How Will Affiliates Fit into the US Online Gambling Landscape?

April 3, 2013
How Will Affiliates Fit into the US Online Gambling Landscape?

Many online gambling affiliates are positioning themselves to enter the US online gambling landscape.  The US has become a virtually untapped market due to the UIGEA and Black Friday.  Some are anticipating a new gold rush in the US.  There are some issues to consider.

There is one major difference between what the US online gambling market will look like and what the land grab of ten years ago was.  That difference is the fact that existing brick and mortar gaming companies look to be the leaders in the US industry.  This means that companies that already have large player databases will be operating online gambling businesses.  This is a big change from when internet startups approached experienced marketers for their players when online poker first boomed.

Las Vegas casino companies and other regional operators will still need an internet presence.  Affiliates can still fill the void that US casino companies will be unable to fill.  It simply appears that the new US online gambling business will not fit the same mold that the past business does.

Brick and mortar casinos may not understand their new internet business in ways that affiliates with years of experience may.  Some traditional casino companies are better at social media and internet marketing than others.  One thing that is lacking in most cases is the content business.

There are few potential online poker companies that have created an internet presence for their future business.  This could be troublesome for these companies.  Many affiliates and other speculators are already creating holding pages that rank for poker room terms related to major casino companies.  Few of the major casino brands have created online poker room or casinos pages.  This is where affiliates will succeed.

While casinos have failed to plan ahead, affiliates have.  Affiliates can offer websites that already rank for US online poker terms, state poker and even brands that are yet to be launched.

Nevada affiliates will require licensing if they share revenue with a licensed online poker room.  The same appears to be true in other states that have considered or passed online gambling regulations.

One future online poker operator currently offers an affiliate program for its hotels.  MGM Resorts allows website owners to promote their properties though this affiliate program.  The commission rate is 3% of the hotel sale.  Revenue from amenities or gambling is not included.  Online gambling affiliates are accustomed to receiving 25-50% of revenue generated.  Commissions may be higher but this may be a wakeup call that US online poker is not going to be as profitable as it is in other countries using the revenue share model.

Ways Around Affiliate Licensing

Regulated online poker rooms may move to a CPA model.  This would mean that an affiliate would be paid for every player sent to the online poker room.  While debatable, terms may have to exclude a player’s activity and rely solely on a player signing up or maybe making a deposit.  Casinos already use this type of product with junket operators that bring them players in Nevada.  The junket operators must register with the Nevada Gaming Control Board and have rights that affiliates that will advertise online poker will not have or want.  This could mean the difference between needing a license or not.

One way around this is to sell banner space through a media buy agreement.  This is done in traditional advertising from radio to television and is also common for more mainstream websites.  This would also not require any type of licensing from gaming commissions.

Current Top Online Poker Affiliate Programs

The online poker affiliate business is already changing.  PokerStars offers a watered down affiliate program with massive deductions from their revenue share agreements.  Full Tilt Poker dropped their affiliate program at relaunch.  Party Poker and bwin have shown contempt for their affiliate partners by changing terms retroactively.  888 offers a reputable affiliate program, but only pays CPA.  Revenue share is not available at 888 as it was stopped years ago.

Lotteries Pay Affiliate Commissions to Vendors

State lotteries are the wild card here.  Lotteries typically pay their affiliates 5% of the ticket sales.  Most lottery affiliates are brick and mortar retailers that sell tickets.  State lotteries have little experience with affiliate programs outside of retailers but that may change if they partner with experienced online poker operators, which is where Delaware is headed.

The new US regulated market will not be the gold mine that online poker has been in the past.  The big advantage though will be that online poker rooms will be starting out with very few active players and a lot of competition.  Marketing budgets will likely be large and publishers that produce unique content that ranks well for regulated online poker searches.  Those sites will be valuable to US online gaming companies.

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