The inner workings of new affiliate trade body RAIG

There are those in the online gambling industry who have been crying out for affiliates to come together and form a trade body for the best part of half a decade. In May 2019, those prayers were finally answered. Former Remote Gambling Association (RGA) chief executive Clive Hawkswood announced he would chair the new trade body, Responsible Affiliates in Gambling (RAIG), after it was founded by three of the biggest firms in the business – Racing Post, Oddschecker and Better Collective.

London-based RAIG will operate as a limited company with Hawkswood one of four directors, alongside Oddschecker’s head of commercial Guy Harding, Racing Post digital director Cian Nugent and head of business development at Better Collective, Karl Pugh.

“Gambling marketing is in the crosshairs of regulators and politicians and there is a risk that bad things will happen if we are not prepared and on the front foot,” Hawkswood says, signalling a call to arms for the affiliate industry. “Having been in discussions and on panels while at the RGA, it was obvious that affiliates were becoming a scapegoat for everything that was wrong in gambling marketing. It was too easy for everyone else to start talking about the affiliate Wild West and for licensed operators to say they had no control over their partners.” He adds: “It is now time to counter that.”

Hawkswood suggests the time is now, but many, including TAG Media director Tom Galanis, believe a trade body for affiliates has been a long time coming. “RAIG’s formation is, in truth, long overdue,” says Galanis, who tried to set up the International Gaming Affiliate Association in 2017, when funding was not forthcoming. “It was necessary as much in 2017 as it is now, and while in the intervening period much has been improved in the affiliate space in terms of compliance, player protection and social responsibility, public opinion of the gambling industry in the UK has unquestionably diminished.”

Tom Galanis, TAG Media director

Turn back time

2017 was the year everything changed for gambling affiliates. The UK Gambling Commission (UKGC) and the Advertising Standards Authority (ASA) made clear they would no longer tolerate marketing failings after a flurry of morally-questionable affiliate advertorials were banned. They also made clear that operators would bear the brunt of the punishment, often in the shape of financial penalties, despite the fact affiliates were often responsible for the failings. Some affiliate campaigns at that time recommended betting as a way to finance treatment for terminally ill loved ones for example, so something had to change.

The evolving environment led to panic among UK operators, and many decided the safest way to proceed was to terminate existing relationships with affiliate partners, many of which had been long, compliant and prosperous. Sky Bet slammed its affiliate programme shut, while bet365 and Paddy Power adopted a strict “one strike and out” policy. This led to a souring of the mood between operators and affiliates, and that relationship has never been the same since.

Two years on, why is 2019 the right time for a trade body? “Digital marketing is probably the single most misunderstood aspect of the online gambling industry by regulators, the media and the public,” says Eilers & Krejcik Gaming analyst Alun Bowden, who called the launch of RAIG a “watershed moment”.

“The most misunderstood part of digital marketing is the affiliate sector, so it is perhaps unsurprising this large, sprawling business, that has been allowed to operate without significant oversight, is beginning to find the new regulated environment a threat.”

RAIG has launched to combat the regulatory threat faced by affiliates in the UK. But how is it going to do that? “Obviously people have got lots of questions and some of those we have not been able to answer, simply because we didn’t want to have a work programme in place without consulting with other companies and regulators first,” Hawkswood said in May.

The cornerstone of RAIG’s strategy is that all members must go through a Gambling Integrity auditing process. The long-term hope is that the results of the audit will be used to establish a best practice for affiliates, but in the short-term, passing the audit will demonstrate compliance with current regulations, including the ASA, CAP and BCAP rules on advertising.

Audits do not come for free, however, and the most common question was how much membership would cost. RAIG initially planned for two membership tiers; full membership and associate membership, costing £20,000 and £5,000 respectively. Associate membership would allow companies to get involved in everything except the legal entity of RAIG as a company, while the £5,000 fee was earmarked to pay for the audit process and not much else.

Full membership, which grants membership of the board alongside the three founding members, was originally placed on a 12-month hiatus, so that Better Collective, Oddschecker and Racing Post could establish the inner-workings of the organisation. Galanis highlighted this strategy as an immediate concern. “This is my principal fear and it is up to the members to conceive of innovative measures to ensure the membership fee structure is achievable for as many affiliates as possible,” he says.

“I must say I am not behind the one-year hiatus, particularly for those affiliates who stepped forward and invested time in the formative discussions between 2017 and 2018. I understand the founding members have contributed not insignificant investment to the set-up process, but I do not agree this should garner benefits beyond kudos for bringing the body to launch.”

He adds: “It has the potential to alienate the immediate competition, all of whom would be willing to join on a level playing field, which would get RAIG to the required position of strength.”

Ending exclusivity

Galanis was not the only member of the affiliate community concerned that a three-member trade body might result in RAIG becoming an old boy’s club for top-tier affiliate firms with large compliance budgets. Hawkswood admits the year-long exclusion period might have been a mistake after being approached by several tier-one affiliate firms – all eager to pay the membership fee, as long as they can join as soon as possible.

“We talked about having full membership for just those three companies – not for it to be a clique or a closed shop – but to give the company some consistency and help with the directorships,” Hawkswood tells EGR. “We will shortly be discussing whether that period is too long because, since we made that decision, we’ve made good progress on the legal side of things. Some of the larger affiliates have also come and said they are happy to come in and help fund it, but they would like the full membership to start earlier.”

He adds: “Clearly there are a wider group of affiliates who are on pretty much the same page as the three founding members and I am desperate not to lose them from this process.”

