How does Nevada present the best hope for Poker Affiliates in the US markets?
The outgoing Chairman of the Gaming Control Board remarked at its September 6 meeting, that Nevada “gets” the role of online affiliates in the poker eco-system. Nevada is driven to “get it right”, to protect its existing economy, retain its operators’ focus on their US business, and leverage its Las Vegas brand and those of its operators. This week, the Nevada Gaming Commission approved an affiliate marketing license for PokerTrip Enterprises, Inc.
Nevada policy makers reject the “if you build it, they will come” approach and recognize that attracting online customers requires more than launching sites and using re-hashed brick & mortar marketing techniques. The as-yet unresolved matters however are the means for and the degree to which “former US-facing affiliates” can come in from the Cold.
An interesting colloquy preceded the actual vote by the Gaming Commission yesterday approving Pokertrip Enterprises as the first licensed online poker affiliate marketer. The Commission made clear it viewed affiliate marketing as a needed resource, both for the industry and for themselves as Regulators. There seemed a clear consensus among members as to the importance of affiliate marketing in learning about player preferences among prospective operators. The PokerTrip CEO was asked to come back to the Commission in 6 months or a year to share his experiences with emerging Nevada-based online poker industry, as he would have a finger on the pulse of developments. This seemed an extraordinary outreach for a cooperative relationship, one which should be welcomed by affiliates.
- Necessity has been the mother of regulatory innovation. Nevada regulators consider theirs to be a “work-in-progress”, most recently revising the licensing structured “classes” along risk-driven investigatory levels, rather than by classing suppliers by strict definition. Nevada is a small market and allows for both regulatory and operator adjustments as both move forward.
- Online affiliates will be able to choose to either get licensed themselves or negotiate for a spot as a sub-affiliate under a licensed Master Affiliate model.
- While Nevada does have rigorous investigatory requirements for operators, Affiliate license applicants receive a less-than-full-blown review process, with a statutory $500 application fee and a $2,500 investigation deposit. This lowers the overall relative cost of entry to around $25,000 US out of pocket. (The licensing cost for non-US entities may run much higher, due to investigative burdens, and a need to present their application merits locally in Nevada. This is still an old-school, “get to know you” process, which requires regulators to get comfortable with approved providers in a new arena, online gaming.)
- The cost difference between licensing and seeking a sub-affiliate deal may deter affiliates from initially leaping into the market on their own. Fortunately, prospective online affiliates will be able to choose to either seek a license themselves or negotiate for a spot as a sub-affiliate under a licensed Master Affiliate model.
- Nevada has never ruled out cooperative ventures by its poker operators with non-US operators and regulators. Because Nevada is a very small intrastate market, the State conversely also seems likely to push as far as possible to open up access for its operators to both international player pools and its own licensees’ ROW launches. Liquidity, liquidity, liquidity is acknowledged by regulators as a necessity.
- Because Nevada’s regulatory model is market-focused, it does not pick winners or create monopolies among approved market entrants . Nevada requires emerging online operators to bear the risk/rewards of their launches. Accordingly, as one approved Nevada online operator remarked, “We want to make dumb mistakes cheaply”. As affiliate marketing need not involve investment of significant upfront costs, there should be an appetite for out-sourcing such services from any operator not owning a WSOP-size database and experienced online marketing expertise.
- Nevada approval and development of online poker will influence other States also to move forward without waiting for Capitol Hill. Because Nevada licensees, both as operators and suppliers, have extensive industry reach in other US States, Nevada presents the best hope for the emergence of a de facto US national market, state-by-state.
- Nevada seems expressly interested in hearing from experienced affiliates who already have inroads among poker players in virtually every US market. Getting a relationship as a marketing affiliate now, with established Nevada brands, should conversely carry over as those brands expand online into their other State markets.
Nevada rejects the “if you build it, they will come” approach to launch, recognizing that attracting online customers requires more than launching sites and using re-hashed brick & mortar marketing techniques. The as-yet unresolved matters however are the means for and the degree to which “former US-facing affiliates” can come in from the Cold.
I expect those issues to be resolved administratively, as regulatory issues for licensing folks who never handled money or ran games seem less troublesome than approving former US-facing operators or payment processors.
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