Parlay Insurance – What Is It & How Much Does It Help the Bettor?

Your Guide to Parlay Insurance

Table of Contents

By Kevin Davis

Aug 14, 2021

Sportsbooks and sports bettors love parlays, as parlays are essentially the sports betting version of the lottery.

For sports bettors, they like parlays because they can turn a small amount of money into a fortune. For sportsbooks, they like parlays because they make more money on them than single game bets.

With sports bettors liking a bet type that makes sportsbooks the most amount of money, legal sportsbooks have come up with a creative way to get bettors to bet on more parlays, parlay insurance.

Below, I go over what a parlay is, how parlay insurance works, and how much parlay insurance reduces the sportsbooks edge on parlays.

What Is a Parlay?

A parlay is a single sports bet that combines two or more separate bets into one wager. Each different bet within a parlay is referred to as a leg. For a parlay to hit every single leg in the parlay must be a winning bet.

What a parlay does is take your initial wager and winnings from your first leg and carries it over to the next leg. For example, if you bet $11 and your first wager wins $10, your parlay turns into a $21 bet on the next leg.

While a parlay is riskier than a single game wager, the payoff is bigger. For a $11 bet on a -110 single game spread, your profit if you win is only $10. However, for a $11 wager on a four-leg -110 spread parlay your net profit is $136.12.

  • Leg 1: Bet $11, Get $21
  • Leg 2: Bet $21, Get $40.09
  • Leg 3: Bet $40.09, Get $76.54
  • Leg 4: Bet $76.54, Get $146.12

What Is Parlay Insurance?

With the lucrative nature of parlays, what gets bettors who lose on parlays to keep betting on them is coming close to winning. If a bettor hits three legs in a four-leg parlay, they begin to believe that they are due for win.

As a way of encouraging bettors who come close to winning on parlays to try again, sportsbooks offer parlay insurance. The way parlay insurance works is that if all legs of your parlay hit except for one, you get a refund.

There are two types of parlay insurance, cash-back insurance, or free bet insurance. For cash-back parlay insurance, you get your original bet amount added to your account balance if all but one of your parlay legs win. For free bet insurance, rather than getting your original bet back as cash, you are rewarded a free bet amount that equals what you bet on the parlay.

Cash back is your best option as a bettor as you can do whatever you want with it. A free bet is not as good as cash back because you only get your money back if the bet that you make with your free bet.

The other drawback with free bets is that you only get your winnings from winning wagers and not your initial stake. For example, if you use a $25 free bet on a -250 favorite, you only get $10 if that favorite wins instead of $10 plus your $25 stake back.

It is important to note that sportsbooks don’t market parlays based on if they are cash-back or free bet parlays, so it is important to read the terms and conditions.

Best Online Sportsbooks With Parlay Betting

Caesars Sportsbook

Caesars Sportsbook

  • Intuitive App

  • Plenty of Markets & Bet Types

  • VIP Rewards System

Get up to $1,500 FREE

Risk-Free Bet

GAMEDAY15Get bonus

New Customers Only, 21+. T&C’s Apply.

Betway Sportsbook

Betway Sportsbook

  • Easy-to-Use App

  • Quality promotions

  • Detailed Live Betting

Get Up To $250 FREE

Risk-Free Bet

No code requiredGet bonus

New Customers Only, 21+. T&C’s Apply.



  • Custom Bets

  • Cash-out Feature

  • Plenty of Fruitful Promotions

Get Up To $500 FREE

Risk-Free Bet

No code requiredGet bonus

New Customers Only, 21+. T&C’s Apply.

Read more about the best parlay betting sites.

Parlay ROI Without Insurance?

Bets of any payout can be used for parlays, but for the purpose of this article I am only using -110 spreads to calculate parlay odds. This is because spreads are the most common bet type and they have a 50% probability of winning.

To figure out the impact of parlay insurance, we need to first calculate the edge that sportsbooks have over customers with parlays. For single-game spread wagers, betting sites have a 4.55% edge when they offer bettors -110 odds on both sides.

