Where next for US affiliates?

As news of further operator withdrawals from the US emerges, the market for affiliates continues to change. Affiliate Leaders looks at what that means for both major players and smaller competitors.  

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When The Stone Roses released their classic double A-side single back in 1989, they expected the Byrds-infused jangle pop of ‘What the World Is Waiting For’ to be the big radio hit. Instead it was the hypnotic beat of ‘Fools Gold’ on the flip side that grabbed the attention and went on to become the Mancunians’ signature tune.

Some of those who excitedly invested heavily in the US online sports betting and igaming market after the PASPA ruling may be all too familiar with the concept. It might well have been the green light the gambling world had been waiting for, but for many of those who dived in headfirst, the returns have been of the iron pyrite variety rather than the gold nuggets they anticipated.

As FanDuel and DraftKings have hoovered up the big player numbers and set off on a course towards sustainable profitability, many other operators have struggled to cope with market conditions that have made the land of the free a very expensive place to do business. 

News this week that NYSE-listed Super Group is to withdraw its Betway sportsbook in the US lengthened a list of casualties that already included 888, Unibet, Tipico, WynnBet, Fubo, MaximBet and PointsBet. The struggle to balance sky-high player acquisition costs with the desire to take enough market share to turn a profit having resulted in either dignified exit, closure or sale. 

The picture varies from state-to-state and there are some local heroes. But the overall landscape is one in which you need the deep pockets of a BetMGM, Fanatics or Caesars, or the patience only possible in privately-owned firms such as bet365 and Betfred to have any chance of making a sizeable impact.

It’s not all doom and gloom

Affiliates targeting US revenues could be forgiven for feeling downcast. 

A dwindling number of operators, combined with the impact – or rather lack of impact – of the slowing regulatory rollout, certainly wouldn’t have been in their preferred business plans. For some of the bigger players, a recent change to Google policies that wiped out much of the value of expensively-developed partnerships with leading newspaper websites has served to exacerbate the problems. 

A change of focus towards the regulating, and potentially vast, Brazilian market must be – at least superficially – attractive. 

However, there are plenty of affiliates who remain confident that a sustainable long-term business in the US is a realistic aim. And their strategies are much more ambitious than to simply hang in there and wait for more states to legalise online slots or for legislators in Texas and California to decide that sports betting tax revenue would fill some budget gaps.

Better Collective is in the process of transitioning from a CPA-focused model to revenue share deals as part of its plan to deliver stability and ongoing profitability from its US operations. Meanwhile, XL Media has announced that the US market is now its primary focus and Gambling.Com Group has reported growth in North America.

Betting Hero is perhaps the standout performer in the market, having broken the 500,000 new bettors mark back in March. Rather than concentrate solely on the familiar online publisher model, it has used live activation teams to educate and sign up players in venues such as casinos, arenas and sports bars. 

What about the little guy?

One of the most appealing things about the betting and gaming affiliate sector over the years has been the relatively low barriers to entry and the opportunity that provides for start-ups to compete and grow. That remains true in multiple markets around the world, but it would be difficult to argue that the US – with the possible exception of one or two states –  is one of them.

The relatively small pool of betting operators in most states limits the opportunity to find a niche that will pay. Is a NASCAR betting site a scalable product? What about an affiliate that specialises on offers on its local pro and college teams? Maybe, but it would be tough, particularly when Google’s updates continue to skew the results towards long-established sites or the minefield that is user-generated content (although it appears that something of a partial change of direction may be underway, as a recent study by BrightEdge found that the volume of Google AI Overviews that utilise Reddit or Quora has dropped sharply).

So what can start-ups or struggling small affiliates do to compete? 

Perhaps the lesson to learn here is not that offered by the techniques of the large listed players – which is that proven strategies, backed by investment and executed well will almost always work. That just emphasises how difficult it is to break in to the market with a new sportsbook review, sports news or odds comparison website.

Instead, the example to look at is probably that of Betting Hero as it grew from start-up to key partner for US operators – find something different. Not just a niche version of a traditional strategy, but something genuinely different that will grab the attention of operators and players.

What that point of difference might be is down to the imaginations of individual company founders. But with social media channels, mobile phones doubling as low-cost video and audio equipment, and a generation of young adults always open to new media formats, it is definitely there to be found.