The associate membership is also set to change, with the £5,000 annual rate likely to be reduced. “Going ahead, I think five grand is high for a lot of affiliates, particularly when they are not sure yet what they are getting for the money,” says Hawkswood. “Like any new enterprise, it was a bit finger in the air about what level the fee should be set at. We talked about different amounts, so hopefully we can do something, because if we don’t have more members, the whole project will stall. If we don’t start increasing members within a few months, questions will be asked.”

Galanis agrees, adding: “My hope is that RAIG is able to attract sufficient membership to become credible. While there is no doubt of the credibility of the three initial members, the trade association simply must be representative of the industry in order to legitimately speak for the industry. It needs to build its membership relatively swiftly.” So far, no new members have been onboarded.

Part of the club

The biggest affiliates in gambling are now publicly-listed companies, including the Malta-based Catena Media. While smaller firms might see RAIG as an exclusive club for the big boys, the big boys themselves might feel wealthy and compliant enough to achieve success without trade body representation.

Catena Media boasts several strong UK brands, including casino comparison site AskGamblers and football stats outlet Squawka, and CEO Per Hellberg hints the company could take or leave joining a UK trade body. “There are very clear guidelines [in the UK] saying what you can and cannot do,” says Hellberg. “If you follow it, you will win in the long term. If you try and fool it, the regulator will hit you. In those types of markets, we put a lot of effort into compliance. We invest in it and flag things with operators we believe are in breach of the rules. If you do that, you will build a good market place. We are willing to be a part of any trade bodies that can help, but we are also happy with our transition and development there,” he adds.

At the time of writing, RAIG has had two board meetings. The three founding firms, along with Hawkswood, are keen to set an agenda to highlight the priorities that need sorting. Hawkswood has already opened discussions with the UKGC, the ASA and the UK government’s Department for Culture, Media & Sport (DCMS) to establish the main concern of regulators.

“I must say I am not behind the one-year hiatus, particularly for those affiliates who stepped forward and invested time in the formative discussions between 2017 and 2018. I understand the founding members have contributed not insignificant investment to the set-up process, but I do not agree this should garner benefits beyond kudos for bringing the body to launch” – Tom Galanis, TAG Media director

Hawkswood hopes that the work programme will always be on the agenda for RAIG, “never set in stone” and constantly developing as more affiliates join the organisation and a sector-wide code of conduct begins to emerge from the auditing process. RAIG therefore needs to narrow in on immediately –achievable objectives. “Each year now we have Responsible Gambling Week,” says Hawkswood. “How can we get affiliates more involved in that? It is about raising public awareness and making people aware of the tools that are out there and available. Affiliates have such big reach, and they could be an obvious vehicle for responsible gambling, but this has never been employed before.

“This type of thing isn’t rocket science, but it would at least show the wider world that affiliates are taking some kind of collective action in a good way,” he adds. “It is no good just talking – we need to start doing things that will make regulators say ‘that is the kind of thing we have been looking for’ – doing the stuff that will help rebuild the reputation of the sector.”

Social anxiety

According to Hawkswood, the UKGC’s biggest concern regarding affiliate advertising was social media activity. A study from analyst firm Regulus Partners found that social media ads now cost the industry £149m – a figure that has tripled over the last three years. The UKGC’s own report on social media in gambling revealed that around 70% of young people had seen gambling adverts on social media, while 66% had seen gambling adverts on other online sites.

PR expert Alex Donohue believes the rapid increase in social media advertising has led to a largely unregulated marketing field that has the potential to cause gambling-related harm. He says: “If the industry is serious about self-regulation of marketing, the first port of call for change must be social media, which has to be reviewed urgently. It’s not beyond the realms of possibility that the same lobby, which successfully pushed for the TV ban, will now have social media in the crosshairs. It’s actually surprising how little the bonnet has been lifted by the usual suspects into social media ads,” he adds.

Hawkswood has pledged that RAIG will investigate the social media practices causing the regulators concern, while he also discussed the possibility of an affiliate licensing regime for affiliates in the UK. This is not greatly desired by any side of the industry and, while the UKGC’s contemporaries in Gibraltar and the Isle of Man are reportedly working on a licensing system for affiliate irms, RAIG’s chairman insists this is incredibly unlikely to happen in the UK any time soon.

“The chances of the UKGC licensing affiliates in the current climate are somewhere south of 1%,” Hawkswood tells EGR. “There is just no appetite for it at the Commission, and it would force primary legislation given where parliament is. In a way, that discussion heightened their need for a relationship with the association, because it shows they don’t have a direct hook into the affiliate world. Their main channel up until now has been through the ASA and through operators, and a lot of operators have taken an extreme approach. We have heard all sorts of figures quoted about how many affiliate relationships have been terminated over the last 12 months,” he adds.

Leading the line

“Clive was unequivocally the most qualified person to take up this position and I am delighted he has,” says Galanis. Delight at the appointment of Hawkswood as RAIG chairman appears to be a unanimous view within the industry. Hawkswood had been out of work since leaving the RGA at the beginning of 2019, with Wes Himes taking over on an interim basis as the operator-side of the industry tries to establish its own phoenix trade body, through a combination of the soon-to-be-disbanded RGA and Association of British Bookmakers.

Clive Hawkswood, RAIG

“I felt as though I should do it and the whole idea is interesting. I’ve got time on my hands and it is a good project because getting something started from scratch is always interesting. Speaking to the companies involved, I could tell by their commitment that this wasn’t just a PR exercise.”

Hawkswood realises the clock is ticking for RAIG and his most pressing challenge is to get more firms involved than just the founding members.