Many online casinos (I'm in Europe) give away free bets (mostly restricted to new players) or offer poker freerolls tourneys (to all players), where you can join for free or for 1c (to guarantee that players deposit some money) and earn some bucks. There are also other complimentary bonuses, which, at a perfunctory glance, imply an expected loss for the casino.

Why is giving away free stuff profitable to casinos? Couldn't players just restrict themselves to these offer (which definitively have a positive expectation for the player) and pass on the other games (that have a positive expectation for the casino)?

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    If you expect gamblers to behave rationally, you fundamentally misunderstand gambling :) – BrianH Jul 22 at 17:32

I think ultimately this is a marketing tactic. Some players may well be disciplined enough to just use the free stuff and then stop, but the casinos know that many other players won't be, and once they've started playing, will continue to play (and pay to do so).

I've also noticed that in some online casino advertisements, there's a restriction that any winnings from free bets can't be withdrawn until they have been used to place a minimum number of additional bets, reducing the chance that the casino actually has to pay out.

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    To summarize: it's bait. with the expectation that most people who take up the offer won't be strong willed enough to walk away. – RonJohn Jul 22 at 13:23

It's called a loss leader. They give away a few free bets to entice a portion of those that take up the offer to stay and spend more. If enough people end up spending money that never would have visited the site otherwise, then it's a winning proposition for the casino.

Couldn't players just restrict themselves to these offer ... and pass on the other games ...?

Absolutely. And that individual player would win. But the casino doesn't need to beat every player. They just need to beat enough players badly enough that they come out ahead overall.

To continue the casino theme, it's like playing blackjack. You can't expect to win every blackjack hand. But if you have a good strategy, you can play enough winning hands that you come out ahead overall.

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    They don't even always win, though. You need to sign up for the free money and pass on all other games and stop playing when you have unlocked the bonus and get reasonably lucky playing the promotional game. If you have bad luck you'll still lose the free money. So even the most disciplined people will lose some of the time. – xyious Jul 22 at 16:41
  • @xyious Right, that's my point. Neither side always wins. But the casino most likely comes out ahead overall, either by winning more than it loses or by winning big when it does win. – D Stanley Jul 22 at 18:07
  • That is actually not a loss leader. As per your cited article, a loss leader is when a product is priced such that it no longer yields profits with the hope that the purchase of other products or services will make up for it. One notable example was, I believe, one of the playstation consoles where the console was sold at a loss but since PS owners tend to also purchase more games, they would recoup those losses and then some by enticing customers to purchase a PS instead of another console. – ApplePie Jul 22 at 23:53
  • @ApplePie How is that different? The bets are given away ("sold" at a loss) with the hope that the better will stay and place more bets, making up for the lost revenue. – D Stanley Jul 23 at 2:29
  • @DStanley a loss leader involve different products. This instance here is the equivalent of a sample or a voucher for a free trial. – ApplePie Jul 24 at 1:45

Casinos knows that on average, every person that walks into their building (or plays on their online site) has a positive expected value (EV). Therefore, they want to maximize the number of people that walk into their building, or use their online site. If for example, on average, a person walking into their casino is worth $25, then they can give away up to that amount to get people to walk in the door.

The concept is no different than restaurants or stores giving away free food, merchandise, or coupons to get people to visit their location. Of course some people will just take the free stuff and leave, but most people don't because they've already invested the time to travel there in the first place. Note that with online freebies, they are much more likely to offer a match rather than pure free money with no strings attached. That's because the time investment for someone to visit their online site is much lower than attending in person.

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