Free bets, bonuses and other promotions can be great additions to gambling sites. They allow players to receive something extra in exchange for trying a site out or for staying loyal to a specific brand. While each type of promotion works in a different way, they all follow the same basic principles.
In general, these remain at quite a stable level, too. If you can receive a 100% bonus up to £200 in January, then you can likely receive the same in August. The bonus may change in a slight way, but not so as you would notice it that much. Yet what about inflation? Wouldn’t this affect the bonuses and free bets you’re able to claim at gambling sites? Of course, at the moment, inflation is something that has been front and centre in the news. Have casinos and sportsbooks reacted to this with their promotions, though?
Inflation definitely affects the casino gaming industry but does it also have an impact on the bonuses and other promotions offered? Well, it would seem like the opposite is true. Instead, operators are facing increased costs from various things. Further to this, they have to pay tax on free bets and promotional funds, too. Let’s take a closer look at whether bonuses have kept up with inflation or not.
Tough Times Ahead for the Casino Gambling Industry
Gross gaming revenue (GGR) is something that the gambling industry looks at every year. At the end of December 2022, it looked as though a new annual record would be set for the period. Yet at the same time, reports suggested that things would likely get much tougher in this area.
According to Moody’s Investors Service, operators should pay attention to the slowing pace. Monthly year-over-year GGR in December had room to stabilise or go higher. After the COVID-19 pandemic, players had a lot more excitement at getting back to the pastime. Yet with this now being back in full swing, the slowing pace has come to the fore. Within the report from the research firm, notes suggested that inflation is to blame.
“As consumers spend more on basic needs as inflation trends higher, we expect gaming revenue growth to lose further momentum. The longer current challenges persist, the tougher it will be for US gaming issuers to sustain their solid earnings performance”.
That’s not a situation that is specific to the United States, either. In the United Kingdom and across Europe, inflation has had an impact on many businesses. This includes the casino gambling industry. Some executives within the sector have pointed to inflation as an issue already. Reduced trips to land-based casinos and less impulse spending are two points noted. Players tightening their purse strings results in less revenue for operators. As most people know, this is due to the effects of inflation and cost of living issues.
Casinos and sportsbook with less revenue than in previous months and years aren’t likely to enjoy that. After all, footfall and spending are things they want to maintain. Yet if players are using more of their money to pay for living, there’s less for casinos, sports, bingo, poker, etc. Therefore, inflation has a knock-on effect for land-based establishments and websites. That’s the same for any business in operation.
Have Bonuses and Free Bets Kept Up with Inflation?
To put things in a simple way, no they haven’t. That’s a shame, considering that brands would want players to continue depositing. After all, their revenue stems from their players continuing to play. It would seem more ideal to adjust promotions so that they factor in inflation. It would seem that the opposite has taken place, though. No thought has gone into the promotions when it comes to inflation.
It’s also relevant to highlight the fact that various other increases have occurred. This includes responsible gambling and associated levies that have increased. Licence fees were also increased for gambling operators in the UK in 2021 and the point of consumption tax levied on operators was increased in 2019.
Soaring energy prices have also had their own impact on the gambling sector as well. The Betting and Gaming Council (BGC) in the UK called for urgent action in August of 2022. It said that the hospitality and leisure sector needs protecting against the price hikes. The issue of COVID-19, climate change and Russia’s continued war on Ukraine are all factors of this. Many sectors are still recovering from the worldwide pandemic to this day. Climate change is something that is under constant discussion, too. Putin seems intent on not stopping with his invasion of Ukraine, either. The issues affecting these particular areas aren’t going away in a swift timeframe.
Flutter Entertainment spoke on the subject of UK inflation in May of 2022. The owner of Paddy Power, Betfair and others, said it is not affecting gambling. According to the company, players were still intent on wagering at its brands. Rapid growth in the U.S. market had also contributed to its Q1 revenues of that year. Even though revenue in the UK and Ireland fell by 8%, Flutter negated talk of inflation being the reason. It said that a winning streak by punters and increased spending on initiatives was the explanation.
U.S. inflation was at its highest level for over 40 years in January of last year. Businesses and policymakers ended up in a spiral, while consumers restructured their budgets. That was a result of the COVID-19 pandemic more so than anything else. Yet Russia’s invasion didn’t help matters, either. History shows that inflation has pushed casinos to adjust minimum bets.
