GPWA Times Magazine - Issue 29 - July 2014

“We believe, at this point, we can save £15 million to £20 million against what we would otherwise have spent in 2015. . . . Across thebusiness there'svery strongbot- tom-upexaminationofcostsandheadcount taking place over the course of the next two months. We'll see what that yields.” AndWilliamHill affiliates (and affiliates of other operators) should expect that marketing and affiliate costs will come under great scrutiny as firms look to cut costs.Toppingwasexplicit about this fact: “We'regoing tobe looking at ourmarket- ingmonies. . . . Therewill be areas of cost sharing through the profit share type ar- rangements we have with some software suppliers and affiliates and so on. Those are in themix.” Cutting through the corporate speak, the cost-saving measures adopted by iGam- ingoperators could include: • Employing fewer affiliatemanagers • Reducing the relianceon affiliates as a sourceofmarketing activity • Beingmore selective about affiliates theyworkwith • Reducing the revenue sharegiven to affiliates • Changing thebasis bywhich affiliates earn revenue Also linked to the mitigation of higher taxes and a desire to cut costs is the bo- nus culture that drives Internet gambling marketing. It appears likely that under the new U.K. point of consumption tax bonuses and free bets given by sports- books will be liable for the 15 percent tax rate, too. The reason for this is that free bets given inU.K. betting shops are already liable for the tax and the govern- ment did not want to create a discrep- ancy. Free bets/spins in online gaming products are tax deductible. Having to take a 15 percent hit on sportsbook free bets is going to both limit the use of bonuses and reduce their generos- ity. If you are a sports betting affiliate that uses tempting bonus offers to at- tract new customers you might have to adapt your strategy after theWorldCup because the bonuses will become a lot less eye-catching. “ Under thenew regulatory setupboth operators and affiliates have the same three options open to them: Get big, Get nicheor Get out.” COVER STORY Affiliatesmightbe feelingsomepain starting in the fourthquarterof 2014. Affiliates, get ready: The tax clock is ticking