What are casino bonuses and what different forms can they take? Why do online casinos offer them? Are they a loss leader or profitable in and of themselves? Do brick-and-mortar casinos offer casino bonuses? These are a few of the questions we are going to explore in this article on casino bonuses.
What Is A Casino Bonus
A casino bonus is extra funds offered to players by online casinos in order to attract their play or encourage them to make a deposit. Usually this comes in the form of money that you can use immediately to play with but requires a certain amount of rollover before you can cash it out. The advantage is that you get a much larger bankroll to play with but the casino is betting that the house edge will catch up with you before you can cash out.
It wasn’t long after the commercial internet started taking off in the 1990s that someone decided it would be a smart idea to launch an online casino. It would prove to be a tremendously profitable business model and by 1997 there were over 200 different online casinos. Online gambling wasn’t nearly as big an industry back then and competition for customers was fierce.
Unlike a brick and mortar casino, which has substantial operating costs, an online casino is inexpensive to run, so the only barrier to success is getting customers in the virtual door. Casino bonuses were viewed as a great way to attract new customers and pretty soon every online casino was offering them.
How To Claim Bonuses
Often to claim a deposit bonus you have to enter in a bonus code at the time that you are processing your deposit. Alternatively, some casinos may automatically attach a bonus to your deposit, and if don’t want to use it you must opt-out.
Occasionally casinos will restrict bonuses to specific methods of deposit in order to encourage their use because of lower transaction costs.
Usually there is maximum amount of bonus you can claim with a given deposit. Another popular format is the welcome package, which features multiple bonuses you can claim with subsequent deposits. You might find recurring deposit bonuses also, which are available every Friday for example.
There are various types of bonuses available but generally most fall under the following categories:
The most common would be a match deposit bonus. With a match deposit bonus, the casino gives you a % of your deposit (often 100%) as a free money bonus.
These bonus funds work just like normal cash, with a catch. You must play through the bonus funds a certain number of times before you can cash out. This amount of playthrough is known as rollover.
Rollover can be attached to just the bonus, or to the deposit and the bonus. Casinos generate something known as expected win by multiplying the action of a player by the house edge of the game they are playing. That is how much money, in the long run, they expect to win from a certain amount of play.
In the short run, there is substantial variance, and a player might win or lose five or ten times their expected loss, but in the long run, this short-term variance will even out. By forcing the player to play through substantial rollover, the casino can generate an expected win that is as large as the bonus funds, thus being able to give away free money as a promotion without actually spending any money.
Another type of bonus is a sticky bonus. With a sticky bonus, which is often very generous in percentage terms compared to the match bonus, the bonus funds themselves cannot be cashed out, they can only be played. A sticky bonus might be for a very large percentile, like 300% or 400%.
The player can play with these funds, and if they get lucky and win, they can cash out their winnings, but the sticky bonus cannot be cashed out. Just like the match bonus, the sticky bonus usually requires a certain amount of rollover before your initial deposit and any winnings can be cashed out.
Game Specific Deposit Bonuses
Another type of deposit bonus that we are seeing more of lately is game-specific deposit bonuses.
It used to be you can use a deposit bonus for anything, slots, table games, it didn’t matter, but now some casinos are restricting players to playing only slots or table games or sports betting with a particular deposit bonus.
No Deposit Bonuses
A no deposit bonus is just like the name says, free money to try out a casino. Often these no deposit bonuses come with restrictions on how much you can win and require substantial rollover. It is rare you get to cash anything out, because of the rollover, but at least there is no cost to the end user to try them out.
No deposit bonuses can also come in form of free spins on slot machines. Sometimes they are more generous and there is little or no rollover with the money that comes from the free spins. These are definitely the best bonuses to take advantage of because it is a complete freeroll for you as a player. You get to play, and you even have a small chance of cashing out some real money.
Casinos often use these bonuses as a way to reward loyal customers or to try to bring in new business.
Aside from first deposit bonuses, designed to attract newer customers, casinos can also offer reload bonuses to bring existing customers back to the tables. Often reload bonuses aren’t quite as generous as deposit bonuses, featuring a lower percentage match or a higher rollover, but they can also have the same terms as a deposit bonus as well.
Frequently online casinos use email campaigns to target former depositors with reload deposit bonuses in order to encourage them to return as a customer.
Another type of deposit bonus is for poker players. Since poker players are playing against each other, not the house, casinos don’t like to give them match deposit bonuses. In fact, with poker players, casinos want to keep them around as long as possible, because they make money from online poker by taking a small percentage of pot as rake.
