To Comply Or Not To Comply: NJ Affiliates At A Crossroad

To Comply Or Not To Comply: NJ Affiliates At A Crossroad

The 150-day grace period for NJ affiliates to cease promoting unlicensed sites or exit the market is fast approaching the end, we speak to them regarding their motivation behind the decision.

Published 24th October 2015

Gambling Affiliates promoting in the US face a quickly approaching deadline on November 1, 2015. This date marks the end of a 150-day grace period granted by the New Jersey Department of Gaming Enforcement (DGE), in which marketers must make a decision to either cease promoting unlicensed sites or have their state-issued licensure or registration revoked. What does this mean for the market, and for affiliates looking to enter the regulated space? There is a great deal of conjecture about what to expect, and what impact marketing regulation has had on the growth of the NJ iGaming market as a whole. It is important for us to look more closely at the motivation behind the decision and what makes this development so interesting.

A short history

Since the launch of online gambling in NJ in 2013, licensed operators have placed great emphasis on product, customer service and overall experience. However, several aspects of marketing, particularly online marketing, have been a challenge primarily attributed to compliance. Compliance in the US affects all aspects of a gaming operation, from platform to payments to marketing, and the market’s performance has been a perfect reflection of this. Online gaming in the US is very much a new frontier, and governing bodies in regulated states like NJ recognize this. The NJDGE has taken pioneering steps to create an environment that will allow for steady growth, while at the same time protecting the integrity of the market.

Policies with purpose

The general consensus in the market is that the DGE’s regulatory approach related to affiliates centers on revenue protection and ad competition. However, George Rover, Deputy Director of the NJDGE, emphasizes that the chief motivations for the latest release are to ensure strong protections are in place to prevent underage gaming, as well as to maintain game integrity and ensure adherence to AML and responsible gaming requirements. “The goal for this policy is to take away from these illegal sites the advertising exposure that is driving business to them.” The general outlook from the market regarding the decision has been positive. According to Rover: “Operators are supportive of this. While it has immediate business impacts, they recognize the benefits of strong regulation in this area and the importance of having reputable, vetted business partners.” According to Luisa Woods, VP of Online and Internet Marketing at Tropicana Entertainment Inc., this move is providing valuable clarity for affiliates. “More affiliates are entering the market as the regulatory environment is becoming better defined, leading to more side-by-side comparisons.” This means affiliates have a decision tomake. Those that choose to take the longterm approach and comply may face shortterm losses, and have a greater chance for becoming successful as the market grows and evolves. On the other hand, affiliates that don’t react may find themselves trailing behind.

Marketing then and now

At the start of NJ iGaming in 2013, we saw the immediate impacts that compliance had on market growth. Since then, the DGE has recognized the important role that affiliates, and digital marketing in general play, and its regulatory updates have encouraged these parties to take the market seriously. According to Thomas Winter, Landry’s VP of Online Gaming, “there seems to be a consensus that digital marketing is not as effective at a state level as it would be in a nationwide open market, notably because of SEM limitations and the small number of affiliates.” Still, according to him, affiliate marketing is slowly developing. “We now have a better understanding of what marketing channels work or don’t work in NJ.” In agreement is Woods from Tropicana, who states that “Operators now have much more market intelligence to assist them in executing sophisticated programs…which means more targeted and personalized ads based on demographics and behaviors.” The DGE’s policy, in conjunction with other factors anticipated for the upcoming year, is expected to have a positive impact. These factors include credit card processing improvements, greater emphasis on mobile advertising, and the further development of affiliate marketing. Winter believes all of these elements, including affiliates, are a key component. “If Google opened AdWords to licensed iGaming operators, this would be the [biggest factor].” Until that time, affiliates choosing to comply with the DGE’s policy hold the greatest opportunity to grow the market.

Beyond the NJ borders

It is most interesting to take a broader look at the impact the DGE’s policy makes. The regulatory decision is also not strictly about licensing. The Deputy Director of the NJDGE states that it’s about protecting regulated iGaming for the rest of the jurisdictions that look to the regulatory body as one that is credible and tough, but fair. “It is also important to protect and recognize the efforts of the regulated, authorized gaming sites that are playing by the rules”, said Rover. “They should not have to compete with sites that do not offer the same player protections or have to abide by the quality standards required by the regulators. These unregulated sites discredit online gaming around the country; we are also taking separate, direct actions against these illegal sites.” NJ is thus pioneering the way for regulatory policy in other states. The DGE is setting a standard for other regulators to build digital marketing into their frameworks, which may open the playing field for the entrance of key players like Google, iGaming affiliates and others into the market. The highly anticipated November date will come, and we will see which way affiliates choose to go. Regardless, leaders in the US regulated market firmly believe the market will see a positive result for 2016. And as the Tropicana VP stated so elegantly, “The end goal is to fully leverage this digital technology and touchpoints like affiliates to make playing online as easy as strolling off the boardwalk and into the casino.” 

“The goal for this policy is to take away from these illegal sites the advertising exposure that is driving business to them.” George Rover, NJDGE

“There seems to be a consensus that digital marketing is not as effective at a state level as it would be in a nationwide open market, notably because of SEM limitations and the small number of affi liates.” Thomas Winter, Landry’s/Golden Nugget

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