[picoman]

suppose you're a conservative book, which means that you want to have equal action on both side of the game to minimize risk. how would you balance the book when people bet a parlay?

suppose the 2 team parlay odds for two -110 events is +260

two events

event 1:
team a -110
team b -110

event 2:
team c -110
team d -110

someone just bet 10k on a parlay: team a & team c to win 26k

Question is, how much action on team b and team d you want to attract by moving the lines?

this is what i have in mind. 2 team parlay has 25% chance of winning. so there is 25% chance you have to payout 26k. so you only want 6.5k worth of action on team b and team d to balance out the risk. which comes to that you want to attract 3.25k action on team and team d each.

does this seem right?

[Ganchrow]

Originally Posted by picoman

suppose you're a conservative book, which means that you want to have equal action on both side of the game to minimize risk. how would you balance the book when people bet a parlay?

suppose the 2 team parlay odds for two -110 events is +260

two events

event 1:
team a -110
team b -110

event 2:
team c -110
team d -110

someone just bet 10k on a parlay: team a & team c to win 26k

Question is, how much action on team b and team d you want to attract by moving the lines?

this is what i have in mind. 2 team parlay has 25% chance of winning. so there is 25% chance you have to payout 26k. so you only want 6.5k worth of action on team b and team d to balance out the risk. which comes to that you want to attract 3.25k action on team and team d each.

does this seem right?

There's of course no way to perfectly balance risk by solely betting the two singles.

If we ignore vig (+100 on the singles and +300 on the parlay) and assume hedging to be costless, a risk-averse book would simply trade out some of its loss in the case of a A/C victory such that the book would face a loss of $2,500 under A/C or B/D and a gain of $2,500 in either of the remaining 2 cases. Without the book having the ability to make contingent bets of its own that would be the best it could do. (If we chose not ignore vig then we'd need to specify a utility function to relate risk to expected return.)

The topic of risk management is certainly a fascinating one but it's difficult to come to any meaningful conclusions without a better a understanding of the book in question's attitude towards risk. A book might choose to implement some version of Kelly to manage its risk, or it may simply choose to control it's max exposure to any one event, or it might just choose to fly by the seat of its pants, fleeing from its obligations if all goes to hell.

[20Four7]

Originally Posted by picoman

suppose you're a conservative book, which means that you want to have equal action on both side of the game to minimize risk. how would you balance the book when people bet a parlay?

suppose the 2 team parlay odds for two -110 events is +260

two events

event 1:
team a -110
team b -110

event 2:
team c -110
team d -110

someone just bet 10k on a parlay: team a & team c to win 26k

Question is, how much action on team b and team d you want to attract by moving the lines?

this is what i have in mind. 2 team parlay has 25% chance of winning. so there is 25% chance you have to payout 26k. so you only want 6.5k worth of action on team b and team d to balance out the risk. which comes to that you want to attract 3.25k action on team and team d each.

does this seem right?

First off a conservative book will not allow 10K on a parlay. A conservative book (risk adverse) would strictly limit their exposure.

Most books (I think) look more at whose betting the play than the play itself. I know that isn't answering your question but I think your question isn't reasonable.

[pokernut9999]

I asked my local earlier this year if and who he lays off with. He said if he has 2 games that are all one sided he will lay off half on each one. If it is like 4 or 5 games he just lets it go. His response was why book if I am going to lay off everything. He has been in business 38 years so I guess he knows what he is doing.

[picoman]

Originally Posted by pokernut9999

I asked my local earlier this year if and who he lays off with. He said if he has 2 games that are all one sided he will lay off half on each one. If it is like 4 or 5 games he just lets it go. His response was why book if I am going to lay off everything. He has been in business 38 years so I guess he knows what he is doing.

thanks. that is why i thought too. if i am a book, i would not do anything if people bet 3-4 team parlays. if it hits, i will pretend i am out of town