Affiliate revenue question

[Sambucatus]

Hello Casinomeister forum,

I’ve used the casinomeister site as a point of reference for some time now but, as you can see by my post count, this is my first post.

I work for a soon to be launched casino affiliate and we are in the process of making deals with several partners.

One question which springs to mind is: how do casinos arrive at their net revenue figure? For example some casinos charge as high as 28% of gross revenue in administrative fees whereas others charge under 20%. Is it legitimate that some casinos charge much more than other in fees?

My other question is how ‘bonus costs’ are calculated. For example if a player receives a bonus is the full value of the bonus deducted from payments due even if they don’t clear it? Given that most casinos deem ‘bought chips’ to be played before ‘bonus chips’ does this affect the way that payments are calculated?
For example suppose a player deposited £20 and got a £20 bonus which needs to be cleared. If the bet £20 with their real money and win is the win credited to the bonus account or real money account? If it is credited to the bonus account does this affect the amount the affiliate is due to receive?

Thanks in advance,

Will

 

[Webzcas]

A bit late in replying here, but as a general rule MOST not all casino affiliate programs offer a rev share starting at 25% of net revenue accrued. Several programs offer more for the first couple of months.

With regards bonuses, these are deducted from the net revenue figure, but if played back, this is then cancelled out.

Before you go live with your site, you might also want to do some research as to which properties you are going to work with, from a player as well as an affiliate perspective.

 

[tomgalanis]

Sorry - just seen this myself. What we'd all love is a nice tidy list of who deducts what from gross revenue (which is essentially customer losses less customer winnings) to come to a net revenue figure from which affiliates are paid a percentage.

Sadly, no such list exists - and for good reason from the operator's perspective... they're just not that keen to tell you!

Things that can get deducted as a set percentage include:

1) Customer Bonus (if not done at a customer by customer basis)
2) Betting/Gaming Tax (this varies from jurisdiction to jurisdiction, although you'll find this to be somewhere between 1 and 5 percent with casinos licensed in Gibraltar, Malta, Isle of Man etc. If the casino holds a license in the UK, Germany, France, Spain etc, the tax is going to be higher. Note - when it comes to promoting casinos to Nevada or New Jersey later in the year - the tax element will be higher, consequently that net revenue sum less.
3) Credit Card Chargebacks, Customer Fraud, Customer Debts etc - some casinos do this on a customer by customer level. This is more likely with casinos who run their own affiliate software, or at least their own customer backend software.
4) Software license fee - this is the big one. Casinos all have deals in place with software providers, such as Playtech, Microgaming, RTG etc. This deal involves the software house retaining a % of all revenues from the operator. A good rule of thumb is: the larger the brand, the less the percentage paid to the software house - all about volume of course. So smaller brands tend to have to forego a greater % to the software house... Now - the key is how much of this %, if any is taken before affiliate revenues are calculated and how much does this entail. This is when you should be somewhat apprehensive about doing a deal with a casino offering 50% net rev share and no-negative carryover...
5) Payment Processing fees - operators are charged in the region of 1-5% on all transactions. Again, this is a volume based thing so the same as above applies. It is down to the operator how much, if any of this they levy on to the affiliate.

So the bottom line is this. Some casinos, notably one I represent, TradaCasino, pay out on gross revenue less the customer bonus. No other charge is levied to the affiliate, but you should expect to see a smaller percentage.

Others deduct significantly more, but offer a higher percentage. It is technically nigh on impossible for a casino to profit from a 50%, no negative carry-over deal without making significant deductions (or dare I say it, do something else), so be on alert to read the terms and conditions carefully - ask your affiliate manager if needs be. The honest ones with nothing to hide will tell you what is deducted and to what rate (it is something you can work out easily for yourself if you drop some money in there).

But a caveat - the deal you seek should take in to account the quality of traffic you're looking to push. Remember, the CPA option is always there with some brands, although again, be wary of the triggers on that too. Quite often a $300 CPA can be too good to be true...

PM me if you'd like any free of charge advice

 

[tomgalanis]

My other question is how ‘bonus costs’ are calculated. For example if a player receives a bonus is the full value of the bonus deducted from payments due even if they don’t clear it? Given that most casinos deem ‘bought chips’ to be played before ‘bonus chips’ does this affect the way that payments are calculated?
For example suppose a player deposited £20 and got a £20 bonus which needs to be cleared. If the bet £20 with their real money and win is the win credited to the bonus account or real money account? If it is credited to the bonus account does this affect the amount the affiliate is due to receive?

Thanks in advance,

Will

This is a big one which I didn't fully address. What should technically happen in affiliate earnings @25% is this.

A customer deposits £100 gets given a £100 bonus. Before they do anything, the affiliate's account should read: -£100 gross, less 10% gross to net, -£90 net, earnings -£22.50.

If the customer drops the bonus back to the house, or the bonus expires, the gross and net revenue should go back to zero along with the affiliate earnings. In the event that there is a no deposit bonus, say a £10 NDB, the following should apply:

-£10 gross, less 10% gross to net, -£9 net, earnings -£2.25. If the bonus is lost, all back to zero. If the customer plays through the bonus and withdraws, the bonus and any customer winnings should be levied on to the affiliate, after a gross to net revenue calculation.

In the instance of a customer using real money vs bonus money, this then becomes academic. Where this becomes a problem is if bonuses are not included in the gross to net calculation at all, or not on a customer level.

I would be keen to hear Webzcas' views on this to see how often he sees such eventualities clearly unfold in his affiliate accounts. My money is on rarely...