Re-Examining the VIP Program Model
Player retention is a make-or-break challenge for online casinos. Operators, developers, and affiliates all focus on developing different methods of retaining players. Player retention strategies are especially important in light of how crowded the market is - for dissatisfied players, there’s always another option.
In light of the field’s heavy competition, it’s very common for online casinos to offer loyalty programs, often in the form of a VIP program. With these programs, players earn points by making deposits, participating in tournaments, and performing other actions the casino views as valuable. Players can move up through the tiers of a VIP program, earning improved benefits at each level.
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However, as in many other areas of the fast-changing online casino sector, it may be time to rethink the nature of loyalty and VIP programs.
Different Points of View
The case for VIP programs is strong. It’s common in many industries, after all, to offer higher levels of service and better products for customers who can afford them. Airlines, for example, don’t limit themselves to economy class, but also offer business and first classes, with increasing levels of comfort and luxury. They also offer membership cards and loyalty programs where frequent fliers accumulate miles and earn rewards.
The same goes for casinos - both online and not. Loyalty and VIP programs offer a mix of tangible and intangible rewards, introducing an element of gamification. Players can earn deposit bonuses and free spins as well as the psychological satisfaction of reaching higher levels and earning points, badges, and bragging rights.
High rollers who make sizable deposits and visit the casino often are valuable players, so online casinos reward them accordingly, by offering benefits like deposit bonuses and free spins. Many online casinos derive a significant amount of their revenues from high rollers, and consider retaining them a high priority.
However, not everyone views the issue the same way. A disproportionately high level of VIPs are problem gamblers who constitute a challenge for casinos by winning massive payouts or by developing such a problem that they need to be excluded. In some jurisdictions, legislators view loyalty programs in online casinos as a form of enabling problem gambling.
One difference of opinion regards transparency. Many operators do not publicize the terms and conditions of the VIP programs in order to prevent players who can’t afford to do so from chasing the program’s benefits to a self-destructive degree. However, some regulators would prefer complete transparency when it comes to operators’ terms and conditions.
Most online casinos have a single set of procedures for dealing with problem gambling, so that all players receive equal treatment. While there are no special protections or regulations for VIPs who exhibit signs of problem gambling, many online casinos employ a special customer support division - VIP managers who develop personal relationships with the platform’s high rollers. This allows the platform to better evaluate the player’s condition if warning signs do appear.
If VIPs do exhibit signs of problem gambling, VIP managers try and steer them towards self-control or even self-exclusion measures. If a VIP continues to exhibit problem gambling behavior despite warnings and advice from the VIP manager, the issue could be escalated through the casino’s responsible gambling team and the player might be given a break or even have their account canceled.
Many casinos implement this familiar, hands-on approach to problem gambling. However, in the eyes of some regulators, it is not sufficient.
Regulations and Reactions
Several jurisdictions have already seen a regulatory pushback against VIP programs.
Highly regulated countries have recently seen the introduction of new legislation aimed at online casino loyalty programs. This year, the United Kingdom Gambling Commission introduced new license conditions that included strict requirements for what kinds of bonuses online casinos can offer. Swedish authorities recently introduced legislation that limits bonuses to a single bonus per player, greatly inhibiting operators’ abilities to offer VIP and loyalty programs.
In Denmark, new legislation has been taken as an opportunity to redesign the loyalty program model. In Jan. 2019, Danish authorities introduced limits on bonuses in order to curb problem gambling. Bonuses are now limited to DKK 1000 (€130). Let us look at the MariaCasino company as an example - in order to remain in compliance with regulators and increase transparency, MariaCasino (part of Kindred Group) enacted a policy of giving players 10% cashback on their weekly losses. The casino views the move as a test of a simpler and more transparent strategy for customer rewards.
Steps Operators Can Take
In some operators’ eyes, the best way forward is to demonstrate to regulators that casinos can effectively and responsibly handle VIP accounts. There are a few different measures that operators can take.
With a player safety early detection system, operators can use an algorithm to track player behavior. Operators can track players’ levels of spending, paying careful attention to amount- and frequency-based indicators. Significant jumps in the amount or frequency of deposits can be an indication of potential problem gambling behavior. However, behavior indicators can be even more effective. Actions like chasing losses, canceling withdrawals, playing at night, and attempting to use invalid credit cards can indicate that a player is developing a gambling problem.
MariaCasino, mentioned above, provides a good example of how operators can cooperate with regulators in a way that doesn’t harm their business or deprive players of a valuable benefit. The program works in compliance with updated regulations while still incentivizing players to stay on the platform. This kind of creative solution could provide the way forward in jurisdictions where regulators target VIP programs and other casino loyalty programs and bonuses.
Some operators are planning on shifting their promotional strategies toward encouraging sustainable gambling habits instead of focusing on high-risk high-rollers.
Operators can also take steps to prevent increasing regulations by proactively engaging with legislators. Increased collaboration between operators could help build a database of problem and self-excluded gamblers. This would allow a feasible method of preventing self-excluded gamblers from simply switching problems.
Also, operators should consider implementing wagering requirements and playthrough regulations on the bonuses they offer VIPs and high rollers in order to minimize the casino’s losses. For example, if a player hits a jackpot or wins big in blackjack when playing with a deposit bonus or a free chip, there should be wagering requirements or minimum/maximum cashout restrictions on the bonus to decrease the casino’s risk of running into losses. The restrictions on the bonuses should be clearly spelled out in the promotion’s Terms and Conditions, and customer support agents should be educated on how to resolve issues tactfully.
All in all, while some lawmakers are moving to regulate VIP programs, increased cooperation between regulators and operators and redesigned loyalty programs will enable operators to responsibly use the promotional strategy.