There's a lot of mention of the parlay wager in both horse racing and sports betting circles, but so many people don't know how to properly approach it.

A parlay is a single bet in which one picks multiple outcomes. The bet is won only if all the picks are correct.

For an example, let's look at the following scenario:

Suppose there are two men named George and Marty. One of the men is hungry and must make a trip to the grill. Picking which man goes to the grill is the first bet. The gambler must then choose if the hungry man will grab a hot dog or a hamburger. The gambler must then pick ketchup or mustard to put on the meat of choice.

Bettors could make a parlay wager by picking all three outcomes. Each choice has a 50 percent probability on its own merit.

If you were only to bet straight up on any of these wagers, it would produce 1-to-1 odds where the bets would match dollar for dollar. But if the betting was then thrust into parlay action, the risk of the wager exponentially increases.

To parlay this scenario, the bettor could wager Marty taking the hot dog and applying mustard to his dog. Since this involves three coin-flip scenarios that must unfold to produce a winner, this bet would pay about 6-to-1 odds. So a $10 bet would win you $60 for your ability to predict the future.
If you were to pick Marty, and he grabs the hot dog but opts for ketchup over the mustard, the bet is a loser despite two of the three outcomes selected correctly.

For the bet to win, all of the contingency bets must win.

Here's another fun exercise: Write down guesses for four coin flips ahead of time and then proceed to flip the coin to see if you are correct. This scenario would pay approximately 12-to-1, however, the true odds of doing this are more like 16-to-1.

There is no limit to the type of parlay bets a person can make. They can be made on team or individual sports and accomplishments. In horse racing, they can be made on the predicted order of finish among two or more horses.

Gamblers can bet on anywhere from two to 20 possible outcomes, although parlays that include more than three or four outcomes are little more than a lottery ticket.

The betting windows love it when gamblers approach them with parlay bets because they are incredibly difficult to win.

Chuck Blount | 210SA contributor