Bonus Abuse: The Domino Effect on Industry Regulations and Player Rewards

The phenomenon of bonus abuse has long been a persistent issue, gaining increased attention with the advent of online casinos. Since their emergence in the 1990s, online casinos have initially tolerated such abuse, resulting in substantial financial losses. However, the casinos eventually reached a tipping point and implemented diverse bonus restrictions. Despite these measures, bonus abuse continues to persist. This article aims to dissect the concept of bonus abuse and provide insight into the current perspective of the gambling industry towards this practice.

What Is Bonus Abuse?

Bonus abuse, also referred to as promo abuse, bonus hunting, or bonus whoring, involves exploiting marketing offers meant for new users by signing up multiple times.

This fraudulent practice, known as multi-accounting, primarily targets no deposit bonuses  like free spins or cash.

Any company that offers signup bonuses as a marketing tactic may be at risk, particularly sports betting, casino, and poker sites.

Fraudsters employ various techniques, such as using stolen IDs, engaging in synthetic identity fraud, or providing prepaid credit card details to circumvent Know Your Customer (KYC) checks.

Experienced criminals may employ emulators, virtual machines, and residential-like IPs, including Socks5 proxies or mobile networks, to obtain fresh IP addresses for their activities.

The Impact of Bonus Abuse Fraud

Bonus abuse gambling at online casinos can have significant negative consequences for all parties involved.

Let’s delve into how this exploitative behaviour impacts both the casinos and legitimate players.

Detrimental Effects on Online Casinos: 

• Financial Losses: Bonus abuse betting can lead to substantial financial losses for online casinos.

When players exploit bonuses without adhering to the terms and conditions, casinos often incur significant expenses without receiving the desired return on their investment.

• Reduced Profitability: It can affect the profitability of online platforms, which may result in lower revenues and reduced ability to provide quality services to legitimate players.

This can lead to a decline in the overall player experience and satisfaction.

• Damage to Reputation: Instances of casino bonus abuse can tarnish the reputation.

Word spreads quickly within the gambling community, and if a casino gets popular for being susceptible to abuse, it can harm its credibility and trustworthiness among players.

• Increased Operational Costs: Casinos often need to invest more resources in implementing stringent security measures and preventive systems to counter bonus abuse effectively.

These additional costs may ultimately be passed on to legitimate players, impacting their overall gaming experience.

Adverse Consequences for Legitimate Players

• Diminished Bonus Offerings: The abuse forces operators to tighten their bonus policies and reduce the generosity of their offers.

Legitimate players who enjoy and rely on bonuses as part of their gambling experience may have fewer opportunities to enhance their gameplay.

• Stricter Wagering Requirements: The fraud leads to stricter wagering requirements imposed by online casino operators.

Players may find it more challenging to meet these requirements, affecting their ability to enjoy and benefit from the bonuses they receive fully.

• Increased Account Scrutiny: Online casino sites often implement more rigorous verification procedures and account monitoring to combat bonus abuse.

While this is necessary to protect the integrity of the platform, it may result in longer processing times and additional burdens for players.

It can also have an effect on those who try it, as it can result in bonus abuse cancelled winnings, deletion of the account and more.

The Mechanics of Bonus Abuse Fraud in The iGaming Industry

In the iGaming industry, online casino bonus abuse occurs by exploiting the system’s failure to detect multiple accounts assigned to one person.

This vulnerability allows abusers to register easily using various identities and repeatedly claim the same signup bonus.

These individuals can withdraw their winnings and continue the process uninterrupted if undetected.

Moreover, fraudsters are investing heavily in scaling up their bonus abuse operations due to the high profitability of this popular industry.

In fact, some fraudsters are going to extreme lengths, such as sourcing fake identities through job ads or KYC forms.

But with all that, the survival of iGaming companies is strongly tied to their bonus structures.

These promotional deals are crucial for expanding and retaining a loyal customer base, be it sign-up, welcome, reload, or no deposit bonuses.

Yet, bonus abuse poses a significant threat to this goal.

When fraudsters exploit these offers, the resulting harm isn’t just immediate but could also have a lasting impact on the company’s stability and reputation.

The Motivation Behind iGaming Companies Offering Bonuses

iGaming companies are compelled to allocate their marketing budget judiciously due to stringent regulations imposed by governments and gambling authorities.

As a result, casino bonuses often become an integral component of their strategic marketing approach.