Controlling expenses was another way the industry tried to equalise this. Yet with such moves, the industry didn’t suffer at all. Online gambling has continued to show consistent growth in general. Predictions remain in place that the gambling industry will be worth $112 billion in 2025.
Sustained inflation could affect online gamblers, without a doubt. Yet it’s difficult to tell what sort of issues these gamblers will face if inflation remains high. Let’s take a look at some possibilities, though.
- Rise of Minimum Wagers – If you’ve been active in the gambling world for some time, you’ll know about the rise in minimums. It’s much more difficult to find 1p or even £1 tables today. This is because inflation has been a constant presence in some degree. Casinos and sportsbooks need to compensate for this. With a continued increase in inflation, minimum wagers could also rise again.
- New Taxes + Regulations – Governments have to find some way to offset the high costs associated with inflation. This can lead to sin taxes increasing, such as those on alcohol, tobacco and gambling. In this respect, the casino industry could become a victim of such. Licensing fees and taxes for operators could also see another rise.
- Operation Costs Passed on to Users – Casinos and sportsbooks may try to seek out alternate ways to recover extra costs. A government may increase fees, but so may game developers. Gambling company employees are likely to want more money, too. This means that customers of gambling brands may need to chip in. Brands could charge them a little more to cover these expenses. Of course, this would be a subtle change. After all, they don’t want to lose customers altogether. Bet limits could rise for this, and deposit and withdrawal fees could become common. Further to this, new bonuses with higher rollover requirements could appear on sites.
With regard to casino stakes, you could compare today’s levels with those from 1960. £5 blackjack tables and one penny slot machines were common then. You didn’t often see tables with £25 minimums in place or slots with £2 limits in place. They are much more commonplace today, though. Stakes have gone through a steady increase since the ’60s and ’70s. That’s not something specific to the UK, either. If you visit the Vegas Strip, you’ll find much the same situation. The smallest wagers possible are still higher than those decades ago.
It would be common to associate this with greedy gambling operators. That’s not the case, though. Inflation has been the driving force behind the changes. A £5 bet in the ’70s isn’t worth the same amount as it is today. It wasn’t even worth the same amount by the 1980s. You may find one or two £5 tables still in operation. Yet, these are in use to draw players in. They aren’t relied upon for a primary source of revenue. A company cannot pay business expenses via £5 blackjack or £2 slots. These games have fallen in line with the increasing inflation over the decades.
Why Haven’t Bonuses and Free Bets Kept Up?
With inflation being a driving force behind so much, why haven’t promotions kept up? After all, these are in use to hold extra appeal for casinos and sportsbooks. Wouldn’t it make more sense for them to change as inflation rises?
The truth is that there isn’t a specific answer for the question. It may be the case that gambling operators don’t want promotions to change too much for various reasons. One of those reasons could be with regard to the current customer roster. Players who joined an online gambling site six months ago or 1 year ago will have received a welcome reward. Let’s say that this was a 100% bonus up to £100. Fast-forward to today and a new player signs up and gets a 100% bonus up to £250 for depositing the same amount. Does that stand out as being fair?
To the new player, it’s very likely that it does. Even to the casino it may seem like a logical route to take. Yet to those regular, loyal players, it would seem like a slap in the face. We’re not saying that casinos don’t change their offers ever, because they do. Yet they try to keep everybody happy – both new and regular players alike.
Another reason could be that the T&Cs would likely need to change as well. Higher bonus funds can mean higher wagering requirements to meet. Players don’t like having to try and reach near impossible requirements like that.
Plus, if operators have to pay tax on free bets and promo funds, this stands to hurt them. Gambling companies want to maintain as much of their money as possible. Paying out more taxes on various areas means they are losing out. The lower the bonus options, the better it is for them in the long run. The tax on the funds will be lower, as a result.
This is a small group of reasons about why promotions haven’t kept up with inflation. Of course, inflation itself does remain a real problem for gamblers. Especially now, it seems. The industry itself could be in a bit of a pickle, thanks to rising costs in different areas. If players are also suffering at the hands of inflation, then the two don’t combine very well. The best thing for everyone involved is for inflation to stay level or rise at a very slow rate.
The question still remains with regard to how much inflation the industry can withstand. Time will tell on that front. Yet for businesses around the world, the cost of living is proving to be an issue.