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Affiliate Monitor
August 2019
Written by Clear Concise Media
for iGB
Published August 2019
© 2019 iGaming Business Ltd
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the permission of the publisher.
The information contained in this publication is believed to be correct at the time of going to press. While care has been taken to ensure that the information is accurate, the publishers can accept no responsibility for any errors or omissions or for changes to the details given.
Readers are cautioned that forward–looking statements including forecasts are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of companies mentioned in this report and the industry as a whole may differ materially from those expressed or implied by such forward–looking statements.
Author: Scott Longley
Editor: Stephen Carter, Joanne Christie
Typesetting: Character Design
Published by iGaming Business part of Clarion Events.
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Tel: +44 (0) 207 384 7763
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iGaming Business • Affiliate Monitor • August 2019 iii
Contents
Editor’s letter ................................................................................ 1
Executive summary .................................................................. 2
Part 1Results from the first quarter ..................................................... 3
Part 2: M&A update .................................................................................... 10
Part 3: A look ahead ....................................................................................13
Editors Letter
iGaming Business • Affiliate Monitor • August 2019 1
Editor’s letter
Welcome to iGB’s new Affiliate Monitor, a quarterly
companion to our popular Market Monitor. With the main
agents of the recent consolidation drive having followed
the trail blazed by XLMedia to the public markets, visibility of metrics
such as NDCs and the percentage of revenue gained via rev share
deals has enabled a more detailed view of how the top end of the
market is performing.
Generating a larger share of revenues from rev share as opposed
to CPA clearly increases the ability of these businesses not only to
plan but to grow revenues in a long-term sustainable manner, and the
comparative analysis in Part 1 exposes clear differences between the
leading listed players.
This Q1 review also falls within what feels like a defining period in the
affiliate sector’s development, with stakeholders dipping their toes in the US market where the sports
betting expansion looms large across the wider igaming space. The quarter also saw the transition from
dot.com to dot.country regulation in Sweden, a highly material market for several of these businesses.
While understandably bullish in the face of a bumpy transition into a heavily restricted bonusing
environment, author Scott Longley is not convinced by the affiliates’ arguments that regulated markets
such as these are “less risky” and “better structured for growth”, seeing these as more credible coming
from the mouths of operators.
“It is hard to see why the bigger affiliates need to follow the regulated mantra of the operators other
than as a sop to potentially nervous investors in Sweden, where most of the entities are listed”, he says.
The big listed players are of course only one part of the story. In addition to other big names being
privately held – such as Oddschecker, the Racing Post and Cherry’s Fortune Lounge – substantial traffic
and revenues are still driven by the long tail of affiliates working below the listed level. For many of
these, the benefits of working in regulated markets are “somewhat oversold” (see Part 3).
We hope you enjoy this new report and find it useful. Should you have any suggestions or feedback
please don’t hesitate to email me at [email protected]
Stephen CarteriGaming Business
Executive summary
iGaming Business • Affiliate Monitor • August 2019 2
Executive summary
The first quarter numbers from the leading
listed affiliate marketing providers –
Catena Media, Better Collective, Raketech,
Gaming Innovation Group, Net Gaming Europe
and Gambling.com Group – provided a broad
snapshot of how the top end of the market has
been performing.
They by no means represent the whole of the
super affiliate sector. Oddschecker, the Racing
Post and the Cherry Gaming-owned Fortune
Lounge all have claims to be counted among the
upper echelon, along with a number of others.
But they do provide enough data points to
gauge the temperature of the sector at what feels
like another important stage in its progress. With
the expansion of regulated US sports betting
looming large across the entire global gaming
scene, it is no surprise that the affiliate sector has
also been affected by the events of the last 12
months or more, and in a quite profound sense.
Most notably, first Catena Media and then Better
Collective have made significant acquisitions in the
US gaming space and both will be hoping their
bet pays off in the medium to long term. This will
be dealt with later in this report.
Meanwhile, the opening of the Swedish online
market in the first quarter, with all the restrictions
with regard to bonusing, has provided a challenge
for the entire sector. Taken with the advertising ban
in Italy it shows how, much as with the operators,
for affiliates the focus on regulated markets brings
with it negatives as well as positives.
