Bonuses are a must for attracting and retaining iGaming players. However, they also present challenges that can lead to financial losses for online casino and sportsbook operators.
Sometimes, operators need help balancing offering attractive bonuses and not losing money. Issues such as a lack of mathematical basis and shallow expertise can lead to fraud, contributing to revenue loss. Here are some real-life tips to help you avoid common mistakes and master bonus campaigns.
Types of Bonuses and How They Work
Below are the basics. Skip this part if you are a pro.😉
Bonuses are essential as they have several benefits, such as increasing player acquisition, enhancing player retention, boosting overall betting volume, and providing cross-selling opportunities. They help promote new games or platform features, diversify the player's experience, and introduce them to products they might not otherwise try. Of course, it leads to additional revenue for operators.
Generally, bonuses have specific mechanics and purpose. CRM managers tailor each bonus campaign to different phases of the player’s journey, from sign-up to long-term engagement, mixing mechanics to achieve particular goals.
⚙️ Common bonus mechanics are:
Deposit bonus with wager
When a player makes a deposit, the casino offers an additional percentage of that amount as a bonus. For example, a common offer might be a 100% deposit bonus. If a player deposits $100, the casino will add another $100 to their account, giving the player $200 to play with.
No deposit bonuses
No-deposit bonuses give players a small amount of money to gamble without requiring a deposit. They are a risk-free opportunity for players to experience real-money games. At the same time, typically smaller than deposit bonuses, no-deposit bonuses are highly valued for their no-strings-attached nature.
Free bets
A free bet is a promotion offered for player retention and engagement. It allows players to place a bet without money, giving them a chance to win without financial risk. When players receive a free bet, they can use it to place a wager according to the operator's terms and conditions. These often specify the types of bets that can be placed, maximum odds, eligible sports/events, and any wagering requirements on winnings.
Free spins with and without wager
Free spins with wagering requirements mean that winnings must be bet several times before they can be withdrawn. The specific requirements can vary but typically range from 10x to 60x. For example, if a player wins $10 from free spins with a 30x wagering requirement, they must bet $300 before they can withdraw the funds. On the other hand, free spins without wagering requirements allow players to keep their winnings without further bets.
Cashback with and without wager
When cashback comes with wagering requirements, the amount returned to the player must be wagered a certain number of times before it can be withdrawn as cash. Cashback without wagering requirements is credited directly to the player’s account and can be withdrawn immediately without further wagering.
Bet insurance with and without wager
Bet insurance with wagering requirements means that if a player's insured bet loses, they receive a refund in the form of bonus money or site credit, which must be wagered a certain number of times before withdrawal. On the other hand, bet insurance without wagering requirements allows players to receive a refund as cash or site credit that can be withdrawn immediately without additional wagering.
💡 We also covered the bonuses topic in the article: Player Retention in Online Gambling for 2024 and Beyond
⚖️ Among bonus purposes are:
Welcome bonuses
New players often receive welcome bonuses to encourage them to sign up and make their first deposit. These are usually the most generous promotions designed to create a strong first impression. Common types of welcome bonuses include a deposit bonus, where the casino matches a percentage of the player’s first deposit with bonus funds. For instance, a 100% deposit bonus would double the player’s initial deposit up to a certain amount.
Reactivation bonuses
The reactivation bonuses offered depend on the player segment. If the player makes regular deposits, the bonus will be even more significant than the initial welcome bonus. In other cases, reactivation bonuses may be less generous and match a deposit percentage made after the initial deposit. The specific offering also varies based on the player's activity following the CRM strategy.
Loyalty bonuses
Rewards for long-time casino players, called loyalty bonuses, come in different forms, such as cashback offers, higher betting limits, faster withdrawal times, and exclusive promotions. These bonuses are part of a VIP program and are given based on different levels of play. The longer you play, the better the rewards.
