They can be either. It's highly recommended that you check out the terms and conditions of the free spin offer. That way you'll know what you're going to end up with. Basically, either of these is possible:
The winnings are paid as bonus funds. As bonus funds, the winnings are subject to playthrough requirements before they can be withdrawn.
The winnings are paid in cash. Cash funds do not need to be wagered and are instantly withdrawable.
Free spins, like all casino offers, always have terms and conditions. You can read more about free spins T&C's here.