GPWA Times Magazine - Issue 44 - July 2019

to its consumers. The focus on social responsibility will also influence the affiliate revenue model. At the end of March 2019, Germany’s federal states agreed upon the amended Third German State Treaty on Gambling. Leaving aside the prohibition of gaming services, the high turnover tax and the ban on in-play betting, the treaty con- tinues to include a maximum spending limit of €1,000 per player per month. Imposing such a limit will influence how operators deal with affiliates and on what business terms. The cost per acquisition of first-time depositors has to reflect the average revenue per user. Among the information presented by William Hill in its annual results was some data on the cost per acquisition (CPA) of online customers and the average revenue per user (ARPU). Between 2017 and 2018, both the cost of acquisition and revenue per user had fallen for U.K. and international customers. The explanation was that a strategy of volume acquisition of mass market customers meant lower CPA, but also lower revenues from those users. But what has also fallen more substantially is the profit margin per customer – the difference between the ARPU and the CPA. For U.K. customers, the margin fell by 38% to GB £69 in 2018, and for international customers it dropped 22% to GB £123. Whatever revenue model an affiliate employs, a falling CPA or ARPU is likely to mean a fall in revenue for the affiliate. They will have to focus on the quality of traffic they direct to their chosen operator. The U.K. is one of WilliamHill’s key markets, and the Gambling Commission has been very aggressive on issuing fines and warnings in recent years for compliance and social responsibility failures. But a recent speech by deputy Labour leader TomWatson suggests that a Labour government would be even stricter on gambling. Watson said: “…Labour will apply limits to the level of spend. It’s about enhanced due diligence and customer protection…. Stake limits should be enforced on certain products when evidence shows they are linked to higher rates of problem gambling. That’s what we saw during the debate over fixed odds betting termi- nals…. So why not apply it to other products, too? Why would a limit to a game offline not apply to the same game online? Offline slot games, so-called B3 machines, have a maximum stake of £2. Online, that limit does not exist, even though many of the games are essentially the same…. Through these limits to spend, stake and speed, Labour will ensure that there are options available for the regulation of online gambling.” A cap on what a customer can spend on a particular game influ- ences what operators are willing to spend in acquiring them. It also restricts what can be offered to third parties like affiliates if Rewriting the Rulebook iGaming operators have gotten much better at generating traffic through their own content . If they feel that dealing with third parties is too much of a risk to their license, they will reduce their reliance on affiliates . 27 G P W A t i m e s . o r g