New York Gaming Regulator Agrees To Softened Affiliate Rules

May 23, 2023
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New York gaming regulators on Monday revised proposed rules that originally would have significantly limited the ability for affiliate marketers to support the state's mobile sports-betting industry.

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New York gaming regulators on Monday (May 22) revised proposed rules that originally would have significantly limited the ability for affiliate marketers to support the state's mobile sports-betting industry.

The New York State Gaming Commission (NYSGC) initially proposed rules in February that would have prohibited cost-per-acquisition (CPA) affiliate agreements in addition to revenue-share models.

The proposed rules specifically would have prohibited sports-betting operators from entering third-party agreements “when compensation for such services is dependent on, or related to, the volume of patrons, wagers placed or the outcome of wagers.”

“Upon further consideration, staff believes that the proposed regulation would effectively prohibit affiliate marketing businesses from being compensated, which was unintended,” said Robert Williams, the gaming commission’s executive director, during Monday's meeting.

The new rule would only prohibit revenue-share models, which are not permitted under state law governing casino gaming, but would allow for affiliates to utilize a CPA model for compensation.

However, NYSGC chair Brian O'Dwyer warned that the commission could still revisit the rule if affiliate marketing becomes problematic.

“I personally will be looking very, very carefully at the marketing in the next six months to a year as to see whether that in fact is appropriate and that the advertising is done in such a way as to be efficacious, but at the same time that will be cognizant of the questions of problem gambling that we have said better come to the forefront,” O'Dwyer said.

“If I find that within the next six months to a year that there has been significant problems with the type of advertising that's coming down, I will come back to the staff and to my fellow commissioners and ask that we revisit that rule and prohibit third-party advertising.”

Massachusetts went through a similar process to New York, with similarly strict rules that were challenged by affiliates before the commission ultimately relented to allow the CPA model. Massachusetts’ decision was cited in a memorandum from New York commission staff to the commissioners as a factor in their recommendation.

In addition to the advertising rules, Williams discussed two other situations of note, including the proposed $150m purchase of PointsBet’s U.S. operations by Fanatics Betting and Gaming, and the ongoing process to award three new casino licenses around New York City.

PointsBet is one of nine operators to hold a New York license, and Williams said commission staff has been working with Fanatics to provide licensing documentation and pre-opening requirements prior to license consideration.

“Given that Fanatics is new to New York and the gaming market, when the ownership transfer is complete, I would recommend consideration of the transaction at the commissioner level,” Williams said.

On the casino licensing process, Williams said that responses to the more than 600 questions that were submitted to the commission as part of the first round of question-and-answers were “taking longer than expected” after initially projecting a three-week turnaround in early March.

“I was incorrect,” Williams deadpanned, but added that the Q&As are a critical step in the process and “taking the time to do this right is crucial.”

There is no statutory requirement for when the responses must be issued, and Williams said that some of the questions are particularly complicated with multiple parts, as well as some questions that are similar in content that require a consistent response.

“I appreciate the patience of the potential applicants and the potentially impacted local government entities who undoubtedly understand the necessity for us to get all responses correct, and they understand that there is no expectation for when the first round will be complete,” Williams said.

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