- Sky says regulatory pressure means managing affiliates too risky
- Recent rulings by UK Gambling Commission have sent shockwaves through industry
Sky Betting and Gaming, which operates brands including SkyBet, Sky Casino, Sky Vegas and Sky Poker, has torn up its affiliate programme in the UK, blaming tougher regulatory pressure for the move.
Affiliates are third parties which are rewarded financially for successfully referring new players to a gambling site.
In its message to those on its affiliate programme, Sky Betting and Gaming said that managing such affiliates “presents a significant risk” to the brand staying within the regulations set down by the UK Gambling Commission.
It now appears to feel that regulatory pressure is so great that it can no longer safely have a relationship affiliates without risking penalty.
The shutdown is due to take place by October 2.
Minds of the industry were focused on Thursday when casino and betting giant 888 was handed a record £7.8 million ($10 million) penalty package by the Gambling Commission for breaches of its license, including failing to stop a technical loophole which allowed self-excluded players back into their gambling accounts.
Not an easy decision?
The Sky affiliates will be responsible for a significant proportion of Sky’s betting and casino revenue, so the decision will not have been taken lightly.
Affiliates, through websites, social media and more traditional marketing methods, refer players through to a betting or casino site in exchange for a type of commission, such as a share of that player’s revenue thereafter, or a one-off payment for successfully getting that player to sign up and make a deposit.
Although online betting and casino brands do their own marketing, they are still hugely reliant on these affiliates to bring in new players and boost spending.
But promotions, such as free bets, free spins, and sign up bonuses, must be in accordance with terms set out by the Commission, and usually these involve making clear what the relevant terms and conditions are.
But though affiliates may break these rules, the regulator says the responsibility to police it falls on the operator.
As you will be aware, the regulatory landscape in which the industry operates is developing and maturing and operators are experiencing increased obligations regarding their regulatory responsibilities and level of compliance. In order to continue to operate in a compliant manner, we feel that operating the Programme is no longer viable and that managing the output of affiliates presents a significant risk to our business from a regulatory perspective.
Sky Betting and Gaming communication
Pressure on how online betting and casino operators promote offers
The Gambling Commission’s new outwardly tougher stance is beginning to take effect, and has led to this unprecedented decision by Sky Betting and Gaming which, in the short term at least, will likely harm its ability to attract new players.
This pressure is coupled with an investigation by the UK government department the Competition and Markets Authority into how online betting and casino brands promote their offers, freebies and bonuses.
It found in June that certain brands were breaking consumer law, by not making clear enough the terms and conditions of these promotions, and making it difficult to withdraw winnings. It said it was in the process of handing down tough enforcement action against those operators found guilty.
It may be that promotions marketed by affiliates fell foul of those rules and is a possible example of why an operator like Sky Betting and Gaming might want to ditch its affiliate programme altogether.
Concerns for the future
Given that these brands derive much of their business from affiliate programmes, there may be concern for the health of the industry generally.
It remains to be seen if other brand will follow, after seeing Sky Betting and Gaming pulling out. Sky does at least have the advantage of its media connections which may help make up some of the shortfall in marketing activity that it relies upon.
It will also be a blow to responsible affiliates who, thanks to a clause in the Sky Betting and Gaming contract, will find themselves without an important source of revenue and may be sent to the wall.
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