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Jan 12

RETRACTED – Nektan – when a bonus is really a tax

Posted by THEPOGG in Blog.

Retracted

Due to player posts on the CasinoMeister forum information has come to light regarding how the Nektan bonus system functions that is not available within their operator’s terms and conditions as of the 21/01/2017. As such much of the simulation work contained within this article is inaccurate.

You can find full report on the Nektan bonus system as it actually functions here – http://thepogg.com/nektan-bonus-system-report/.

bonus

NOUN

1. A sum of money added to a person’s wages as a reward for good performance:

1.1 British An extra dividend or issue paid to the shareholders of a company.

1.2 British A distribution of profits to holders of an insurance policy.

1.3 An extra and unexpected advantage

https://en.oxforddictionaries.com/definition/bonus

During a recent complaint situation we had reason to review the bonus program being used by the Nektan white label platform. A summary of this situation was that a player had made a £10 deposit and automatically received a 25% “bonus”. A complaint then ensued as the bonus came with a 4xbonus maximum win limit.

Technically the operator is within their rights to void any winnings more than £10 in this situation – by playing with the bonus the player has “accepted” the bonus and any terms associated with the bonus. However, review of this bonus has led us to conclude that the expression of the win limit is intentionally misleading, no player who understood the terms they were agreeing to would accept such a bonus and, most importantly, that these promotional offers do not fit any reasonable definition of the term “bonus”.

Intentionally misleading win limit

The maximum win term associated with bonus play at Nektan casinos are being listed as follows:

“The maximum conversion amount from bonus funds will be capped at 4X the bonus amount awarded. Bonus funds convert automatically once wagering is complete.”

This isn’t unusual across the market, but what is unusual is to see such an aggressively low win cap on less than 100% match bonuses. The specific situation that our complainant faced was a 25% bonus on a £10 deposit. So for an extra £2.50 the player was then restricted in such a way that they could not win more than £10.

In our opinion the win cap would be more clearly understood as 1xdeposit rather than 4xbonus. The use of the number 4 suggests the cap is higher than 1 would despite both reflecting the same amount.

As pointed out to Nektan, if a bonus of 1% was offered, would players gain a clearer understanding of the win cap if it was to be listed as 100xbonus or 1xdeposit. I’m confident that the vast majority of players would agree with us that 1xdeposit gives a more balanced picture.

This is a semantic issue at essence – the terms do literally describe the same things, even if one format is easier to understand and the currently used format could be viewed as the operator looking to take advantage of misunderstandings.

If players understood the terms they wouldn’t agree to the bonus

It should also be noted that Nektan bonuses restrict the player to using slots games to complete the wagering requirements. So when the player receives a bonus they are now in a situation where, for what can reasonably be described as a tiny and inconsequential addition to their account, they are locked into playing a high variance game (meaning they’ll likely lose everything or win big compared to their starting balance) and if they win the majority of that win will be voided. What player in their right mind would agree to this?

Further to this, these bonuses are being added to player accounts with no warnings. The player will receive no indication other than a change in their balance when they receive a bonus.

Again this is a semantic issue – it is the responsibility of the player to ensure that they understand the terms and conditions of any promotional offer they accept. “Acceptance” is a passive term, meaning that by starting to play while aware that there is a bonus within your balance, you have “accepted” its presence.

Bonuses that cannot reasonably be described as bonuses

The above issues may be semantic in nature, but this section certainly is not.

When we took a closer look at the specific bonus being offered what became immediately apparent was that the operator placed the player in a position where regardless of how they chose to play they were worse off with the bonus than without.

Looking at the bonus this player received – 25% on a £10 deposit with a £10 win cap, a maximum allowed bet of 50% of the bonus and a wagering requirement of 30xbonus (£75) – we simulated the impact of playing this bonus on a well-known slots game offered by Coin Falls casino (the operator in question) using the maximum and minimum allowed bet on the simulation tool available at Beating Bonuses (http://www.beatingbonuses.com/twotier_java.htm).

We used Microgaming’s Thunderstruck slots game. This game has a House Edge of 3.90%. This means that if a player was to wager £75 playing this game they would expect to lose 75×0.039 = £2.93.

This is one of the games offered at Nektan casinos and should also be reasonably representative of slots games in general (we will provide similar information on some other slots games in the Appendix). The one caveat we would add to this is that the newer games coming out of the Net Entertainment stable are leaning towards higher variance. This is likely to make conditions even worse for the player than represented below as it will create more bust outs balanced out by bigger wins that are likely to be voided.

