📺 The Rise of Influencers in Sports Betting and DFS

Expect a change in the way sports betting and DFS apps are promoted online.

We were at SBC America in North Jersey last week. It is one of the preeminent conferences in sports betting with attendees from the likes of FanDuel, DraftKings, ESPN, and many other sports-adjacent brands and gaming operators.

One of the prevailing takeaways is that there will be a big shift in how sports betting, gambling, and fantasy apps are marketed to consumers online.

To date, large marketing partners and affiliates have consisted, broadly speaking, of two types of sites:

1) SEO-driven content sites (like Legal Sports Report and Play USA)

2) betting and fantasy data sites (like Action Network, Lineups and Rotogrinders)

Those categories saw acquisition prices of 8 and even 9 figures over the last five years.

But SEO-driven sites are on the way out.

In their place, you guessed it, influencers.

Let’s dive deep, and talk about what this means for betting brands, current affiliates, and content creators.

Table of Contents

• 🔦 SEO Fallout

  • 📰 Media Partner Annihilation

  • 🏎️ More Efficient Marketing

• 👴🏻 Old Idea of Affiliate Marketing

  • 🏰 1) European Model

  • 📱 2) Social Media Is Passive

  • 👣 3) Tracking Is Easier

• 🏴‍☠️ The European Model Is Now Dead

• 👩‍🎤 Influencers Come Alive

  • 🎰 Casino YouTubers

  • 🏈 Matthew Berry’s Fantasy Life

• 🤷 How Do You Work with Influencers?

  • 💵 Flat Fee CPAs May Be the Wrong Model

  • 🤥 The Problems with Rev Share

  • 🏛️ Tech and Regulators Aren’t Ready for Transacti …

• 🔋 The Power Is with the Influencers

  • Like McAfee and Portnoy, But Smaller

  • 📈 Data

• 💼 Work With Kyle and Jason

A note: This article touches specifically on the sports betting and fantasy affiliate industry, but the ideas apply to all brands and content creators who want to think about creating deeper relationships with partners and customers.

🔦 SEO Fallout

📰 Media Partner Annihilation

Good lord.

As we told you last week, the SEO model was under major threat from a Google algorithm change specifically targeting affiliates who work with traditional media brands.

Our gut was right.

We spoke with multiple interested parties last week who uniformly acknowledged that Google’s “manual actions” removed entire affiliate revenue-generating sections of major media brands.

This, alone, is enough to upend the ecosystem. Large, publicly-traded affiliates, like Gambling.com, rely on the revenue generated from these partnerships to support their valuations.

That makes this Sportico article (byline, April 24) about GDC’s publisher partnerships particularly poorly timed:

Roughly 15% of the company’s revenue. 😬

The reality is the value of these partnerships was in the partner media brand’s ability to rank in search, and not because, say, the Miami Herald was particularly good at converting newspaper readers into New York (yes, New York) sports bettors.

But the news is much worse for the traditional media sites who rely on these partnerships to pay journalist salaries than it is for large affiliates.

But for affiliates… in many cases the sites removed from Google results have been replaced by industry-specific sites owned by the large affiliate companies. For some of them, the change might be a net win… depending on how well they were maintaining their owned properties vs. chasing revenue on rented land.

🏎️ More Efficient Marketing

That, of course, presumes that sportsbooks are eager to keep paying flat fees to affiliates who are ranking for their brand terms.

For example, now that the sports betting land grab is over and some operators have left the market, DraftKings and FanDuel might be less willing to pay $150-$300 to a marketing partner who ranks on Google for “DraftKings pa app”, since that customer almost certainly would have found the app on their own.

👴🏻 Old Idea of Affiliate Marketing

The increased focus on margins (read: profitability) and devastation of the marketing partner model led to one fairly expected buzzword getting thrown around at the conference: influencers.

Not exactly a new concept, but to-date working with influencers has not been a primary way that sportsbooks generate new customers.

Why?

🏰 1) European Model

The 1.0 version of online sports betting marketing in the US was dominated by methods common in Europe (where online betting was legal for a long time before it was here). And in Europe, consumers typically searched for reviews of apps available to them given the tight country borders, wide-range of regulations (or lack thereof), and frankly the sheer number of apps— some of questionable legitimacy. Searching for quality brands was necessary for European bettors. So that’s the model that received early investment here.

📱 2) Social Media Is Passive

It turns out social media is a pretty passive experience, and signing up and depositing with a new betting app is a cumbersome process. Most users simply aren’t in position to complete these steps while browsing Instagram or X. But someone searching for a sportsbook promo code five minutes before a game is very much ready to jump through those hoops. Hence, few, in any, major betting* affiliates rely on influencer or social referrals.

*We’re hearing DFS 2.0 is having much more success with influencers

👣 3) Tracking Is Easier

It’s harder to track social and especially video referrals than it is a link clicked on a website. Full stop.

🏴‍☠️ The European Model Is Now Dead

Catena killed it. [Kidding… mostly]

In the US, verifying the legitimacy of sports betting apps isn’t really a problem. Most consumers trust DraftKings, FanDuel, ESPN (Penn), or BetMGM to, at a minimum, not steal their money or identity.

So a large number of searches in the US have turned out to be for the brands themselves on the backs of massive TV ad spends.

How that works:

See ad for DraftKings on TV → Google for a promo code → see affiliate site → click link on site → download app → affiliate gets paid

It’s a money machine, but one that operators are beginning to better understand.

DFS 2.0 sites like PrizePicks and Sleeper, which seem less eager to embrace these types of affiliates, are making things difficult for them. They are squashing promo code attribution from affiliates by offering up a best available “promo code” right inside their apps, without the need for users to seek one out elsewhere… or use the one they came with. This potentially saves PrizePicks and Sleeper from paying an acquisition fee.

