How Free Chips Work in the Online Casino Biz
Published on August 01, 2016
Most gamblers with any experience at all in the online casino game know what a signup bonus is.
But signup bonuses are only one of the types of promotions available at Internet casinos.
This post takes a look at “free chips”. These used to be, and sometimes still are, called “no deposit casino bonuses”. You’ll also see similar offers called “free spins”.
If you’ve seen offers for free casino chips and free slot machine spins on the Internet, but you didn’t know exactly how such offers worked, this post is for you.
The plain vanilla ice cream in the online casino ice cream shop is the signup bonus. This is simply a matching amount that the casino offers new depositors.
Here’s an example of that type of bonus:
Example Casino is running a promotion for new players. You can get a 400% bonus on your first deposit. The minimum deposit is $25, which means you’ll get $100 in bonus money to play with.
You’ll notice that the first type of bonus I mentioned was the signup bonus. That’s because it’s the most common promotional offer you see. I know of NO online casino which doesn’t offer such a bonus.
But no deposit bonuses don’t require you to deposit any money. This isn’t the same thing as playing the free games, though. When you’re just playing the free games, you’re playing for the Internet equivalent of Monopoly money. You can’t win.
But when you get a free chip or a no deposit bonus, you have the opportunity to gamble for real money and can potentially win real cash without any kind of initial investment or risk at all.
Here’s an example of a free chip or no deposit bonus:
Example Casino 2 is running a promotion for new players. If you sign up for a new account there, you get a free $25 chip without having to make any kind of deposit at all.
Free spins are similar to no deposit bonuses or free chips, but they’re more limited. You essentially get a free number of spins on the slot machine games at a particular online casino. And you still get a chance to win some real money without having to make an initial deposit.
Often these free spins are limited to a specific game or number of games.
Here’s an example of a free spins promotion:
Example Casino 3 is running a promotion for new players. You don’t have to make a deposit, all you have to do is register a new account. Once you’ve done so, you get 40 free spins on Example Slot Machine Game.
Most of these offers require you to input a bonus code with the cashier. These are not necessarily that important. Many times Internet casinos use these codes to track who referred the player to the casino, but not always. You can sometimes find bonus codes that are specific to certain referrers and get a slightly better bonus offer than you would have found otherwise, but not always.
If you know anything at all about casino math, it doesn’t take long to realize that you could run a profitable business taking advantage of all this free money the casinos are giving away, right?
I mean, you could sign up at over 1000 online casinos and cash out the bonuses from each of them, couldn’t you?
At one time, you really could almost guarantee yourself a profit of some sort by taking advantage of these promotions. I have a friend who, 15 years ago, took advantage of enough casino bonuses to buy a jukebox for his game room.
But it didn’t take long for online casinos to figure out the math behind such strategies, either.
One of the first things they did to counter this type of behavior was to start creating lists of games that you could play using bonus money and games you could’t.
Most online casinos limit your play to their slot machine games.
Other games have too much potential for abuse, especially games which offer a reasonable chance of hitting an even money payout.
Here’s an example:
You deposit $25 and get a $100 bonus. You decide to bet $125 on a single spin of the roulette wheel, and you take one of the even money bets. The odds of winning an even money bet on a European roulette wheel are 18/37, or 48.6%.
You win, and now you have $250, so you cash out.
The casino lost a lot of money on that deal, since only $25 of that was your money.
On the other hand, another casino only allows you to gamble on slots, and their highest denomination slot machine game has a maximum bet of $25. So you’re forced to make 5 bets in a row in order to get all $125 into action.
If you’ve ever read an article about minimum boldness versus maximum boldness when it comes to gambling strategy, you know that your best chance of doubling your money in a negative expectation game is to put all your money on a single bet.
That’s because the more bets you make, the more likely you are to see the statistical reality.
If you’ve read my recent post about gambling math terms, you know that to calculate the probability of getting a result plus another result is calculated by multiplying those probabilities together.
So if you’re betting $25 at a time, and you want to double your money, you have to win 5 bets in a row. Assuming that you’re playing that same roulette game, you have to multiply as follows:
48.6% X 48.6% X 48.6% X 48.6% X 48.6% = 2.71%.
So the casinos limit your gambling on most of these bonus offers to games with low limits and games which don’t have an almost 50% chance of winning an even money bet.
But that wasn’t enough to protect the casinos’ interests. They decided that they needed to install wagering requirements (often called rollover requirements or playthrough requirements) to further protect themselves.
Here’s how wagering requirements work:
You get a bonus of $100 on your $25 deposit, but the casino requires 40X playthrough. That means you start off with $125, but you have to place $5000 in wagers before cashing out. And to top that off, you’re required to play slot machines—you can’t use this bonus to play blackjack or even roulette.
It’s easy to do the math and calculate how much money you’re expected to have left after making $5000 in wagers. You just multiply the amount of money you’re putting into action by the house edge. That tells you how much money you can expect to lose, mathematically.
Most online casinos have at least a 5% edge on their slot machine games. Some probably have a house edge of 10% or higher, but I’ll use 5% for this example.
$5000 X 5% is $250.
You started with $125.
So mathematically, you’re expected to lose your deposit and all the money you got from your bonus.
This doesn’t mean you can’t walk away a winner. You might hit a $6000 jackpot on your first spin of the reels. (This happened to me once.)
If you do hit a big jackpot early on, achieving your wagering requirements might leave you with a healthy profit. Suppose you hit $6000 on that first spin, but then you lose the expected $250 on all your subsequent spins.
You’ll have a healthy profit of $5750 to take home.
You just can’t expect that to happen because of the bonus money.
Look at it this way, though—bonuses give you MORE opportunities to hit a jackpot like that. More spins results in more chances of hitting a big win.
Mathematically, the odds are still against you. That’s how casinos work. They’re not in the business of offering too good to be true deals to smart gamblers who are determined to make a profit.
But casinos didn’t stop with restricting your play to certain games and then requiring you to make a certain minimum number of wagers. They were still losing too much money. So many of them instituted a maximum cashout clause.
This is the maximum amount of money you’re allowed to win when using one of these bonus promotions.
The amounts vary based on the promotion. In the case of free chips, free spins, and no deposit bonuses, the maximum cashout amount is pretty small. You’re usually looking at a limit of $100 or less on your potential winnings.
When you’re dealing with standard matching bonuses for new casino signups, the maximum cashout amount is relatively generous. Now we’re talking about more like $2000 or something.
Not all casinos have a maximum cashout clause, but it’s becoming more prevalent.
Online casinos offer a bewildering number of ways to give you free chips to play with, but they’re not as good a deal as you might initially think. No matter whether you’re getting matching funds on your deposit, a no deposit required bonus, or a bunch of free spins, the casino has policies in place to protect itself from advantage gamblers and bonus abusers.
These countermeasures include limiting the wagers you’re able to make to games with a relatively high house edge and a low chance of getting an even money payout—usually slot machines. They also include requiring you to wager your deposit plus your bonus a certain number of times before being allowed to cash out. And they often include a maximum amount that you’re allowed to win and cash out.
Casino players aren’t the only people in the business who can do math. Advantage gamblers are smart, but casino management is smart, too. Casino bonuses can be a lot of fun, but it’s almost impossible in today’s Internet casino environment to use such bonuses to give yourself an edge over the casino.