Massachusetts Gaming Regulators Reach Compromise for Sports Betting Affiliates

The Massachusetts Gaming Commission (MGC) has finalized its rules on affiliate marketing for the state’s licensed sports betting operators.

Massachusetts gaming sports betting affiliate
The Massachusetts Gaming Commission conducts a meeting in September 2022. The state gaming regulator is limiting how online sportsbooks and affiliate marketing sites work to market internet sports gambling operations. (Image: Axios Boston)

Affiliate marketing is a major component of the legal US sports betting industry, with being a major player. Affiliate marketing as it relates to sports betting deals with how an online sportsbook signs up a new customer.

Sportsbooks compete in a crowded market in the more than 30 states where sports betting is currently legal. Operators spend heavily in promoting their operations and try to entice new bettors to their platforms with incentives such as sign-up deposit bonuses and bonus bets.

Many media websites covering the legal sports betting industry receive commissions when a reader clicks through an advertisement or link to an online sportsbook and registers with the platform. Media outlets are typically compensated for directing the player to the sportsbook with either a revenue-sharing agreement or a cost-per-acquisition (CPA) deal.

Online sports betting in Massachusetts began earlier this month with six platforms, DraftKings, FanDuel, BetMGM, WynnBet, Barstool Sportsbook, and Caesars Sportsbook. Massachusetts was the 24th state in the US to commence legal online sportsbook operations.

Revenue-Sharing Disabled

The MGC during its Monday meeting finalized its affiliate marketing rules. With sports betting advertising the focus of recent scrutiny nationwide, the gaming regulators sought to implement rules that better protect consumers from marketing schemes the state finds questionable.

The five-member MGC, on the advice of its staff, said Monday that Massachusetts sportsbooks won’t be allowed to enter into revenue-sharing agreements with affiliate marketers. Common in many other legal sports betting states, revenue-sharing pacts relate to a sportsbook sharing a sliver of the income generated by a player who signed up for the online sportsbook or iGaming site with the website where the player’s registration originated.

Revenue-sharing agreements provide the affiliate with a piece of the customer’s losses in perpetuity. The MGC believes those partnership agreements between the gaming operator and marketer aren’t in the best interest of consumers.

No Sports Wagering Operator may enter into an agreement with a third party to conduct advertising, marketing, or branding on behalf of, or to the benefit of, the licensee, in exchange for a percentage of net sports wagering revenue earned from users that the third party directs or causes to be directed to the Operator,” the MGC’s updated rules on third parties now reads.

However, the MGC opted to allow affiliates to receive a CPA fee per new customer that creates an online sports betting account. The fee, however, must be a one-time payment and not based on the amount gambled by the customer.

MGC Levies Fine

In related regulatory news in Massachusetts, the MGC announced a $20K fine issued to Memoire nightclub at Wynn Resorts’ Encore Boston Harbor. The state said the financial penalty was for the nightclub’s failure to comply with alcohol service regulations.

Memoire agreed to the civil penalty after conceding that one of its employees in September 2022 committed two noncompliance incidents. The state didn’t detail the matter but said the nightclub “took appropriate disciplinary action” against the staff member.

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