Online Casino Compliance (Part 2)

Bonus hunting in the past – positive expected value

Bonus hunting reached its peak between 2000 – 2006. The online gambling industry was new. Awareness of all the gambling math formulas wasn’t that high among casino managers and so many casinos offered high bonuses with low wagering requirements (WR) and no restrictions on allowed games. Finding a 200% bonus with 25x wagering requirements was quite common.

Bonus hunters at that time were able to exploit the positive expected value of a bonus when played on a certain game. The formula for this is quite simple:

Expected value = 100% – (WR * HOUSE EDGE)

If you have a \$200 bonus and play Blackjack with a HOUSE EDGE = 0.5% it means that with every bet you statistically can expect to lose 0.5% of your bet. When you turn over your money 20 times you can expect to end up with

100% – (20 * 0.5%) = 90% of your money

When you do the same on slots with RTP = 96% then you end up on average with 20 % of your starting bankroll. The bonus hunting strategy was very simple:

1. Find a bonus and an allowed game with a positive expected value
2. Play small bets until you meet the wagering requirements
3. Withdraw the remaining money (ie your profit)

Simulation

The following graph displays the budget over time for players playing \$1 bets on either black or red on French Roulette. With a \$200 starting bankroll and wagering requirements of 20x, after turning the bonus over you can expect to end up with 46% of \$200 which is 92 bucks.

In the graph you can see I did 5 runs and each is marked with a different color. You can easily see that each of the players would comfortably rollover his bonus ending up with \$80 up to \$150 in his account.

Casinos’ counter measures

So why did it take casinos so much time to notice this pattern? I’m not exactly sure but here are 2 possible reasons:

• Many casinos were making nice profits anyway and were afraid of offering lower bonuses than their competition.
• Startups (which casinos were that time) tend not to worry about a few bucks here and there if they have hands full with the task of growing and making money.

But in the end the casinos did notice and over time have implemented some countermeasures. Most of these are now found in bonus terms and conditions:

• Contribution to wagering requirements was decreased for games with higher RTP. For example, Blackjack often contributes to meeting WR only with 5% of the bet or doesn’t contribute at all.
• Wagering requirements were increased to more than 40x for standalone bonuses and to more than 25x for bonuses bound to the original deposit.
• Low risk betting (like covering whole roulette wheel with bets) was forbidden

Funny fact: the 3rd mentioned condition is absolutely not needed if the former 2 are applied but as a relict is still present in bonus conditions of many casinos.

Casinos had to react, because players kept looking for instructions how to make money in online casinos and how to make money from online casino bonuses. The situation in the past allowed them to win big money in the casino, which, of course, wasn’t good for the casinos themselves.

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