Why We Use Parlays
For our 1k -> 10k experiment, we will be using a fair amount of parlays, so it makes sense for everyone to understand the reasoning behind it.
Contrary to popular believe, parlays are not sucker bets. Parlays simply exaggerate your edge. If the house has an edge over you, then parlays will wipe you out more quickly. If you have an edge over the house, your edge becomes multiplied.
In theory, the larger of a parlay we play, the higher our expected value is. The only problem with this is that a lot of books stop offering true odds after the first 3 or 4 teams are put in the parlay.
If we lose a parlay 70% of the time, how does that make sense? Well, over time, that means we will also win 30% of the time. If that holds, then we have the EV we were shooting for. Betting on a multi-team parlay can be very similar to betting on a large underdog. This will allow us to bet, for example, $20 on a game instead of $80, greatly reducing our chance of going bust.
Some guys over at SBR have already laid out the math very nicely, so I'll just redirect those that are interested to their post. Parlays