The Psychology of Free – And How it Impacts iGaming
Posted by Harry Kane on Tuesday, April 5, 2022
The growth of the iGaming marketplace has been observed across the globe, particularly in mature and longstanding markets such as Italy and the UK. In the UK alone, iGaming and remote sports betting is worth £5.9 billion, while it now accounts for some 37.8% of the overall gambling industry.
While there are a number of factors that drive growth in the realm of iGaming, there’s no doubt that the success of this market is built largely on the ‘power of free’ and basic social principles like reciprocity. We’ll explore the psychology of this further below, while asking how this impacts iGaming across the globe and empowers operators to incentivise their players.
Exploring the ‘Psychology of Free’ – What Does This Mean?
Whether you like to shop online or visit your local stores, you’ll be familiar with promotional offers such as ‘Buy One, Get One Free’ (BOGOF) and ‘Spend a Minimum of $200 and Get a Free Gift Worth $100’. These promotional offers are incredibly common throughout the developed world, with the result that scarcely engage with them mindfully and have been conditioned to comply with them instinctively over time.
Of course, this has much to do with the fundamental principle of reciprocity, which underpins all promotions or free offers of this type. This word refers to the practice of exchanging things with others for mutual benefit, and in retail terms, this means responding to a generous offer or promotion with full participation and a potentially higher spend than you would have otherwise committed to.
According to detailed research published by Dan Ariely in his book ‘Predictably Irrational’, customers are also inclined to consciously change or adapt their behavioural patterns and demonstrate higher level of compliance when they’re offered something free.
Interestingly, this principle applies to just price, either, as it’s a highly emotive and effective trigger that can encourage customers to buy excess items or even goods that they don’t need in order to qualify for a perceived reward. Arguably, it’s even irrelevant that most offers of this type cannot be accurately described as ‘free’ (at least when you consider the technical definition of the word).
In fact, so-called “BOGOF” offers require you to complete an initial purchase or buy one selected product to qualify for promotions. By the same token, rewards-based promotions always command a minimum spend, which may have been more than you would have originally spent with a particular brand.
So, how do Online Casinos Leverage These Principles?
Now, it should come as no surprise that online casinos and remote sportsbooks leverage reciprocity and the power of free to help incentivise their customers, particularly in a saturated and high growth market that’s dominated by a relatively small number of large betting chains.
But what are the most common mechanisms used to drive reciprocity? Well, the single most common offer sees betting brands pledge to ‘match’ your deposit up to a fixed value, creating additional funds with which you can wager.
For example, you may leverage a 100% deposit match offer by crediting your account with $50 and subsequently receiving another $50 with which to play. Once again, there’s an initial cash commitment in player here, while most sportsbooks and casinos stipulate a minimum deposit level to guarantee eligibility.
Remember, you’ll also have to meet various ‘wagering requirements’ to cash in on such an offer, with these expressed as a multiplier of the bonus value and determining how much you’ll have to play through to unlock any withdrawals associated with your bonus funds.
However, the most important thing is that its taps into the principle of reciprocity by offering you a tangible reward in exchange for your patronage, while adding funds to your bonus balance and incentivising new players across the board.
Remote sportsbooks often use even more simplistic free offers and promotions. More specifically, they’ll reward their customers with ‘free’ bets, which can be deployed across various markets and usually with minimum odds restrictions.
These also come with terms, conditions and the requirement to make an upfront commitment, usually in the form of a deposit or qualifying bet above a minimum threshold. However, the reward and mere suggestion of getting something for nothing is enough to compel players and encourage them to part with their hard-earned bankroll.
Ultimately, it cannot be denied that free bets and deposit match bonuses have proved hugely successful at incentivising online gamblers throughout the digital age. Of course, such tactics are also widely leveraged by new or emerging casino platforms to compete with more established rivals and achieve an optimal market share.
The Bottom Line
Clearly, the so-called “psychology of free” and underlying principle of reciprocity remains a key driver of sales and impulse spending across the globe, impacting an array of industries and markets including the online gambling sector.
It appears to be a particularly effective tool in the world of iGaming, however, with the number of active and unique online gambling accounts (across casinos and sportsbooks) in the UK alone peaking at 31.57 million as recently as 2019.
This was up from just 24.08 million six years before, with this rush to market by new customers coinciding with increasingly generate promotional offers and increased investment in marketing and promotions. This number has increased further too since, as online gambling bonuses become increasingly creative and generous in equal measure.
Ultimately, we’d expect this trend to continue in the near and medium-term, notwithstanding any future regulatory or legislative changes that look to clamp down on welcome bonuses or incentives. This could be a significant regulatory proposal in the future, especially if the UKGC or government decide that generous promotions for new players are contributing to problem gambling in some form or another on these shores.