Published 18th February 2020
There are many benefits to working as an affiliate in the gambling industry.
From the freedom to visit the conference bar early to the absence of many gambling licence responsibilities, affiliates enjoy privileges usually only reserved for the National Lottery…
So it’s surprising that any affiliate would want to take the plunge into a world of operator volatility and risk from which they are protected (for now, at least).
Yet, in the last iGB Affiliate survey in 2018, more than a third of affiliates questioned (37%) stated that they would indeed consider becoming an operator or were going through the process of becoming one at the time.
At Lindar, we completed our own operator journey with the launch of MrQ that same summer. We did so off the back of four years as a white label owner and even longer as an affiliate, first with Two Little Fleas and, more recently, with OnlineBingo.co.uk.
MrQ is a proprietary bingo and slots platform developed, designed and managed from our Hertfordshire office and governed by our own GB remote gambling licence.
And, while a part of our business still works as an affiliate, our core business journey to licensed operator, via white labels, has taught us many lessons we wish we knew before we started.
So if you’re thinking about making the transition yourself, maybe grab that beer from the bar, find a seat where you won’t be pestered, hide your visitor badge and discover the five most important things we didn’t know before moving from affiliate to operator.
1. IT’S DIFFICULT TO BUILD A BINGO SITE FROM SCRATCH
They say ignorance is bliss, but for us it was a blessing. If we knew or anticipated every detail, obstacle and cost that would go into launching a proprietary bingo platform, we probably wouldn’t have even started.
There’s a lot more to it than creating a random number generator and flicking a switch. One of the first problems we actually encountered was hiring staff aligned with our vision.
One developer turned us down after estimating that the build would cost £6m. We needed people who believed MrQ was possible in the face of doubt. Another early misconception was the belief that creating a set of basic designs will lead to equally simple software development. We overlooked the nuances of what would actually be involved and the effect of macro regulatory changes on our production, plans and projections.
2. THE CHALLENGES OF PIVOTING FROM A MARKETING COMPANY TO A CUSTOMER-FOCUSED BUSINESS
Bundling 10 people into a meeting room to decide on the best way to deal with one player is not the streamlined customer service process we hoped for prior to launch.
Before MrQ, we knew very little about how to talk to customers and even less about the breadth of situations we’d shortly be presented with. Establishing a better understanding of service as a gambling operator, and recruiting such experience from the outset, may have lessened the stress of what was a genuine baptism of fire.
3. THE IMPACT OF THE REMOTE GAMBLING DUTY RISE TO 21%
Although we already had an understanding of the effects of remote gambling duty (RGD) as a white label operator, we certainly underestimated the impact of its increase as a proprietary software owner.
The rise to 21% in April last year has made acquisition costs higher, made marketing ROI more difficult to achieve and required us to adjust our growth strategy to better accommodate additional expenses.
We obviously would have made more money had we launched MrQ a year or two earlier, but as recent months have shown, there is very little stagnation in the world of gambling regulation.
Perhaps our mistake was simply misunderstanding our vulnerability in relation to shifting RG trends and public discourse.
4. ACQUISITION COSTS AND THE ABUSE OF NO WAGERING OFFERS
Our decision to launch as a ‘no wagering’ site with uncapped, real money wins, set us apart from the vast majority of our direct competition at launch, but also came at a cost.
No wagering offers are still in the minority of online gambling promotions, with many operators favouring the play-through restrictions, withdrawal limits and win caps we were actively trying to avoid.
In hindsight, we probably placed too much faith in players recognising – or even caring about – the nuances of our offer structure versus those of others. When placed alongside promises of 500 free spins (with 85x wagering), £1,000 casino bonus (split over four deposits) and £100s in free bets (with a maximum £10 win), our offer of 10 real money spins (for a £10 deposit) struggled to get noticed.
Plus, when it does get noticed, it often gets abused. Without the protection of wagering requirements, we’ve seen our offers shared on social media and exploited in ways we had not seen before.
Fortunately, the past year of regulatory crackdowns seems to have reduced the proportion of largely dishonest promotions and increased player awareness of the true benefits of playing at a no wagering site.
5. THE CHALLENGE OF ACHIEVING BINGO ROOM LIQUIDITY IN A NON-NETWORKED ENVIRONMENT
As the former operator of more than five white label bingo sites, we’ve always benefitted from the networked nature of game rooms.
We could attract new players with guarantees that sessions would run, there would be people online to chat with and large prize pools to play for.
We didn’t fully appreciate the challenge of having to fill our empty bingo rooms from scratch, on a new platform that was unfamiliar to players.
Our initial launch offer of 30 days of free bingo filled up our free room, but we struggled to migrate players into paid rooms once the trial period had elapsed.
As a result, much of our acquisition has focused on more valuable slots players which has been boosted further by the addition of new games via our integration with Pariplay Fusion.
Soon we hope to be able to offer bingo bonuses and voucher credits (no wagering required, of course), which will give us more flexibility in terms of what we can offer new bingo players who join.
Another key lever we can pull in our favour as a proprietary operator is affiliate relationships and opportunities. We’re able to quickly create dedicated landing pages, generate exclusive offers and tailor the user journey according to the source.
THE OPERATING THEATRE
One of our core motivations for creating MrQ was that we believed online bingo could be done better.
As an affiliate, we’d seen and experienced the issues which plagued bloated software and set out to create a better optimised environment for players. Working as an affiliate allows for a more complete understanding of the wider industry landscape without the threat of being blinded by attachment to a single product.
Transitioning to an operator is a long and hard process, especially in the UK, and it doesn’t look like it’ll get any easier. The imminent ban on credit card deposits, proposed online stake limits and mandatory integration into Gamstop, only strengthens the barriers to entry for new operators.
But, if done right, the rewards are there. As I discussed in my iGB article ‘Waving the white label flag’ back in October 2019, new regulations bring new opportunities.
White label brands are arguably worst affected and most squeezed by bans and blame, with parent licence holders looking to protect themselves against third party infractions and threats to their certification.
A general contraction of the white label market and a levelling of the bonus playing field in the form of wagering reductions and T&C standardisation leaves space for innovative new products to capitalise on the fallout.
Innovation will always win. So, if you’re an affiliate that’s identified an opportunity and have the tenacity to see it through, take note of our top five lessons above and take your place at the operating table. There may be easier ways to make money in gambling, but there are few more satisfying.