The Regulated Poker Affiliate Dilemma

John Mehaffey March 31, 2014

Online poker is now regulated in three states.  Affiliate opportunities are available in Nevada and New Jersey.  The leader in affiliate programs so far is New Jersey.

Becoming a regulated poker affiliate is not as easy as becoming one for an offshore site.  Unregulated sites have a potential affiliate complete a web form.  Some have a vetting process, while most will immediately give affiliates links that will track players.

Regulated affiliates must go through an application process.  New Jersey affiliates must apply for a vendor’s license before being allowed to market sites.  Most operators help with this process.  Nevada also has a licensing requirement for affiliates.

Affiliates have been a controversial topic for the entire existence of online poker.  Sites often recognize the need to have websites help refer traffic for a fee.  This is common in online marketing as operators need neutral content creators to help draw niche traffic.  An affiliate receives a percentage of the revenue a player produces or a one-time commission when a player meets a certain threshold often tied to a deposit and rake amount.

This model has been abused in the online poker industry over the years, especially on networks.  Some affiliates will play network skins against each other.  This is done when an affiliate threatens to move players to a different skin if commission is not increased.  Another activity some affiliates participate in is under-the-table or “illegal” rakeback.  This is when an affiliate incentivizes players through a kickback based on rake.  This action may even be condoned by a room on a network, while explicitly disallowed by a network or affiliate agreement.

Poaching is a problem at some international networks.  An affiliate might approach a player that is known to put in a high volume of play at a skin and offer him a deal at a different site on the same network.  An affiliate might offer these types of players under-the-table rakeback that violates network rules, sometimes with the blessing of the skins.  This hurts the network in several ways.

Skins that acquire players through legitimate means are the ones bringing recreational players into the system.  These operators that have players poached will have less marketing money and incentive to draw fresh depositing players to the network.  Once these types of players are gone from the system, the sharks move on and the network declines due to a lack of liquidity and game quality.

U.S. Can Act to Prevent Affiliate Issues

The U.S. is in a unique situation.  These types of affiliates can be weeded out from the start.  The first action is the licensing process.  This requires potential partners to disclose past relationships, actions and corporate information.  This will force affiliates to follow the rules or lose licensing and all future earnings.

How to Prevent Affiliate Abuse

One of the easiest ways to prevent rogue affiliates from gaming the system is to exclude ones with a history of doing so.  This may be difficult.  The next best thing would be to prevent affiliates from processing any payments.  This is already not allowed and should be easy to enforce if affiliates are subject to auditing.

One way to prevent affiliates from poaching players is to mandate that a player belongs to a skin and affiliate for a set period of time after last activity.  In other words, a player that has generated rake in the past 90 or 180 days cannot move to a different skin.  This would be easy to enforce because players must provide a Social Security Number and verified deposit method.

This rule may be too harsh in the mind of customers.  An alternative would be to allow an unsatisfied player to move to another skin while still giving credit to the skin and affiliate from the original site for a predetermined period of time.

One part of the application process could be where an affiliate must prove the ability to generate players through legitimate marketing.  This may be done by regulators initiating a review of all websites owned by a company to ensure that the sites actually generate traffic and do not have a history of copyright infringement.

Regulators must also find a good middle ground on the amount of paperwork needed to complete the affiliate licensing process.  A setup that is too expensive or time consuming will alienate potential marketers that can help spread the business.  It may also drive the activity underground, something the licensing process hopes to avoid.

Some affiliates are angry that regulated poker is not as easy to enter as its offshore counterpart.  The same holds true for operators and they have found a way to get through the process.  In the end, licensing will weed out the undesirables that have given the affiliate business a bad name.  This will help legitimate affiliates build profitable longterm businesses.

 

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