Volume: 16 Issue: 9
Sky Betting & Gaming (‘SB&G’) announced on 4 September 2017 that it will shut down its affiliate marketing programme, Affiliate Hub, by 2 October this year, with all commission and player referral arrangements with affiliates to come to an end by that date. SB&G credited its decision - which has surprised some in the industry - to being the result of “growing regulatory concerns” and because the Affiliate Hub was no longer viable from a business operations perspective.
“The recent GB Gambling Commission (‘GC’) penalties against BGO and Lottoland which specifically related to the actions of affiliates, the record £7.8 million penalty against 888 for licence breaches and the affiliate adverts which led to Advertising Standards Authority (‘ASA’) rulings against a number of operators, have combined to create the ‘perfect storm,’ leading some operators to take the view that using affiliates is simply too great a risk to their licence,” explains Melanie Ellis, Senior Associate at Harris Hagan. “The operations of affiliates are under considerable scrutiny and it is clear that the GC is increasingly expecting operators to take responsibility for the actions of their affiliates,” adds Nicola Bridge, Partner at Mishcon de Reya. “Operators are reviewing their affiliate relationships and where they do not have confidence that an affiliate can be relied upon to deliver traffic in a compliant and reliable way, they may feel compelled to sever the terms of their arrangements.”
The GC announced in May 2017 that it had fined BGO Entertainment Ltd for ‘misleading advertising,’ while Lottoland was ordered to pay £150,000 to socially responsible causes in June 2017 for ‘advertising failings.’ On 13 September the ASA upheld complaints about promotions, made separately by affiliates on behalf of Ladbrokes, 888, SkyBet and Casumo, describing the promotions as “socially irresponsible” after finding they targeted vulnerable people. Though the operators did not approve the ads, they are as a licence condition responsible for adverts carried out by affiliates. “Recent media reports about affiliates deliberately providing misleading tips to increase their revenue from operators may well have also influenced operators to reach the decision to cease using affiliates,” adds Ellis.
Ladbrokes Coral announced meanwhile on 13 September that it would be “clamping down hard” on rogue affiliates and was continuing to try to improve affiliate marketing, and Paddy Power Betfair introduced in September 2017 a ‘1 Strike Policy’ to its partnership programmes, outlining affiliate marketing activity it will not tolerate and warning affiliates that it will suspend those breaching the policy.
Following these moves, Ellis would “At the very least, expect other operators to seek to maintain a tighter control on affiliate advertising in the future, although it is difficult to see how this can be done given the practical restrictions on operators reviewing all affiliate adverts. I would expect to see larger affiliate companies taking steps to reassure operators that their advertising will remain compliant with the LCCP and advertising codes. Some affiliates might welcome the opportunity to become regulated by the GC under a specific affiliate licence, however there has so far been no indication from the GC that it is considering licensing affiliates in this way and therefore the regulatory burden and risk remains firmly on operators.”