The allure of a “risk-free bet” feels obvious. What better way to join a sports betting platform than with a wager that doesn’t carry any risk?
In recent years, new bettors were inundated with marketing materials from mobile sportsbook operators about “risk-free” sign-up bonuses. Customers loved the offers, and operators used the phrasing to attract new customers in competitive state markets, but after regulatory pushback operators are moving away from the risk-free term.
Those risk-free bets weren’t absent risk. In most cases, they involved digital sportsbooks offering a customer replacement betting funds for an initial wagering loss, and if a bettor lost a second wager using the replacement funds, they were out their initial stake.
Some regulators have thus objected to the risk-free phrasing, especially in newly legalized states like Ohio and Massachusetts where there’s been special focus on responsible gambling policies. Those states’ regulators helped spur an industry-wide shift in which multiple major operators, whether voluntarily or as a state requirement, have dropped “risk free” from their marketing. It’s a shift that responsible gaming experts hoped would have taken place via self-correction years ago.
“It never should have happened,” Alan Feldman, a distinguished fellow in responsible gaming for UNLV’s International Gaming Institute, said of the questionable terminology. “Gambling, by its definition, is putting something of value at risk. Although I appreciate philosophically what the companies are going after, in gambling terms it needs to be more clear.”
U.K. operators used phrase in early 2000s
Legal sports betting has become widespread in the U.S. over the last few years, after the repeal of PASPA in 2018, and risk-free bets became a frequently used phrase by U.S. sportsbook operators.
The term didn’t originate in the last five years, though, as it was prevalent in Europe earlier this century. Online sports betting took off in the U.K. in the early 2000s, and risk-free wagers were used by operators hoping to acquire customers in the new market.
“They’ve long been the main marketing tool used for acquiring new customers for well over a decade,” Alun Bowden, a senior consultant at Eilers and Krejcik Gaming, told Sports Handle via email. “They’re part of the furniture. The terminology tends to vary, from risk-free bets to free bets to money back, or more recently cash back as a way of differentiating from betting credits, but it all means the same thing.”
Bill Esdaile is the managing director of Square in the Air, a marketing consultancy for sports and betting companies, and he worked at Sporting Index for about a decade in the early 2000s. Sporting Index set up Sporting Odds (now Sportingbet), which was one of the first online sportsbooks in the U.K.
Esdaile remembers operators racking their brains in the early 2000s as they searched for ways to acquire customers.
“Everyone was moving toward this weird and wonderful thing called the internet and didn’t know how to persuade sportsbook players to join,” Esdaile said.
Free bets, which came in the form of “risk-free” offers with a site credit given in return for a losing bet or as a standalone bonus bet, became a popular choice among operators.
As more operators entered the U.K. market, the competition increased. That meant more competitive free-bet deals in an attempt to gain market share. The language of both “risk-free bet” and “free bet” became popular among operators and familiar among customers.
“It was just sign-up offer upon sign-up offer,” Esdaile said.
Esdaile doesn’t credit responsible gambling measures as the catalyst for a gradual decline of various free-bet offers in the U.K. years ago — it instead came due to the market maturing and the offers holding less value to sportsbooks — but there have been increased responsible gambling measures in the U.K. in recent years. Bowden says there’s been a shift in the U.K. from various free-bet promotions, including risk-free wagers, to other marketing efforts.
“Recently we’ve definitely seen a move away from ‘risk free’ type bets and toward boosted odds as a main tool to engage with existing customers. … This is largely due to more regulatory scrutiny of the language around these offers,” Bowden said.
Similar trajectory in the U.S.
When the legal mobile market launched in the U.S., operators wanted market share. Hence lucrative promotional offers became common, often using “risk-free bet” language as an enticement similar to what had been seen in Europe. They seemingly provide customers with an advantage over the sportsbooks, as bettors eagerly try to turn the promotions into money.
For the operator, the marketing costs of offering those promotions can be justified. In theory, if an operator convinces a user to bet with them, they can become a loyal customer with lifetime value to the sportsbook. U.S. operators often compete against each other for the best sign-up promotions at each state’s launch, leading to an increase in risk-free bet size.
While many sportsbooks have offered a few hundred dollars worth of “risk-free” bets for new users, some operators have gone bigger. Caesars Sportsbook, for example, has gone as high as a $5,000 risk-free bet for new users. At one point, SI Sportsbook offered a $7,500 risk-free bet in Colorado.
Someone talk to me about this supposed $7,500 risk-free first bet available in Colorado via the SI Sportsbook. If that's real, I'm gonna need a quick loan next week …
— Douglas Farmer (@D_Farmer) November 4, 2021
“What also differs markedly between the U.S. and the U.K., in particular, is the generosity of these, with the U.K. offers usually capped at £10 or £20 due in part to the huge volume of matched betting that occurs,” Bowden said.
While U.S. operators borrowed the “risk-free” terminology from the U.K., they skyrocketed the amount of potential risk involved. Instead of users having roughly $20 at stake, bettors were able to risk hundreds or even thousands of dollars through the promotions.
“The U.S. market has really gone hard with these types of offers and on a scale the global market just hasn’t seen before,” Bowden said.
While the promotions have offered value to customers, most of the risk-free bonuses offered by U.S. operators weren’t actually risk free in light of how multiple losing wagers would cost the bettor money. That has come to concern regulators as well as advocates for responsible gambling, even if the offers get touted as highly valuable in some other outlets beyond the sportsbooks themselves.
