As one might expect to be the case in a city that never sleeps, gambling is big business in New York. Since sports betting went live in January 2022, the Empire State quickly rose and overtook every other jurisdiction. However, upon further analysis, the situation surrounding the nature of the industry became more complex, and the picture didn’t look as positive as it once had at first glance.
New York is well known for being a high-tax environment, which has had a significant negative impact on the operators’ profits. With imposed levies in the Empire State amounting to a 51% tax rate on gambling operators and New York’s strict rules prohibiting the deduction of promotions, it has not provided as much of a lucrative environment for gambling operators to profit. But how have these restrictions had an impact on affiliates?
How Affiliates Operate
If one takes an in-depth look at revenue share agreements, it’s easy to see that this is where affiliates make a substantial profit. And it’s particularly true for larger, more established names. Take NoDeposit365, which focuses on no-deposit bonuses, for instance, its team of experts has been on the scene since before the demand for online gambling exploded. While their recipe for success is one with a few secret ingredients, the foundation of their past and present accomplishments is far from neuroscience.
The affiliate business model works whereby one party, such as an online gambling operator, pays another (an affiliate) a certain percentage of the profit for services provided. However, in New York, the revenue generated by gambling operators after the heavy rate of taxation has generally been very low. Depending on how the affiliate arrangement has been made, this could prove somewhat advantageous, especially if the affiliate profits from costs per acquisition (CPA) deals.
Understanding Cost Per Acquisition Deals
Where a CPA deal has been established, affiliates receive a flat rate when a customer engages in agreed-upon actions such as signing up with the gambling operator, placing a bet, or, in most cases, making a deposit.
Although under normal circumstances, a revenue share would be more profitable than a CPA deal, especially in the long term, this would not be the case in an environment like New York State.
Here, even though a pre-tax revenue share arrangement would work well for affiliates, it is highly likely that the operation would only pay out after the levies have been deducted, making everything far less attractive.
Therefore, it is understandable why affiliates would opt to have a CPA deal when working with casino operators in New York. Clearly, they stand to benefit far more financially than if they were to take a revenue share agreement.
The Affiliate Industry Views
Leaders in the field of affiliate marketing have agreed that working with operators in New York for a CPA deal has been beneficial for them. For instance, Will Armitage, the Co-Founder of BestOdds, expressed positivity when he said his company had inadvertently profited from operating in what he described as ‘the unique Empire State landscape’.
Armitage went on to explain that, unlike more established competitors, start-up affiliates are generally put on CPA deals until they prove their worth to a business. However, the unique environment that New York has provided has served these affiliates well.
Generally speaking, the jury is still out amongst the bigger affiliates as to whether the CPA deal or revenue share model is best. Armitage says this depends on the stickiness and quality of the traffic the affiliate directs the way of the casino operator.
New York’s online gambling industry is still in its infancy and despite the short-term success BestOdds has experienced in the Empire States, Armitage says that it is yet to rethink its approach to business in other states.
He also acknowledged that as a start-up affiliate, BestOdds did not have the same negotiating power as more established affiliates would have and, therefore, would necessarily be able to push for revenue share deals everywhere, which has been their aim despite the difficulty they face in terms of applying for revenue-share licenses in eastern states that require this.
The Future For Affiliates In New York
It’s still relatively early in the game, and only time will tell whether revenue share agreements will become more attractive for affiliates in New York. So, for now, it is likely that the bigger affiliates will be keeping their fingers crossed for a busy football season. Established affiliates who’ve managed to negotiate a revenue share model will be hoping that gamblers return to casino operators en masse for the NFL season.