Ian Sims, co-founder of marketing compliance firm, Rightlander, explains the changing regulatory landscape for affiliates – and what firms can do to stay on the right side of the law.
iGAMING TIMES: The importance of affiliate compliance is not going away any time soon. What is the current state of play?
IAN SIMS: There’s no doubt that the majority of affiliates have woken up to the fact that compliance is not an option in regulated territories but there are still a lot of issues out there. One of the more interesting observations recently is the conflict that is apparent between marketing and compliance. We see evidence that some affiliates and marketing agencies are still treading a fine line, in some cases publishing content and taking steps to ensure that it won’t appear appear in Google, perhaps with a naive belief that this will keep it away from prying eyes. It is clear that some people still believe that the UK Gambling Commission is looking for issues via Google whereas the more serious breaches often come via consumer complaints.
We also still come across unethical marketing practices which have proved successful enough for the owner of that campaign to compromise on compliance in order to continue to reap the benefits. One of the things we strongly recommend now to licensees is that they consider separating the compliance and marketing roles, especially if the marketing role is an incentivised position. It is still important for the compliance officer to understand what an affiliate does and how they do it, so having the roles work closely together is important, but asking a marketing person to bring in traffic and be accountable for compliance is creating the potential for a conflict of interest. Many of our clients have taken this step now and it is not without its considerations but from a business perspective it would seem a sensible move.
iGT: Do you think the increase in regulation is good for the industry? Will we see a time when affiliates themselves are licensed?
IS: I’ve always been an advocate of regulation because I believe a happy player is better for everyone. That said, the recent change to UK regulations that insists a player is fully verified before they deposit is problematical for me because as a player, when you sign up to play somewhere you are effectively testing that operator out. You don’t know at that point if you will stay because every player wants something different and every operator does things differently. To know that you have to go through the hassle of verification just to find out if it is somewhere you want to gamble puts me off. I worry now that stricter regulation may drive players to grey market operators where there is no UK licence or player protection, much as the UIGEA did in the USA.
As for affiliate licensing, we know that this is a requirement in the US and it will no doubt feature elsewhere around the globe but in the UK, the UKGC explained to me in a recent meeting that at present the regulatory framework does not facilitate the work involved. I wouldn’t rule it out down the line, but I think this will depend largely on how affiliates behave in the interim period and while there are other priorities it is unlikely. In fact, the UKGC recently announced their 2019/2020 business plan and affiliate licensing was not on the roadmap although interestingly, game developers are.
iGT: What impact is all of this having on operators? How have they responded? What have been the greatest challenges?
IS: As you’d expect, compliance adds an overhead to any business but the first mile in any newly regulated territory is always going to be the hardest and once the procedure is established, it can settle into a routine that is comfortable for most businesses. As alluded to above, the initial reaction to combine the compliance role with the marketing role has presented some unique challenges but in many cases there was little option: with budgets already allocated and affiliate compliance causing a rather sudden sea-change, many operators found they had to fire-fight a little. The response to regulation generally has been cautiously positive or at least, seen to be a means to an end that will ultimately benefit the industry, so there hasn’t been much opposition to the concept of applying marketing compliance initiatives in most quarters. Understanding what was actually wanted was and still is a challenge to some degree as the regulators won’t generally offer too many specifics because it creates the opportunity for unethical marketeers to exploit loopholes. This lack of transparency is probably still a challenge as it is human nature to test boundaries!
It’s undoubtedly had a financial impact on operators with some now having massive compliance budgets and it wouldn’t surprise me to hear that the viability of affiliate marketing is an ongoing conversation in many offices. It’s only going to take one bad apple to upset the apple cart, not only for operators but for other affiliates, too. Complacency is also a danger as it shouldn’t require fines to remind operators of the need to prioritise the ongoing commitment to a wholly compliant marketing channel.
iGT: What tools are available to operators to help with affiliate compliance? What role is Rightlander playing in all of this?
IS: It’s no surprise that there are tools on the market to assist with affiliate compliance – the sheer scale of the task in ensuring millions of pages across tens of thousands of sites and thousands of affiliates remain compliant in different territories, each with different compliance rules, is just too much to monitor manually, efficiently and cost-effectively. In fact, even technology can’t provide all the answers: for example, how do you deal with a website that rotates content and shows different things to different people in a random fashion? The answer is you can never be 100% sure you have caught everything, but technology can at least revisit the site on a regular basis and build up a more complete picture.
The tools on the market vary widely. A dedicated compliance tool such as Rightlander manages the bulk of the task outside of the operator environment, throws the net wide across millions of pages and delivers results when issues are found. There are several tools which now combine marketing functions with basic compliance functions that allow users to delve into Google and conduct their own searches across prominent pages and there are niche tools which focus in on finding content on infringing websites specifically, an area that the UKGC have also specifically stated they expect operators to monitor.
iGT: To give an idea of the task at hand, and how you can help, how many pages has Rightlander scanned to date? How many compliance violation alerts?
IS: Rightlander is currently scanning over eight million pages of gambling-related affiliate and social media content every month – and that’s just in the UK. Sweden, Denmark, the USA and many more countries are gradually evolving their affiliate marketing compliance regulations and it won’t be long before that number above is doubled or even trebled.
When it comes to issues found, it’s impossible to know the exact answer because each operator has their own criteria for measuring compliant content. For example, we produce reports which measure how accurately an affiliate is representing the significant terms and conditions alongside a bonus offer. Some operators look for 90 percent accuracy while others would be happy with 75 percent. Similarly, removing marketing content that suggests that gambling can improve a player’s life is a top priority for UK regulators but a lot of the terminology used is open to interpretation so while we can identify content that raises red flags in this area, not all of it need necessarily be deemed an issue.
iGT: How will you continue to develop your products and services to meet the ever-changing demands of regulators/watchdogs?
IS: In actual fact, Rightlander now evolves more as a result of client requirements than it does regulatory guidelines. The technology is pretty flexible in that it can cater for most things a regulator throws at us already but it is still having to learn how each of our clients builds the process into their workflow and as result, we are constantly adding functionality for either individual clients or across the software in general. The focus at the moment is on helping compliance staff to save time by making the compliance process faster and as easy to manage as possible while remaining incredibly efficient in detecting the issues.
iGT: Anything else to add?
IS: In conclusion, operators and affiliates are getting a handle on affiliate compliance and automated compliance monitoring tools are now a core part of this ongoing process. However, as the panic dies down and compliance assumes more of a background task, there is a danger that misplaced accountability within an organisation could result in distractions and conflicts of interest and a nasty surprise further down the line. Now is a good time in my opinion to review the allocation of this responsibility to ensure the business is properly protected.