PR: ECOGRA REPORT ON THE GRAND PRIVÉ AFFILIATE PROGRAM INVESTIGATION

[Pinababy69]

eCOGRA REPORT ON THE GRAND PRIVÉ AFFILIATE PROGRAM INVESTIGATION


15 February 2010 - Following a number of Internet-based allegations concerning the closure of the Grand Privé Affiliate Program (‘the Program’) on 1 December 2008, eCOGRA's Compliance and Advisory Services department was engaged by the management of the company on 17 November 2009.

Pursuant to an independent and fair resolution of the issues involved, eCOGRA was tasked with:

Independently investigating the manner in which the Program was terminated and the reasons therefore;

Carrying out a full and independent review of the program software and data to confirm amounts owed to claimants;

Determining a fair settlement for claimants, taking into consideration the potential lifetime earnings of each affiliate’s respective players; and
Compiling a full and transparent report which will be publicly released on conclusion of the investigation.

According to our mandate, the following actions were taken in order to ensure the maximum number of affiliates were afforded the opportunity to submit legitimate and verifiable claims:

On 7 December 2009 both eCOGRA and Grand Privé issued widely distributed press releases advising affiliates of the opportunity to submit claims, and also urging affiliate watchdog organisations to assist in ensuring their respective affiliate members were informed of this opportunity;

After noting affiliate concerns regarding the limited reach of affiliate representative bodies and webmasters, Grand Privé management expanded the communications exercise by emailing every affiliate who had active players on the Program’s records during the 3 months prior to 1 December 2008 when the Program closed; and

An online Claim Submission Form for affiliates was made available from 7 to 31 December 2009 and claims were collated by eCOGRA.

Our investigation included confirming the accuracy and completeness of the database list of emails used in the expanded communications exercise in 2. above.



Our findings are as follows:

1. Termination of the Affiliate Program and reasons therefore

Following various meetings with management and an onsite investigation at the Grand Privé operational base during the months of January and February 2010, an inspection of supporting evidence allowed eCOGRA to substantiate that:

For commercial reasons, in August 2008 a decision to close the Program effective 1 December 2008 was taken.

System problems were being experienced on an ongoing basis due to the Program using software in Beta testing. In order to maintain the integrity of the data three permanent employees were required to manage the Program software. In addition the software provider was required to spend an extensive amount of time assisting and troubleshooting ongoing system problems. This resulted in escalating costs, deteriorating service levels and reputational damage.

Due to the high operational overheads and the relatively small portion of income being derived from the affiliate business associated with the Program, losses were incurred by the Program over a period of more than 12 months.

After carefully considering alternative courses of action, management decided to close the Program in order to protect other areas of the organisation from further losses.

All affiliates were informed of the intended closure by email on 7 November 2008 and encouraged to move their accounts and players to the Villa Fortuna Affiliate Program, which used improved affiliate program software. A follow up email with the same message was sent again on 21 November 2008. Termination was conducted according to the termination clauses stipulated in the affiliate contracts.

During November 2008 management entered into mutually agreed compensation arrangements for related future player activity with the majority of affiliates who at that time had players considered to be reasonably active. We have however confirmed that certain affiliates were overlooked in this process.

On 1 December 2008 all affiliates were paid November commissions, and the Program was officially closed.

2. Review of the program software and data to confirm amounts owing to claimants

58 claims were submitted to eCOGRA, of which 7 were found to be invalid (1), and 26 earned commissions during the period 1 December 2008 to 31 December 2009. The following steps were taken by two eCOGRA employees, both qualified Chartered Accountants with substantial industry experience, in order to substantiate amounts owing to claimants during this period:

A comprehensive completeness and accuracy audit on the affiliate database provided by the Program was conducted.

The relevant claimants’ information was located in the database and information used for the linking and tracking of players associated with the claimants was obtained, in part using information supplied in the claim submissions received from affiliates.

This information was used to manually source all players linked to the relevant claimants within the casino back office database.

The underlying data for the players linked to the relevant claimants was scrutinised to identify players who were still active in the period 1 December 2008 to 31 December 2009.

The actual commission amounts per affiliate were then recalculated using the gaming data, from 1 December 2008 to 31 December 2009, for the linked active players.