For parlays, the house has a larger edge. This is because with a parlay, you are multiplying the house’s edge on each bet by increasing your betting volume. A sportsbook’s edge on parlays is increased as the number of legs on a parlay is increased.

For example, on a two-leg spread parlay, you have a 25% chance of winning your bet (50% of 50% is 25%). As a result, the break even odds for a two-leg spread parlay should be +300. However, because of the -110 vigorish on spreads, the payout is +264 which is a breakeven percentage of 27.5%. With a breakeven percentage that is much higher than the true odds, the house has a 9% edge on two-leg spread parlays.

For three-leg parlays, the sportsbooks edge on parlays increases to 13% and for four-leg parlays the house has a 17%. Most importantly for five-leg parlays, the house has a 20.8% edge. The reason why betting sites encourage as many legs as possible on parlays is because their edge increases with each leg that is added.

They might have to pay out a large sum of money on longshot parlay wagers, but in the long run this is how betting sites make the most money. In fact, as of June 2021, New Jersey sportsbooks have had a 17.8% profit margin on parlays in 2021.

With parlays being worse for sports bettors than single-game bets, the question is if parlay insurance decreases the houses edge enough to be a worthwhile bet.

Cash-Back Parlay Insurance

To find the sportsbooks edge on parlays when cash-back parlay insurance is offered, I decided to run a Monte Carlo simulation of one million parlays. The way my simulation worked was that for each leg of the parlay, half of the time the bet would win and the other half of the time it lost.

After simulating each parlay, I added up the results of all the legs and if all legs of the parlay hit that counted as a win. If all but one leg of the parlay hit but one, the parlay would be graded as a push meaning you would get your money back. Finally, if two or more legs of the parlay lost, the parlay would be graded as a loss.


Parlay LegsCash-Back Insurance ROIParlay ROI Without Insurance

Use of Insurance

Parlay LegsWin PercentageLoss PercentageUse of Insurance

If a parlay has four legs or fewer and cash-back parlay insurance, then the sports bettor has an edge against the book. At the moment, the only sportsbook offering cash-back parlay insurance is FanDuel and to qualify for insurance, parlays must include at least five legs.

For five-leg parlays in my simulations, only 3.1% of those bets won, and insurance was applied to only 15.6% of wagers. A five-leg parlay with cash-back insurance has a return of investment (ROI) of -4.6% which is nearly identical to the ROI of a single spread bet of -4.55%.

This means that a $100 five-leg parlay bet would have an expected loss of $21 without insurance, and only a $4.60 loss with insurance. A $100 single-game spread bet has only a $4.55 loss.

If you are the type of bettor who likes five-leg parlays, cash-back parlay insurance is beneficial. However, if you are the type of bettor who only bets single-game wagers, five-leg parlays with cash-back insurance have the same house edge as single-game wagers.

If a sportsbook were to offer cash-back parlay insurance on parlays with fewer legs, then the bettor would have an edge against the books. For four-leg parlays with cash-back insurance, bettors have a +8.2% ROI, and for three-legs they have a +24.5% ROI. If a betting site were generous enough to offer two-leg cash-back parlay insurance, bettors would have a +41.1% ROI.

In addition to a small house edge on regular parlays, parlays that offer insurance more frequently help the bettor. For two-leg parlays, insurance was applied in half of simulations and for three-leg parlays it was applied in 37.5% of my simulations.

As a sports bettor, when you are offered cash-back parlay insurance you should bet as few legs as possible to either have an edge against the sportsbook or minimize their edge.

Free Bet Parlay Insurance?

Parlay LegsFree-Bet Insurance ROICash-Back Insurance ROIParlay ROI Without Insurance

For free bet parlay insurance, it is not as good as cash-back insurance, but it is still beneficial to the player. If you have a five-leg parlay without insurance your ROI is -21%, but if you have free bet insurance, you have a -13.6% ROI.

For the simulation I did on free bet insurance, the only difference between that simulation and the cash-back insurance simulation was that if you were eligible for insurance, you were rewarded a free bet. With that free bet, I assumed that you placed that bet on a spread and that half of the time you would lose and the other half of the time you would win and end up losing only -.09 units of your original stake.