Instead online casinos offer poker players locked deposit bonuses. Basically how it works is, for every $10 in rake that you pay, they will give you $1 or $2 credit towards unlocking your deposit bonus. So it is essentially a form of rakeback.
Another form of bonus that poker players can get is free tournament tickets. These are usually better value, and can often be claimed with a relatively small deposit. You might be able to deposit say $20 and get a free $10 tournament ticket.
Bingo bonuses are targeted at players who like to play bingo. Bingo bonuses are often quite generous, because of the high house edge associated with bingo games.
There are many different types of bingo bonuses. You might get a number of free cards if you deposit a fixed amount, or you might get a match deposit where you are given a percentage of bonus funds to buy bingo cards based on how much you deposit.
A referral bonus is given to players who suggest the online casino to their friends. If your friend signs up and makes a deposit, then they will credit you some free cash. This way the casino gets another customer, and you get some free play at the casino.
Pros / Cons Of Different Bonuses
There are a few things you need to look at with any bonus. One of the most important factors is rollover. Bonuses with a high rollover are less attractive, because you have to spend more time to clear them, and you are less likely to walk away a winner the longer you play because the odds do favour the house.
You should also be aware of whether the rollover is attached to just the bonus or the bonus and the deposit, since that can make a considerable difference. Another important factor is the match percentage. A bonus with a higher match percentage, all other things being equal, is going to be better because you have a bigger bankroll for the same deposit.
You should also read through the terms and conditions and see what sort of restrictions are imposed. Some casinos are quite strict about how bonuses can be used, and if you see any rules that are contrary to your play habits, you may wish to avoid taking that bonus.
You will also want to make sure that the bonus is valid for the games that you want to play. If you want to play live dealer casino, then it doesn’t make a lot of sense to get a bonus that is only for slots.
Some bonuses have cashout restrictions, which is also a negative feature since we want at least the possibility of hitting a big score. You certainly want to be aware if this is the case, since if there is a maximum amount you can win while playing under a bonus this will help determine your gambling strategy. But it may be better to avoid such a bonus altogether unless it has other favorable features.
Abuse & Lower House Edge Games
Historically, deposit bonuses were quite lucrative for the player. Whether they were simply an intentional loss leader on the part of the casino, or the casino staff just didn’t do the math properly is anybody’s guess. By playing games with a very low house edge, players were able to generate expected losses which were far below the value of their bonus funds.
For example, most forms of blackjack have a house edge of half of one percent 0.5%. So if you play through $200 in action, you expect to lose only $1. But casinos would have deposit bonuses where you had to play through only 20x your bonus amount.
If you would deposit $100, you would get a $100 bonus, and then have to give them $2000 in action on blackjack. This would lead an expected loss of $10, and an expectation of $90 in profit. Theoretically. In practice, you might lose the whole $200 or win $1000, depending on how big you were betting and whether you were favored by lady luck or not.
What was even crazier is casinos would have autoplay functions on their table games, so you could set the game to play blackjack basic strategy at $1 a pop, go do some house chores and come back an hour or two later and your deposit bonus was cleared with minimal variance. Unfortunately, casinos eventually got wise to this practice, and they started to discount low-house edge games like blackjack.
Now if you have a deposit bonus with a 30x rollover, blackjack might only count for 10%, making the effective rollover 300x. Not nearly as sweet.
Loss Leader Acquisition Tool
Even as a loss leader, bonuses can make sense. The best way to acquire customers is for them to try your product. And especially for online casinos, which have limited overhead and minimal variable costs associated with additional customers, it makes sense to go all out to try to bring in new customers.
It is all a numbers game. At the end of the day most players don’t even win in the end with bonuses and while some will do and will cost the casino money if they withdraw and don’t play again, the majority will continue to play.
Bonus Terms and Conditions
As the industry evolved, so did bonus terms and conditions. Some casinos are extremely strict about their bonus funds. For example, a profitable bonus clearing strategy is to go all in immediately. Let’s say you take a $200 100% match deposit bonus with 30x rollover.
After making the deposit and taking the bonus you have $400, but need to put in $6000 of action before you can cashout. If you try to clear that bonus on a slot with a 5% house edge, you have an expected loss of $300, which is greater than the bonus amount. But what happens if we go all in on a hand of baccarat first betting on banker?
In that case, you take your $400, and then either double it to $800 or bust. There will be a 50% chance you lose and bust $200 (remember $200 was casino bonus money not real money) and a 50% chance you win and have $800. In the latter case, you then have an expected loss of $300 in clearing the bonus, so you will have $500 left for a $300 profit. One time you win $300, one time you lose $200, for an average profit of $50.
