How Do Bonuses Make Profit for Online Casinos?

Typically, a casino will match-up your first deposit. If you deposit £100, for example, you will get an extra £100, so now you have a total of £200 on your casino balance to play with. With this kind of casino promotions, one cannot help but ask, how do casinos make a profit from this?

online casino bonus

If you have been playing in online casinos lately, then you are no stranger to the latest casino bonuses that casinos offer to new and seasoned members.

Here, we will be taking a look at the inner workings of promotional offers, and then we will try to assess how they earn massive amounts of profit from what seemingly is a counter-intuitive offer.

How Do Bonuses Work?

There are many types of casino bonuses. Some casinos offer free money outright, while some require that you deposit a specific amount to get a bonus match. Unusually, online casinos offer some percentage of money that you deposited. This is called the match-up bonus. This can range typically between 50% and 100%. Some even offer 200% match-up bonuses.

Some bonuses are offered through free spins. Most of the time, they are only given to new members to try out specific slots. Some casinos have a weekly promotion where free spins are offered to regular players, too.

Now, the bonuses that you get when you register in a casino is real money. If you deposit £100 with a 100% match-up, you will have £200 to play with. To the untrained eye, this is a lot of money. But to the casinos, they really have little risk. Though they give you free money, you cannot withdraw that money. You need to use that money to place bets. The bonuses simply work in a way where you have limitations on how you can use them, and then these limitations are the very thing that help the casino earn profits.

Here are some of the most common rules in casinos when you take a bonus:

  1. You must meet the wagering requirement before you can withdraw your winnings.
  2. There is a limit for the maximum bet amount for each round of a game.
  3. Different games contribute a different amount towards wagering. Slots are the best for the player in this regard, as they contribute 100%.
  4. You cannot use your bonus money on some games, especially skill games. There is usually a list of excluded games in the bonus terms.
  5. You must use your deposit first before you can use the bonus money.
  6. You must meet the wagering requirement within a specific period.
  7. If you break any rule, all the bonus funds and the winnings from them will become invalid.

As you can see, these rules make it so difficult to get the most out of the money you received from the online casino. And because of these rules, only a lucky person can actually benefit from the bonus funds. Under normal circumstances, the player may have twice the size of their initial deposit, and yet all of this money is likely to end up in the casino’s coffers.

The Rules Explained in a Scenario

bonuses in online casino

Balance: If you joined a casino with 100% welcome bonus and deposited £100, you now have £200 to play with. In a typical scenario, you first need to wager your £100 before you can use the bonus £100. What this means is that you will have two types of balances. The first one is your deposit balance, and the second one is your bonus balance. Once your deposit balance is depleted after losing in different games, the money that came from your pocket is now in the casino’s profits.

Wagering: Now, you still have £100 in bonuses. The thing is that you can only use this balance on selected games, and most of the time, you cannot wager more than £5 per game round.

If this is the case, you still have to meet a wagering requirement. The industry standard is 35X (though it can be 25x-40x, etc.). What this means is that if the casino gives you £100 in bonus money,  you will have to wager £100 X 35 = £3,500. You must bet a total of £3,500 before you can withdraw any money from the bonus funds. And if you are limited to betting £5 per game, what this means is that you need to bet £700 times! If you bet £5, then £5 is subtracted from your wagering requirement target of £3,500. Now, you only have to bet £3,495 before you can withdraw.

Moreover, sometimes the 35x wagering requirement is tied not only to the bonus balance but to your deposit as well. In this case, you will need to wager (deposit+bonus)x35. Following our example, the playthrough will be £7,000 (£200×35), and with a £5 bet limit, you will need to bet 1 400 times ( if you bet £5 every time).

Wagering contribution: Also, the games contribution to the playthrough matters greatly. Slots usually contribute 100%, table games and cards – 10%-25%, some games ( like roulette for craps) can contribute nothing at all. Let’s take video poker with a 10% contribution as an example. In this case, you will need to wager  £7,000 x5 = 35 000. For this reason, we recommend you to play slots which contribute 100%.

What does this mean?

  • If the wagering contribution is 100%, then £5 will be taken off the £7,000 if you bet £5.
  • If the wagering contribution of a game is 10%, then 10% of £5 is only £0.50. For every £5 you bet, only £0.50 will get taken off from the target of £7,000.

Time limit: It can take you forever to completely wager £7,000, much less get it done considering you are starting with a bankroll of only £200 in your playable balance. And to add insult to injury, you have to meet the wagering requirement within seven days. Some casinos are gracious enough to allow 30 days.

How will you meet the wagering requirement if you only have £200 on your balance? The only thing that must happen is that you win your bets most of the time. This is a difficult thing to do, considering that most casino bonuses only allow you to bet your money on games of chance, and not on games of skill.

Max cashout: Why not just wager the whole £100? You can’t. The maximum you can wager, typically, is £5. The same principle applies with free spins. You can only bet a small amount, so small that winning the jackpot if you got lucky is not even going to yield a big win. But even if you win really big within the given time and meet all requirements, some bonuses have a maximum cashout limit, which is usually 5x-10x of your bonus.

And to top it off, the odds of winning are not really in your favour. In a game of chance, the odds are tilted towards the house. These odds are called the house edge. The same rule applies to skill-based games like poker and blackjack.

Summary

online casino promotions

A casino bonus is a simple promotion that leans towards the benefit of the online casino operator. The rules are placed there to ensure that your chances of earning from it are so slim.

So, how does a casino earn profit even if they give money away? The answer is simple: you first lose your initial deposit, and that is how they earn money. Once your initial deposit is depleted, you can use the bonus money to recoup your losses, but the rules make it close to impossible to win, much less win big.

And finally, you may hit the million-pound jackpot from the bonus money, and yet you cannot withdraw it. Bonus money also has a limitation to how much you can withdraw from it and its winnings.  All these bonus rules decrease your winning chances, thus preventing a casino from going bankrupt. The more you lose, the more a casino wins.