#4: State of Digital Sports Betting Promotion

Jason: Think she asked him about the revenue breakdown between owned and partner sites???😎

Kyle: It was a TERRIBLE interview. She barely had command of what she was asking and he didn’t do a great job of explaining why his sites (or affiliates) are useful.

To her defense, a general grasp on the affiliate business model by the media seems to be a stretch. Agreed that this was not a good interview….. Gambling.com has a better story to tell and don't think it came across here. You can talk more about quality engaged audiences, long-term potential of their betting-focused brands working well when the world switches to rev share, and strong media partnerships. I heard a lot about bonuses, which probably isn't the bull case for investing.

To your first point, the affiliate industry seems to be currently monetizing through a very thin sliver of content-- transient, promotional news article in Google News. Judging by the SERPS, GDC has to be getting a material % of US revenue from their McClatchy partnership as these brands (Miami Herald...) do very well in Google News. In addition to the breakdown between owned and partner, the question I'd ask GDC is: What, if any, minimum payments are required with these partnerships? Concern is a continued slowing in said bonuses coupled with less profitable revenue creates gale force headwinds. Though to be FAIR AND BALANCED, their Rotowire acquisition appears to be paying off as I am seeing them everywhere in Google. And their organic SEO team is v good.

We should talk about the affiliate switch to rev share (for readers: most affiliates are paid a flat fee upfront, but some can choose to share in player profits over time). Better Collective said it punted on $2 million in CPA revenue with one operator in September for long term rev share upside. Now they have 4 operators on rev share, not sure on how many states. If sportsbook ad spend and bonuses decrease AND affiliates switch to rev share… short term revenue for BC and whoever else does it is going to be ghastly. 2023 might already be a low growth year in terms of new depositing players, it won't be pretty if some of those activations don't hit top line revenue until 2025.

I get ripping off the band-aid before Ohio, MD, Mass….and of course FL, CA, TX. Affs have to do it at some point, BUT, it is on the assumption that operators are not passing along every little fee that eats away at revenue. When we briefly explored rev share before being acquired, it was an extremely unattractive proposition from operators. One must assume that BC has much better terms than 2 guys working in a 700 sq ft office in Bucks County PA.

In the basement. With mold.

No but for real, how long will it take to make back the $300 per player they say they are getting with CPA, and how much more upside is there?

Oh boy, here we go…..

They should form a committee to look into predatory tax rates. Maybe the bonuses would be more straightforward if they weren’t holding books hostage on 51% of the revenue. 

Hard to argue there. It sounds like the tax rate discussion is on the table again in early 2023 with NY igaming legislation. Amazingly we are approaching 5 years since the tide turned for online gaming in the US. Seeing regulatory bodies go after supposedly predatory ads is not a shock. How quickly things turn into the UK with ad limits and such is an entire discussion in itself.

What’s the most likely impactful change there. Canada-like bonus prevention eh? Or limits on brand and affiliate advertising?

Most likely short term impact is change in advertisement language and in app offerings. It is a slippery slope that most operators will not be happy with.