Affiliate licensing: an optimist’s view

Affiliate licensing is one topic that will split the industry. Your view will probably depend on whether you retain an optimistic outlook on the egaming industry in general, so for transparency I should declare that I am the eternal optimist! I like to believe that for every problem there lies an opportunity if you know where to look.

I’ll start this with my (ex) affiliate hat on. My position is that I think the positives of affiliate licensing outweigh the negatives. Take that hat off and put my Rightlander hat on and I’d somewhat selfishly see this as a threat to business in the first instance but, alluding to my statement above, there is going to be an opportunity here somewhere. Let’s look at the impact of licensing and see just what those might be to affiliates and as a result, the industry in general.

Right now, operators bear the brunt of affiliate misdemeanours and there is logic to this as it makes it easier to police. While it is a forced hand because you’d lose out on brand visibility to your competitors nonetheless, from a regulatory perspective, the operator is the decision maker. Making the affiliate responsible for their actions would obviously suit an operator and it is just logical.

In fact, this line of thought also protects affiliates. I’ve seen enough misleading and devious marketing on a day-to-day basis through the course of our scanning over the past two years to know that if I was still an affiliate, I’d be facing a substantial risk to my revenue from the actions of other affiliates. The cost of policing, threat of fines, closure of markets and affiliate programmes by operators would ultimately mean losing revenue share for referred players.

Up for debate

Ultimately, I’d have two choices if I wanted to remain a gambling affiliate: get licensed or move to grey markets. The latter sounds attractive and may even be more lucrative initially, but then you’d be forever fighting a tide of regulation as it sweeps around the globe. The other option would be to get licensed which, right now, is obviously an unknown quantity. However, if it is handled correctly and was cost-effective, it might see me survive while much of my competition disappears.

It’s interesting but perhaps not surprising that RAiG has thrown its hat into the ring on this one. The immediate reaction from many might be that licensing favours the larger affiliates, but in fact they face more threat from this than the smaller guys. They may grow through acquisition, create large networks and struggle to manage or even understand the depth of content they have. And if a larger affiliate loses their licence, that can have an impact over hundreds, if not thousands, of sites.

Ultimately, a sensibly regulated industry breeds trust and while the numbers might be smaller and players more expensive to retain, trust breeds loyalty so you’d expect to see better player values.

Licensing will shake things up undoubtedly and not everyone will get through that but those with strong propositions, innovative business models and authority in their niches will probably come out stronger than ever. Whether affiliate licensing is even viable or not right now in some jurisdictions is open to debate.

But even if it doesn’t happen soon, it is an inevitability that it will happen someday. The powers that be can’t afford to ban affiliates as Google would simply become a doorway to grey market operators for gamblers and they can only take the current operator responsibility so far before the operator gives up on the market, leading to the same scenario.

Ian Sims is the founder of Rightlander, a state-of-the-art affiliate compliance platform that allows affiliates and operators to identify potentially non-compliant content in regulated jurisdictions. Prior to establishing Rightlander, Sims was an egaming affiliate for 13 years.