No. 1, January 2026

Note on bonus cost structures

The first note in this series starts with the cost that players see and finance directors argue about. A welcome offer looks like a single number on a banner, in the accounts it is a bundle of at least four separate costs, and the headline figure is usually the smallest of them. This note takes the bundle apart.

The four parts of a bonus

The visible part is the matched deposit or the free bets, which the operator funds only when the promotional balance converts to withdrawable money. The second part is the wagering it forces, turnover requirements mean the operator wins some of the granted value back through the house edge before a withdrawal is possible. The third part is breakage, the share of granted bonuses that expire unused, which in the offers we have examined can absorb a substantial fraction of the headline liability. The fourth part is fraud, promotional abuse rings that farm sign-up value across dozens of accounts, a cost that appears nowhere near the marketing line and lands in risk operations instead.

What the offer actually costs

Put the parts together and the realised cost of a welcome package tends to sit well below its advertised face value, in the structures we have modelled often at a third to a half of the banner number once wagering, expiry and clawback have done their work. That gap is the entire economic logic of the big headline. An operator advertising a large match is buying attention with a figure it expects to pay out only partially, and competitors who read the banner rather than the terms will misjudge its spend.

The accounting fog

Cross-company comparison is harder than it should be because bookkeeping treatment varies. Some listed operators deduct promotional cost from gross gaming revenue before reporting net figures, others carry it inside marketing expense, and a few split it depending on whether the offer required a deposit. Two firms with identical generosity can therefore show visibly different marketing ratios. When we compare bonus intensity across companies we work from gross-to-net revenue bridges where filings provide them, and we treat any comparison built on the marketing line alone as unreliable.

Where the structures are heading

Regulatory pressure is standardising the product. Wagering caps in several European markets, bans on sign-up incentives in others, and advertising codes that require terms in the creative have all pushed operators toward smaller, cleaner offers. The finance-side effect is quietly positive, lower headline offers with lighter turnover conditions produce more predictable liabilities, and predictability is worth margin. The competitive effect cuts the other way, when everyone's offer shrinks to the permitted maximum, the offer stops differentiating anyone and the acquisition burden moves to media and affiliates. Later notes in this series will follow it there.

Our working conclusion is that bonus cost is best read as a pricing decision rather than a marketing one. The operator is setting the effective odds of its own recruitment funnel, and the ones that model breakage and abuse honestly recruit at a discount to the ones that only watch the banner.