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 3
Collective (41%), Raketech (21.5%) and Gambling.
com (50%) all seeing substantial progress while
Catena managed only an 8% rise and Net Gaming
Europe (-12%) again went backwards.
New depositing customersPerhaps the starkest metric is that of new
depositing customers (NDCs) and it is right
at the top of the tree where the battle gets
interesting. Arguably it is the total NDCs which
gives the simplest measure of the size of the
affiliate business and its relative health. Hence,
we can see that while Catena Media retains top
spot with more than 124,000 new depositing
customers in the first three months of the year,
Better Collective is hard on its heels with 116,000.
Moreover, while Better Collective enjoyed a
whopping 147% rise in NDC numbers year-on-
year, Catena Media actually saw a 7% drop in the
year-on-year total.
Results analysisA look across the results from the six highlighted
companies for the first three months of the
year shows quite a contrast in top-line revenue
performances. On one hand, Better Collective,
Raketech and Gambling.com Group all achieved
significant increases in revenue, of 97%, 78%
and 52%, respectively. On the other, Gaming
Innovation Group’s affiliate arm and Catena
Media achieved relatively meagre 10% and 9%,
respective, year-on-year rises and Net Gaming
Europe actually fell by 6.4%, albeit this was due to
the ending of gaming operations and the move to
concentrate on affiliate operations.
Given the rate of M&A in the sector,
some of the differential can be explained by
recent acquisitions coming into the quarterly
calculations. However, the year-on-year organic
growth rates across five of the six (GIG’s was
undisclosed) shows a similar pattern, with Better
Part 1Results from the first quarter
Table 1: Listed affiliate 1Q19 results comparison table
Metric/companyCatena Media
Better Coll. Rtech
Gambling.com
GIG media serv.
Net Gaming Europe
Revenue (€m) 26.1 14.9 8.7 5.24 9 4.1
YoY revenue rise (%) 9 97 78 52 10 -6.4
Adjusted EBITDA (€m) 11.2 6.5 3.5 1.75 5.2 2.8
YoY adj. EBITDA increase (%) -10 212 38 33 18 -9
EBITDA margin (%) 43 44 54 33 58 63
Pre-tax profit (€m) 1.99 4.9 4.8 1 n/a 1.9
YoY organic growth rate (%) 8 41 21.5 50 Unkn. -12
NDCs 124,007 116,000 28,607 26,525 34,408 Unkn.
YoY NDCs % increase (%) -7 147 76 66 6.25 -15
Proportion of revenues from rev-share (%) 44 72 39 Unkn. 57 40
Source: Company reports
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 4
Chart 1: Better Collective’s focus on sport
Source: Company reports, Redeye
The NDC growth at Better Collective was also
impressive quarter-on-quarter, up 52% from
76,000. It is a growth path which suggests that if
the momentum continues into the second quarter
the company could well surpass Catena Media as
the largest listed affiliate by quarterly NDCs.
Proportion of revenues from revenue shareHowever, the issue with looking purely at NDCs
as a key metric is that it comes with no certainty
of quality of customer. Hence, it is worth looking
at the percentage of revenue gained via revenue-
share arrangements as a potential proxy for
long-term sustainable revenue prospects. In
this sense there is again a clear divide between
Better Collective, with 72% of total revenues
coming from revenue share, compared with 44%
at Catena. The only other affiliate that comes
close to this percentage is GIG’s media services
unit with 57%, though with in-house sign-ups
amounting to 13% of the total business, it might
not be the truest measure.
Analysts at Redeye in Stockholm said in a recent
coverage note for Better Collective they believe
the quality inherent in revenue-share arrangements
means that the company deserves a higher multiple
than any CPA-based business. This, the team wrote,
is because of the long tail of “loyal players which
continues to generate future revenues”, making it
more suitable for communities.
“There is a clear element of skill in sports betting,
making it suitable for interactions and tips sharing
between players,” the analysts added. “The sports
betting vertical is also more accepted by gambling
authorities, and there are several large operators
willing to lobby for online sports betting.”
Hence, in part the differential between Better
Collective and Catena Media can be explained
by way of the former’s greater focus on sports
betting compared to the more online casino-
focused Catena Media (where 41% is sport and
53% is casino).