Enter Wagering Restrictions
Casinos got wise to this strategy and imposed limits on how much you can bet while clearing the bonus. Modern deposit bonuses can have a ton of different restrictions on what games you can play, what betting strategies you can use, and so on and so forth.
And the key is, that the terms and conditions are very restrictive, but they can choose to overlook them if it is a favorable customer, that is someone they expect to lose a lot of money to the casino. But if they suspect that the customer is smart money who is trying to take advantage of the bonus system then they can enforce the onerous terms on them.
Land-Based Casino Bonuses
Brick and mortar casinos don’t offer bonuses the way that an online casino does, but they do have a lot of promotional offers as well. For example, it is common for casinos to mail out match play coupons to get customers in the door.
With a matchplay coupon, if you bet $10 on blackjack along with a $10 matchplay coupon, if you win you get $20 profit instead of just $10.
Some casinos offer ‘funny money’ chips too that you can play with that work just like real chips except you can’t cash them out. Alternatively, a casino might offer comps, such as a free dinner, or hotel room, or tickets to a show, in order to get you to come and play.
Major Terms & Restrictions
Typically bonus funds come with some common restrictions.
The casino can’t just let you cash out the bonus funds immediately, that wouldn’t be very profitable for them, so instead they attach wagering requirements to the bonus funds. Usually these come in the form of rollover, as in you must bet the amount of the deposit a certain number of times.
For example, you might have to wager the bonus funds 20x before you can cash out. Rollover can be attached to just the bonus, or the deposit and the bonus.
When casino bonuses first came out they didn’t differentiate between casino games, so smart players would clear their bonus with a low house edge game like blackjack or video poker. In fact, a blackjack game with favourable rules like surrender, stand on soft seventeen, and the use of just one or two decks can have barely any house edge at all.
Over time, casinos started to restrict what games could be used to clear a deposit bonus, in order to prevent customers from using a low-house edge game to get through the rollover with minimal expected loss.
Another restriction on deposit bonuses comes in the form of time limits. Often a deposit bonus must be cleared within a specific period of time, like a week, or it is voided along with any winnings.
That way if a player is winning but betting at a low level they must either forfeit their profits or increase their level of play.
Minimums and Maximums
Generally, deposit bonuses come with relatively low minimums. Casinos want to encourage customers to make a deposit, even if it is a small one. Still, they usually require a minimum of $20 or so just to make sure it is worth the transaction costs of handling the deposit.
Deposit bonuses also generally have a maximum, so you can deposit as much as you want but you will only get matching deposit funds up to a certain amount.
Online casinos often limit how much you can cashout during a particular time period. This can help them avoid having too much negative cash flow, especially if they are a busy casino with many depositors.
There is also the hope that while waiting to cash out you continue to gamble the rest of your balance with them.
As internet gambling becomes increasingly subject to governmental regulation and oversight, residents of certain countries must comply with funds verification. So far this has been mostly in the United Kingdom, where in an effort to crack down on problem gambling and money laundering they have required individuals to document the source of their income in order to play at heavier levels.
Certain sources of funds, such as personal loans, unemployment pay, credit cards, or cash from a business account may be deemed unacceptable.
Withdrawing Before You Clear Your Bonus
Sometimes players get discouraged trying to clear a deposit bonus, and just want to cash out. Usually this is allowed, but you do lose all of your bonus funds and any profits you had made so far with the bonus. Real money balances are not affected.
Make sure you are aware of how much of your money is real money and how much is bonus funds when deciding to forfeit.
Casino Bonus Marketing Strategies
Marketing is a crucial aspect of any online casino’s business. One effective marketing program for online casinos is to have a mailing list of everyone who has ever registered for their casino.
You have to give an e-mail when you sign up anyway, so they can automatically add you to their list and send promotional emails encouraging you to take advantage of deposit bonuses or other promotions (see below).
Aside from e-mail campaigns, online casinos also market through social media. Well-established firms like Bet 365 with larger marketing budgets can also use traditional tools of promotion, like banners at sporting events or television commercials.
Another tool online casinos use to market their business is affiliate programs. In exchange for promoting an online casino, an affiliate receives either a share of the casino’s revenue or is paid per customer that they sign up for.
Other Types of Casino Promotions
Deposit bonuses are just one type of casino promotion. Casinos might also offer free slot or blackjack tournaments, where players can compete at no cost but receive cash prizes or casino credit.
Loyalty programs are another way that casinos can reward their high-value customers and encourage them to keep coming back to play at the casino.
In addition, casinos can offer leaderboard competitions where the more you bet the more points you get with a top prize going to the player with the most points.