How to take advantage of all of the first deposit bonuses given by Sportsbooks in Ohio….
Let me preface it by saying there are a ton of different possibilities depending on which sides of the hedge hit but I did one scenario
First I'm listing all of the promos
— Jordan Kalman (@Jkalman41) January 31, 2023
There are ways to best utilize free-bet sign-ups, but not every customer has the understanding or patience to take advantage of the offers. YouTube is littered with videos of people explaining how to best take advantage of risk-free bets, but not every bettor wants to sit through a 20-minute explanation before jumping into their wagers. The videos aren’t always accurate, either.
One video from about a year ago posted on Oddsjam’s YouTube channel, which has over 66,000 subscribers, explicitly claims that risk-free bets are indeed completely risk free.
For a new bettor who might not understand hedging or the rules of the risk-free bets, it’s possible to wager an amount outside their comfort zone under the assumption the bet is truly risk free. This could, potentially, lead to someone losing a big wager when they can’t actually afford it.
Losing over $1,000 on a risk-free betting promotion isn’t necessarily commonplace — and customers bear responsibility for reading the rules of betting promotions they accept — but regulators have started viewing the marketing language as misleading.
Regulators pressure operators
The crackdown on terminology intensified late last year, in new states preparing to launch mobile sports betting. The promotions themselves weren’t the issue, but the language used to market them was a concern.
The Ohio Casino Control Commission, which regulates sports betting in Ohio, prohibits the use of “free” or “risk free” in advertising when the promotion requires a customer to wager money. The OCCC stressed its guidelines leading up to the state’s legal sports wagering launch on Jan. 1.
Despite the guidelines, some operators still used the phrase in marketing materials. As a result, the OCCC fined three operators at the beginning of 2023 for either using “risk free” to describe promotional bets inappropriately or for that occurring through their affiliates involved in marketing.
“The Commission takes responsible gambling seriously – and expects the industry to value the same,” Matthew Schuler, the OCCC’s executive director, said via press release.
Caesars Sportsbook was among those fined, and the operator agreed to pay its fine instead of requesting a hearing. Interestingly, it wasn’t Caesars Sportsbook that used that language in Ohio promotions, but rather Dimers.com, an affiliate. Caesars Sportsbook later told the OCCC that it terminated its relationship with Dimers after the mistake.
The Massachusetts Gaming Commission, in a state where retail betting began this week and mobile sportsbooks will launch next month, also prohibits sportsbooks from advertising promotions as “free” or “risk free” if a bettor needs to risk their own money as part of the promotion.
“I’m really glad to see regulators stepping in, because that way the practice becomes standard across the board,” Feldman said.
Operators make changes
The Super Bowl is just a few weeks away, so there's no better time to get in on the action 💪
New customers can sign-up now and place a no sweat first bet up to $3,000 💰
— FanDuel Sportsbook (@FDSportsbook) January 30, 2023
“FanDuel continues to demonstrate its commitment to RG principles with the decision to offer greater transparency to customers by discontinuing the use of ‘risk free’ terminology from our marketing in 2022,” a FanDuel spokesperson told Sports Handle. “This is in keeping with our parent company Flutter’s approach in markets around the globe that have also moved away from using this language.”
“It’s important to note, FanDuel’s advertising never promised ‘risk-free betting.’ … Our risk-free bets were rewarded as returned cash or cash site credit with limited restrictions,” the spokesperson said. “However, we believe that meeting this clearer standard is important to continuing a strong customer trust perception and our commitment to consumer protection measures.”
While “no sweat” isn’t drastically different from “risk free,” the distinction is sufficient, Feldman says. By no longer implying the wagers are without risk, FanDuel is doing a better job of explaining its promotion to customers.
“Literally, it’s the words ‘risk free’ [that are the problem],” Feldman said.
BetMGM and DraftKings told Sports Handle they’re also moving away from the language. BetMGM plans to say “first bet offer” and “bonus bets” in promotional materials in all U.S. and Canadian markets, according to a company spokesperson.
PointsBet is doing similarly, as the company says it started transitioning away from saying “risk free” last year.
“After careful review, PointsBet came to the conclusion that ‘Risk-Free’ was a term that was not in the consumer’s best interest, so we began phasing that language out of all our marketing in Q3 2022,” Rick Martira, PointsBet USA’s executive vice president of media and strategy, said in a statement to Sports Handle. “We are now utilizing the phrase ‘Second Chance’ to avoid any misconceptions that a bet is void of any risk.”
Barstool Sportsbook now uses “first-bet refund” in some of its promotional phrasing, a more accurate description of the promotion. BetRivers calls its promotion a “second-chance bet.” Caesars Sportsbook has also shifted away from the “risk-free” language in recent months, adopting phrasing such as “Your first bet is on Caesars.”
New sports bettors in Ohio can receive up to $500 in a second chance bet 💰
— BetRivers Sportsbook (@BetRivers) January 1, 2023
Feldman views operators moving away from saying “risk free” as a positive step for responsible gambling measures. He believes more progress is needed, however, and hopes this is a sign of improved responsible gambling efforts to come. The next valuable step, he said, will be operators becoming more direct with customers about responsible betting.
“There’s nothing wrong with discussing responsible gambling with your customers,” Feldman said. “That’s the way you maintain your relationship with the customers. That’s the way you demonstrate your care and concern for them, and ultimately it’s the way you have sustainable customers.”