What is the future of UK bonusing?

Let’s start by looking at the characteristics of the UK digital sports betting and gaming market and what defines it. The market is a result of long-term, inward-looking and old-fashioned bookmaker thinking which is copycat in nature and compounded by legacy technology constraints.

The upshot of all of this is that everything looks almost the same, differentiation is near non-existent and operators are all basically selling the same pizza and competing on price, packaging and promotion. We are in a race to the bottom on bonuses and it’s not good for operators, the industry’s image or the customer.

There are additional consequences of the above situation. The first is rampant bonus chasing/abuse on an organised scale, and there is irony here. In an effort to acquire customers, operators are giving more and more away in sign-up offers. The result is that the offers can be gamed and a whole cottage industry of organised signup offer abuse has evolved. This means a very significant portion of the customers acquired are in fact of little, or even negative, value to the operators.

To put a scale on this, last year over 30 million new accounts were created by UK customers with online operators. There are not 30 million unique customers in the UK, not even a fraction of that. Masses of duplicate accounts are being created for the purposes of bonus abuse. This creates what I call the washing machine.

Almost no operator in the UK can make money from newly-acquired customers nowadays. Why? Many of the new accounts are plainly people who have no intention of being a true customer and are just signing up to arbitrage welcome offers. On top of that, the share of wallet of genuine accounts is poor because even they have multiple accounts and shop around for offers and bonuses too.

A second consequence is that bonuses are becoming more and more complex and they are already beyond what would be considered normal in other sectors. This causes a bad name for the operators and tarnishes trust. Furthermore, there is abuse where there are customers who know full well what they are doing but claim to have been confused or duped by complex bonus systems and threaten a regulatory complaint to be forgiven losses or to be given free bets or spins. All operators know this experience and its costs.

Making the best of a bad situation

For new entrants and innovators the above situation is near impossible. Advertising costs are ludicrous, the acquired customers are often of no value to the business, margins are small due to price competition and share of wallet is very fractured. It can’t go on in my view. There needs to be a step change in the sector.

If we had an extreme case and all signup bonuses were banned and retention offers were hugely restricted then the washing machine spin cycle would come to an end. Selling pizza on price and promotion would no longer be an option and operators would have to fundamentally change and compete on quality of product and service. Innovation would be a survival essential and success would be truly merit based. This would be great for the sector, for new entrants, for the innovators and for the customer.

I look forward to the day when BetBright can throw off bonusing and compete and shine through product and customer experience, but, as I said, the industry will either have to change its approach to bonusing or the mighty hand of regulation will need to do it for us. It is in our own interests, our customers’ interests and in the interests of quality and innovation.

Marcus Brennan is an ecommerce entrepreneur and founder of multiple businesses in the telecommunications, gaming, social and entertainment sectors. In June 2012, he founded BetBright and took on the role of CEO, a position he maintains today.