The Value of the iGaming Bonus Market

Statista projects that the iGaming market will reach a substantial value of 92.9 billion USD by 2023.

In their pursuit of attracting new customers, the most lucrative iGaming operators, known as Tier 1 operators, allocate approximately 18% of their gross revenue towards bonuses.

On the other hand, Tier 2 operators, lacking comparable budgets or local licenses for advertising, heavily rely on bonuses and affiliate schemes to sustain their operations.

For Tier 2 operators, affiliate marketing plays a crucial role in driving around 25% of their gross revenue expenditure.

Additionally, expenses on bonuses can contribute significantly, ranging from 25-45% of their overall spending.

Marketing strategies in the iGaming industry are subject to evolving regulations, such as those enforced by the UK Gambling Commission, as well as changes in advertising opportunities on platforms like App Stores.

Nevertheless, the undeniable significance of bonuses remains evident as they continue to play a crucial role in establishing, expanding, and sustaining iGaming companies in today’s digital landscape.

Most Popular Bonuses At Online Casinos

While conversion rates may vary significantly among different operators, the industry typically offers similar types of bonuses that are commonly observed.

Some of these bonus types include:

• Sign-up bonus: A bonus offered to new players who have just created an account and went through verification.

Almost always comes in the form of a no deposit bonus (either with free spins or free cash).

• Welcome bonus: A promotional offer that new customers receive when they create an account and make their first deposit.

It often comes in the form of free bets, bonus funds, or enhanced odds, enticing new players to join the platform.

• Reload bonus: This is a reward existing customers get when they make additional deposits to their accounts.

Its aim is to encourage players to continue depositing and playing on the platform, providing them with extra funds or perks as a reward.

• Free bet: A free bet is a bonus allowing players to place a bet without using their funds.

If the bet wins, the player receives the winnings, but they do not lose any of their own money if it wins.

• Cashback: Players receive a percentage of their net losses back as a refund. It serves as a form of insurance, providing a partial refund to players who have experienced losses over a specified period.

Cashback bonuses can help mitigate losses and provide an additional incentive for players to continue playing.

• Reward program: A reward program, also known as a loyalty program or VIP program, is a system that rewards players for their continued activity and loyalty.

Players earn points or rewards based on their wagers or deposits, which they can later redeem for various benefits such as bonus funds, free bets, exclusive promotions, or other special perks.

• Referral bonus: The existing customer receives an incentive once the referred player meets certain criteria, such as signing up, making a deposit, or placing bets.

Referral bonuses help operators attract new customers through word-of-mouth marketing and incentivise existing players to refer their friends or acquaintances.

How It Works

The process of bonus abuse involves fraudulent individuals exploiting promotions by repeatedly signing up and withdrawing funds before being detected.

As long as these activities go unpunished, the abuse will continue to persist.

Multi-accounting, which entails creating multiple accounts, is a significant challenge online casino sites face in combating the issue.

This practice makes fraudsters employ stolen IDs, synthetic identities, and prepaid credit card information to bypass Know Your Customer (KYC) checks, resulting in compliance and regulatory complications.

Notably, bonus abuse is commonly orchestrated by large and complex criminal networks with extensive resources rather than small-scale operations. Abundant resources enable fraudsters to create numerous accounts, thereby increasing bonus abuse.

Different Types Of Bonus Abuse

Bonus abuse is a prevalent tactic employed by fraudsters in online gaming. These unscrupulous individuals utilise various strategies to exploit bonuses and promotional offers that casino operators provide.

The most common operations are:

1. Collecting welcome or signup bonuses: These fraudsters aim to cash out promotional offers without participating in gameplay.
2. Collusive play: Fraudsters manipulate multiple players to deceive legitimate users who are unaware of the scam.
3. Chip dumping: In this scheme, a poker player deliberately “loses” their chips to another player, influencing the outcome of a hand.
4. Arbitrage: Referred to as an “arb” and executed by “arbers,” this tactic involves placing simultaneous bets on different platforms to increase the chances of winning.

The process begins with the sign-up phase. The fraudster, or a group of them, creates numerous new accounts, also known as “gnoming.”

They employ fake names, disposable emails, and sometimes stolen or fabricated credit card information. Once these multiple accounts are established, the fraudsters initiate their attacks.

These examples represent only a fraction of the known methods. Despite the efforts made by operators to prevent such abuses, resourceful fraudsters continue to find various avenues to exploit the system.