While a five-leg parlay with free bet insurance wasn’t good for the bettor, a four-leg parlay evened the playing field between sports bettor and sportsbook. If you have a four-leg parlay with free bet insurance, your ROI in my one million simulations was only -5.2% which is only slightly worse than a single-game bet on a spread of -110 which is a -4.55% ROI.

Currently TwinSpires is offering free bet parlay insurance on parlays with four or more legs.

With parlays with four legs or more are unprofitable with free bet parlay insurance, parlays with two or three legs are profitable. Currently no sportsbooks are offering this directly, but WynnBET will occasionally offer customers parlay insurance on parlays of two-legs or more.

The way WynnBET’s offer works is that if you have enough site tokens from losing wagers, you can spin a wheel on your parlays of any size. The wheel randomly picks a prize that is usually a profit boost, but sometimes you can win two free nights in Vegas (which I won twice), or even parlay insurance (which I also won).

On the two-leg parlay where I won free bet insurance, I had a 13.7% edge based on my one million simulations of two-leg parlays with free bet insurance.

Is Using Parlay Insurance Worth It?

Without parlay insurance, parlays are usually a bad idea. Even though the payout is higher, the house has a larger edge because you are multiplying their edge on single-game bets against other single-game bets which also have a negative expected value (EV).

However, with parlay insurance, for the most part your ROI is the same as your ROI for single-game bets. If your goal with sports betting is to have fun, then cash-back parlay insurance with five legs or less or free bet parlay insurance with four legs or less are worth it.

My only words of caution would be for beginning or intermediate level bettors to avoid parlays without insurance. This is because these wagers are not only highly volatile, but in the long run they will deplete your bankroll.

Another instance in which you might want to bet parlays is if you are offered a parlay profit boost. In a future article, I will be covering this topic.


By Kevin Davis

Kevin Davis is a Betting Analyst at The Game Day residing in Hoboken, NJ. Previously a Bronx resident, Kevin got his start betting on sports at his local Bronx barbershop. When sports betting was legalized across the river in Jersey, Kevin was there on the ground floor making regular trips to the Hoboken PATH station or for soup dumplings in Fort Lee. Previously, Kevin has written for The Action Network, and Vegas Insider.

Schedule & Odds

Top Offers

NBA Betting News

  • Celtics +300 to win NBA Title

    The Boston Celtics are +300 to win the 2021-22 NBA Championship, per BettingPros consensus odds.

    Betting Impact:
    The Celtics are +300 ahead of their home date with the Warriors for Game 6. We will see a considerable odds shift if the Celtics can win Game 6 on their homecourt. Boston was +310 after Game 5.

  • Celtics vs. Warriors over/under listed at 210

    The over/under for Game 6 of the NBA Finals between the Boston Celtics and the Golden State Warriors is listed at 210, per BettingPros consensus odds.

    Betting Impact:
    The total for this contest sits at 210, down from the 210.5 it opened at. 60 percent of the public action has come on the over.

  • Warriors -400 to win NBA Championship

    The Golden State Warriors are -400 to win the NBA Championship, per BettingPros consensus odds.

    Betting Impact:
    Golden State now sits at a prohibitive -400 to win the NBA Championship. For comparison, Stephen Curry MVP is -360. Andrew Wiggins, the dark horse to steal the award with a big close-out game, sits at +2000.

  • Celtics +310 to win NBA Championship

    The Boston Celtics are +310 to win the 2021-22 NBA Championship, per BettingPros consensus odds.

    Betting Impact:
    The Celtics peaked as high as high as -230 prior to Game 3 and now sit at an attractive +310. Boston entered the season at +4000. The odds could swing wildly again if Boston wins Game 6.

  • Warriors vs. Celtics over/under listed at 210.5

    The over/under for Game 5 of the NBA Finals between the Golden State Warriors and the Boston Celtics is listed at 210.5, per BettingPros consensus odds.

    Betting Impact:
    The total for this contest sits at 210.5, down from the 212.5 it opened at. 72 percent of the public action has come on the over.