Simulating the £75 game play but including the £2.50 bonus, £10 win cap and wagering at the maximum allowed bet of £1.25 (9 lines, 0.13/line) we get the following results:

*

The player is now expected to lose £7.03 – far more than they would be expected to lose playing without a bonus.

That’s the highest allowed bet. Let’s look at the lowest.

If we repeat this simulation using the minimum possible bet of £0.01/line (total bet £0.09/spin) we get the following results:

The player is expected to lose £2.64, slightly less than playing without a bonus. So the range of possible losses for players goes from £2.64 to £7.03 depending on the bet size used. £2.64 is very slightly less than the expected loss playing the same amount without a bonus but depends on the player placing £0.09 per spin (9 line with 1 coin of 1p). As such we repeated the test to see at what point increasing the stake resulted in an expected loss greater than the expected loss playing without a bonus. Below are the results for a wager of £0.02/line (£0.18/spin):

As can be seen, even moving the stake up a single penny results in a loss of £3.88, significantly higher than the expected loss of £2.93 playing without a bonus. So we can say that any player wagering more that £0.09/spin is being disadvantaged by this bonus.

We conducted a survey on the CasinoMeister forum (http://www.casinomeister.com/forums/slots-discussion/76882-what-your-average-bet-size.html and the results can be seen below:

At the very best we can say that less than 2% of respondents play in the bracket where they could benefit from this bonus.

Accepting this bonus has created a situation where, because so much of any win will be voided, they are mathematically expected to lose more than playing without a bonus. Having repeated this test on two other games (details in the Appendix), the results were even worse for the player. This player has been disadvantaged by this “bonus”.

Conclusion

Fundamentally the term “bonus” has a positive implication and by definition has to provide an advantage. This player unquestionably has been disadvantage when they were given this “bonus”.

A wider study of a range of bonuses with these rules is covered within the Appendix. A quick summary of the findings of this study is as follows:

For 25% match bonuses:

– At a deposit of £10 almost all players will be disadvantaged by this bonus regardless of game selection or bet size.

– At a deposit of £50 over 60% of players will be disadvantaged. Only those players betting £0.50/spin or less benefit from this bonus.

– At a deposit of £100 almost 40% of players will be disadvantaged. Only those players betting £0.80/spin or less will gain any advantage from this bonus.

For 50% match bonuses:

– At a deposit of £10 almost 40% of players will be disadvantaged. Only those players betting £0.80/spin or less will gain any advantage from this bonus.

– At a deposit of £50 only players betting more than £4.50/spin will be disadvantaged.

– At a deposit of £100 the vast majority of players gain an advantage from this bonus.

While the figures above are specific to the game Thunderstruck, testing on other games (also covered in the Appendix) demonstrates that players being disadvantaged by these bonuses is not unique to Thunderstruck. In fact, the majority of players are being disadvantaged when they are given a 25%, as are a significant proportion of players receiving a 50% on a small deposit.

These smaller percentage bonuses are actively costing players money. They provide no advantage and act as a tax on players. In our opinion these activities cannot honestly or accurately be described as a bonus. That they’re being added automatically to player accounts without notification or alert and that the terms are giving a misleading representation of the win limit only adds insult to injury.

Win limit terms are necessary with some bonuses to reduce the incentive for those players skilled enough to establish and maintain an edge over the casino through the use of promotions. In this instance however the aggressively low win limit is being implemented to limit variance, or in other words, to ensure that the Nektan clients don’t have to pay out significant wins after giving a player a bonus.

This is a short sighted and greedy policy. The attraction of gambling is that you have the chance to win an exciting amount compared to the balance you’re staking (at least as far as slots games are concerned). This policy looks to remove that possibility. It provides operators an incentive to add as many bonuses as possible, knowing that where a bonus is in play there’s no possibility of having to pay a big win. When bonuses cross the line into disadvantaging player there is an even stronger financial incentive. However the long term implications of this type of policy will be to frustrate and disappoint players resulting in reduced retention levels. They trade long term player loyalty for the short term gain of highly increased chances of smaller profits.

As a consequence of these policies we will be moving all operators running on the Nektan platform to Not Recommended status. Having reviewed the below sites, the vast majority are template copies of each other and are using identical promotional materials. Players should avoid all of the following operators:

7Jackpots
Bet Reels
CashReels
Casino.uk.com
CasinoMobile.co.uk
Chomp
CityAM
Cloud
Coin Falls
EuroViking
Fika
Fonesino
Fortune Frenzy
Fruity Vegas
Go Win
GrandDuke
GreenDog
Handy Luck
Jackpot Jones
Jackpot Mobile
Jackpot Strike
Kerching
LoveSpins
LuckyTap
Mayfair
MobiReels
Monster
mRiches
Neon Jackpot
Northern Lights
PlayUK
Pocket Vegas
Pots of Luck
Pyramid’s Fortune
ReelVegas
Sapphire Rooms
Slot Fruity
SlotMore
SmartMobile
Spin Princess
StarShine
The Sun Play
TinySlots
Touch Lucky
Touch Mobile
VegaZino
Whirlwind Slots
WinZino
XSpins
Yo

We will also be forwarding this article to the UKGC for further review.

