Affiliate challenges

Sports betting is a high-margin industry with massive growth upside, in which the industry winners and losers are yet to be determined.
Vast amounts of both national and international funds are flowing into the industry to finance this newly legalised betting gold rush.

There have been plenty of discussions around the challenges faced by operators and the technology groups tasked with building the digital foundation for these companies.

However, what hasn’t been reported on are the challenges being faced by the media outlets working in partnership with operators, whose goal and business model is built by driving new business to the sportsbooks.

Regulations, Licensing And Staying Compliant

Legalised sports gambling for a large percentage of the world is a new concept and this includes almost the entire US market. When hundreds of billions of dollars is the projected market size of an industry, a business looking to break into that market would have to expect it to be highly regulated.

Government officials for each legalised state are trying to implement the necessary rules to ensure legal sports bettors have protection and the freedom of choice to pick the operator that works best for them. State officials also need to maximise their profit, while ensuring the sports betting market can continue to grow and prosper. Not every state gets it right on its very first attempt. Regulations are often changing and keeping up with state-by-state requirements and changes is difficult, and very often confusing.

In most states where sports gambling is now legal, an affiliate company like BestOdds.com is required to be licensed before it is able to drive end users to a sportsbook operator.

States will launch their licensing requirements, and then adapt or change those requirements as they learn more. These requirements vary drastically, with some states providing licensing documents that are 30 pages long and incredibly difficult to fill out, even for experienced legal professionals.

The bottom line is that the sports betting industry needs to be regulated; but creating regulations, especially in a newly legalised sector, is a very difficult challenge for any government.

New companies need to set aside the time, money and resources required to stay compliant.

Technology Labour Crunch

The affiliate business is certainly not immune to the tech labour crunch. Companies looking to break into the space must be very confident in their rolodex to hire the required short-term tech talent; and then they must be creative in how they hope to onboard future talent.

Internal training programs, and incentivising staff to onboard their talented friends and peers, are just a couple of ways some new affiliate companies are tackling the tech labour crunch.

The Reluctance Of Financial Institutions To Work With Affiliates

On paper, an affiliate company seems like a straightforward business that checks off many of the boxes financial institutions look for in companies to partner with.

Successful lead-generating companies are highly cash generative and operate in the same gambling space as sportsbook operators, but without any of the same risk. Affiliate company profits or lack thereof are not tied into the results of a sporting event. There is no danger of a heavily backed underdog winning and forcing an affiliate company to pay out large sums of money. That’s what sportsbooks do.

There is also no danger that an end user is using an affiliate relationship to launder money, which is a real concern for the financial institutions who work directly with operators.

Despite the required transparency and lack of risk when partnering with an affiliate company, banking institutions are currently in no rush to help fund these types of new businesses.

We don’t expect their reluctance to change anytime soon.

The Future Is Still Bright

Trying to build a long-term affiliate company in the sports gambling space has its definite challenges, but it should also be mentioned that it is not all doom and gloom.

It is a model that has proven successful many times over.

The now legalised sports betting space in North America is just in its infancy and certainly some of the challenges and hurdles faced today will clear up in time.

It should be noted that for those affiliate companies who are able to overcome the current industry challenges, meaningful profits can definitely be achieved.

There is no easy money in sports gambling or in life, but that doesn’t mean the hard work of a new company won’t be rewarded if it is built properly.