Moreover, Catena also noted that CPA deals
are far more common in the US, so it might be
wise to temper the enthusiasm for the higher
percentage of revenue-share business at Better
Collective considering its recent acquisition in the
US market.
Sweden The debate around regulated and unregulated
markets – about revenue sustainability and what it
means to be grey in the affiliate space – has been
brought into sharp focus by the opening of the
Swedish market in January this year.
Sweden has been a foundation market
for many of the listed affiliates. For instance,
Catena Media has built up a substantial Swedish
and Scandinavian presence over a series of
acquisitions, including the deals for Wonko Media
in March 2016, Spelbloggare.se in July the same
year, Slotsia in February 2017 and Newcasinos.
com in May that year.
So the less than auspicious opening in the
Swedish regulated market will have been
disappointing to Catena, even as it has tried to
spin the poor opening months as being a long-
term positive.
“For the long term we expect this will prove
beneficial for us,” the company said in its results
statement. “Since operators will need even more
players, there should be even higher demand
for our services. Additionally, with Swedish
Sports betting 78%
Casino 20%
Other 2%
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 5
legislators considering restricting marketing
channels for online gambling, our offering will
grow even stronger.”
A more neutral tone came from Better
Collective, which itself established a greater
presence in Sweden via the €30m Ribacka
acquisition in December last year, right on the
cusp of the market opening.
The company said at the time of the deal
that it considered Sweden to be “one of the
most interesting markets for online sports
betting in Europe”, but like Catena Media it has
clearly to date been left disappointed by the
“report of decreased activity” on the part of the
operators. This left the company summing up the
performance there with the word “satisfactory”.
Similarly sitting on the fence was Raketech,
which said that it has managed the transition to
a regulated market successfully due to long-term
planning but that average player values have
decreased and added that it was difficult to predict
“when, and at what level, they will stabilise”.
Broader regulated market questionsA potentially contentious claim from Redeye
was that regulated and taxed markets were the
most suitable for betting. The “and taxed” part
of this is significant as this would cover Germany,
where many of the larger listed affiliates have a
presence. But, of course, the taxed element only
covers sports and not casino.
The argument cited by the team at Redeye
was somewhat thin. “Better Collective focus
on regulated markets as they provide the best
possible environment for betting behaviour,”
the analysts wrote. “The regulated markets are
also more transparent with predictable rules as
well as high awareness and demand. All in all,
the regulated markets are less risky and better
structured for growth.”
The suggestion that the environment for the
consumer is better in regulated jurisdictions
is potentially true and certainly the evidence
from many regulated territories is that a large
cohort of consumers would prefer to bet with
Chart 2: Catena Media share price, first half 2019
100
90
80
70
60
50
February 2019 April 2019 June 2019
Source: LSE via Google Finance
62.85 SEK Fri, 28 Jun
It is hard to see why the bigger affiliates need to follow the regulated mantra of the operators other than as a sop to potentially nervous investors in Sweden
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 6
a sop to potentially nervous investors in Sweden,
where most of the entities are listed.
In the case of Better Collective, there is also
a further twist to this. The company’s largest
client – at an estimated 25% of total revenues –
is bet365, which, as is well-known, is a privately
owned entity that plays on both sides of the
regulated/unregulated border.
Indeed, arguably a more worrying stat for
investors is the heavy reliance on one major
customer. The analysts at Redeye attempted to
dismiss the inherent risk due to the “sheer size
and diversity of bet365’s operations”. However, it
is far from clear how either necessarily mitigates
Better Collective’s reliance on it.
regulated operators. The hygiene factor does
have a place when it comes to transparency
and predictable rules.
But whether they are “less risky” and “better
structured for growth” is more open to debate.
Certainly, in Sweden as it stands this has not yet
proven to be true, though of course it remains
early days.
