IN-DEPTH 4 August 2016
A taxing problem is on the horizon
Affiliates have got 12 months to prepare for the upcoming changes, but they need to start today says Tom Galanis
By Tom Galanis
When former Chancellor George Osborne delivered his budget in March, the most striking element for online gambling operators was the extension of general betting duty to all free or discounted bets, coming in to force from 1 August next year.
It is yet another straight jab to online betting affiliates, but perhaps not the devastating uppercut that a tax hike on online advertising might have been.
What the next year or so offers is time for affiliates to reduce their collective dependence on the free bet model, which has for so long provided the modus operandum for many a site (and I’m including some operators in that). Affiliates will need to rethink the way they look to differentiate the brands they promote to provide qualifiable reviews – and it will be the operator’s duty to work on delivering this long in advance of next summer.
However, if the experience affiliates had with regards to the information (or lack thereof) on how the point-of-consumption tax would be reflected in their affiliate commission calculations is anything to go by, the precedent would seem to indicate that operators are unlikely to have their brand strategy revised and enacted much beyond August next year, and less likely still that they’d see fit to relay a change in direction to their affiliate “partners”.
As such, the onus will be on affiliates to invigorate the path for operators. In a lesson as to how this can be done, we should look particularly at the example of the success of the accumulator affiliates, who have galvanised the jackpot-chasing lad culture on social media to become a money-spinning audience for bookmakers, many of whom have altered their entire marketing strategies to engage this high margin sector. Not only did they drive product innovation, but they also made betting interesting and accessible to a new generation of punters.
Whilst still a highly viable angle for affiliates to adopt, it would appear that the type of offers set up to re-engage the customers the likes of FootyAccumulators drive are now on the scale-back. Coral – arguably the bookmaker most heavily focused on acquiring from the lad segment – has recently clamped down on offer-driven account holders, brutally denying them access to the kind of enhanced prices that are set up to get a relatively disloyal audience to redeposit and share the offer amongst their network. Coral are, of course, faced with the prospect of tightening their belts thanks to the likely fire sale of hundreds of their betting shops in order to see their merger with Ladbrokes approved, but looking to cut costs by attacking this high margin part of their database just goes to show the pain that the new tax on free play turnover will have on both operators and affiliates – not to mention their players.
As such, affiliates across all verticals still wishing to attack the world’s largest regulated gaming market will need to go further than accumulator affiliates did. Players will continue to reference affiliate portals for information, but the ultimate crux of their desire to take the extra steps of researching and comparing bookmakers, casinos, poker rooms and bingo operators is to find the very best in value. For too long, the industry has focused its attention on delivering supposed “value” in the impressive scale of matched deposit bonuses along with free spins, multiple free bets and no deposit bonus/free play offers. Poker players and sharp punters also found the natural (albeit cannabalistic) value in rakeback and best odds guaranteed respectively.
Now this must change.
Unquestionably, the current landscape of a few dominant software suppliers in our industry, and the rigidity necessary for aggregator platforms such as Everymatrix to deliver their product offering, does not provide a natural breeding ground for operators adopting this technology to spawn innovative differentiators that can survive the winter of regulation and live through to an eternal spring where they can flourish, giving ongoing value and joy to a database of customers that keeps coming back for more without the allure of a “Free £XXX” in the shop window. The next bet365 is not just around the corner. So how can affiliates take the proactive steps needed to prod their operator “partners” in to doing something smart? Forgive me, but to elaborate concisely I’m going to morph in to Baz Luhrmann for a moment.
Affiliates It’s your time to guide product marketers and brand managers in a certain direction. Give credence and column inches on your sites to clever start ups in the industry.
Casino affiliates Offer smart game developers whose titles may yet to be picked up by operators the chance to deliver free play versions through your sites. Rather than drive your players to games you know they love, give them a flavour of what is to come and deliver the results and the feedback to your affiliate managers.
Poker affiliates Give a serious nod to concepts like the Global Poker League.
Sports-betting affiliates Don’t just laugh off BetStars’ Spin&Bet.
Take eSports seriously It’s massive business. Item betting/trading in Counter- Strike alone carries an intrinsic turnover value of over $5 billion globally (that’s 2x the size of the much vaunted daily fantasy sports industry).
Lobby Ensure you have a collective voice with the Gambling Commission in the UK and regulators in key territories. This will help to avoid being blindsided by commercial fireballs that an ill-thought tax bill or advertising ruling.
Bingo affiliates Sell.
Tom Galanis is an i-gaming marketing consultant. Over the past 11 years, Tom has led the development and management of 24 affiliate programs for companies as illustrious as bet365, the Gala Coral Group and the Rank Group. Tom currently provides master affiliate, marketing and business development consultancy services to companies operating in both the i-gaming and social gaming space, notably Playstudios, the company behind the renowned myVEGAS social casino titles. He was inducted in to Global Gaming Business’ 40 Under 40 class in 2015