Appendix

It was pointed out to us by Nektan that this bonus was unusually small so we’re going to look at some other situation.

25% on a £50 deposit

If we look at a deposit of £50 with a bonus of £12.50, a win cap of £50, a maximum bet of £6.75 and a wagering requirement of £375 we see the following results (expected loss without a bonus is £14.62):

Bet size £0.69/line (total bet £6.21/spin):

The player is expected to lose £35.55. A significantly higher expected loss than playing without a bonus.

Bet size £0.01/line (total bet £0.09/spin):

The player is expected to lose £4.07. The expected loss of this play is now less than playing without a bonus. As such we looked to establish the bet where this bonus would be a benefit rather than detriment to the player:

A bet of £0.06/line (total bet £0.54/spin) gives the following results:

An expected loss of £14.76, slightly worse than the no bonus expected loss of £14.62. As such we can say that for any player betting more than £0.54 per spin, this bonus actually costs the player more than playing without a bonus. Going by our CasinoMeister survey, approximately 64% of players surveyed would have been disadvantaged by this bonus.

25% on a £100 deposit

If we look at a deposit of £100 with a bonus of £25, a win cap of £100, a maximum bet of £12.50 and a wagering requirement of £750 we see the following results (expected loss without a bonus is £29.25):

Bet size £1.38/line (total bet £12.42/spin):

The player is expected to lose £71.14. A significantly higher expected loss than playing without a bonus.

Bet size £0.01/line (total bet £0.09/spin):

The player is expected to lose £5.37. The expected loss of this play is now less than playing without a bonus. As such we looked to establish the bet where this bonus would be a benefit rather than detriment to the player:

A bet of £0.12/line (total bet £1.08/spin) gives the following results:

An expected loss of £29.50, slightly worse than the no bonus expected loss of £29.25. As such we can say that for any player betting more than £1.08 per spin, this bonus actually costs the player more than playing without a bonus. Going by our CasinoMeister survey, approximately 40% of players surveyed would have been disadvantaged by this bonus.

50% on a £10 deposit

Now let’s see what happens when we improve the bonus to a 50% bonus. Firstly on a £10 deposit with a wagering requirement of £150 (expected loss without bonus 150×0.039 = £5.85).

Bet size £0.27/line (total bet £2.43):

An expected loss of £7.46. More than playing without a bonus.

Bet size £0.01/line (total bet £0.09/spin):

The expected loss is £1.74. As before this is less than the expected loss without a bonus so again we looked for the wager size where playing without a bonus would be more beneficial to the player.

At a wager of £0.09/line (total bet £0.81/spin) we get the following results:

An expected loss of £5.85 – exactly the same as playing without a bonus. So the player cannot bet more than £0.81/spin without being disadvantaged by a 50% bonus of £5. This means that – by the CasinoMeister poll – at least 40% of players are going to be worse off than playing without a bonus (27 respondents selected the 0.51-1.00 category – For the purposes of this exercise ALL of these respondents have been consider to be betting £0.81/spin or less).

50% on a £50 deposit

Now we have a £50 deposit, £25 bonus, a wagering requirement of 25×30 = 750, a maximum win of £100 and an expected loss of 750×0.039 = £29.25 if you played the wagering requirement without a bonus.

Bet size £1.38/line (total bet £12.42/spin):

So we can see an expected loss of £37.40. More than playing without a bonus.

Bet size £0.01/line (total bet £0.09/spin):

So at this point we can see that the player is only expected to lose £2.92 which is far better than play without a bonus. But let us again look to find the point where an increase in bet size makes this a bad proposition for the player.

At a wager of £0.50/line (total bet £4.50/spin) we get the following results:

The expected loss is £30.04, only slightly more than the £29.25 you are expected to lose playing the same amount without a bonus. Again referring to the CasinoMeister poll, 9 respondents stated that they bet more than £5/spin. This would be the only group disadvantaged by this bonus, representing approximately 8% of player.

50% on a £100 deposit

Now we have a £100 deposit, £50 bonus, a wagering requirement of 50×30 = 1500, a maximum win of £200 and an expected loss of 1500×0.039 = £58.50 if you played the wagering requirement without a bonus.

