Running up that hill: part 2

By iGBA Editorial Team

You can’t always avoid the speedbumps in the road, but forewarned is prepared, argues Will Armitage in part two of his five-article series on the challenges of scaling an independent US affiliate startup. This edition he shares his experiences – and advice – on dealing with the fallout from sportsbooks being forced to tighten their belts and move from lossmaking land-grabs onto the path to profitability

Semper paratus is the motto of the US Coast Guard. It translates as ‘Always Prepared’ or ‘Always Ready’ depending on which Latin dictionary you use. Well, heeding the contents of my articles should prove helpful to those younger affiliates navigating the waters of the US gaming industry for the first time.

My first article touched on the frustration felt by affiliates being dependent upon complex onboarding funnels at the sportsbooks. A lack of data at the micro player level is another bugbear for us. Armed with some insightful data, affiliates would be better placed to optimise and fish in certain ponds to attract better value customers for the sportsbooks.

In other industries, there seems to be more genuine collaboration with businesses that are happy and motivated to share data with affiliates for what is ultimately their own benefit. The issue with US gaming affiliates is that building the tech to facilitate such anonymised data sharing is not high up on the Project Planning Group’s list of priorities.


That actually segways nicely onto my principal theme for this piece: priorities.

A joy of running an unlisted business, apart from there being a lesser burden from an IR perspective, is that you are not beholden to the whims of Wall Street. Instead, you can focus on doing what is best for the business and your existing shareholders. (Note that a regular cadence of no-holds-barred updates for shareholders of private businesses is very important. It is always a great lead indicator of a business going to the wall when a shareholder of a startup receives only sporadic updates!)

When you operate a public company, you are burdened with a whole other level of supervision and obligations which can be both onerous and time consuming. I always feel sympathy for CEOs and their IR teams when you hear the phrase ‘activist investor takes a stake in X!’ You know they are already struggling to keep their particular business on an even keel and then along comes some belligerent shareholder to make their life hell by demanding a break-up of the business or a change of strategy. Witness Carl Icahn’s courting of Caesars in recent years. Learning that such a titan of the American financial landscape is agitating at the gates must be an exhausting and nerve-wracking state of affairs.

The point I wish to make here is that whether the demands of Wall Street are concentrated in the hands of one sole corporate raider, or in the collective of major banks’ analyst departments, two things always ring true.  First, if you fail to live up to expectations a company’s share price will be hit. Second, everybody likes to hop on and off the same bandwagon.

Looking back to the period 2019-2021, Wall Street was perfectly content to see the major sportsbook operators deploy staggering spend on the land grab that took place. It’s fine to be so loss-making when you are building both your brand and database during the nascent years of the US sports betting and igaming market.

A golden period

For affiliates, this was indeed a golden period. They enjoyed generous deals with the sportsbooks, generous bonuses with which to attract their audiences and generous takeover multiples. There was also less competition among the affiliate community. I’ll touch more on this point in my fourth article, but it’s something worth remembering.

For as long those banks’ analysts believed in the “scale at (nearly) all costs” storyline, there was a happy medium among them and the CEOs of US gaming companies. Keep that funnel wide open and attracting new customers. That was the playbook at that time. And it worked.

Lavish account opening offers at the sportsbooks were the bread and butter for many an affiliate. (I find it rather ironic that the data showed that sometimes these account opening offers were so generous to the potential customer that it positively scared them away from signing up!)

No one really cared about the quantum of losses or when would a major sportsbook turn a profit, until they suddenly did.

Enter 2022 and a very different world dynamic, with inflation rearing its ugly head.

It did not matter whether you were a betting operator, a darling of the fintech world or a mining company, suddenly analysts of every sector were seeking more of the ‘p’ word – profit.

The result for the US gaming industry has been one of tightening belts, especially across brand and paid marketing, in addition to giving away less enticing bonuses. Wall Street is calling the shots now and dictating their business models for them.

The trickle-down effect for a smaller, independent affiliate is that you must work harder to convert and attract new customers than you were doing several years ago. With inflation likely to be here for a good while yet and profits being what the analysts, and thus investors, expect, I think the first half of 2023 will see the end for a few mid-tier and smaller affiliates in the US gaming industry.

They won’t have the ammunition with which to survive and succeed. With sportsbooks spending less on their own advertising in 2023 and account opening offers being reined in, the inquisitive new customers will be fewer in number and less likely to convert into a FTD.

Therefore, my advice to a new entrant targeting the US betting and igaming affiliate space this year would be to operate a broad strategy for acquisition. The landscape is very different to the early or pre-Covid days.

If you focus just on one avenue to attract an audience, it will be very tough to scale or succeed purely in your sole vertical. You need a multipronged approach to reach as wide a range of potential customers as possible – and then you need to retain them…

Photo by Nicola Barts


Will Armitage

spent 12 years working for IG Group (IGG.L), the world’s leading spread betting company; firstly, on the dealing desk before moving into management where he ended up as Head of Europe. After leaving IG, he worked for a US wine start-up, Lot18, in which he was an investor. Since then, he has been an active angel investor, mentor and entrepreneur. He co-founded his latest start-up, BestOdds, in January 2021, with the website going live in August of last year.

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