Prohibition of Affiliates Repealed in Massachusetts’ State Regulation Update

Will Massachusetts Allow Affiliates in Sports Betting? Regulations Not Yet Set In Stone

Discussions look hopeful in Massachusetts, where regulators hear from operators in the sports betting industry as to why affiliate marketing should be allowed.

Massachusetts is gearing up for online sports betting to go live in the state. But ahead of the imminent March launch there is still much up for discussion among regulators and sports betting operators. On February 27, the Massachusetts Gaming Commission held a roundtable discussion with operators set for go-time in the market including FanDuel, BetMGM, and Caesars. It is a bold as it is a welcome step in the online gambling sector, especially for esteemed and trustworthy affiliates such as, who have contributed so much to the industry.

The discussion at hand was centered around the regulations to do with third-party affiliates, a common relationship in the wider industry. Currently, regulations have heavy limits surrounding sports betting affiliates, however this meeting was a chance for industry players to try and turn the tides – to loosen up restrictions to allow a more common model.

What is an affiliate?

An affiliate is another company or entity that funnels leads to a business through its own marketing efforts. Each lead that comes through to the business will usually result in a kickback to the affiliate.

This is a way for companies to reach their advertising further without paying an upfront cost. They can also use this to determine which affiliates have a bigger impact on sales, and seek out similar people or businesses to be influencers or partners. For affiliates, it is only their time they invest to chase leads to funnel to the business.

The kickback to the affiliate is usually given after a customer hands over a sum of money to the business. For most affiliate marketing, this is when a customer buys a product or service through an affiliate’s link to the original business. Affiliates may also get a kickback simply for someone to sign up at the business, or they may get residual income every time a customer makes a purchase – even if the customer only dealt with the affiliate once.

What other businesses use affiliate marketing?

Affiliate marketing is all over the web. If you have ever come across a review website with links to a number of shopping links – e.g. Dave’s Top 10 Hiking Packs or 7 Must-Have Beauty Scores in 2023 – the links will likely be affiliate links. This means that the hosting website of the list receives a small sum if you click through and purchase one of the items from the store they recommended. It’s the digital equivalent of a finder’s fee.

If you have come across a YouTube clip where they are talking up a certain product and tell you to use a particular code if you purchase through a website – that’s an affiliate, too.

Why was Massachusetts concerned about affiliates in online gambling?

As the regulations stand, currently in Massachusetts before the sports betting launch, companies are banned from engaging affiliates under a Cost Per Acquisition (CPA) or Revenue Sharing agreement. Considering that these types of advertising models are the most common within the affiliate marketing world, and online gambling in particular, it was a considerable blow to companies in the space. In the roundtable discussion, BetMGM noted that CPA agreements made up the majority of their affiliate relationship deals in other markets. It was also a blow to affiliate marketers, some of whom had already signed up for relationship agreements with the companies before the release of the restrictions.

It can be interesting to note that way back in 2013 New Jersey had similar restrictions, although once the industry matured the regulations were relaxed, as overseeing bodies became assured that the CPA deals were legitimate and not a source of untoward behavior in gambling more widely.

Has there been an outcome yet?

While the roundtable discussion ensured that everyone’s voice in the room was heard, there has been no ruling as yet on the affiliate restrictions. The results of the discussion and proposed changes to regulations will be decided upon shortly. Industry players are hopeful that talks will lead to a better outcome than the current written texts provide. Caesars have already said that they will not engage in revenue-based affiliate marketing models unless the restrictions are taken away, as the current landscape is too tricky and they don’t want to risk their license within the state.

Meanwhile, in New York

Over in New York there are similar discussions and proposed regulations are underway. In newly proposed regulations, the state will also ban third party affiliate advertising, marketing, and branding that is related to the number of players affiliates draw in, the wagers placed, or wager outcomes. These proposed regulations are also up for discussion for 60 days, during which time companies will have a chance to voice their opinions on the matter. Operators and affiliates hope that their efforts to educate lawmakers about affiliate programs and the benefits involved, while keeping players safe, will not go unnoticed. 

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