Why Do Online Casinos Offer Signup Bonuses?

When it comes to signup bonuses, I've always been a lot like that great old Thomas Jefferson quote: "Never spend your money before you have it."

Online casinos offer deposit bonuses to entice people to open accounts, primarily. But the reasons why that enticement works are fascinating in and of themselves.

Think about it – these bonus offers don't actually promise what people think. These aren't offers of free money – you have to place wagers (and lose an awful lot of money) to earn the cash specified in the bonus offer.

I think at some level, deep down, most of us know better than to expect something for nothing. Yet online casinos continue to make deposit bonus offers and people continue to line up to claim their share.

Why do online casinos offer these promotions?
Better yet – why do people fall for them?

Signup Bonuses Are the Online Equivalent of Casino Comps

Online casinos use signup bonus offers because casino customers are used to getting free stuff.

There's a historical precedent for the use of signup bonuses. If you've spent any time in a land-based casino, you know that the name of the game is earning comps. A comp can be anything from a free cocktail to a week's vacation in the penthouse suite. Comps are based on how much you play, how much you lose, and how valuable your business is to the casino.

No online casino can comp you a glass of wine or send you out for a comp'd prime rib buffet, so they use promotions like signup and reload bonuses. To understand the psychology behind the welcome bonus, we should look at why casinos provide comps and how those comps affect behavior.

Psychology tells us that one of the most powerful defense mechanisms we have is the ability to rationalize. Our brains use rationalization to both justify and explain controversial or unexpected events. A teenager who steals $20 from her mom's wallet may say: "At least I didn't go out and rob a store or pawn your jewelry."

Rationalization is the most powerful tonic against cognitive dissonance. When you lose money in the casino, your brain recognizes this as a bad thing and wants you to stop. Then a pit boss send you an offer of a free night's stay and like magic rationalization sets in. The fact that you're getting a free hotel room for the night helps you justify the gambling losses. So you play more – and lose more to the casino.

It's simple - the signup bonus works for the casino's bottom line because it convinces us that it's okay to gamble a bit more than we intended.

Signup Bonuses Make Great Copy

Online casinos use promotions because offering your members free money looks good on paper.

When you see the words "$1,000 FREE" it's hard to stay rational. This one's a double-edged sword. By offering bonus money for signing up, online casinos tap into that part of our brain that wants to win big. Somehow, these offers also slow down the part of our brain that knows that there's no such thing as a free lunch.

Think of it this way – you're reading a review of a casino. The section on promotions indicates that the site's welcome bonus is worth "up to $10." Well, when you're used to reading "up to $500," or "up to $1,000," ten bucks looks puny. Our natural tendency is to go for that big $1,000 payday rather than the $10 one. And by the time we're comparing a free $10 prize to a free $1,000 prize, we've all but forgotten that we're probably not going to win that much, anyway. In fact, we may have totally forgotten about things like wagering requirements.

This doesn't just extend to reviews – it's much flashier to run an ad indicating a huge payday than a more modest and attainable one. It also gives the casino a way to create separation between themselves and their competitors. In short, large sign-up offers make for good copy, so they're here to stay.

Signup Bonuses Are (Excellent) Marketing Tools

Online casinos use deposit bonus offers because a lot of people fall for them.

Yes, people are conditioned to expect something for free from their gaming provider. And yes, people tend to go for big-money offers. But online casinos don't just use these promos for flashy advertising and to fulfill expectation – they do it because chasing these bonuses requires actual cash play on the casino's games. This is a marketing tool that also gives users an incentive to gamble more than they may have intended to when signing up.

Not only do potential customers use these figures to compare casinos, the promotions themselves encourage customers to participate in activity that's profitable for the casino.

I'd say there's four major casino game designers in the industry. That means that most online casinos look and act pretty much the same. In many cases, the major difference between Casino A and Casino B is the size (and requirements) of their bonus and other promotional deals. Because of the nature of these promo deals, competition is possible along a number of different fronts.

For example, some casinos will make offers with larger and larger top-end amounts to draw in customers. I've seen welcome bonus offers that max out in the thousands of dollars. Sometimes casinos will link multiple deposit matches together to form even larger prize amounts. Other sites will incentivize with simpler terms and conditions – like lower wagering requirements.

By giving online casinos some room to differentiate their services from the competition, online casino welcome promos are excellent marketing tools.

Signup Bonuses Don't Cost Online Casinos Much

Online casinos know that most players aren't going to earn any bonus cash at all.

These offers come with all sorts of complications, requirements, and time limits. Wagering requirements put the full value of signup bonuses out of the reach of most players. These bonus' full amounts are so far out of the reach of the average player that the casino makes more money by advertising them than it pays out. More in than goes out equals a profit. That's basic business acumen.

Let's say you're going to deposit $100
at an online casino that's offering a bonus of up to $500.
25x the bonus plus the deposit amount.
That means placing $15,000 worth of bets in order to clear $500 in "free cash."

Final Opinion:

It doesn't make financial sense to chase that $500 prize by placing $15,000 worth of bets, unless you were planning to bet that much to begin with. It's more likely that you'll earn a percentage of that $500 prize rather than go for the whole amount.

It doesn't make financial sense to chase that $500 prize by placing $15,000 worth of bets, unless you were planning to bet that much to begin with. It's more likely that you'll earn a percentage of that $500 prize rather than go for the whole amount.

Casinos know that customers aren't likely to chase that entire bonus amount and they use this to their advantage.

Online Casinos Might Be Lying About their Promotions

Some (very few) online casinos might be using false advertising to try to entice people to join.

I wanted to mention this last because it's not all that common and I don't want to scare people away from online betting. Some betting websites scam their members by paying them extremely late, changing bonus terms to favor the house, or just plain stealing member's funds.

So why wouldn't they lie about their welcome bonus offers? We've already seen how powerful these offers can be on the human psyche. If a casino isn't planning to be an above-board operator, why wouldn't it advertise a promotion it has no intention of deliver?


At the end of the day, it doesn't matter why casinos use this tactic. What matters is how you interact with it. If you go into a new online casino knowing full well that you're only likely to earn a few bucks as part of a bonus, you won't be disappointed. These days, claiming the full value of a $1,000 signup bonus requires a hefty bankroll and a ton of bets. But earning a quick $10 in free wagers may only set you back $50 or so. As long as you set realistic goals for your deposit promotion, it makes sense to sign up and try to earn as much free cash as you can. Just don't make the mistake of thinking you'll get anything near rich through online casino freebies.