Bonus Cost
Bonus cost is the monetary value of the bonuses, free bets, and free spins an operator grants to players, counted as a cost that is subtracted from Gross Gaming Revenue (GGR) to arrive at Net Gaming Revenue (NGR).
Definition
Bonus cost is the value of the promotional credits an operator gives to players — deposit-match bonuses, free bets, free spins, cashback, and similar incentives — recognised as an expense that reduces revenue. In the standard revenue chain it is typically the main item deducted from Gross Gaming Revenue (GGR) on the way to Net Gaming Revenue (NGR), alongside gaming taxes and payment/provider fees, so NGR = GGR − (bonuses + taxes + fees). There is no single convention for what the figure captures: some operators book the gross face value of every bonus granted, while others use a "realised" or net cost that counts only bonuses actually redeemed and converted to withdrawable cash, excluding amounts that expire or are forfeited. For sports free bets the economic cost also differs from face value, because winning "stake-not-returned" free bets pay only the net winnings, not the notional stake.
Worked example
Over one month a casino brand records £1,000,000 in total stakes on 96%-RTP games, so GGR = £1,000,000 − £960,000 = £40,000 (the 4% house edge on turnover). During the same month it grants £8,000 in deposit-match bonus credits and free spins; that £8,000 is the bonus cost. If it is the only deduction, NGR = £40,000 − £8,000 = £32,000, and bonus cost as a share of GGR is 8,000 ÷ 40,000 = 20% — a promotional-efficiency ratio operators watch closely. The figure shifts with the accounting convention: if only £6,000 of the £8,000 granted is actually redeemed and the rest expires unwagered, an operator using a "realised" bonus-cost definition would deduct £6,000, giving NGR = £34,000. A sportsbook shows the face-value gap: a £10 stake-not-returned free bet placed at odds of 2.00 pays £10 in winnings if it lands (not £20), so its real cost to the book is the expected payout, not the £10 headline value.
Why it matters
For learners, bonus cost makes clear that "free" bonuses are a real, budgeted marketing expense to the operator rather than free money — reinforcing that promotions are structured entertainment offers whose expected value still favours the house, not a route to income. For professionals, it is the primary lever between GGR and NGR and the input to promotional-ROI analysis (bonus-to-GGR ratio, blended cost of acquisition), so getting its definition and controls right directly affects reported profitability. Because NGR is the standard base for affiliate and B2B revenue-share deals, the exact scope of "bonus cost" — what is included and whether it is gross or realised — can materially change the money owed under a contract, and in some jurisdictions it also affects the taxable revenue base.
Related
Note: "Bonus cost" is not a standardised figure. Whether it means the gross value of all bonuses granted or a net/"realised" cost (only bonuses redeemed and converted, net of expired or forfeited amounts) varies by operator, accounting policy, and revenue-share contract — always confirm which definition a given report or agreement uses. The items included (match bonuses, free bets, free spins, cashback, loyalty credits) and whether bonus cost is deducted before or after tax also differ. Tax treatment is jurisdiction-specific: some regimes let bonuses reduce the taxable GGR base while others tax free bets and free plays (for example, the UK brought free plays/free bets into the Remote Gaming Duty base from August 2017) — verify locally. Free-bet "stake-not-returned" mechanics mean face value overstates the true economic cost. The worked numbers are illustrative and internally consistent, not drawn from any specific operator.