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The Psychology of Free: Comps and Bonuses in the Gambling Industry

Gambling is a popular and lucrative industry that attracts millions of customers annually. People enjoy placing bets and hoping for a big win, whether online or offline. But what makes gambling so appealing and addictive? One factor influencing gambling behaviour is the psychology of free: the use of comps and bonuses to entice and reward players.

Comps and bonuses are free or discounted goods and services that casinos offer to their customers, such as free drinks, meals, hotel rooms, cashback, loyalty points, free spins, deposit matches, and more. These incentives are designed to create a sense of gratitude, reciprocity, and loyalty among players and increase their spending and playing time. Comps and bonuses also exploit several cognitive biases that affect how people perceive and evaluate risks and rewards.

One of these biases is the endowment effect, which means that people tend to value something more once they own it or have access to it. For example, if a casino gives a player a free chip or a bonus credit, the player may feel more attached to it and reluctant to lose it, even though it has no real value. This may lead the player to bet more or play longer than intended. A study by Thaler (1985) found that people who received a lottery ticket for free were less willing to sell it than those who bought it for a low price, even though the expected value was the same.

Another bias is the sunk cost fallacy, which means that people tend to continue an action or investment that has already cost them time or money, even if it is not rational or beneficial. For example, if a player has already spent a lot of money on a slot machine or a table game, they may feel compelled to keep playing until they win back their losses or break even, even though the odds are against them. This may lead the player to chase their losses and lose more. A study by Arkes and Blumer (1985) found that people who received a free ticket to a play were likelier to attend it even if they had a conflicting event than those who paid for the ticket, even though the cost was sunk.

A third bias is the availability heuristic, which means that people tend to judge the probability of an event based on how easily they can recall or imagine examples of it. For example, if a casino displays or advertises big jackpots or winners, players may overestimate their chances of winning and underestimate their chances of losing. This may lead the player to take bigger risks or play games with lower odds. A study by Lichtenstein et al. (1978) found that people who saw a list of rare causes of death rated them as more likely than those who saw a list of common causes of death, even though the opposite was true.

Comps and bonuses are not only effective in influencing gambling behavior, but also in creating customer satisfaction and loyalty. Research has shown that customers who receive comps and bonuses report higher satisfaction, trust, commitment, and retention levels than those who do not. Comps and bonuses also create a positive word-of-mouth effect, as customers are more likely to recommend a casino to their friends and family if they receive free or discounted offers. A study by Reichheld (2003) found that increasing customer loyalty by 5% can increase profits by 25% to 95%.

Comps and bonuses are integral to the gambling industry’s marketing strategy. They appeal to the psychology of free and exploit cognitive biases that affect how people gamble. They also create customer satisfaction and loyalty, which are essential for the long-term success of any business. However, comps and bonuses also have ethical implications, as they may encourage problem gambling or addiction among vulnerable customers. Therefore, casinos should use comps and bonuses responsibly and transparently, and customers should be aware of their potential effects on their gambling behavior.