Bojoko urges fairness as report uncovers affiliate revenue share as low as 8%
Published by Bojoko, the report focused on online casinos listed on its website that it has a 45% revenue share agreement in place with.
Despite this arrangement, average net revenue share after all casino fees stood at 23.9% among the casinos, with 8% being the lowest share.
The highest revenue share percentage stood at 40.8%, while 18 of the casinos audited had an after-fees revenue percentage lower than 16%, and 23 casinos between 30% and 41%.
Reflecting on the findings, Bojoko chief business officer Joonas Karhu said the report shows that more needs to be done to improve the relationship between both parties.
“We accept the need to pay fees on revenue share agreements, but those fees must be fair and transparent so that affiliates have the opportunity to discuss them before entering into an agreement to promote and operator’s brand,” Karhu said.
“But the report does more than just highlight this issue – it provides solutions and steps that can be taken to ensure fairness and transparency so that both parties can maximise the benefit of the relationship.”
Casinos fees can relate to a number of factors such as local market taxes, banking fees, marketing, licensing costs, bonuses, chargebacks, software provider fees and admin expenses.
Karhu said while these fees are essential, he, feels each partnership needs more balance.
“When an affiliate and operator agree to share revenue and the cost item is reasonable, it should be split evenly,” he said. “When it’s a question of cost-per-acquisition (CPA), which refers to a one-time reward to the affiliate for referring a qualified new player, the operator should absorb the fees – as the industry standard is now.
“This is because with a CPA, the operator believes in their ability to enjoy more revenue than the paid CPA and yield a positive return on investment due to their operational excellence.
“But when it comes to revenue share agreements, costs should be split as the operator is not paying an up-front free for the player, rather sharing the revenues they generate over time.”
In terms of how to address the issue, Karhu put forward a number of suggestions, such as an even revenue share split that does not favour either party, better communication from the casino operator to the affiliate, greater transparency in advertising for affiliate programmes, and for affiliates to question what they receive from their partners.
Karhu added that the new Professional Gambling Affiliate Association (PGAA) could also play a key role in future talks. Launched in October, the association aims to address the imbalance in the relationship between operators and affiliates.
“This is a breakthrough moment for both operators and affiliates, providing contractual security for both parties around key areas of any working relationship and commercial agreement,” Karhu said.
“Affiliates have long played a vital role in driving new players and first time depositors to online casinos, and the PGAA contract ensures they are rewarded fairly for doing so.
“Transparency is absolutely key to trust, and by building an additional layer of trust into these partnerships we can ensure they are long and successful.
“Revenue share agreements and fees have been an area of concern for some time now, but with our contract we can overcome these for the benefit of both parties.”
Are operators taking advantage of affiliates by making too many deductions from their share of the takings or are they simply reacting to changes in the marketplace and trying to claw back some overgenerosities of the past? Next week, iGB will publish an article exploring this topic.