We’re probably at a point where all of us understand that online casinos are far, far from the modus operandi of non-profits. In fact, they are masters of finding the edge in every quantifiable way, allowing them to increase revenue while lowering costs from any perspective.
This tells us that there must be a reason why they’re still willing and able to provide freebies to a general user base that they want to be as large as possible. We’re not referring to any weird ulterior motives, but only to the idea that there’s value in this incentivization model.
Naturally, we don’t really have access to actual data or calculations within the casino systematization. We can only use economic and business principles to assess whether the bottom line is in a good spot for this gambit to work for casinos.
With this idea in mind, we pivot to a search for answers. Why do casinos still feel the need to provide such offers? Why do they shape them in fixed-number, unique, limited, or daily free spins? You’ll get all the explanations you need for a peek into their process!
What are free spins?
At their core, free spins are online casino rewards provided by gambling brands. They can serve various purposes and come in many different shapes and sizes. However, the standard approach is to provide them as a registration incentive that costs nothing, but can yield real money winnings.
Their nature entails an inherent lack of a deposit. Generally, this applies to you redeeming, activating, and playing the bonus, but also to the act of converting your wins into real money.
The last step is when you might find a few rogue brands requiring an ‘activation’ deposit that would allow you to unlock your winnings.
Another key aspect is the fact that they are distinct from other types of spins that you can benefit from while gambling online:
- On-deposit spins, colloquially known as bonus or extra spins, are those that you get as a byproduct of spending money. It can be as simple as redeeming a promotion that provides these spins in addition to a bonus match.
- In-game spins are those that you receive as a triggering special feature. They are a built-in mechanic of an individual slot and have nothing to do with the casino where you play said game.
Practical reasons behind this initiative
If anything, online gambling operators that run digital casinos are the ultimate paragons of practicality. They understand their individual context very well and are able to assess whether providing free spins is a good decision.
At the same time, they must do their due diligence in keeping up with the industry. Offering such an incentive is a decades-long tradition at this point, and the model still has sway.
As a result, casinos feel compelled to provide their own bonuses, and these spins are the way to go. The entire market seems to understand that, when planned correctly, such a strategy has plenty of merits and a lot of upside.
Explaining the acquisition funnel
In layperson’s terms, an acquisition funnel is the pathway that begins with a hook and ends with a favorable outcome for the business that set up that funnel. It entails a series of steps that feel like an arc for the player.
In the context of free spins, it has the following parts:
- Registration: The casino attracted your attention with its offer, leading to your decision to create an account on its platform.
- Giving you the spins: Once you sign up, provide any necessary bonus code, and confirm your identity, the casino will award you the free spins and allow you to play them.
- Deposit: In this sequence, the casino hopes to convince you that it’s worth continuing your gameplay on its platform. You’d finish using the spins, perhaps with a cashout. Your first deposit is the initial sign of commitment.
- Retention: This is the overdrive gear of this sequence. You’d become a regular customer of the casino, deposit constantly and be a source of revenue for the operator. For as long as your money (and losses) are part of the calculation, this step owes to a funnel that began with free spins.
Low customer acquisitions costs
Let’s put this into two perspectives:
On one hand, we have the theoretical formula of the customer acquisition cost. It tells us that the CAC is total sales and marketing costs divided by customers acquired. It needs to account for what it pays for both the personnel that set up these free spin campaigns, as well as the theoretical cost of these spins.
- On the other hand, we have the actual value of the bonus that you receive. If, say, a casino provides you with 50 spins at a unitary value of $0.1, it means that it will forfeit $5 that, otherwise, might’ve been what you paid for your bets. If it caps your maximum winnings at $50 for the entire bonus, it means that the maximum per-user cost would be $50.
It may seem like a lot, but the truth is that guardrails like wagering requirements and RNG (the player’s bad luck) lower the blow significantly.
Stimulating lifetime value
Simply put, the psychology of freebies tells us that consumers are more likely to have a positive outlook when considering using a company that offers such opportunities.
A customer’s lifetime value is, from the firm’s point of view, the total amount of worth that they generate. In gambling, this is a bit odd to calculate since pure chance can lead to a sequence in which the casino must pay the user if they win, which is a perfectly possible outcome.
However, the highest chances of a casino retaining a profit margin come specifically when you deposit money out of your pocket. The inherent RTP of a game and a casino means that it will have an edge at all times, which translates into a retainer kept by the platform.
If you, the player, join the casino’s ranks with a positive perception of generosity, you have a better chance of continuing to deposit, which only increases your lifetime value during that time segment.
Further retention considerations
The difficult part that online gambling operators must grapple with is that player investments are far from a guarantee. That set of free spins can attract quite a lot of bonus hunting, but it’s also a small sample size to do anything close to guaranteeing that players will deposit.
As such, first impressions are extremely important, but in need of balance. If the casino overleverages itself with its generosity, players will have little incentive to stick around and deposit since they’ve already won a significant sum.
Now, if the platform is too stringent with its terms, it will run into another problem: a low acquisition rate. It must do its best to convince the player by providing a low-friction sequence that means quick gaming, a quicker payout, and an advantage that awaits past the finishing line.
That solution would be an enticing welcome bonus that hinges on a deposit. It would certainly be difficult to turn into an attractive proposition beyond that, but it can use the free spins as a hook that can lead to a justifiable deposit.
Wagering requirements, maintaining a balance
We’ve mentioned them already, but it’s time for some brief explanations on the wagering requirements. They are the linchpin that keeps the idea of free bonuses together. It’s possible specifically because they maintain a theoretical lid on how easy you can convert the spins into withdrawable cash.
The initiative rests on the idea that you must complete a set of bets with the money that you win from the spins. If you win $100 with spins whose wagering requirements are 35x, your total bets would have to total $3,500. This translates into 3500 spins worth $1 each.
The numbers speak for themselves. The wagering process is not easy, even if you play slots, whose contributions are 100%. If these measures are in place, there is no guarantee that your funds will survive, nor will the casino have to pay you out.
Conclusion: What does it mean for the player?
As the player, you are entering a deal that will cost you nothing in terms of expenditures, but you’d still have your data at risk if you’re not careful about the casino where you gamble. This is why you must put a lot of effort into choosing which casino and guard yourself against possible instances of data theft.
It’s extra important to remember this aspect because, unfortunately, there are illicit casinos that operate illegally. They use the market-wide interest in free spins as a way to fish out unassuming players toward joining them by providing extremely favorable terms.
Naturally, the issue lies in the fact that you will never receive any payment from such actors. They’ll delay any withdrawal or simply refuse to pay you. In other cases, they’ll even ask for the previously mentioned ‘confirmation deposit,’ making you pay them before they’d even consider giving you the money that you won and rightfully unlocked.
Thankfully, there are plenty of casinos whose bottom line allows them to make this calculated risk and treat you fairly. Even these options come in various shapes and sizes, which is why it’s so important to be deliberate in how you choose where to redeem these spins from.
As a closing statement, we’d also like to remind you that gambling addiction can start with small, harmless, and even free betting experiences like the one provided by no-cost slot rounds. This makes it even more important to gamble responsibly!
