Prior to May’s GiGse conference in Miami, we contributed an article to eGR North America looking at the growth of the US eGaming market and affiliate marketing’s role in its evolution. The article is available on the eGR North America site, and can be viewed here. However, you can also read the full piece below.
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2018 marks the fifth anniversary since New Jersey and Nevada regulated real-money eGaming. The online casino and poker verticals have generated over $790 million in New Jersey alone, according to the Division of Gaming Enforcement (DGE). Affiliate marketing has played a vital role in supporting the evolution of the US eGaming market as well as daily fantasy sports (DFS) and, more recently, iLottery. With eGaming in Pennsylvania and legal sports-betting now on the horizon, affiliate marketing’s importance in acquisition is only set to increase.
Even discounting sportsbook, this year will almost certainly be bigger than 2013. Online poker and casino in Pennsylvania will launch imminently as well as iLottery. The Keystone State is the first major regulated eGaming jurisdiction since New Jersey and boasts the largest pool of potential players (13 million population).
From 2013 to Now
The power of affiliates in targeting and converting traffic has been proven in New Jersey and Nevada. The revamped affiliate program of Caesars Interactive Entertainment (CIE), which serves both markets, has generated over $2.5 million in net gaming revenue (NGR) and more than 30,200 player registrations since it launched in 2015. The record monthly revenue the DGE reported this March of $25.6 million can be attributed in part to the affiliate channel, given that programs like CIE’s continue to grow.
A major reason affiliates have thrived is that Google AdWords prohibits pay-per-click (PPC) gambling ads. Subsequently, affiliates have served as a cost-effective channel supporting long-term player acquisition.
Affiliate marketing must, however, be complemented by other digital channels. Although its ROI tends to be lower, media buying’s required investment is worthy for additional brand exposure. Given high US smart phone penetration, brands have also been developing native apps and placing a strong emphasis on app store marketing after Apple introduced Search Ads to the US in Q4 2016. This was galvanized last August, when Google allowed gambling apps in the Google Play store.
Affiliates have also driven strong revenue growth in the DFS space. The two dominant US brands FanDuel and DraftKings have had programs since 2011 and 2013 respectively. The DFS vertical’s growth has been assisted in part by the recently-repealed federal Professional and Amateur Sports Protection Act (PASPA)’s prohibition of single-event sports-betting outside Nevada. Both FanDuel and DraftKings are now looking to launch US-facing sportsbooks.
The last five years have also seen Illinois, Georgia, Michigan and Kentucky launch iLotteries since the re-evaluation of the Wire Act in 2011. Likely influenced by the affiliate channel’s success in eGaming acquisition, Michigan launched a pioneering state lottery affiliate program in January. The program has already acquired well over 1,200 players and generated close to $31,000. This revenue has built on the lottery’s $8 million in weekly offline sales.
The Next Five Years
With the Pennsylvanian online casino and poker market live in H2 2018, brands will inevitably look to the affiliate channel. The Pennsylvania Gaming Control Board (PGCB) is widely expected to follow the DGE’s welcoming approach to affiliates, including its separate licensing models for CPA/flat deals and revenue share commission models.
Following the Supreme Court’s PASPA ruling this month, Pennsylvania is also one of the states – along with New Jersey, Mississippi, West Virginia, Delaware and Connecticut – expected to launch sportsbook markets before year-end. The latter state is also considering legalizing online casino and poker as well. Against this possible future, affiliates’ role in US-focused acquisition could soon explode.
As more jurisdictions regulate and player volumes rise, there will also be higher interest from international affiliates. Over a third (35%) of Michigan Lottery’s top-performing affiliates are from outside the US.
In the iLottery space, Pennsylvania and New Hampshire both regulated last year. Even the less populated New England state is expected to generate $13 million extra revenue annually.
As in Michigan, an effective digital strategy incorporating affiliates will help both lotteries tap into a wider pool of users. Given that, unlike in the real-money eGaming space, PPC lottery ads are legal, both lotteries and their affiliates can also integrate paid search into their strategies.
With its broad offering covering iLottery, sportsbook, casino and poker, Pennsylvania combined with PASPA’s repeal could well serve as the tipping point for broader regulation country-wide. Against Eilers & Krejcik Gaming’s forecast of 32 states legislating sports-betting by 2023, the next five years will be even more momentous for eGaming than the last – and affiliate marketing will play a major role in shaping that future.
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Having now read our article about affiliate marketing’s role in the growth of the US market, let us know your thoughts in the comments section below. To schedule a demo of our affiliate marketing software for eGaming brands, or learn more about our range of services, please reach out.
