Bonus abuse – what can operators do to limit their exposure?
Bonus abuse – what can operators do to limit their exposure?
Oshi.io founder Nick Garner addresses the thorny issue of bonus abuse, its effects on the industry and asks… what can be done?
Talk to any operator and they will recount their bonus abuse stories. It’s one of the great problems within iGaming that can destroy a brand. I can’t really speak about other operators, but I can tell you about my own experiences with my online casino, Oshi.
The bonus ecosystem
It’s important to go up several levels and look at the bonus ecosystem as a whole. Why does it exist? My theory is that most casinos and sports books are fundamentally the same. So in order to attract share of wallet, an operator has to give away free money as an inducement.
The bonuses most always come with a wager requirement, which means as a customer you are tied into betting your money so many times to be able to withdraw it. I think of it as locking a customer into the system.
What I’ve noticed is that you get three groups of customers:
- the unknowledgeable, who think bonuses are all free money
- the wise, who know that bonuses just tie you in and if you win, you’re stuck in the system till you most likely lose your cash
- the abuser, who understands how the system works and treats you as their adversary
Receiving a bonus is a bit like being given a Christmas present and told that you must spend three hours working for it and if you don’t create enough value, the Christmas present gets taken back. As you can tell, I don’t like bonuses and if I ever play or bet, I always refuse to take a bonus, put my money in, win/lose and it’s straightforward.
The iGaming ecosystem is so geared to ‘big hooks’ to get customers in and with operators liking bonuses to lock customers in for a while, there is reason bonus system trundles along.
I think people abuse operators because they feel a right to. In other words, there’s no real social contract in place to say that abusing and taking money from an iGaming operator is a bad thing. It’s not like you’re taking money from a poor person. Bonus abuse is almost an extension of just standard play.
I can’t speak about other operators in this context, only my own casino. However, what I’ve noticed is legally we are in a fairly weak position. Often with bonus abuse it’s very difficult to precisely identify exactly what somebody’s done to accuse them of wrongdoing.
Even if we know exactly who the abuser is and what they’ve done, we can’t reasonably take action against them for theft. This is because were working across multi country jurisdictions and any kind of legal action would be hugely expensive and probably ineffective.
If you look at our terms and conditions, they state that "If, upon such a review, it appears that a Player(s) are participating in strategies, taking advantage of any software or system bug or failure, or participating in any form of activity that Oshi, in its sole and complete discretion, deems to be abusive (‘Promotion Abuse’), Oshi reserves the right to revoke the entitlement of such a Player to receive or benefit from the promotion (and/or withhold the pay out of the proceeds of such abuse to the Player/s in question)”
In other words, you can have a go at abusing us and we will withhold your winnings. We don’t withhold your deposit unless there is something seriously amiss.
Our terms and conditions are pretty standard and they have to be fairly lenient, because most times bonus abuse is really difficult to spot and comes down to an arguable case from both sides. When there’s no real downside to giving abuse a go, apart from being banned from the iGaming operator website, people will just try it on.
I’ve always done my best to be an upright and trustworthy business. There are sites like AskGamblers.com and casinomeister.com who act as reputation intermediaries, working between unhappy players and the operators themselves. They use their position and prominence as a lever to make sure that operators who are represented on their websites are customer friendly.
Overall our reputation is reasonably good, but I think were seen as more of a soft touch than many other casinos, simply because we’ve made an effort to keep our reputation intact.
In turn, we become a bit of a target for the worst kind of people who attempt to defraud us of money and then go screaming to AskGamblers or Casinomeister saying that we are scammers and we don’t pay.
We had one interesting example of this about a month ago, where we had something called a double spend attack. It’s unique to Bitcoin.
The argument then went public and I ended up responding to this person on AskGamblers explaining our position. Fortunately the problem has been solved and these double spend attacks have stopped, which is why I am talking about them now.
Just like so much other bonus abuse, the whole case was very ambiguous. We saw a betting pattern and decided it was abuse. The abuser argued it was just normal play and he should get his money.
In the end, we settled it fairly amicably but there is a black mark on our reputation because of it.
What really annoyed me was that we ended up paying that person back eight Bitcoins in total; 4 fake ones, 4 real Bitcoins and no winnings. (If you’re reading this and you know a lot about Cryptocurrency, you’re probably wondering what the hell is going on. I understand , but there’s a lot of detail to this which I’m not going to go into here.)
There are lots of kinds of bonus abuse such as a typical one where people seek out casinos who offer no deposit bonuses, playing through those bonus commitments and occasionally win which they can then withdraw off the back of no upfront cost.
But one of the most difficult types of abuse to spot is what I would describe as volatility arbitrage. This is where a customer joins a casino, knows which games are low volatility and with their matched bonus will play a low volatility game until they churn their money through. With the money left over from the first cycle of play, they then go on to a high volatility game and if they get lucky, they win a large sum. How you identify this kind of thing? It is very difficult.
In this kind of case, it’s impossible for us to say definitively that it was abuse, but we see the betting patterns and it’s all fairly obvious what’s going on. The only catch is that with thousands of different players, how do you identify them easily if they are winning a small amount here or there.
In the end, it’s one of those difficult things every iGaming operator has to deal with. If an operator is too aggressive with customers, they get a terrible reputation and people don’t want to risk gambling on their website. If they’re too lenient, they get fleeced.
What does bonus abuse cost?
Bonuses are such an important part of the iGaming ecosystem which probably account for 25% – 45% of spend from gross revenue. Even when people play nicely and don’t try to game the system, bonuses are expensive. When you get this other layer of spend, i.e. the cost of abuse bonuses open a whole world of financial pain.
What does it cost? I can only give a very speculative guess and say that it’s probably 15% of revenue? But it’s really hard to say, because so many cases are really difficult to call. And besides which, I don’t want to go accusing innocent people of abuse.
Large operators will have powerful algorithms looking for any unusual betting behaviour, the kind of thing that we’ve been working on recently. It’s so worth investing in simply because you save, but there is another massive hidden benefit: reputation.
Wrongdoers generally accept they’ve been caught out, but if you have what’s known as a ‘false positive’ i.e. somebody is flagged up as being an abuser but isn’t, they’re going to feel angry, upset, betrayed and will hate you. It’s why we always carefully investigate a case before we make any accusations. So what does it cost? A lot more than money sometimes.
I still have faith in the goodness of people. Yes, there are scammers who would happily suck every single penny out of us and kill our company, but for every one of them, there are probably 200 straightforward people who just like to happily play on a Slot game to pass the time.
All I can do is stick to one of our core principles “don’t be evil” and assume the best in people. Bonus abuse will never go away, but over time we get better and better at dealing with it.
Happy Christmas :)