The Collaborative International Dictionary of English v.0.48:

parlay \par"lay\ v. t.
   1. To wager the winnings plus the initial stake of one bet on
      a subsequent wager, or to engage in a series of such
      increased wagers.

   Note: This is the characteristic act in a common betting
         system used by gamblers to try to achieve a large win
         from a small initial stake. Statistically, it is
         similar to betting a small stake on a game with a large
         payoff and a proportionately small chance of winning.
         [PJC]

   2. To exploit success in one endeavor so as to achieve
      greater success in subsequent endeavors.
      [PJC]

   3. Fig., to transform a gain into something of greater value.
      [PJC]

The Collaborative International Dictionary of English v.0.48:

parlay \par"lay\ n.
   The act of betting the winnings from a prior bet, plus the
   original stake, on a subsequent bet; the second or later such
   bet in a series; also, a series of such bets, with the stakes
   for later bets coming from the winnings of earlier bets.

   Note: This is the characteristic act in a common betting
         system used by gamblers to try to achieve a large win
         from a small initial stake. Statistically, it is
         similar to betting a small stake on a game with a large
         payoff, but with a proportionately small chance of
         winning.
         [PJC]

WordNet (r) 3.0 (2006):

parlay
    n 1: a series of wagers in which the winnings from one wager are
         used as a stake for the subsequent wagers
    v 1: stake winnings from one bet on a subsequent wager [syn:
         parlay, double up]