that bettors understand the risk they are undertaking in light of the potential reward. Perhaps the greatest risk could accompany success in such markets.
A bettor who has success with a small stake on a parlay could face temptation to increase their stake in order to chase an even larger profit. A potential snowballing of that could lead bettors to place more risky bets to recoup those losses and eventually a legitimate compulsive gambling issue might develop.
Sportsbooks could mitigate that situation by implementing some educational measures or limitations on promotions.
Potential interventions to avoid problematic results
A simple way to increase bettor literacy around parlays would be to integrate more information about the wagers into the user interfaces. For example, the dialogue boxes could include information about the implied probability of bets paying off. A perhaps even better display would be comparing the probabilities of the parlay vs. straight bets for all the included legs.
Also, sports betting apps could simply limit the frequency with which they promote parlay bets. That might be the most unlikely option, however. Because of the high margin of victory for such markets, it’s in the best interest of sportsbooks to incentive bettors to place such bets.
For that reason, regulators might have to eventually step in here the way they have on other issues like partnerships with colleges and advertisements boasting “risk-free” bets. Sportsbooks had opportunities to self-regulate on those matters, too, and failed to some degree.
Consumer protection is a hallmark of gambling regulation. Restricting how sportsbooks promote their parlays could be the next task regulators take on if sportsbooks show that such oversight is necessary.