It is a side of the gambling industry that not many people will be aware of, but affiliate marketing is big business when it comes to the world, and especially when it comes to betting.
For the uninitiated, affiliate marketing is when a company will market another, bigger company in exchange for a commission for every person that signs up to the secondary company because of the first.
To put it another way, let’s say that you ran a hotel or an airline. Someone contacts you and says that they get thousands of visitors to their website every week, so they’re willing to advertise your company in exchange for 10% of everything that every customer referred to your company from their site spends on pizzas. This is exactly how the likes of Expedia work.
That is, in very broad strokes, how affiliate marketing works. As you can imagine, if you spin that to talk about bookmakers instead of travel companies then the amount of money that can be involved will go up exponentially. Someone finding a way to refer people to a bookmaker for even 5% of what they gamble whilst they’re a member of that bookmaker would stand to make £50 for every £1,000 of net profit made by the operator.
When you consider that it is in the affiliate marketers interest to send as many people as possible to a bookmaker, should they be licensed in the same way that the bookies are?
What Are Gambling Affiliates?
To expand further on the point in the opening, a gambling affiliate is a person or business that directs traffic towards a betting website. There are numerous different ways that such a thing can be done, but if you’ve ever seen a betting tipster page on Facebook, someone on Twitter telling you to place a bet with a particular company or a football blog with adverts for gambling companies plastered all over it then you’ve essentially seen a gambling affiliate at work already.
The main hope of a gambling affiliate is that you sign up with the betting company that they’ve recommended because, contrary to what was written for ease of explanation in the intro, they will earn revenue on all net losses across their player base.
The obvious question at this stage might well be why gambling companies bother with affiliates if they’re losing a third of their income, but the answer is that betting sites lose around 35% of their players each year.
With that in mind, then, sites that are needed in order to help the betting sites replenish their customer base as regularly as possible. Affiliates can send huge numbers of people across to the various gambling companies by putting key phrases onto their sites that they know that people will search for, offering tips on the best betting sites for certain sports or guides to events that those that don’t bet very often will bet on and look for advice about the best things to place their wagers on.
Current Licensing Requirements
At the time of writing, the Gambling Commission requires anyone that provides the facility to gamble, whether remotely or in-person, to have a licence.
The requirement also extends to anyone advertising gambling to consumers in the UK to be licensed. There are four different types of licence, with three of them acquired from the Gambling Commission:
- An operating licence
- A Personal management licence
- A personal functional licence
- A Premise licence
It’s the first three that are the remit of the Gambling Commission, with the one that you’ll need depending entirely on the business that you run.
When it comes to affiliate marketers, it’s something of a grey area and the Gambling Commission are not currently interested in them bar the idea of ensuring that they don’t use misleading language, such as suggesting that people will be rich and good looking if only they’d spend their money on gambling sites, because that’s not true.
The fact is that the betting operators are essentially responsible for ensuring their affiliate marketers follow acceptable advertising standards as it’s the gambling operators that are actually offering the service and therefore the only ones that have to have a licence.
Is It Right That Affiliate Marketers Aren’t Licensed?
The obvious question that springs up when you look at the current licensing requirements is whether or not it’s right that the chips fall at the door of the betting company rather than the affiliate marketers when it comes to responsible advertising.
A look at a different business world, such as the alcohol industry, will soon show you that the rules over advertising require all parties concerned to ensure that they follow strict regulations. A bar would get into trouble if it created an advert welcoming in teenagers and telling them they’ll be attractive to the opposite sex if only they’d drink vodka, for example.
In essence, the same thing is true for gambling in the sense that affiliate marketers would soon lose their ability to work with different betting companies if they made false promises to customers. Yet that is an entirely self-regulated situation for the parties concerned, as opposed to one in which a higher power looks over all of the affiliate marketers and makes sure that they’re following the rules.
If a marketing site said something like, “This betting company is amazing, I haven’t lost a bet with them yet so you should definitely sign up” then it wouldn’t be all that reliable, but it would require the gambling company they’re talking about to tell them to take it down and that it wasn’t acceptable.
Those that favour affiliates remaining unlicensed would be quick to point out that they don’t actually take any money off punters. If you decided to sign up with a betting firm without having used the services of an affiliate site and then spend tens of thousands of pounds on bets, how is that any different to if you’d chosen to do so after reading a blog saying that the website was good for horse racing betting?
People will bet regardless of the rules surrounding the advertising in the industry, so there’s surely an argument that getting some advice on which company to bet with is a good thing.
The Argument For Licensing
The key argument in favour of licensing marketing affiliates in the world of betting is down to the fact that they are a really important element of a betting company’s ability to operate successfully.
The tie between affiliates and the gambling companies themselves is a close one, meaning that if a marketing affiliate were to do something beyond the pale then it would unquestionably reflect poorly on the industry as a whole, perhaps even damaging the public’s trust. Is it fair on the operators, therefore, that the affiliates wouldn’t technically have to shoulder any of the blame?
There’s also the fact that an unlicensed industry is one that is surely ripe for criminal elements to attempt to infiltrate it. Whilst there are very definite rules and regulations in place to stop money laundering and the likes from becoming commonplace, a lack of direct oversight will always make an industry more appealing to those that wish to be underhand in their dealings.
Vendors will do cursory investigations into marketeers, but ultimately it is an unregulated industry. In New Jersey and Nevada in the United States of America, regulation has been brought in for that very reason.
Is The Situation Likely To Change?
As of July 2019, there was no major movement from the Gambling Commission to attempt to regulate the affiliate side of the industry. Instead, the onus is very much on the gambling operators to ensure that any companies or persons that work on their behalf do so in a responsible manner.
This is, of course, regulation in its own right, seeing as though a company would get into trouble with the Gambling Commission if a business working on its behalf broke the rules outlined by the GC. Even so, the governing body for licensing gambling operators is happy to keep a distance from affiliate marketers for the time being.
Affiliates are also subject to the legal restrictions put in place on gambling advertising, so it’s not as if they can just make whatever promises they feel like without having to be worried about consequences. As long as the affiliates limit themselves to marketing and advertising activities they will be able to avoid the direct scrutiny of the Gambling Commission, however. While there are no plans for this to change any time soon, it’s not out of the realms of the possible that gambling operators will enhance their own due diligence in the future to ensure that they aren’t punished by association.
Self-regulation is likely to be key to avoiding any actual regulation coming into being from the powers that be, though whether that’s right or not will be a matter of opinion.