This may be less so the case for online casino and lottery, since the advertising options aren’t as targeted as a sportsbook advertising during a sporting event. People are more likely to seek out answers through searches.

👩‍🎤 Influencers Come Alive

Two great examples of influencers in this space.

🎰 Casino YouTubers

By far, the most engaging panel we sat through last week was with three casino YouTubers (“REAL LIVE YOUTUBERS!” as I exclaimed to Jason before we went in, like they were spotted rhinos at the Philly Zoo).

Kelly Koffler (Beyond Blackjack), Josh Duffy (Slotaholic), and Jon Della Terza (NJ Slot Guy) were the only people all week who seemed like they were playing offense, and they had a firm command of their business.

Koffler detailed how, while at a casino in Las Vegas, a woman from Australia came up to her, asked for a picture, told her how she and her family flew to Vegas specifically because of her videos about video poker, and basically fully fan-girled out.

Koffler said had dinner with the woman and is flying to Australia to hang out with her later this year.

That’s influence. And there’s nothing passive about it.

With real influence, you can get people to do things— even fly from Australia to play video poker. But the relationship is much less transactional than the way affiliates currently interact with their audience.

🏈 Matthew Berry’s Fantasy Life

[Full disclosure: we’re investors here]

Fantasy Life’s hundreds of thousands of email newsletter subscribers are highly engaged because the company diligently scrubs its list to include only the most active readers. This enables them to cultivate a long-term relationship with their audience, which is valuable to the brands that sponsor them. They rely little on fleeting SEO visitors to make money. They also have a growing presence on YouTube without gaming the algorithm.

But there are hundreds of other examples of local, regional, and national influencers in sports. These take the shape of sports social accounts, YouTubers, podcasters, and newsletter writers and bloggers. They can all convert players without solely playing the search game.

🤷 How Do You Work with Influencers?

Here’s the problem with brands working with influencers, who often use video and social as their primary form of content.

💵 Flat Fee CPAs May Be the Wrong Model

The real value of true influencers is that they don’t just refer a customer through search and move on. They can compel people to use a product or app on an ongoing basis.

In gaming, this lends itself to the rev share model, where affiliates share in the long-term losses of the players they refer.

🤥 The Problems with Rev Share

Could be super lucrative, but there are two major obstacles here:

1) In most states, working on rev share requires affiliates to get a gaming license, which is an onerous, full-cavity-search application process.

2) Maybe more important, the casino influencers who spoke at SBC talked a lot about integrity and not wanting to be incentivized to have their audience members lose money — imagine taking sports betting advice from someone who wants you to lose.

So rev share may not be the solution.

🏛️ Tech and Regulators Aren’t Ready for Transaction-Based Comp

A more interesting model may be compensating affiliates on a per-bet basis, win or lose.

This would better align incentives, but the industry isn’t ready for this.

For one, regulators may not be able to get their heads around it. This sort of model would require deep integration between third-parties and apps, so placing specific bets was more seamless. But, unlike, say, a clothing retailer, which might allow you to buy a shirt on Instagram, gambling regulators are rightfully protective about where and how bets are placed.

Second, the tech may not be there to allow this sort of micro-transacting.

We spoke with the CEO of one props-based app, and he confirmed that operators don’t seem ready to walk down this road just yet.

🔋 The Power Is with the Influencers

There’s no doubt, in the current environment, operators call all the shots. One panel even featured complaints from affiliates about not getting paid by “mid-tier” sportsbooks.

Because influencers have true sway with their audience, brands don’t have as much leverage over them as they do with more traditional website-based affiliates.

Screw over an SEO affiliate, everyone says “Huh, what?” Screw over an influencer with a loyal following, you have a panic on your hands on the Fourth of July.

It’s also harder to acquire an influencer, because often they are personality-driven.

You’re seeing this dynamic play out with Pat McAfee and ESPN— he has been on their air criticizing ESPN Bet… because the company has a content licensing deal with him, and not ownership of his show.

🤑 Flat Fee Sponsorships

Perhaps the answer is much simpler: just pay true influencers, like McAfee and Barstool Sports, a flat-fee to deeply integrate a brand into their content.

• Before his ESPN partnership, McAfee struck a 9-figure exclusive deal with FanDuel.

• After walking away with Barstool and the $500 million he and his investors were paid, Dave Portnoy got what is thought to be an 8-figure deal with DraftKings to make them the official betting partner of Barstool.

We spoke to Portnoy a few months ago, and he said there was no “performance” component of the deal.

This sort of relationship could work out for both sides.

Let’s say Barstool could earn $20 million per year as a sports betting affiliate. That would require a ton of time and money to create the perfect mousetrap, with no guarantee of payoff. But let’s say DraftKings offered them $10 million as a flat fee. Barstool removes any risk + all the time commitment, while DraftKings takes on some risk but has much more upside if things go well.

Brands and smaller influencers can do something similar. Of course, both will have to properly value these arrangements, and that will get more difficult the smaller and less established the influencer is.

📈 Data

Perhaps money isn’t even the primary currency. With influencers who have more diverse businesses - say with subscriptions, events, or products - data may be just as important to them as payment.

Is there a world in which sportsbooks would be willing to share mutually acquired customer data with an affiliate? Maybe, maybe not. Regulation can be a concern here. But if the affiliate had a product or service to sell, this added data could be just as valuable as cold hard cash.

Either way, it’s clear sportsbooks, fantasy apps, and even online casinos are eager to shift toward a world in which they rely more heavily on influencers for not only online referrals, but also consistent ongoing engagement.

💼 Work With Kyle and Jason

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