The Constant Challenge for Gambling Operators: Understanding Fraudsters’ Targeting Tactics

Historically, gambling fraudsters have set their sights on gambling operators due to the lucrative opportunities presented by promotional abuse.

With gambling operators offering generous bonuses and low betting requirements in the past, fraudsters found it easy to exploit these loopholes, leading to a surge in fraudulent activities.

Fortunately, gambling operators swiftly recognised the issue and took measures to address it.

They have reduced the size of bonuses, implemented higher wagering requirements, and established additional restrictions to deter fraudsters.

Despite these countermeasures, fraudsters have evolved their tactics and become more sophisticated in their pursuit of exploiting bonuses.

They now employ advanced mathematical calculations to optimise their odds for arbitrage and employ less conspicuous methods to avoid detection.

This ongoing cat-and-mouse game poses a significant challenge for gambling operators as they strive to stay one step ahead of the ever-evolving strategies employed by fraudsters.

Bonus Abuse Prevention: How Online Casinos Combat the Issue

Instead of engaging in contentious disputes over bonuses, gaming sites prefer to take preventive measures to avoid such situations altogether.

Below, we outline the primary methods casinos employ to stop bonus abuse before it occurs.

Monitor Players’ IP Addresses

In theory, a gambler could repeatedly create multiple accounts and claim numerous bonuses without facing any consequences.

Unless the casino keeps track of relevant data, the same player might deceive them into repeatedly granting bonuses.

However, gaming sites have implemented measures to prevent such occurrences by monitoring the IP addresses of gamblers.

An IP address is a unique numerical label assigned to each internet-capable device.

Automated identification of previously registered players is now possible through IP address tracking on gaming sites.

With this feature, casinos can easily inform the gambler of their existing account and avoid double welcome bonuses, making the gaming experience more fair and enjoyable for all.

Exclude Specific Countries from Eligibility of Offer

Certain countries have gained a reputation for exploiting casino bonuses, particularly by creating multiple accounts to maximise their chances of winning money through no-deposit bonuses.

To tackle this problem, casinos maintain comprehensive records of nations known for abusing bonus terms.

As a solution, they opt to exclude entire countries from qualifying for bonuses, effectively addressing the issue in one go.

However, it is important to note that this approach may seem unfair to honest players hailing from those nations.

Nevertheless, casinos sometimes make collective decisions to safeguard themselves against individuals solely interested in taking advantage of bonuses.

Restrict Eligible Deposit Methods for Bonuses

An essential aspect of exploiting a bonus involves withdrawing funds quickly, enabling bonus abusers to cash out and move on to the next site swiftly.

For this reason, numerous online casinos do not permit depositors using Skrill and Neteller to qualify for bonuses.

This is primarily because the gaming industry considers these banking options as the fastest methods for cashing out.

Typically, when using these e-wallets, players can expect to receive their funds in less than 24 hours.

Consequently, many operators disqualify deposits made through these methods by allowing more time for reviewing potentially suspicious bonus winnings.

Tips to Avoid Being a Bonus Abuser

It appears that adhering to certain guidelines is necessary to avoid being classified as a bonus abuser.

However, you can overcome this issue effortlessly by following the tips provided below.

• Use different bonuses: Rather than creating multiple accounts at a single casino, you can easily gather the desired bonuses at one online casino and proceed to the next.

When the original gaming site introduces new promotions that interest you, you can always return to take advantage of them.

• Review the T&Cs carefully: To avoid any unexpected surprises while attempting to earn a casino bonus, it is crucial to read and understand the terms and conditions thoroughly.

This step is an effective way to eliminate any potential surprises that may arise.

• Avoid Manipulating Terms & Conditions: Selecting games with the highest RTP reduces the risk of losing money during playthrough requirements.

While aiming to profit from bonuses is acceptable, be cautious when withdrawing funds immediately after playing high RTP games.

Some casinos may view this strategy as bonus abuse, so exercise caution and be aware of their policies.

Conclusion

Online casinos cleverly provide bonuses to keep players interested and engaged. Although earning profits through bonuses is acceptable, gaming sites do not approve of attempting to gain undue advantages.

Nevertheless, it is essential to understand that not all operators endorse using any means necessary to win.

Although some online casinos may not welcome it, exploiting loopholes for profit is not essentially unethical.

Determining what qualifies as bonus abuse can be challenging.

Gaming sites generally raise concerns when players unfairly take advantage of bonus offers.

That’s why we recommend you play responsibly and make only informed decisions.