Compound Interest

In previous articles, we have warned you about betting parlays. The typical parlay offers the house value of about 30%. However, sometimes we can get exceptional value by using a little thought and the power of compound interest. Well, not really compound interest, but I couldn’t think of a better quote than what Einstein had to say about the Eighth Wonder of the World.

BETTING PARLAYS IS ALL ABOUT THE VALUE

The Major League Baseball Wild Card Playoff Games offer tremendous value for underdog bettors. Why? Because win and you are in, lose and you go home. In reality, the odds for each team should be set at +100. Home field advantage doesn’t matter, nor do the starting pitchers matter. What matters is WINNING the game. Both teams in the Wild Card Playoff Game have the exact same motivation. But the sportsbooks want you to think one pitcher, or one team, is superior.

As you can see in the image posted with this article, I parlayed the underdog moneylines for both Wild Card Playoff games. Not only am I getting plus money on the individual teams, I have now compounded the payoff using the power of an underdog moneyline parlay.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it” – Albert Einstein

The ticket shows the payoffs for each team, if they were bet individually. Colorado Rockies +128 and Oakland Athletics +170. One Hundred dollars bet on the individual sides would win $128 on the Rockies for a payoff of $228, and $100 bet on the A’s would yield a payoff of $270. Add these two together and the total payout would be $498, for a net profit of $298. It took me $200 to win $298.

The problem with the typical two-team parlay is not the payout, it is the difficulty of getting both teams to win, so you can get paid. On any given day, the motivation levels for the teams may not be equal. But in the Wild Card Playoff Game, the motivation levels are equal – both teams want to win. This is what the team members have been dreaming about all their lives – getting to the World Series. And here is their single chance to advance and get into the Divisional Round Playoff.

Hence, both teams are motivated. And in my judgement, have exactly the SAME motivation. With that premise, it makes a lot of sense to bet the underdogs individually AND parlay the underdog moneylines. It cost me $100 to bet the ticket shown here. The win amount is a little more than $515, five times the cost of the bet! This isn’t exactly the idea Einstein had, but it’s a damn good approximation. I’m compounding my $100 on teams that have an even shot of winning the game, but I’m getting a compounded interest rate of 515%!!! Sort of. Hopefully you get the point.

I don’t know if Einstein ever bet on sports, but he surely would like to have a piece of this action!