United States of Affiliates: how the sector could hold the key to US market success

The narrative around the gold rush that is the US sports betting market has been firmly focused on operators trying to crack the code to profitability. The presence of the big three, in DraftKings, FanDuel and BetMGM, with a strong supporting cast of international outfits such as bet365 and local firms like the recently launched Prophet Exchange, has resulted in a market share scramble like no other. As these firms burn through dollars at a rate of knots and spout expectations and tales of fortune, headlines within and outside the industry will duly reflect these players. However, under the radar, the affiliate side of the industry is also progressing steadily but surely in the US. Big European players have made their mark, such as Better Collective and Catena Media, while Gambling.com Group and XLMedia continue to perform well. Manchester-based Checkd Group recently secured an Ontario licence to complement its existing presence in 15 US states and shifted commercial manager Callum Broxton to New York to become the group’s head of US operations. Speaking to EGR, Broxton says it made “complete business sense” to expand beyond the M60 and growing the US and Canada was of paramount importance to the affiliate. He reveals he will consider building out a team from his New York base but will continue to use the knowledge of local experts to produce content. Broxton goes on to note the FlashPicks website has been rigorously rebooted by the UK-based Checkd Dev team and that the launch of a new user-friendly betting companion app is in the works.

Tough competition

Despite being live in 15 states and with plans in place for growth, Checkd is still up against some big players in the US. Better Collective splashed out $240m on Action Network, an acquisition that helped drive Q2 2022 US revenue up 90% to €13.2m. CEO Jesper Søgaard said on an analyst call following the results that the Copenhagen-based business would continue to plough investment into its US division. Søgaard said: “We see a lot of opportunity in the US and have made the decision to invest significantly in that market. That is also related to adding people and making sure we get the best content writers and people to manage the business. It is a very aggressive approach, but we really believe we should go for the opportunity.” Better Collective isn’t the only European-based affiliate making a name for itself in the US. Rival Catena Media all but confirmed it was putting its eggs in a US-shaped basket after commencing a strategic review into its entire European business over concerns regarding a lack of realised synergies from previous M&A deals. The review could put both UK- and Malta-based staff at risk of redundancy. Catena Media said the move and re-allocation of resources would provide “maximum value for the company and its shareholders going forward”. Catena Media CEO Michael Daly previously told EGR: “North America has to be our focus. We’ve made indications at possibly listing there because the investor market is also different and growing. The ROI is better in North America right now than anywhere else. We’d be doing a disservice to our shareholders and our teams everywhere, even if we’re not putting as many dollars into Europe as we are in North America.” Elsewhere, Gambling.com Group’s North American revenue skyrocketed 342% to $6.2m in Q2, with the affiliate also going live in Ontario, showing the sector is in rude health. CEO Charles Gillespie didn’t rule out dipping into Europe too despite the positive growth of the group’s North American arm. Gambling.com Group recently filed a shelf offering which will allow the group to sell securities to the public with an eye to fund future M&A. Gillespie said: “We still have a preference for US M&A, but we wouldn’t be doing our job if we didn’t also consider the attractive European M&A targets that are out there. If you look at us and some of our peers and you compare those businesses in Europe, Europe’s a big place.” Broxton is unfazed by the competition, instead arguing that the affiliate market does not need to be a race to the top for market share but can in fact be spread out between competing companies. He highlights the different approach from Checkd, centred around developing a community, its strong social media presence as well as tech-based solutions. He says: “The market is large and fertile enough for affiliates of all sizes to occupy its various niches. We are not planning to reinvent the wheel but to transpose what we have found has worked so well in the UK. “There has been a whirlwind of M&A activity in the US affiliate space, amid the huge landgrab for new customers, with no sign of a slowdown any time soon. With the development of tech solutions, a major strength of ours, we believe this level of expertise will prove very attractive in the US market.” Broxton goes on to champion the savviness of US sports bettors, having been “obsessed” with stats from the early days of DFS, as well as the shifting regulatory landscape allowing New York to go live. He adds: “With a number of huge states yet to legalise sports betting, we have barely scratched the surface in terms of peak NFL betting. Looking at the population figures for California, Texas and Florida alone, added to the fact that more than half of all NFL franchises are based in states that either currently bans online sports betting or does not make it widely available, the potential is clear.”

Burn baby, burn

And while this groundwork has been put in, with affiliates expanding into new states with new commercial partnerships, a definitive shift is on the horizon. And as with most things in the US, they tend to be bigger and bolder than its European counterpart. Wild sign-up offers of $3,000 and a bonfire of marketing dollars were the flavour of the month, but as pressure continues to grow over routes to profitability, this tact is being pulled back – a withdrawal that leaves a vacuum which affiliates are looking to fill with haste. Søgaard noted that because of the way Better Collective’s business model operates, a shift of operators looking to work with affiliates on a more regular basis was only a good thing. During the same analyst call, Søgaard said: “I think this trend of a changed focus on how they do marketing is potentially favouring us because we are performance-based. Whenever they spend with us it is immediate revenue and when you work on revenue share it is profitable. We are a very attractive marketing channel when they are considering the mix.” For Broxton, it was “inevitable” that the short-term muscle flexing and outlandish offers would come to a natural end. The quick out-the-blocks approach to grab attention and initial market share would have to plateau, leaving affiliates to move in and take an “increasingly important role”. He continues: “The key for affiliates now is to attract the casual betting market, who will not necessarily have hungrily signed up to every offer out in front of them. If we can help to educate the tens of millions more people who now have access to sports betting compared to a couple of years ago, smoothing their journey towards placing an educated, fun bet, then as an industry sector we will have a major role in defining the industry moving forward.” While affiliates cannot actively escape engaging in mega-monied spend, from acquisitions to increasing headcount, there is now a consensus the sector has a far greater role to play in the US than first envisioned. While operators talk of micro-betting, NFTs and the eventual arrival of igaming, wringing out customers throughout the entire entertainment ecosystem, without a competent affiliate side helping to deliver these clicks and dollars, the American dream may well never be achieved.