3. Determination of a fair settlement for claimants

We have been able to accurately calculate the commission accruing to each claimant for the period 1 December 2008 to 31 December 2009.

In order to take into account any potential future earnings, we have added to this amount an additional commission amount for any claimant’s players that were active during the 6 month period prior to 31 December 2009. The effect of this is that we have implied an average lifetime value for each of these players of at least 3.5 times the actual(2) average lifetime of all Grand Privé players.

In our opinion, this is fair and reasonable compensation for the likely future earnings of these players.

We wish to thank all those representing affiliates’ interests for their feedback and support throughout the investigation. We would also like to note that the investigation team received the full cooperation of the Grand Privé management.


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(1)Utilising all information provided by claimants (Name, Email, Banner Tag, Website, etc.), no records could be found in the Program database.

(2)The actual average lifetime value of players is confidential information which we are unable to disclose.



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[dominique]

Just gathering initial webmaster reports - seems like the players were untagged after the aff program closed?

[jetset]

Grand Prve have just released a press statement through Lyceum's PR set-up.

Anyone know whether any affiliates have been paid yet as a result of this investigation?

Here's the GP release:

GRAND PRIVÉ AFFILIATES PAID

Following an independent third party investigation, the payment of 26 accrued commissions, including 'life of player' adjustments, have been made

15 February 2010 (London, UK) - Following the closure of its Grand Privé Affiliate Program on 1st December 2008, a dispute surfaced over certain affiliate commissions which resulted in the company requesting an investigation through the independent, third party services of industry standards and player protection body eCOGRA.

The result of this protracted and detailed investigation, conducted by industry-experienced Chartered Accountants who were given full access to the company's records, has shown that 26 affiliate commissions of relatively low amounts were overlooked in the initial closure process.

Grand Privé apologises for this unintentional omission, has accepted the eCOGRA findings and will pay these accrued commissions, including any commission earned during the 13 month period to 31 December 2009 and 'life of player' adjustments.

A copy of the full eCOGRA report can be viewed at www.ecogra.org (ecogra site) and at www.grandprive.com (Grand Privé site) in keeping with Grand Privé's commitment to eCOGRA that the report would be made public on completion of the investigation.

The report covers communication of the investigation to interested parties; the methodology used by the eCOGRA team and its conclusions.

Highlights include:

1) Confirmation by the investigating team that software problems were experienced on an ongoing basis, soaking up various resources to maintain the integrity of the program and resulting in escalating costs, deteriorating service levels and reputational damage. Losses accrued to the company which were not viable in relation to the relatively small income being derived, and after some 12 months this led to a decision to close the program.

2) The investigators confirm that two communications exercises were carried out by the program on 7th and 21st November 2008 which culminated in settlement agreements with affiliates who had active players and compensation with their November commissions. The program was then terminated, with affiliates encouraged to enter the Villa Fortuna Affiliate Program with its superior administrative facilities.

3) However, the exhaustive eCOGRA investigation, assisted by claims from affiliates, has established that in the above process some 26 legitimate commissions were overlooked. These omissions were most definitely unintentional and are regretted.

4) In addressing the compensation due to these 26 affiliates, the eCOGRA auditors were able to accurately calculate the commission accruing to each claimant, for the period 1 December 2008, when the program closed, to 31 December 2009 when the investigation began. To this has been added an amount to compensate for 'life of player'. The effect of this is that we have implied an average lifetime value for each of these players of at least 3.5 times the actual average lifetime of all Grand Privé players.

5) Grand Privé accepts the professional recommendation of the eCOGRA investigators that this is fair and reasonable compensation.

The 26 affiliates will be paid the accrued amounts by 26 February 2010, and Grand Privé has closed the book on this unfortunate and regrettable issue.

Management would like to thank those affiliates who submitted claims for their information, along with those affiliate representative bodies who assisted the eCOGRA investigation team by publicising the enquiry.

Appreciation is also due to eCOGRA, which conducted this very professional and detailed investigation for no charge as a service to the industry.

[Webzcas]

The 26 affiliates will be paid the accrued amounts by 26 February 2010, and Grand Privé has closed the book on this unfortunate and regrettable issue.

Only 26 Affiliates owed commissions. You have to be kidding me. I think Dom is right that players were untagged when the affiliate program closed.

