Navigating the prevailing trade winds buffeting the affiliate sector

A recent report published by The Lancet Public Health Commission sets a familiar course: that gambling is very much a public health issue. Being a Brit with significant attachment and experience in the UK gambling market, I have become well versed in digesting reports of this nature.

However, what stands out most from this particular report, dated November 2024, is the global nature of its scope. 

It is a remarkably well-researched piece, covering obvious markets such as the US, Belgium, Australia, Germany and Ontario, Canada. It also explores the public health impact of gambling in sub-Saharan Africa countries, as well as markets most would consider very much at the far-flung reaches of the gambling galaxy – Bangladesh, Paraguay, Trinidad and Tobago, Myanmar and Namibia.

The ‘Good ship Affiliate’ has built its reputation on expertly finding ways and means to remain a fair few nautical miles out of sight of the regulator’s periscopic purview. Whether that be through deftly navigating compliance requirements in regulated markets or pathfinding uncharted waters.

Both these tacks are facing macro-environmental threats. Regulation breeds fierce competition. While this is initially beneficial for those affiliates leading the way, profiting hugely from operators’ plying the newly sanctioned dominions with billions of dollars of acquisition dynamite as they seek to win big on the gold rush, the aftershock has proven not so pretty.

Either the new gold reserves are harder to discover – see the US in 2024 – or the over-proliferation of above-the-line advertising brings the unintended, but now oft-repeated, public backlash that deepens regulation and depreciates margin for all involved. 

See the UK. See Belgium. See Germany. See Brazil in 2025 – yes, even the free-flowing samba beat of the Brazilian market is hitting a few bum notes with the prospect of more limited customer acquisition offers looming next year.

I’ve been around long enough to recall the demise of poker affiliation, owed in no small measure to the over-proliferation of rakeback as an overused common stock in the operator/affiliate/player ecosystem. 

Poker affiliates were kings of the world in the mid-noughties – the titanic industry was unsinkable, and consequently they completely overlooked the cannibalisation that rakeback wrought on top of the obvious impact of the UIGEA iceberg. This was episode one of the ‘Affiliate Race to the Bottom’. 

A few episodic sequels of no worthy note later and we arrive at the post-PASPA era of online sports betting world in the US. Leading affiliate groups became the igaming darling buds of the stock market on the back of state launch gold runs. 

Life was very rosy. The industry’s growth saw its leading lights very much lean into regulation, and the markets loved them for it. At least for a while.

Cue a snail’s pace of new state launches, a couple of bites from the Google shark and some fishy M&A, and the likes of XL Media, Catena Media and, more recently, Better Collective have reeled in their growth targets and have had to cut loose assets or staff to steady the ship.

For those public affiliate companies locked in to regulated markets, there is reason to be fearful. Calling a spade a spade, the US market is a disjointed omnishambles, even with speculation that Missouri may open up in 2025. I’ve seen Ozark – Missouri is a complicated place! 

Very few operators in the legal sports betting market have seemed inclined to sort out the basic fundamentals of tracking, with systems which genuinely don’t belong in this millennium. The US, even with timely state launches, is by no means the safe bet for affiliates that it may be for a handful of operators and suppliers.

I cannot recall a time when there was not a gold-lined cloud somewhere on the horizon in the igaming affiliate world, never mind a silver one. 

Excitement of upcoming markets was always accompanied by the stability of trusted markets such as the regulated UK nest egg, the lucrative pre-regulated Swedish and German markets and the golden geese of Norway and Finland, which always seemed to produce treasure troves for those enjoying the spoils of their digital dominions.

Now those pre-regulated markets are in increasingly short supply. Somehow, the ‘Great White Hope’ for many leading affiliates in the space can be found in the leftfield advent of the sweepstakes social casino. 

For a corner of the industry that has always felt assured of itself, it would be easy for an outside observer to attach a badge of desperation to the trade winds we collectively find ourselves following, which have unquestionably turned from a free-flowing afternoon pleasure cruise to a jolting, haphazard jet-ski joyride, lacking a clear destination and a fair bit of discomfort in the nether regions.

Historical blips in the igaming affiliate market have always been mitigated by the comfort of established market security blankets and the promise of new riches that tomorrow will bring. But I’m not convinced we can all sleep tight in our cabins this time around. 

On the crest of a grey wave

The aforementioned Lancet report very much indicates that even in remote, pre-regulated markets, which even affiliates have yet to truly explore, the authorities are learning historical lessons (however industry trade groups might front up against the public health concerns) faster and more resolutely than all the main protagonists within the industry. 

This will see most future regulation slice into margins, curb product functionality and marketing effectiveness, vastly limiting growth opportunities in newly regulated markets and open the world up to a larger black market.

So, in which direction does the igaming affiliate market set sail? It has been fantastic to witness the corporate development of the likes of Better Collective and Gambling.com Group. They have taken the known fact within the industry that affiliate marketing is big business and delivered that message with great success to the wider world via the stock market. 

But I’m not sure the prevailing winds are long suited for many more Wall Street voyages. Strapping yourself tight to the mast of regulated markets with an abundance of PLC red tape feels somewhat perilous when, somehow, more stable growth these days may be found in the darker waters inhabited by crypto casinos right now. 

Of course, that particular seascape has the propensity to change overnight, but I think therein lies the point. 

Affiliates have always been able to adapt to market conditions faster than others in the industry, moving with agility, tactically bouncing to the next opportunity before the world has even spotted it. It is the very essence of why operators still rely on our corner of the industry for growth in all markets. 

Agility becomes tougher when you’ve built a company of thousands of staff and all the processes that are required to underpin it. 

Building a lean affiliate business that surfs the crest of the grey wave is where it’s at frankly, and doing so either blind to the knowledge, or maybe even safe in it, we cannot – indeed, must not – take safe passage for granted. 

Tom Galanis is CEO of TAG Media, a leading igaming affiliate marketing agency, publisher and content marketing platform, offering a unique portfolio of digital marketing products and services to deliver new customer acquisition to online casinos, sports betting operators and game studios worldwide.