Sunday, April 14, 2024

Cashback and Refund Bonuses are Standard in the iGaming Industry, but is There Such a Thing as Risk-Free Gambling?

‘No-risk’ or ‘risk-free’ bonuses have grown in popularity recently and are now one of the most commonly offered welcome bonuses for players at online casinos, sportsbooks, and bingo sites. But what is a risk-free bonus, and is there such a thing as risk-free gambling?

A ‘risk-free’ bonus is most commonly a welcome bonus (although a gambling site can give it at any point in the consumer journey) that requires players to deposit and wager. Should the player make overall net losses during the expressed period of the deal, the operator will refund the net loss to the consumer as site credits, which they can use to bet with again. As the player cannot lose, the offer suggests there is no risk. The refunded bet or credit is not withdrawable and must be used on new wagers at the same site. While these types of promos are also called ‘cashback’ or ‘refund’ bonuses, they’ve become more popularised (especially in the US) as ‘risk-free’ bonuses. 

Let’s just run through a couple of examples:

  1. Play risk-free for your first 24 hours: This deal is typically found at online casinos and comes with an upper financial cap, between £100 and £1,000. Most terms and conditions will include wagering requirements.
  2. Score a £1,000 risk-free bet as a new player: This betting bonus is the sports version of the deal and guarantees a player’s first bet from losing. The first bet must be between the minimum and maximum thresholds, and the operator will refund the bet credit should the player lose. The bet credit is usually non-withdrawable, and there may be rules regarding the original bet, such as odds conditions.
  3. Get 10% cashback on monthly net losses: Moving away from welcome offers, this is promoted as an ongoing ‘risk-free’ cashback bonus for regular players. As an ongoing bonus, the refund amount is only 10% rather than the total amount, as seen with the above examples.

Whether the ‘risk-free’ bonus is a welcome bonus or an ongoing offer, it comes with time limits, financial caps, wagering requirements (or other withdrawal rules), and other terms and conditions. 

Taking note of these terms and conditions is vital because, for example two, the sportsbook’s bet bonus, some sportsbooks include bet conditions, such as the first bet must be used on markets with odds of +200. This, plus the fact that the offer only extends to the first bet, could encourage riskier consumer betting behaviour, with players laying larger or different bets to their original plan. 

Should the player’s first bet win, they will be well rewarded for potentially upping their bet amount. However, if it loses, the player will receive a single bet credit of the same amount back, binding them to a second large bet. Should the second bet win, the player will not receive the bet amount in payout, only the winnings, meaning the original bet amount was risked. 

Example one doesn’t tend to encourage the same level of risk-taking behaviour as example two, in that players can lay any level of bet and play multiple slot spins or game rounds. However, the refunded amount tends to come with wagering requirements, which means even if the player receives a refund and goes on to win, they’re still bound to spend more at the casino to cash out. Again, this encourages more risk-taking behaviour on the player’s part to access a withdrawal.

In the case of example three, ongoing offers, it’s clear this deal is not without risk either, as it only refunds a partial amount of the player’s money. There is also the fact that gambling is not a risk-free behaviour. Gambling is inherently risky; it’s why people do it, and while we hate to be cliche, as the saying goes: no risk = no reward.  

In the US, many states have legalised online gambling since 2018. Ohio is the latest state to join the fray, with sports betting going live on Jan 1st, 2023. Many operators in Ohio opened offering ‘risk-free’ bonuses, which has already led the Ohio Casino Control Commission to issue fines to BetMGM, DraftKings and Caesars. What was the issue? The wording ‘free’ or ‘risk-free’ on bonuses that require consumers to deposit and incur risk or loss to earn the bonus. 

The Ohio case makes it clear that this type of bonus is not risk-free from a regulatory stance and that by requiring the consumer to deposit and incur a loss, whether it is refunded or not, there is an inherent risk. Interestingly, a much lower-risk kind of bonus (as players can withdraw freely once the bonus is used) does exist – no wagering bonuses. 

Casinos and bingo sites with no wagering do not encourage excessive gambling to access or complete a bonus. Instead, consumers can claim the bonus, use it and then withdraw their money as they wish. While this type of bonus is not without risk (in most cases, consumers still need to deposit to claim the offer), neither is it marketed as a risk-free bonus, meaning the same issues do not apply. Above all, it’s a fairer and better type of bonus for players, as it does not bind players to wager large sums of money.

So, if these bonuses are not without risk, why are they labelled as risk-free? It’s a simple case of appealing (or misleading) advertising. The way gambling operators advertise promos has been a continued issue of regulatory concern for the UKGC, and more so lately (see the UKGC updated guidance for bonus terms and conditions). On subsequent occasions, the UKGC has called on operators to clear up their language regarding bonuses, ensuring the terms and conditions are clear and fair for consumers. Unlike in Ohio, the use of ‘risk-free’ terminology has not, thus far, caught the attention of the UKGC.

However, the UKGC has in the past called out VIP schemes and cashback offers as irresponsible (even threatening to ban them) as they target problem gamblers and incentivise losing, or as the Daily Mail puts it, after investigating Bet365, locking players into a cycle of betting. 

Gambling as an activity of betting real money on chance can never be risk-free. However, aside from remarketing this type of bonus to reflect better the fact that it does include risk, operators can also do more to ensure that gambling is as safe as possible. This includes flagging player accounts which show problem gambling indicators, ensuring they assess players who are making large deposits, and providing it’s affordable for the player, encouraging the use of safer gambling tools, like deposit limits and reality checks.

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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