Sky Bet's Affiliate Hub closure due to ‘increasingly tough enforcement stances’

11 September 2017

Sky Bet’s decision to close its affiliate hub has been the hot topic of the week in online betting and gaming and it’s one which will get great scrutiny at next week’s Betting on Sports Conference.

The closure of Sky’s affiliate programme has the potential to send ripples throughout the industry on several levels, which is why the issue will be debated on a number of sessions across the event, held at Olympia Conference Centre from 12-15 September.

Sky Betting & Gaming CEO Richard Flint is appearing on the panel on social responsibility - the main reason that Sky has given for closing its affiliate hub, but whether the decision needs to be followed up by other operators will be discussed in the 14:45 session entitled: “IMGL Masterclass: Regulation - Liability management: Why the buck doesn’t stop with operators”.

Morten Ronde, CEO of Danish Online Gambling Association & Director of IMGL, Gaming Attorney at Saiber LLC Jeremy Kleiman, Clifton Davies Co-Founder David Clifton and Tal Itzhak Ron, Chairman and CEO of Tal Ron, Drihem & Co., Law Firm will all be discussing where an operator’s line of liability lies.

Clifton explained: “This seems to me an unfortunate but inevitable consequence of the principle behind the combined regulatory requirements of data protection legislation, advertising rules and Gambling Commission LCCP demands, namely that gambling operators must take responsibility for the misdemeanours of their affiliates.

“Sky B&G appears to have decided that managing the compliance risks posed by its affiliates is too challenging a task and, with regulators adopting increasingly tough enforcement stances, one can't help but wonder how many other operators will reach the same view.”

Ronde added: “From an operator view it's very unsatisfactory that the affiliates do not seem to have any responsibility or liability of their own. The authorities have chosen to go after the operators because they are easier to locate. We see the same pattern in Denmark.”

Kleiman said a similar thing has happened in the US: “In an odd way, strong regulation in the US has had a similar effect, namely, killing off the affiliate business. Most affiliates do not want to undergo licensing, which is required in NJ depending on the compensation structure, for fear that their operations in other markets will be scrutinized by the regulator. And operators do not want the compliance obligation of policing their affiliates.”

However many affiliates are not pleased with the way they are being portrayed. Lee-Ann Johnstone, CEO at Best Odds Marketing, is moderating a panel on super affiliates on day one of the conference. She commented: “This decision appears to quite reactive from Sky Bet, through it’s not the only option out there as operators do have other choices when it comes to managing affiliate performance against regulatory requirements.”

Better Collective CEO Jesper Soegaard, Chief Affiliate Officer at Clever Advertising Group Marcos Oliveira, Bookies.com Managing Director Matthew Glazier and XL Media CEO Ory Weihs will be on that panel discussing the business landscape for affiliates.

Glazier added: “Sky Bet's decision to close their UK affiliate programme was seismic, leaving affiliate partners searching for answers. Some affiliates have been affected to the degree that their business has been decimated, while many are now left wondering whether other operators will follow suit or if Sky Bet have just been the lone wolf."

There will be a whole range of other issues debated on the Betting on Affiliates Track. The four-session agenda at #boscon2017 will cover selling your affiliate business and protecting revenues through diversification, along with an update on the most pressing issues for affiliates in today's climate and predictions for the future amidst a period of consolidation.

Gemma Boore, Associate at Mishcon de Reya LLP, is talking about ‘Speaking with a single voice’, an issue that she feels is particularly appropriate in the current climate.

"The news that Sky Betting and Gaming has closed down its affiliate programme has caused shockwaves in the sector,” she said. “However, it is a timely reminder for affiliates who, if they want their industry to succeed, will need to ensure they continue not only to comply with existing regulations, but may also need to improve standards.”

“Sky's decision to close its programme on 28 days' notice was in accordance with its contractual rights, which actually allow the operator to cancel the programme without notice. This is common practice in the industry and leaves affiliates at risk as their commercial partners can terminate agreements at any time and halt affiliates' income streams.

“In order to reduce the risk of losing valuable contracts in this way, affiliates will need to demonstrate their value by not only delivering on their promises to direct sufficient traffic, but also by doing so in a socially responsible way.  If the future success of the sector is to be assured, affiliates need to work in harmony with operators."

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