Refer-a-friend bonuses
Refer-a-friend bonuses are offered to players who encourage others to sign up at the casino. Typically, once the new player makes their first deposit, both the referrer and the referred friend receive a bonus, such as free spins, free bets, or a deposit bonus.
VIP bonuses
High roller bonuses cater to players who make large deposits and bets. These bonuses are more extensive and often include perks beyond bonus money, such as invitations to special events, personal account managers, and other VIP treatments.
However, bonuses can be a double-edged sword, and here's why.
Why iGaming Operators Lose Money on Bonus Gampaings
People make mistakes, and that's okay. Over the years of operation, our risk department has encountered dozens of vulnerabilities in bonus campaigns. Here are some common ways leading to revenue losses on bonuses:
🔴 Lack of Tools
Some operators lack specially designed mathematical models to calculate the profitability of promotions with bonuses. Consequently, bonus hunters can withdraw funds before managers discover the vulnerability.
For instance, our CRM managers use a bonus calculator that computes the values for each type of bonus. Additionally, our AI team has developed an ML model whose primary function is to recommend the type of bonus to offer the particular player segment and the duration of the offer.
When a CRM manager offers bonuses such as +100%, it creates opportunities for fraud. In such cases, a player might deposit $100 and receive a $100 x2 bonus. They could then place $100 bets on both even and odd outcomes, guaranteeing themselves $185 in winnings, $85 of which they could withdraw from the platform. A professional fraudster could exploit such vulnerability in multiple accounts.
Oleksandr Klovskyi, Senior Risk Analyst
🔴 Lack of Experience and Shallow Analysis of Competitors
It's important for operational teams to fully understand the potential impact of their bonus decisions. Some bonus campaigns can result in losses and increased fraudulent activities on the platform.
Competitors often use impressive numbers in their proposals to attract both players and marketers. Marketers may try to outbid such offers without delving into the details, such as maximum bonus amounts.
Operators often set their bonuses higher than all competitors, and all cost calculations are based on this maximum amount. If fraud players intend to take advantage of the system, they will use this promo to the maximum. For instance, with a 100% bonus on the maximum deposit, a bonus hunter would deposit $1000 and receive a $1000 bonus.
In such cases, calculations are typically based on historical data, considering players’ average deposits. This can result in underestimating expectations. For example, if players typically deposit $200, the operator’s losses would be around $10, but if a bonus is issued for $1000, the losses would be $50. As you can see, there is a significant difference.
🔴 Lack of Segmentation
Managers without advanced user segmentation give bonuses to all clients, including bonus hunters and other “negative” player segments, leading to fraudsters taking advantage of the opportunity.
This point has an addition. Even with advanced multi-level segmentation, errors can occur in bonus settings. This happens when CRM managers forget to exclude “negative” player segments from bonus mailings. We already know how it ends—losses for the operator.
🔴 Lack of Sustainable Approach
To increase lifetime value (LTV), it is advisable to establish wager and margin conditions that prevent players from exhausting their entire deposit and bonuses quickly. This helps keep players engaged on the platform for a longer period.
However, some operators, particularly in Asia, prioritize immediate profits over boosting LTV by setting conditions that lead to rapid loss of both bonuses and deposits, resulting in a decrease in player retention.
🔴 Dead-end “Churn” Players Reactivation
Operators often attempt to re-engage inactive players by offering them bonuses. These players can return to the platform and play using only the bonus money without making any deposits. Reactivation companies may have a requirement such as “wager this month,” in which case the system considers the bet from the reactivation bonus, allowing the player to receive bonuses and play without making deposits.
We suggest offering reactivation bonuses to inactive players 3 to 5 times. If a player does not begin making deposits after receiving these bonuses, we stop reactivation and move them to another segment.
Oleksandr Klovskyi, Senior Risk Analyst
GR8 Recommendations: How to Avoid Common Pitfalls
If we consider general bits of advice, it’s vital to calculate bonuses using models from your CRM solution provider or risk management department.