But these are arguments for operators,
not necessarily affiliates. There is an idea that
operators would prefer to work with affiliates
similarly committed to the regulated space and
therefore the latter should consider following
down the same pathway. But in truth it is hard to
see why the bigger affiliates need to follow the
regulated mantra of the operators other than as
Chart 3: XL Media share price – one year to end of June 2019
1 day 5 days 1 month 6 months YTD 1 year 5 years Max
120
100
80
60
40
September 2018 January 2019 May 2019
Source: Nasdaq First North via Google Finance
Chart 4: Better Collective share price performance, first half 2019
1 day 5 days 1 month 6 months YTD 1 year 5 years Max
90
80
70
60
50
September 2018 January 2019 May 2019
Source: Nasdaq First North via Google Finance
63.50 GBX 28 Jun 2019
80.50 SEK 28 Jun 2019
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 7
Italy banThe other problematic country is Italy. It was
Catena Media’s acquisition of ASAP Italia which,
arguably, marked the high point of the recent
wave of M&A as it was barely a month after the
deal was announced that the Italian authorities
unveiled their plans to put a halt to all advertising
and marketing of gambling within the country,
including affiliate marketing.
Catena itself tried to look on the bright side in
its first quarter results, and suggested that odds
comparison sites, where there isn’t any form of
invitation to play, “are not considered advertising”
provided they “comply with the principles of self-
restraint, truthfulness and transparency”.
Gambling.com Group also noted the “clarified”
news on “non-prospecting performance
marketing activities”, and added: “The affiliate’s
role in the gambling advertising ecosystem is a
value-add to the consumer and not the kind of
predatory marketing the Italian regulator was
aiming to stop.”
Summing up the pressures in Sweden, the
Netherlands (where the prosecutorial Dutch
gambling authority has had affiliates in its
crosshairs as much as errant operators) and
Italy, Net Gaming Europe said the “ongoing
restructuring” of the European gambling sector
would “continue to have an adverse effect
on our revenue in the short-term”. And chief
executive Marcus Teilman added: “The short-
term uncertainty does not change the long-term
market conditions, but at present it is too early
to say when there will be a lasting recovery in
Europe. Increased political risks lie ahead and are
something we have to live with.”
The share price performancesThe uncertainty is certainly reflected in the share
price performances across the listed affiliate
space. Most clearly suffering is Catena Media,
which has seen its share price more than halve
since its peak in November 2018 – from SEK128 to
a low in May of SEK50 before recovering slightly
to end June at the SEK62 mark.
Also in the doghouse is XL Media, which has
suffered a series of precipitate drops in the past
year. Such is its unloved status that between
late December and early May the company has
bought more than 10 million shares as part of its
share buyback operation for a total of £6.4m.
This has, to date, had only a mild effect (see
share price chart). The programme continued
throughout May and June. As can be seen, the
share price has covered some ground from its late
May lows of 49p.
It’s an altogether different story with Better
Collective, where the shares have enjoyed a
reasonable price performance since floating last
June. Largely due to the prolonged slump in the
value of Catena’s share price, Better Collective
now has a broadly equivalent market cap of
SEK3.4bn, compared to about SEK3.56bn for
Catena.
Better Collective
• Revenues up 97% to €14.9m;
organic growth 41%
• NDCs up 147% to 116,000
• Q1 EBITDA up 212% to €6.5m
• Pre-tax profit €4.9m, up from €1.5m
Revenue share remains the majority of total
revenues at 72%, down from 80% this time
last year. Of the remainder of its revenues, 18%
came from CPA and 10% from other income.
The company noted that beginning in late 2018,
PPC campaigns had been initiated.
Company-by-company results takeaways
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 8
Raketech
• Total revenues up 78% to €8.7m – this
included a €2.3m ‘waived liability’ regarding
a related party. Excluding this, revenues rose
32% to €6.5m
• Organic growth was 21.5%. (It should be
noted that QoQ, revenue excluding the
waived liability fell 15%)
• Adjusted EBITDA was up 38% to €3.5m
• NDCs up 76% to 28,600
Raketech also made much of its continued
M&A ambitions. It mentioned the TVMatsit deal
in Finland as a “good example” of its strategy
of adding in new markets and buying in the
best entrepreneurial talent. The company said
its Finnish casino operations were a strong
contributor to YoY growth.
