Wednesday, May 2, 2012

Why You Should Avoid Bonuses

Bonuses are, by and large, awful. They exist because affiliates like to tout bonuses, specifically sign-up bonuses, and as we discussed, affiliates control much of the industry's direction. Affiliates like ridiculous sign-up bonuses because they sell well. People are likely to click on those links. And since affiliates earn their money from the profits of a casino, they are going to focus on the casinos that will generate the most links.

Almost maliciously, they also like those massive sign-up bonuses because the casinos are then set up to make it highly likely that the player will lose everything, because with the casinos losing 50% or more of their profits to the affiliate, it's the only way that they can stay in business. Thus, the profit from that player is 100%, and the affiliate makes lots of money.

In one sense, you can't completely blame either the affiliates or the casinos. This situation evolved organically as a give-and-take between casinos and customers. Truly, Online Casinos have the same fundamental needs as any other business. They need to attract new customers and retain existing ones. The problem arose in the way these two ends eventually grew to be met.

1. You need large Sign Up Bonuses (SUB) to attract new customers.

2. You need to provide continuing bonuses to retain existing customers.

This situation gave rise to a number of consequences, all economically expected.

a. People will try to create multiple accounts to take advantage of a large SUB.

b. People will make a purchase only if it is associated with a large bonus.

c. If possible, people will use a "robot" to grind their way through a bonus's Wager Requirement (WR).

d. The Casino needs additional overhead to track, accommodate, and prevent a, b and c, while also covering their base costs and the costs associated with affiliates.

e. The Casino needs to make additions to both their General Terms & Conditions and their Bonus Terms & Conditions to specifically address a, b and c. Thus we have terms like “bonus abuse” and “spirit of the bonus” or “spirit of the offer.”

Because bonuses are a "loss leader", a Casino needs to get that money back from somewhere else. One place to do this is with the slots. So, they drop their slot RTP. Not surprisingly, for most, if not all, casino bonuses, the only games that count 100% toward the wager requirement are slots. Because they've been "rigged" to essentially guarantee that the casino will not lose.

Another place to do this is with the Bonus Terms & Conditions. In them, casinos advertise large Sign Up Bonuses, but place severe restrictions on actually receiving that bonus, like a 50X Wager Requirement, game play limited to certain games, follow-up purchase requirements, and other similar mechanisms.

If you haven't already figured it out, this is a terribly untenable business model. And while you can't blame them for evolving into this situation, you can blame them for the maintenance of it. Everyone involved can be rightly blamed because the system as-is means that the vast majority of players are one-time customers who show up, lose it all, and never return.

This is awful for everyone but the affiliates, since they earned some money from that person, and the affiliate is vacuuming up new people every day. For the casino, it's a catastrophe. Eventually, they will have generated a lot of bad will, the click numbers drop, and affiliates remove them from the listings.

This is why we have casino's that go out of business like health food stores in Mississippi. Likewise, it's also why we have casinos that “rebrand” themselves every year or maintain a dozen different names. It's the only way to reset their reputation: simply not have one. And since all of the customers are one-time players from affiliates, there's no motivation to actually make a better product.

Indeed, the casino/affiliate/bonus system is strangling the industry.

But in the face of such intransigent stupidity, what can you, the player, do?

The best way to play at an online casino is as a casino. You go there to play some games and hopefully end up on the winning end of the math that underlies the entire endeavor. Casinos that focus on bonuses have stopped being casinos. They have become a store that sells bonuses. Needless to say, this has turned the world of online casinos into an ever-escalating battle between people who want to manipulate bonuses and those who write the increasingly-obtuse terms & conditions meant to stop them.

Not only do you not want to accept bonuses for practical reasons, you don't even want to patronize casinos that implement bonuses. Why? Because if a casino has a bonus, chances are the RTP's on the games, usually slots, are very low.

If the RTP's are published, you at least know what the playing field is, but then you must face wager requirements of as high as seventy-times your deposit plus your bonus. That means that if you deposit $100 and get a $100 bonus, you would need to wager $14,000 dollars before your money becomes unlocked and you can withdraw it.

If you play at a casino as a casino, generally, casino logic holds sway. It works exactly as you would expect it to work. You go in, place a bet, and see what happens. Accepting bonuses breaks this system, and I, for one, am not interested in breaking games that I enjoy.

All of this is not meant to decry bonuses of any sort, only the ones that are given before activity happens. Many casinos offer post-play bonuses, and this is the same at brick-&-mortar casinos. I live near Foxwoods Casino, the largest in the world, and you accumulate bonus dollars for ever dollar gambled. These can be traded in for more chips, food, accommodations: anything. If online casinos have a similar system of compensation for loyalty, that is good business.

Unfortunately, few casinos do this. Most rely on big, up-front bonuses. And that is only making the industry worse. You need to patronize casinos that don't do this, because they are our only hope for making the industry better.

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