Correlated Parlay Betting: An Analysis of Betting Market Profitability Scenarios in College Football

Abstract

In this paper we consider the case of potential “correlated parlays” in American college football wagering.  The structure of college football games is such that games in which favorites prevail in “against-the-spread” (spread) bets are expected to be more likely to go over the posted “total” of the game. Using a longitudinal data set over the years from 2005-2015, our findings confirm this to be the case. However, to prevent bettors from utilizing this trend to profit in their wagers, many sportsbooks disallow some, or all, same-game parlay bets.  Consequently, we find that sportsbooks have generally been too conservative in refusing such bets and have thus foregone profitability in the vast majority of betting situations.  This analysis opens a new line of discussion in the area of sports market efficiency research – that of correlated parlay betting.  We consider this case and present potential directions for future research.