Yesterday we discussed different sports betting commission structures in detail. Well, now it’s time to address an aspect of a sports betting affiliate program that can have a dramatic impact on the affiliate’s commissions: negative rollover.
Negative rollover refers to a negative commission balance at the beginning of any given month (besides the first month) that has been carried over from the previous month’s earnings. This happens when an affiliate’s players generate negative revenue for the operator.
A no-negative-rollover policy means that affiliate negative commission balances are zeroed out at the end of each month. This allows the affiliate to earn positive commissions on earnings from the subsequent month without having to “pay back” the sportsbook’s loss. Negative rollover remains an issue of serious contention in the sports betting world, due to its dramatic impact on the distribution of player profits between the operator and the affiliate.
For obvious reasons, affiliates are very attracted to programs that offer a 100% no negative rollover policy. Because of the unpredictable nature of sports betting, it is quite possible that an affiliate could generate a substantial negative revenue balance in any given month; if for example, if a single player has a large win, or if there are no major upsets in popular sporting events that month. Such a large negative balance could cancel out months of future earnings for an affiliate if their affiliate program does not have a no-negative-rollover policy.
The flip side of this means that if an operator’s program has a no negative rollover policy, they can lose considerable money in the long run if they do not manage risk well (in terms of cutting off players that win too frequently), offer large bonuses with few wagering requirements, or have overly attractive odds. For example, if an affiliate’s players win $5000 one month and lose $5000 the next month, the sportsbook will actually lose money because they are absorbing the player’s losses one month and paying the affiliate a commission the next month.
Many Sportsbooks have been successful in improving the average player value month-to-month by cross selling players in to Poker, Casino, and Games. Some bookmakers that have successfully built popular casino, poker and games products include Victor Chandler, Canbet, Centrebet and Ladbrokes.
Another way operators have addressed the negative rollover issue is by implementing a “high roller” policy. This allows the sportsbook to enact a form of negative rollover specific to an individual player, if that player wins more than a certain amount, for example $5000, in a given month. The high roller policy basically states that this player will be tracked separately from the rest of the affiliate’s earnings, and commissions will only be paid for this player once losses (positive net revenue) outpace winnings (negative net revenue).
So before signing on to a sports betting affiliate program, an affiliate should consider whether or not the program features negative rollover. And if it does, the affiliate should look at the circumstances under which it applies. Only to high rollers? To all players, but the sportsbook will cross sell other gaming products to them from which the affiliate can earn commissions?
All of these are consideration that affiliate should make before investing too much time and money in referring their players through a program. Doing so will ensure that there are no nasty surprises several months down the line after they’ve already built up a player-base.