Sportsbook Signing Bonus Offers Disappearing

Historically, when sports betting has debuted in new states, operators have flooded the market with risk-free bets as a way to sign up players. So, handles were high, but operators lost money. That formula is on the way out.

Place a bet with your local sportsbook and get one of those free bet bonuses. Oops. Sorry. You’re probably too late. For a variety of reasons, sign-up bonuses have taken a hiatus—maybe a permanent one.

Last November, SI Sportsbook, which had just gone into business in Colorado, offered this deal: bet up to $7,500 on your initial wager. If you win, good luck to you. If you lose, you get a free bet equal to the amount lost, according to Sports Handle.

Less than a year later, and the offer for new users is $100 in free bets after the first $20 wager.

Caesars, which had offered a $10,000 risk-free bet last year, now provides a meager $1,250 risk-free bet.

“As you get deeper into the player cohorts they become less valuable, so bonusing becomes smaller,” said Alun Bowden of Eilers & Krejcik Gaming. “Early adopters might be worth throwing $500 at, but your Johnny-come-lately, $10-a-game bettors aren’t.”

The pattern follows what happened in Europe, but far quicker.

“The U.S. is basically the European sports betting sector on fast-forward,” Bowden said, noting that sign-up bonuses in Europe now generally linger in the $30-$35 range.

Besides diminishing returns, shareholders are tired of not seeing profits. “They want to see more marketing promotional discipline,” said Ryan Sigdahl, a partner and senior research analyst at Craig-Hallum Capital Group. “All of the major operators are targeting positive EBITDA at some point in 2023, so they need to start rationalizing spend now to work towards those targets.”

Shareholders have faced a disturbing reality. Stock prices have collapsed compared to a 52 year high.

Example? DraftKings fell from $64.50 to $17.88. Ouch.

“Also, New York’s high tax rate of 51 percent is burdensome, so operators need to rationalize quicker than states with lower rates and thus more dollars to spend on the player versus giving to the state off the top,” Sigdahl said.

Operators have collected tons of data on users and have begun to tailor offers and events to keep them in the game.

“In addition to receiving pressure from investors and the macroeconomic climate, operators now possess more user data than ever before and are optimizing their marketing mixes to reflect learnings surrounding unit economics,” said Lloyd Danzig, the founder and managing partner at Sharp Alpha Advisors, which specializes in sports betting and online gaming.

Of course, there’s always a smart aleck in every group. BetMGM, for instance, has upped its offer from $600 risk-free to $1,000. The company also ended bonuses in New York and Pennsylvania, at least temporarily.

Danzig says the bonus trend will likely reassert itself.

“It is true that sign-up bonuses have largely declined across operators,” Danzig said. “However, this trend is likely to be interrupted by the launch of sports betting in populous states like California and Florida, as well as by the entrance of heavyweight contenders such as Fanatics.”

What potentially sets Fanatics apart in its desire to acquire customers is the cross-selling potential it has as a clothing company.

“It’s all an extension of the game,” Las Vegas-based gaming consultant Brendan Bussmann of B Global told Sports Handle over the summer. “If I have someone betting in the middle of a game and they are a Nebraska fan, I can sell them a T-shirt while they are in-game wagering. It’s the Holy Grail of being able to sell memorabilia as well as engaging people in the game.”

Still, the future doesn’t look too good, Sigdahl said.

“We think this is a natural evolution for the industry in the early innings of maturation and a good thing for the differentiated operators. Ultimately, product will win the customer long term.”