IN THEIR OWN WORDS: THE FUTURE FOR AFFILIATES


Jeremy Enke, founder of Poker Affiliate Listings, leads the debate on future forecasts for a regulated US market from the affiliate perspective.


Jeremy
There has never been such uncertainty amongst gambling affiliates and operators as there is now - after the US Department of Justice shut down and seized the domains of the world’s top four online poker companies. There is a great deal of speculation about what the landscape of online gambling will look like in a highly regulated and technologically advancing iGaming industry.

This uncertainty is especially concerning to both poker and casino affiliates trying to plan a long-term strategy moving into the New Year. Many of these affiliates have spent years building their affiliate businesses and rely on the revenues they earn through the various poker and casino affiliate programs in question.

There is no question that US regulation would undoubtedly legitimise the online gambling industry. However, the potential impact on affiliates remains unknown. Most affiliates believe that in a regulated environment, US land-based casinos will play a much more significant role.

In fact, several US casinos have already begun positioning themselves for a future regulated online gambling market and, more specifically, online poker.

For example, South Point Casino has launched an online poker room, however, only for play-money at this point. Likewise, we are starting to see more alliances between the powerhouses in the online gambling space and the larger land- based casino companies. Recently, casino operators MGM Resorts International and Boyd Gaming also unveiled a plan to partner with online gaming company bwin. party (Digital Entertainment).

With the inevitable emergence of bricks and mortar casinos entering the online gaming space, there is no doubt that the role affiliates play in the industry will be significantly changing. Unlike many start¬up online brands in the past, these newly regulated online gambling destinations backed by the world largest casino operators will have powerful marketing departments supporting them. Not to mention, most will have an existing robust customer database to market to both online and offline.

With that said, there will always be a need for affiliate marketers. Nevertheless, most affiliates agree that the changing landscape and regulation will more than likely result in lower commission rates.

Personally, I don’t think it is conceivable that an online poker room owned by MGM, for example, would allow poker affiliates to offer rakeback. Instead, you will probably see a greater emphasis from the rooms themselves on VIP programmes and incentives to players.

“I don’t think it is conceivable that an online poker room owned by MGM, for example, would allow poker affiliates to offer rakeback.”


You can also expect a more traditional and retail approach from the new breed of gambling brands that are entering the online space. Similar to my thoughts on rakeback, I don’t think the prevalence of revenue sharing models will be popular amongst regulated online gambling sites. Instead, affiliates will more than likely be compensated through CPA models, and at a lower rate than gambling affiliates have been accustomed to in the past. The good news, however, is that in a newly regulated market, the amount of potential new players will greatly increase. The trust and accountability that has been lacking with respect to online gambling in the US will now become a cornerstone for any successful gambling operation.

Although, without knowing exactly what will transpire in the US market with respect to regulation in the future, all of this is pure speculation. For several years, affiliates have worked very closely with the online gambling operators. This has given affiliates a unique insight not only into how the industry works, but also what value individual operators place on their affiliate programs.

So we reached out to several successful gambling affiliates and got their perspectives on the likely role for affiliate marketers in a highly regulated and technologically advanced iGaming industry of the future. Here is what they had to say:

Kurt
“I don’t believe that this will be the death of the poker affiliate but there will be a severe adverse effect on our income. There might be a small boost at the beginning while Caesars, Wynn and MGM pretend to be competition for each other. After all the dust clears and Caesars and Wynn have their complete online and bricks and mortar casino monopoly, you will see a huge cut back in affiliate departments comparable to, but worse than when Full Tilt Poker started all its fee taking and 60 day policy, etc.

“Affiliates will be subject to income like Amazon associates and will, essentially, be working for less than minimum wage. Unrelated to Caesars/Wynn, Google will continue to pound us with algorithm changes that sniff out link sales and banner sales. Basically, for affiliates, it’s going to be like ‘survivor’ episodes where unless you bring something to the table (something that makes them dependent on you), you will be voted off the island, so to speak. I suspect that data mining sites will be shot down because IGT has developed sophisticated bots that will probably be operating on the monopoly sites. I also suspect that the taxes taken from online poker will not help the American people, but rather be used for more control measures.

Next, we spoke with a casino affiliate who wished to remain anonymous, but has been successfully promoting online casinos as an affiliate since 2004.

“The online gambling industry is long overdue for legislation in the United States. I believe online poker will be the first form of online gambling to be regulated and will be followed shortly thereafter by casino and possibly sports (betting). Las Vegas will be heavily involved in any legislation and will be given the golden key to the online markets before the existing offshore operators.

“Online casinos will still heavily rely on affiliates to drive new players and traffic. Bricks and mortar casinos will be able to significantly increase their revenues by opening up an entirely new gaming channel in the online world. With the incredible amount of competition, these casinos will hopefully be competing for the super affiliates’ traffic and be willing to pay accordingly.”

Next up, we spoke with a prominent sportsbetting affiliate to get his perspective on what US regulation would mean to the overall sportsbetting affiliate market as well as his individual business.

Kev
“US regulation of online gambling isn’t likely to affect sportsbetting affiliates. Most of the existing sportsbooks that service US action are based out of Costa Rica. I don’t think any would have a legitimate chance of receiving a US licence. My guess is that since sportsbetting is somewhat more taboo than online poker and casino gambling, we may not ever see ‘legal’ online sportsbooks.

“As a sportsbetting affiliate, I wouldn’t expect my business to drastically change if the US does decide to regulate online gambling. I don’t think anyone expects that sportsbetting will be included in any US regulation. If, somehow, the land-based sportsbooks were to be allowed to take wagers online in the future, I don't foresee them working with affiliates at all.”

Other quotes from the various affiliate forums are as follows:

Mr-AJ
“I think it’s all about competition. With two or three rooms, affiliates won’t play a big role. But if there are ten or more of them and all want to become the leading brand they better work with the largest affiliates and pay at least decent CPAs (I doubt revenue share will survive then).”

PTP
"It’s not just a matter of competition, etc. I feel very confident that regulation will make it very difficult for rooms to have open affiliate programs because their licences will restrict it. I also believe it will limit player tracking substantially.

“You don’t have to look any further than Stars and FTP to realise that once a online operator has a strong brand, their need for affiliates nearly vanishes (and their rates reflect that). Everyone licensed in the US will already have that brand. Not only that, they have decades of experience in direct player marketing and a customer list light years long and in at least one case, the top-ranking poker content property on the web.

“If licensing somehow ends up being very loose and allows competition, then it might be a different story, but I still think all the money that comes in will go to producing TV shows and their own- premium content properties. Some of the top-tier sites, like 2p2 and PN, could get paid placement advertising.”

Summary

As you can see, there are mixed opinions amongst the affiliate community of exactly what a regulated US landscape would look like. The general consensus amongst gambling affiliates is that there will still be a need for them in a regulated market. With that said, however, many successful affiliates have begun diversifying into new niches and markets.

Throughout the last ten years, the gambling affiliate market has grown to be one of the most competitive and lucrative affiliate markets in the world. This has produced a wealth of talented Internet marketers across the globe that specialise in online gambling traffic. While the role of affiliates in a regulated marketplace may change, the importance for operators tapping into this resource cannot be denied.

Only time will tell what the exact role of affiliates will be in a regulated US online gambling market. But when discussing future regulation in the US, three things are certain: politics will be involved, Las Vegas will be involved, and online gambling will continue to be one of the most lucrative Internet industries in the world.
 
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