Ahead of attending the G2E gaming conference in Vegas last month, we developed an article on the affiliate marketing channel and the US online gaming market for Gaming Intelligence’s GIQ print magazine. You can read the article on the Gaming Intelligence site or read the full piece below.
Affiliates are driving as much as a fifth of new player registrations for New Jersey online casino and poker brands, according to Paysafe Group’s Income Access data. The recent repeal of the US Professional and Amateur Sports Protection Act (PASPA) and the imminent launch of the Pennsylvanian iGaming market will likely enable the channel to scale new acquisition heights. As American gaming expands, affiliates are set to play just as important of a role growing the market as they have in Europe.
Affiliates have been an integral element in UK gaming brands’ acquisition strategies for well over 15 years. Today, the channel’s results are impressive, with Paysafe Group’s Income Access’ data revealing that a mature affiliate programme can drive up to a third of UK operators’ new player registrations.
However, UK market growth has been accompanied by competition and saturation concerns for operators and affiliates alike. Against this backdrop, affiliates are looking to the US Supreme Court’s repeal of PASPA in May as a window of opportunity. The end of PASPA has enabled states beyond Nevada to regulate single-event sports betting.
New Jersey and Delaware legalized the vertical in June followed by Mississippi in August. Pennsylvania, West Virginia and Rhode Island are expected to launch sports betting markets by year-end, while highly-populated New York indicates it will re-examine its existing legislation in 2019. Overall, H2 Capital predict that 19 states will have regulated the vertical by 2023, when estimated gross gambling win of $4.9 billion would have exceeded the $4.7 billion forecast for the UK.
Looking ahead, affiliates are being granted a golden opportunity to build on the channel’s foundational phase in New Jersey. When the Garden State launched its online casino and poker market in 2013, the Division of Gaming Enforcement (DGE) adopted an inclusive approach towards affiliate marketing. The regulator licensed affiliates promoting iGaming brands. Those promoting on a CPA or flat-fee basis required free vendor registration, while an Ancillary CSIE License costing $2,000 was needed for revenue share promotion.
Neighboring Pennsylvania regulated online casino and poker in Q4 2017. While the Pennsylvania Gaming Control Board (PGCB) has yet to formally announce its approach to affiliates, the regulator is expected to emulate the DGE’s strategy of regulation when the market launches later this year.
Lower Entry Barriers
Affiliate marketing has flourished in the New Jersey market despite limitations. Its small population – nine million compared to the UK’s 65.5 million – and the need to target traffic within a small geographical area are just two factors to deter affiliate interest. Until now, the limited range of verticals permitted – online casino and poker but not sportsbook – also served as an entry barrier to affiliates already wrestling with the overhead of licensing fees.
Such barriers are starting to be lowered. New Jersey’s regulation of sports betting, and DraftKings’, playMGM’s and SugarHouse’s online and mobile sportsbook launches in August are almost certainly a sign of things to come. Other operators focusing on the Garden State will likely soon add sports betting to their digital offerings – and expand their affiliate programmes accordingly.
Beyond New Jersey, West Virginia’s and Pennsylvania’s respective legislation cover online wagering, creating a potential opportunity for affiliates when the markets go live. Of course, Pennsylvania has also regulated online casino and poker, with the PGCB granting its first iGaming license to Caesars Interactive’s Harrah’s Philadelphia in late August. If the regulator follows the DGE’s approach to affiliate licensing, affiliates could soon have a market as diverse as New Jersey to promote in terms of verticals – but much more populated (14 million).
In Pennsylvania and beyond, operators will also see the diverse benefits of affiliate marketing. Where gaming taxes are higher, they will benefit from the strong return on investment (ROI) and overall cost-effectiveness of the channel’s performance-based model, whereby operators only pay for player acquisitions.
The US marketing landscape for online gambling is also more restricted than markets like the UK, where AdWords campaigns are permitted. With Google prohibiting the pay per click (PPC) channel for American iGaming brands, operators have an important reason to invest more in affiliates.
The affiliate channel’s diverse marketing strengths have combined with multiple states’ post-PASPA regulation of sports betting and the imminent launch of the Pennsylvania iGaming market to create an important US opportunity for operators and affiliates alike. They can either ride the wave of revenue opportunity – or be left on the shore.
Do you have any questions? Where do you think the US iGaming affiliate marketing channel will head in 2019? Add your comments below.