From NFL.com, and for ENTERTAINMENT PURPOSES ONLY

Ah, football season and all it encompasses: tailgating. Camaraderie. The thrill of seeing elite athletes injure themselves for your gratification.

And setting money on fire.

Look, we can’t convince you not to wager on football: God knows it makes the game more exciting, and even the people who follow it for a living and have to remain objective as to the games’ outcomes can’t always help themselves.*

Al Michaels is the kind of guy who sounds like he just might have placed a modest wager or two at some point in his life. If you’re going to bet, bet with your friends. In the long run you’ll probably win no more than you lose, and most importantly, if you bet with your friends no one’s getting a cut.

Unfortunately, people don’t. And nothing sounds cooler among a certain brand of guy than saying you’ve got some sort of institutionalized action on a game. (With a bookie named Lefty? With a sports book? With Vegas?) If you announce that you’ve placed a sanctioned wager on a game in progress your friends will like and respect you, but not nearly as much as the bet middlemen themselves will.

If this only makes partial sense, you’re fortunate not to know the basics about gambling on sports. Honestly. But to justify the time you’re spending on our blog, here goes:

When you wager through a casino, a bookie, or an online sports book (let’s just say “an intermediary”), the intermediary is not your opponent, taking the other side of the bet and hoping you lose. The intermediary facilitates your bet, finding one of its other customers to take the other side. Obviously, the intermediary needs to get paid for accepting your bet. The industry standard is 10%, so if you want to win $10 on a standard bet, you have to wager $11.

So does that mean the intermediary makes 10% off every bet? Of course not. Half those bets are going to win. For every $22 the house collects ($11 on one side of a game, $11 on the other), it pays out $21. That’s 4.5%, which is still a sweet return for 3 hours’ work (if you can call simply holding onto money “work”. Even banks have to approve and make loans.)

Would you be interested in an investment that pays 4.5%, say, every 3 months? You should: it’d pay 19.5% annually. So. How about an investment that pays 4.5% over the course of an afternoon?

The volume with which you answered “yes” should equal the volume with which you should answer “no” if you’re the one on the hook for providing the return. That quick 4.5% is how much the intermediaries make off you.

It gets worse, much worse, in the form of parlays: the most efficient method devised for impoverishing you since the invention of the state lottery ticket.

A parlay, if you’re not familiar, is a high-risk/”high”-reward bet that involves multiple events. Instead of a straight bet – Team A to cover the spread, or Team B to – a parlay also incorporates Team C or D, and maybe E or F, up to and including Teams CC and DD.

In other words, with a “3-team” parlay you need the Lions, Buccaneers and Vikings all to cover. With an 8-team parlay, you need the Chiefs, Cowboys, Texans, Seahawks and Jaguars to cover too. If all 8 teams pull through for you, a $1 bet would pay $100.

If 7 of your 8 bets come through, you win nothing. Sure, that sucks, but look at that amazing payoff for going 8-for-8!

Do you know how hard it is to pick 8 games correctly?

Let’s start with an easier example, picking 3 games correctly. Somewhat obviously, there are 8 ways to pick 3 games (Home-Home-Home, Home-Home-Visitor, Home-Visitor-Home…all the way to Visitor-Visitor-Visitor. Try it and see.)

Only one of those ways pays. And with standard wagering odds, it’ll pay 6-to-1.

But mathematically, it should pay 8-to-1.

So on average, for every $8 the house takes in on 3-team parlays, it pays out $6 and pockets the rest. That’s a 25% “interest rate” for an afternoon’s trouble.

And that’s about the best (for the player) cut, or “vigorish”, that the house collects on parlays.

Back to our question about how hard it is to pick 8 games. 2⁸ = 256. An 8-team parlay should pay 256-to-1, instead of the 100-to-1 it does (numbers courtesy of BetUS.com.)

To a lot of people, innumerate people, it doesn’t really matter because 100 and 256 are both big numbers and thus either one is a great return as a multiple of a $1 bet.

At 100-to-1 odds, the house takes 61% of the players’ money. Even the Obama Administration doesn’t confiscate that much from high-income earners, yet.

Still not convinced? Here’s a handy parlay chart. Enjoy tonight’s games.

*Exhibition game, San Francisco favored by 3½. That’s Minnesota’s 3rd-string rookie quarterback.

**This post featured in the Festival of Frugality #248**