Bet size £2.77/line (total bet £24.93/spin):

So we can see an expected loss of £74.76, more than playing without a bonus.

Bet size £0.01:

So at this point we can see that the player is only expected to lose £6.94 which is far better than play without a bonus. But let us again look to find the point where an increase in bet size makes this a bad proposition for the player.

At a wager of £0.90/line (total bet £8.10/spin) we get the following results:

The expected loss is £58.53, only slightly more than the £58.50 you are expected to lose playing the same amount without a bonus. By the CasinoMeister poll it’s clear that the vast majority of players are gaining an advantage from this bonus.

75% on a £10 deposit

This time round we have a £10 deposit with a £7.50 bonus, a wagering requirement of 225 and an expected loss of 225×0.039 = £8.78 if you played the wagering requirement without a bonus.

Bet size £0.41/line (total bet £3.69/spin):

So the expected loss is £7.53, less than playing without a bonus.

Bet size £0.01/line (total bet £0.09/spin):

So the expected loss is £0.60, better than play without a bonus.

As such we can say that at 75% all bonuses are beneficial for the player.

Same test on different slots games

To demonstrate that these bonuses disadvantaging players is not unique to the game Thunderstruck, we repeated the initial testing again on the Loaded and Isis games. While these games are not specifically offered by Nektan casinos, they will serve to demonstrate the similar results are to be expected on games other than Thunderstruck. Loaded has a House Edge of 3.71% and Isis has a House Edge of 4.78%.

Loaded 25% on a £10 deposit

A deposit of £10 with a bonus of £2.50, a win cap of £10, a maximum bet of £1.25 and a wagering requirement of £75 we see the following results (expected loss without a bonus is 75×0.0371 = £2.78):

Bet size 0.12/line (total bet £1.20/spin):

The player is expected to lose £7.93, more than playing without a bonus.

Bet size 0.01/line (total bet £0.10/spin):

The player is expected to lose £3.58. Again this is more than play without a bonus. As such we can determine that this bonus disadvantages ALL players who take it.

Loaded 25% on a £100 deposit

A deposit of £100 with a bonus of £25, a win cap of £100, a maximum bet of £12.50 and a wagering requirement of £750 we see the following results (expected loss without a bonus is 750×0.0371 = £27.83):

Bet size 0.12/line (total bet £1.20/spin):

The player is expected to lose £39.51, more than playing without a bonus.

Bet size 0.01/line (total bet £0.10/spin):

The player is expected to lose £5.16. The expected loss of this play is now less than playing without a bonus.

Bet size £0.07/line (total bet £0.70/spin) gives the following results:

An expected loss of £28.84, slightly worse than the no bonus expected loss of £27.83. As such we can say that for any player betting more than £0.70 per spin, this bonus actually costs the player more than playing without a bonus meaning that at least 40% of all players will be disadvantaged by this bonus.

Isis 25% on a £10 deposit

A deposit of £10 with a bonus of £2.50, a win cap of £10, a maximum bet of £1.25 and a wagering requirement of £75 we see the following results (expected loss without a bonus is 75×0.0478 = £3.59):

Bet size £0.05/line (total bet £1.25/spin):

The player is expected to lose £8.15, more than playing without a bonus.

Bet size £0.01/line (total bet £0.25/spin):

The player is expected to lose £3.58. This is £0.01 lower than playing without a bonus. We can conclude that it doesn’t matter what stake the player plays, if they’re betting more than £0.01/line they’re disadvantaged by this bonus and even if they play at £0.01/line, they’ve gained no advantage from this “bonus”.

Isis 25% on a £100 deposit

A deposit of £100 with a bonus of £25, a win cap of £100, a maximum bet of £12.50 and a wagering requirement of £750 we see the following results (expected loss without a bonus is 750×0.0478 = £35.85):

Bet size £0.50/line (total bet £12.50/spin):

The player is expected to lose £81.46, far more than playing without a bonus.

Bet size £0.01/line (total bet £0.25/spin):

The player is expected to lose £23.80. The expected loss of this play is now less than playing without a bonus.

Bet size £0.02/line (total bet £0.50/spin):

An expected loss of £34.15, slightly better than the no bonus expected loss of £35.85. At 0.03/spin the result is significantly worse than £35.85. As such we can say that for any player betting more than £0.50 per spin this bonus actually costs the player more than playing without a bonus. Going by the CasinoMeister survey, almost 65% of players will be disadvantaged by this bonus (i.e. better off playing without a bonus).

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