Archive: Free Bets? Terms & Conditions Apply

A dive into the fine print of sportsbook bonus bet offers

This is an archive copy of a post that originally ran on Substack in October 2023.

As previously established, sports gambling is a BIG business. With football once again in full swing, the only thing more inescapable than Taylor Swift and Travis Kelce are ads for sports betting. According to Media Radar, more than $866M was spent on gambling advertising in 2022, a 40% increase versus the prior year. A recently published report by advertising research firm iSpot shows that 2023 spending is up 25% through August of this year. Given how little of the football season is captured in the 2023 period thus far that growth will most likely accelerate further by year’s end. Almost all of the ads at the time of this writing are offering free bets to new players.

A quick primer on betting mechanics

“No risk, no reward” is the mantra for all of gambling, but the actual mechanics of how various bets work can be confusing. In simple terms, with sports betting you are wagering a set amount of money on a specific outcome occurring. If the conditions of that contract are met, you will receive a payout plus your original wager in return (this part is important later).

Example: You are betting $100 on which team will win a given matchup and choose the underdog paying +200. If the underdog wins, you would receive a total payout of $300 ($200 in winnings plus the return of your $100 wager).

Here is a link to a more detailed explanation of various betting odds and how to read them.

The first taste is “free”

Free samples are a tried and true marketing tactic. Whether we’re talking about Auntie Anne’s pretzels in your local (maybe dying) mall or the frozen section at Costco, everyone loves free samples (go to Costco hungry if you don’t believe me). Given the popularity of gambling in general it should then be no surprise that sportsbooks would try anything they legally can to entice would-be bettors.

FanDuel and DraftKings are two of the most prominent sportsbooks/advertisers and both are running a promotion (at time of this writing) where a $5 bet gives $200 in additional bonus bets. 40X in free money sounds like a good deal, but like any deal that seems too good to be true, the devil is in the details.

Author’s Note: Since I didn’t want to actually sign up for any of these promotions, my understanding of some of the specific mechanics is limited to the fine print and videos I was able to find.

DraftKings

Here are the key elements from DraftKings’ terms and conditions for the current bonus bet promotion:

• After creating a new account, deposit a minimum of $5 and then place a $5 bet
• The $200 bonus is paid as eight $25 bonus bets
• Bonus bets must be used within 7 days of issuance or they will expire
• Only the profit from any winning bonus bet wager will be returned to the player
• Winnings generated from bonus bets can be withdrawn

FanDuel

Here are the key elements from DraftKings’ terms and conditions for the current bonus bet promotion:

• After creating a new account, deposit a minimum of $10 and the place a $5 bet
• $200 bonus does not need to be used in one lump sum
• Bonus must be used within 7 days of issuance or they will expire
• Only the profit from any winning bonus bet wager will be returned to the player
• Winnings generated from bonus bets can be withdrawn

The key similarity to both offers is a ticking clock once the bonus bets are issued. This means that most players won’t be able to wait and bet on matchups where they are specifically knowledgeable. Additionally, since players only receive the profit portion of any bonus bet, it incentivizes choosing major underdogs in order maximize potential return. While it is true that huge underdogs will occasionally pull off the upset, sportsbooks haven’t stayed in business for decades by being bad at setting odds. These two factors alone seem to put players on the back foot from the start.

“Risk Free” Bets

Another popular promotional offer you might see are so-called “risk free” first bets. At one time FanDuel offered a “No Sweat First Bet” up to a $1000, which seems even more lucrative than the current bonus bet offers. For this promotion, if you won your $1000 or less wager then good for you the sportsbook isn’t on the hook for anything else. If you did lose, then the fine print matters A LOT. It is likely you will either receive a bonus bet in the amount mentioned (functioning as previously described), or a site credit. Site credit bets will typically include the wager amount in your payout, but you still have to put it on the line again to be able to ultimately withdraw the funds. Either way you are making another bet as part of it and getting players to want to make that next bet is where the money is made in the long run.

The House Always Wins

The most successful businesses thrive by becoming a part of their customer’s daily routine. Think about everyone who makes a daily stop at Starbucks or Dunkin on the way into work. The nonstop ad-blitz for these promotions is clearly aimed at ingraining sports betting as a natural extension of watching sports. These types of promotions aren’t run because casinos and sportsbooks are nice people. They are designed to separate you from your money either immediately or in the long term while hopefully creating a habit. The 1995 film Casino has a scene that perfectly captures the underlying strategy: “The longer they play, the more they lose.”

Walking away when you’re ahead and beating the allure of “just one more” is the hardest move for any gambler to make and the sportsbooks know that. There are obviously many ways to waste money. We’ve all jumped on various sales and promotional offers in our lives, and sure, they might leave us with an item we didn’t truly need, but there is usually some longer term value to derive. When you lose in sports betting the only thing you have to show for it is the hole in your bank account and a bad feeling in your stomach. Gambling can be fun, but we should all be clear-eyed about where is ends for most people.