Also, if you plan to offer better conditions than your competitors, make sure to get all the details of their offers. For example, some operators may offer juicy bonuses, but players may struggle to withdraw their winnings from the platform.
Now, let’s look at more detailed recommendations for everyday bonus activities.
🟢 For Welcome Bonuses
If you are a new brand, offering solid welcome bonuses is a must. However, these bonuses should be tailored to different player segments. It's also crucial to plan a chain of bonuses so that if the first bonus doesn't attract the player, there's a more generous one to follow. With the right CRM system, this chain can be unlimited in both complexity and length.
The manager must create a player journey model detailing how and when to communicate with them. If there are any gaps in the journey, players may lose interest, forget about your brand, or move to competitors. If players start to churn, implement 30-60-90 reactivation strategies.
If you offer casino and sportsbook entertainment, it's a good idea to provide welcome combined sports and casino bonuses. This will help you understand which product interests your new players and add them to a particular player journey model. Commonly, at GR8 Tech, we use gamification for such purposes.
🟢 For the Event Calendar
Align bonus campaigns with relevant events, such as major sports events, new game releases, or holidays. This relevance can make promotions more appealing and timely, potentially increasing their effectiveness. For example, offering free spins on a new Christmas-themed slot game during the holiday season can attract more engagement.
🟢 For Cashback
Make the cashback from turnover only available for VIP customers. When starting cashback, ensure that you separate products—do not mix slots from the live casino, and inside the live casino, do not combine games where you can fill the entire field of options with bets and those where you cannot, for example, roulette with blackjack.
🟢 For Free bets
To ensure a break-even promo free bet for bets, the amount of free bet issued must be 10 times less than the turnover required from the player.
For a break-even promo free bet for a deposit, the amount of the free bet issued must be 20 times less than the amount of the deposit required from the player.
🟢 For Free Spins
- It's better to select games for free spins with a low RTP.
- Choosing games for free spins that are not highly volatile is also advisable.
- If free spins are given for a deposit, the total number of free spins issued shouldn't exceed 150% of the deposit, ideally falling within the range of 50% to 100%.
- The standard wager for free spins per deposit is x35, and the standard maximum bonus release after playing free spins is x10.
🟢 For Bet Insurance
The platform should design the bet insurance process to keep players engaged. For example, the money received for bet insurance could be used for more bets, encouraging ongoing participation.
Understanding bet insurance can be quite challenging as it involves complex mechanics within the betting world. It requires obtaining an insurance policy, accurately calculating the insurance percentage, and determining the wager. Convenient mathematical models are necessary to handle these calculations effectively. It's important to note that without experience or access to a calculator or risk check from your provider, it's best to avoid providing such a feature.
🟢 For Wager Bonuses
- We recommend the wagering requirement x20 for a single deposit sports bonus. If the wagering requirement is lower, then the promotion will be unprofitable. You can lower the wager to x10 and add wagering terms only with express bets, which will increase your margin.
- We recommend the x35 wagering requirement for the slot bonus on deposit.
- We recommend x40 the wagering requirement for the live casino's wagering bonus.
- Optimal bonus percentage: up to 150%.
The key is to strike a balance between a thoughtful gift and a value that keeps the player engaged on the platform.
Oleksandr Klovskyi, Senior Risk Analyst
On a Final Note
Navigating the complexities of bonus activities in the iGaming industry is like walking a tightrope. On one side, there's the undeniable appeal of bonuses in attracting and keeping players; on the other, there's the potential for financial risks if not managed carefully. Effective bonus management involves striking a balance by offering attractive bonuses while conducting thorough risk assessments and detailed player segmentation.
Make sure you use bonuses not only as just marketing tools. With a strategic approach to campaigns and anti-fraud tools, bonuses will become your competitive advantage in iGaming.
🔎 What interests you about bonuses and CRM best practices? Leave a comment below, and we'll cover the juiciest bits of this topic in our future posts. ⬇️⬇️⬇️
