Part 1: Affiliates and the pendulum-swing against igaming marketing
of regulations either directly or
indirectly affecting affiliates in the
UK) is “well overdue”, suggests
John Hagan, founding partner at
Harris Hagan and chairman of the
Industry Group for Responsible
Gambling (IGRG).
“Affiliates need to be advertising
in a socially responsible way,” he
says. “They need to be acting as if
they were licensed themselves. Now,
I don’t believe there is any appetite
on the part of the Commission to
license affiliates themselves but if
they don’t act in a responsible way,
then they will find that operators
won’t work with them.”
An industry split
This is a stark either/or choice.
Sarah MacDonald, senior associate
at Wiggin, agrees with Hagan’s
prognosis and suggests that
affiliates seeking to carry on in the
long term will have to adjust to this
new reality.
“It stands to reason that if
operators are increasingly under the
spotlight of the relevant regulators
to ensure that their marketing
activities are conducted properly,
affiliates will need to up their game
too,” she says.
In many jurisdictions, she adds,
an operator is simply not in a
position to claim that the marketing
of their products and services was
produced by an affiliate as a way to
relieve them from their compliance
obligations.
“But what this means is affiliates
will need to ensure that they are
producing marketing that complies
with all the relevant rules,” she adds.
“Whilst this may mean that the
more non-compliant affiliates find
themselves out of work, this is a
huge opportunity for those affiliates
who understand the regulations to
gain the trust of the operators and
dominate the sector.”
6
The carrot and the stick Ready or not
Those affiliates that are willing
participants in this self-elective
process of prepping for greater
scrutiny are positioning themselves
to enjoy better business prospects
in a promised land of compliant
affiliate marketing.
In this way, it can be argued, the
regulatory structure in the process
of being constructed in various
jurisdictions is both a threat and an
opportunity.
“It’s threat in the sense that
affiliates who have not woken up
and smelt the coffee – and as a
consequence very considerably
upped their game in terms of
regulatory compliance – will find
themselves out in the cold, at least
insofar as their relationships, or
absence of them, with responsible
operators in reputable jurisdictions
are concerned,” says David Clifton,
co-founder of the Clifton Davies
legal consultancy.
“It’s an opportunity in the sense
that affiliates who commit to
education, training and a proper
commitment to compliance with
advertising, data protection and
gambling regulatory requirements
will have a sustainable future and a
very major competitive advantage
over their less responsible rivals.” Knowing there is change afoot and
being capable to doing anything
about it are, of course, two separate
things. The second does not
necessarily follow from the first
– just ask anyone who has ever
studied a mass extinction event.
A large part of the reason
why the affiliate sector has seen
the extensive M&A that it has in
recent years can be ascribed to
the pressures being placed on
affiliates by regulation. Among the
smaller players, the enthusiasm
to carry on under the weight of a
greater regulatory burden and with
potentially diminished prospects
even if they manage to trim their
sails accordingly is likely to be
limited. In such circumstances, a sale
process can look very attractive.
Preparedness for greater scrutiny
will be mixed, suggests Clifton.
“Some who have heeded the clear
and longstanding warning signs are
well prepared,” he says. “Others who
haven’t, aren’t.”
He points to the response in
I find it staggering that
some affiliates still say,
‘Tell us what to do and
we’ll do it’
David Clifton, Clifton Davies
Consultancy
Under pressure: Regulation and the evolution of affiliate marketing