At Greco, Ozric Vondervelden – co-founder and CEO – and his team aim to mitigate risks associated with sports betting, online casinos and all forms of online gambling.
Among the focus areas of Greco are “arbitrage and bonus abuse, which is the process of undermining the intended function of a bonus engine. Different ways of manipulating the intended way function of a wallet.”
Vondervelden and Greco assist clients with reporting and automation tools that help manage those risks. One area of focus stands out, though.
“Multi-accounting,” Vondervelden says. “This is an issue synonymous with many forms of bonus abuse. We’ve done a lot of work in advising on how to optimise the development of online gambling rules and how to optimise payment or verification processes.”
Bonus abuse – and the evolution of bonusing in general – is a colourful tale and it’s still ongoing.
The story so far
Vondervelden says one key narrative has dominated the industry over time. All roads lead to retention. But they don’t start there.
“The value of player acquisition has been dropping over time,” Vondervelden says. “As betting markets in Europe started to reach saturation and maturity, there was a big shift to focus on retention.”
The extension of that umbrella term, Vondervelden posits, is a focus on which operators should be rewarding.
“Over time,” he continues, “pressure stacks up. Regulation, taxation and bonus abuse lower the amount of value operators can afford to risk. There’s also been the introduction of terms and conditions as an extension of large headline value offers, while also reducing exposure by managing risk returns.”
We’ve seen this concept in action across myriad markets. Big banner offers such as second-chance bets or deposit matches promote massive dollar amounts. Still, the actual value of the bonus is much lower than primarily advertised due to the playthrough requirements.
“Maximum win caps, maximum stake sizes on restricted content, wagering requirements… there’s a whole array of levers you can pull,” Vondervelden says.
In Europe, there has been a marked shift in the methods operators deploy to manage risk. One of the more recent trends, according to Vondervelden, is the introduction of winning caps.
“This specific process reduces the need for many others. It removes the need for a max stake size, for example, which covers many different risks. It’s become increasingly popular over time.”
Wagering requirements, too, have been rising steadily.
“There’s been A-B testing in the past to look at the difference between, say, a €5 bonus with turnover requirements versus a €1 cash drop,” Vondervelden says. “Both equal €1 in value, but players have an appetite for less restrictive terms.”
However, that’s not necessarily reflected in operator offers. Some are known to offer 1x requirements while others require significantly higher playthrough. The landscape is still varied in this area.
Understanding value; mitigating bonus abuse
Bonus abuse is a relatively vague term that encompasses many behaviours. Vondervelden asserts that “behaviour” is a key facet in understanding bonus abuse and how to track it.
“You can look at wins and losses, deposits and withdrawals, or the level of incentivisation a player takes,” he says. “But these processes are all incredibly flawed.”
Instead, a holistic approach to bonus abuse prevention and mitigation requires an understanding of player value.
“We advocate a deep understanding of the theoretical or expected value of your players,” Vondervelden says. “This exposes the intent of the player in its purest form. We recommend combining this with behavioural analytics to understand if someone’s cheating you and also how much value they’re taking from you or giving you. It’s all on one scale: bonus abusers, VIPs and everything in between. You can’t assess one segment without the rest.”
Value covers a lot of definitional ground, though. It can apply to the total value of bonuses across sportsbooks, for example.
“It’s been a while since I last checked the UK total, but it was somewhere just over £2,500,” Vondervelden says. He compares this to a current US market like New Jersey, where his latest analysis reports more than $18,000 in possible bonus value. That’s higher than it ever was in the UK, he notes.
“To be clear, that’s the amount of value a player can take; not the headline values that are on offer.”
Value can also be used to segment players.
“A valuable player gives back and doesn’t just take,” Vondervelden says. “The value of a bonus is different for every player. It’s determined by how the player approached it in terms of volatility, RTP, stake size and strategy. The focus should be on what the bonuses value is to the player.”
It’s the last three words that are key here. Vondervelden says operators must tailor bonuses to players based on that value.
That’s a key portion of Greco’s offering, too.
“Ultimately,” Vondervelden says, “we’re a BI tool that will tell you the value of your players, not based on what they won or lost, but what they should have won or lost for every interaction.”
This data improves decision-making when used properly, he says. “It helps determine the value of your affiliates, make lifetime prediction models, reward your players and more. You can make optimised decisions at the earliest opportunity with the highest degree of confidence.”
Understanding player value is essential as it helps identify bonus abusers. “You’re looking for someone who is consistently taking value and optimising what they take,” Vondervelden says. “Looking at theoretical value, that would just be a downtrend on a chart, no matter how many bits of cash play they do to hide their behaviour. They can’t falsify that data.”
The industry is partially to blame for bonus abuse, Vondervelden says. “Players have become used to these bonuses. They’ve been upskilled into bonus abuse, whether consciously or not. You could see it as more opportunistic. When every operator is throwing huge amounts of value, naturally there’s an incentive for players to jump from one operator to the next to take value, which promotes this loyalty with players.”
This risk, then, is that operators realise the player base they flaunt is the same player base as their biggest competitors’.
“They don’t have the market share they thought they did, so they have to continue the bonus race and focus on retention rather than acquisition,” says Vondervelden.
“I don’t think they’re going to get a break in terms of bonusing until they focus on the analytics and start targeting bonuses toward player retention.”
Across the pond
Vondervelden’s work with Greco has brought him to all corners of the world and he says many of the trends from Europe carry over to other jurisdictions. The US, for example, has been on a similar trajectory to the European markets.
“The US, in some senses, is showing signs of saturation. And we’re seeing a reduction in value, generally. There’s an increase in the terms and conditions surrounding welcome promotions.”
The US is gradually moving to a more analytical approach to how operators reward players; Vondervelden says the country could learn a lot from Europe.
“I don’t want to tell the US how to do the US,” he says. “But there are many red flags. Every operator’s offer is remarkably similar. Using a bonus to define yourself is somewhat of a plaster. I think in the long term, the product is what’s going to define operators that make it out on the other side of this race to the bottom.”
The future of bonusing
What does bonusing look like in the next year… or five years?
“We’re moving fast with AI,” Vondervelden says. “It’s going to seep into every industry, and I think it could have massive value in gambling. You can have AI models create a bonus where the value is tailored to a specific player and full customisation in terms of how it’s communicated, what game gets recommended, how and when they receive that communication and so on.”
The problem with this imagined “utopia”, as Vondervelden calls it, is a lack of data. “Currently, the industry can’t determine how much value to offer a given player. There are no good metrics for it. You can’t leverage this technology until you first work out the basics.”
Still, Vondervelden is hopeful.
“Fully realised and fully automated for every player,” he says. “That’s the perfect bonus to me.”
Original article: https://igamingbusiness.com/finance/staying-ahead-of-the-fraudsters/