I expect ecogra will be in for a lot of flak in the coming days from the webmaster community and to be honest I think it will be well deserved........

For anyone interested in the responses by affiliate webmasters to this report by ecogra, check out this thread over on the GPWA - http://www.gpwa.org/forum/gp-ecogra-...tml#post583682

[dominique]

The opinions expressed by webmasters at GPWA are mirrored in other webmaster communities.

Personally, the amount discovered to be owed to me makes no sense at all.

Unfortunately, since the aff website is gone, I have no way to prove that.

[Webzcas]

Other Webmaster Forums with responses on this:

http://www.affiliateguarddog.com/for...lls-t2279.html

http://www.casinoaffiliateprograms.c...stigation.html

[jetset]

On the contrary - I think a number of folks who have been guesstimating that this issue involved "hundreds of thousands of dollars" in unpaid commissions (perhaps not realising or accepting that GP had already carried out a compensation negotiation with most of those impacted) may have a little egg on their faces.

IMO it comes down to whether the de facto professional skills and personal integrity of eCOGRA's chartered accountants on the investigation team are accepted...and whether such an organisation would risk everything in a reputational sense to dishonestly engage in a cover up for one medium sized online gambling group when it has business and professional relationships with most of the major groups in the industry and highly respected trade bodies like EGBA.

I have some admiration for eCOGRA management in grasping this very prickly nettle, given the emotionalism and massive condemnation that has characterised the affiliate sector over the past year or more on this GP dispute.

That took some balls and a lot of confidence in the auditing experience and skills of the investigating team, knowing that many affiliates would choose to believe the worst no matter what the outcome of the audit.

Judging by the investigating team's recommendations mentioned in the statement above it appears that they have come up with a reasonably generous compensation formula that exceeds the usual 'average of player lifetme" calc and takes into consideration the past year since the GP aff. program closure.

Hell - there's even an apology from GP in there along with the commitment to pay those who have been verified!

Was it a genuine oversight on GP's part, subsequently exacerbated by an increasingly hardass management attitude as the insults and criticism flew? No dollar numbers are mentioned but it would seem foolhardy for any management to let a dispute get to the levels this one did for what may have been a relatively small amount of dollar compensation....but then logic can fly out the window as emotions surge in management too.

Whatever, and again depending on what your personal perception is, at least an investigation has now been completed and flaws exposed have been addressed (once GP pays those involved, of course!)

[dominique]

I suspect that Grand Prive untagged players pursuant to the aff program closure.

It is the only way I could explain the amount alotted to me, which is less than one month's traditional revenues.

It would be quite difficult for ecogra to follow actual amounts if players were untagged.

[Webzcas]

Jetset, as an affiliate webmaster that was fortunate to have never promoted Grand Prive, I personally have not been affected by this.

BUT

I am inclined to agree with Dom. It certainly looks like the majority of players were untagged when the program closed down.

I cannot believe that only 26 affiliates were due monies.

So in my view there are two scenarios here.

Either eCOGRA have been party to a cover up. Something I very very very much doubt is the case.

Or Grand Prive have not provided eCOGRA with the details of all the untagged players and shaving not in the barbers sense has been carried out enmasse.

I honestly believe the fall out from this, could be very damaging to eCOGRA regardless.

But this is not my battle. I will be watching from the sidelines.

[jetset]

I am not involved in the affiliate world, and it is not my battle either, but logic tells me that eCOGRA would be unlikely to allow itself to be used as a pawn by GP in an issue as high profile as this - for the reasons I gave previously.

Affiliates appear to have forgotten that eCOGRA is not some penny ante outfit of dubious integrity, but a large and professional organisation staffed by qualified people whose work is respected by major corporates and trade bodies in the industry.

But instead of speculating on tagged or untagged players etc etc etc (or any other new wrinkle that can be introduced) I would recommend that Dom and others actually communicate with the CEO at eCOGRA and document their fears with facts, seeking an assurance from him that this aspect was covered in the investigation....or not. And if not what he intends doing about it.

I look forward to his reaction.

Let's at least deal with facts and not speculation as this latest GP chapter unfolds.

Edited to postulate that the lower player activity being claimed by affiliates (see Dom's post above as an example) could be the result of the widespread damnation of GP that the affiliate community undertook over the past year or more, which presumably could have overlapped onto player choices and perceptions.