First, the risk
Casino games are games of chance with a built-in house edge. No strategy, system, pattern or timing changes the odds in the player’s favor over time, and most players lose money over time. Nobody should gamble money they cannot afford to lose. VIP programs do not change that. They are a business tool, and this article describes them in general terms without naming or rating any operator.
What a tiered program is
A VIP or status program ranks customers into levels, often with names suggesting metals, gems or ranks. A player moves up by accumulating points, wagering a certain amount, or depositing a certain amount over a set period. Each level carries a set of benefits, and the higher levels are usually reached only after substantial activity.
Typical benefits across the industry include:
- Better point-earning rates or cashback percentages
- A named account manager or priority customer support
- Higher withdrawal or deposit limits
- Special promotions, gifts or invitations to events
- Faster processing of requests
The details, the conditions and the cost to the player vary a lot between programs, and many are not fully described publicly.
Why they exist
Operators spend heavily to attract new customers, and keeping an existing customer is usually cheaper than finding a new one. The way casinos earn money from play is explained in the article on casino revenue, and a small number of high-volume players often account for a disproportionate share of it. VIP programs are designed to retain exactly those players: to make them feel recognized, to give them reasons to stay in one place and to reward continuing activity.
Status also works psychologically. Once a player has reached a level, dropping back feels like a loss, and many programs require a minimum level of activity to keep a tier. That can encourage play that would not otherwise have happened, particularly near the end of a qualifying period.
What VIP benefits cost in expected terms
The key point is that a reward is calculated from what you wager, while your expected loss is also calculated from what you wager. The reward is a small fraction of the amount, and the house edge is usually larger.
Here is a hypothetical example with illustrative numbers. A player wagers $50,000 in a month on games with a 3% house edge. The expected loss is $50,000 × 0.03 = $1,500. Suppose their tier returns benefits worth 1% of the amount wagered, which is $500. The expected loss after the benefit is $1,500 − $500 = $1,000. The player is still expected to be behind, and the benefits only reduce the average loss. The results of any single month could be quite different, with a larger loss or a profit, but this is the average the numbers point to.
Notice also that the expected loss grows with the amount wagered. A higher tier is reached by wagering more, so the player’s expected loss in dollars rises even if the benefit rate improves. The benefits can feel substantial in dollar terms while the underlying cost is much larger, because the cost of reaching the level is invisible: it sits inside the house edge on all that play.
Other costs can be hidden in conditions. Benefits may carry their own wagering requirements, expiry dates or limits, which the discussion of bonus terms covers. Perks such as gifts or events may be valued lower by the operator than they appear to the player.
Who these programs are for, and who they harm
A VIP program is designed for people who play often and for large amounts. For a recreational player who wagers modestly, the benefits are usually small. For a heavy player, the benefits are larger, but so is the exposure to loss.
There are also risks specific to this setting. Personal attention from an account manager can create a feeling of friendship or obligation. Invitations and gifts can make leaving seem rude or wasteful. A player who has spent a lot may feel they must keep playing to justify the status, a version of the thinking described under sunk costs. Higher limits can also make large losses possible more quickly.
Anyone who notices that they are playing more to reach or keep a tier, or that gifts and attention are influencing decisions, may find it helpful to step back. Regulators in many places have also raised concerns about VIP schemes and have placed restrictions on them, which is part of why gambling regulation exists, although the rules differ widely from place to place.
Questions to ask about a program
- How is a tier earned and kept, and what happens if my activity drops?
- What exactly is each benefit, and does it carry conditions?
- Is the benefit a percentage of wagering, of losses, or a fixed item?
- Would I wager this much if no tier existed?
- Can I opt out, and is there any penalty for doing so?
If a program is making it hard to keep to a budget, setting firm spending limits or opting out of the program can help. Anyone struggling with gambling can contact a local support service.