The Psychological Theories that Means You Make Bad Decisions About Gambling Bonuses
The gambling industry has a bonus for every occasion. When you sign up you’re offered a welcome bonus; when you deposit you get a deposit bonus; new game out? There’s a bonus with it!
And these all feel lovely. They feel like giveaways. But we know better than that. We know that the online casino industry is massively profitable. And we don’t understand how this can be the case when it is so often matching all the money it receives with 100% bonuses that give the player all their money back.
Except that’s not how it works. And it doesn’t work that way because of wagering requirements. And wagering requirements work because you’re bad at making decisions around loss.
A wagering requirement is one of the hardest things to justify when you try to explain the online casino industry to someone who’s never played online.
“What, you mean, if you deposit £10 they’ll give you a £10 bonus but then make you spend £400 of your own money before you can touch any of your winnings?!”
And when it’s put like that it sounds insane. And it is!
It’s all based on clever psychology, and we think that understanding that psychology might help you make better decisions around bonuses.
The first psychological effect here is “The Endowment Effect”.
The endowment effect is the feeling that we have of valuing things that we own. A common experimental proof of this is to take two people and give one of them an item, then ask both of them what they would pay for that item – the price that one would sell it for against the price that the other would pay for it.
Even if both participants know the actual value of the item the person who has it almost always values it much more highly than the person who is buying it. Because it’s theirs!
And that’s how wagering requirements trick us. It gives you a free lump of money. And once you start playing with that money you will almost certainly have some winnings that will show up in your bonus account. And you’re likely to value those winnings much more highly than their actual worth – because they belong to you.
So, even though most wagering requirements quite starkly limit the amount you can withdraw from bonus money bets you might find yourself in a situation where you’re willing to pay in order to free up that money!
So a bonus that gives you a £300 wagering requirement might have a limit of £100 on pay-outs from your bonus. And yet we know that players are willing in large numbers to pay that money to unlock that money – because it is endowed with an ownership premium.
Another psychological effect, the Familiarity Effect, may also impact how we decide to gamble. Things – places, things, people, whatever – that are familiar to us have more value.
The chief effect of the wagering requirement on a welcome bonus is to commit you to spend a lot of time at a casino site. Sometimes you’ll only have a week to complete a wagering requirement for example, and if this is hundreds of pounds, with a maximum bet limit that’s very low, then you may well find yourself spending a lot of time at a casino site. So you’re becoming familiar with it.
Already, your winnings look like they’re worth much more to you because you got them for “free” in your mind, yet they are yours, and now you’re chasing them in a familiar online place.
So the pull to stay at a site grows stronger.
The Expectations Effect
We also have expectations around losses. Once you have been given a gift, you feel like you are already up on the deal. Spending other money, or losing all that money in the process feels like it’s simply evening up the score.
All of these effects add up. Psychologists have concluded that we “overvalue what we already own”, that “we are comfortable with what we are used to having”, and “our expectations about the future are that our current opportunities will continue or improve”.
Together these effects make us “feel that loss is much worse than it really is.”
You can see how this plays into a bonus of any sort.
Defeating Your Own Brain
Working this way isn’t a sign of weakness. Marketing of all sorts relies on the way that humans work, and that we are not always simple, rational creatures. Homo Economicus is the perfect consumer who makes all the right choices for all the right reasons – and it is a theoretical construct, not an actually existing person.
But you can help yourself simply by understanding the way this psychology works and by understanding how a welcome bonus work.
Our view is always that a player is best off considering accepting a welcome offer only as a way to get some free credits to look around a site and to completely ignore the financial aspect of the deal. That’s’ right, forget the money and just play the games for fun. That’s hard to do, but by ignoring the finances you’re also less likely to deposit more than you really ought to.
When you evaluate a welcome offer more by what it demands of you than by what it offers you are more likely to make a good, rational decision.
So a 100% welcome offer with a 30-time wagering requirement with a 30-day time limit demands of you that you spend £3,000 in 30 days if you make a £100 deposit. How does that sound compared to the £300 you’re getting for free?
Evaluating offers and rejecting many of them is likely to be one of the healthiest decisions you make in your online gambling career. After all, we know that these offers exist to deliver profit and we know – because they are so long-lasting and so ubiquitous – that they must work at doing that. With that in mind, read the small print of the next offer you’re given and see if it’s really worth it.