Catena Media
• Revenues up 9% – without any large
acquisitions, it is fair to say revenue growth
is anaemic. The company said revenues were
“below expectations”
• Costs rose by more than double the rate of
growth in revenues (up 19.9%)
• Adjusted EBITDA down 10%
• New depositing customers (NDCs) were
down 7% to 124,000
• Profit: Alongside the increase in personnel
costs (up 36% to €5.6m), other operating
costs also rose 44% to €5.9m and
depreciation and amortisation rose 85%
to €3.4m. While interest on borrowings
fell by more than half, other finance costs
more than doubled. This all helps explain
the 60% fall in pre-tax profit. The company
blamed the investment in the US market and
financials for the rise in operating expenses.
• Abandoning of 2020 EBITDA target: Significantly, the company has given up
on achieving its target of hitting €100m in
EBITDA by 2020, delaying it to 2021. The
company blamed the lack of progress in the
US rollout and its concentration on organic
growth over acquisitions.
• Financials: Without mentioning the
restrictions on the part of the European
Securities and Markets Authority on the
marketing of CFDs, the financials unit
at Catena clearly suffered, with revenue
dropping back from €1.5m to €1.16m. The
company blamed “historic low market
volatility”. This doesn’t sit with the recent
results from the retail financial trading
sector, where operators have blamed
revenue reverses on the new regulatory
restrictions.
Part 1: Results from the first quarter
iGaming Business • Affiliate Monitor • August 2019 9
Gaming Innovation Group (GIG)
• Total revenues down 13% due to issues in the
Swedish market
• Media services saw a record amount of €9m
for the second quarter in a row
• Growth of 10% was purely organic
Media servicesAnalysts from SEB said the performance of
the media services unit was a positive surprise
given the backdrop in Sweden.
The company said that the media
department was the “main contributor” to
profits. Total EBITDA for the quarter came in
at €4.1m (down from €4.3m in Q1 2018) but
€5.2m came from media services (losses came
in other B2B areas).
First-time depositors stood at 34,408
compared with 32,382 during the same period
last year. Of the FTD total, 7% were referred
to GIG’s own brands, 6% to platform services
clients and 87% to other operators. The
company said the “demand and value from
external partners remained high in the quarter”.
TrendsThe company said it saw growth opportunities,
in particular in North America and Asia.
GoogleThe company said that as of 29 April Google
had begun accepting advertising from gaming
operators in Sweden. However it added that the
new PPC advertising policy in Sweden “does
not allow for the affiliate model at this time”
but the company said it was “hopeful” this
could be a revenue channel in the future.
Net Gaming Europe
• Revenue down more than 6% to €4.1m
• EBITDA was also down 9% to €2.6m
• NDCs were also down 15% to around 110,000
The company blamed the issues with regulation
in Europe for the revenue decline, despite growth
(up 42%) seen in the US (mainly via PokerListings.
com). The US was worth 24% of total revenue in
the first quarter. The company said the negative
organic growth was caused by the phasing out
of paid media operations, along with the move
towards revenue share versus CPAs.
Gambling.com Group• Revenue rose 52% to €5.2m – organic
growth was more than 50%
• Adjusted EBITDA rose 33% to €1.75m
• NDCs were up 66% to 26,525
• Net borrowings now total €15.6m
Gambling.com is trying to make an impression
in New Jersey; it has a licence to cover revenue
share in New Jersey and has launched its own
American Gambling Awards. However, its
comments paint a less than positive picture
about when the US might be profitable: “The
Group has seen strong recent growth in traffic
from the US market but from a relatively small
base and the US market remains a source of
growth for the mid and long term rather than a
major revenue generator at present.”
Part 2: M&A update
iGaming Business • Affiliate Monitor • August 2019 10
The flow of deals in the affiliate space in
the past three or more years has clearly
slowed. According to the deal tally
between January and June 2018, 18 deals were
completed in the space involving 10 acquiring
entities. The pace of deals at points was
dizzying; in April 2018 alone there were six deals,
for instance.
In comparison, in the year between June 2018
and July 2019 there have been just six deals
involving four acquirers and while both the Better
Collective deals notably came with reasonably
high ticket prices, the others were presumably far
less pricey.
Part 2: M&A update
The wild frontierThe most significant deal in recent months was
Better Collective’s big move in the US. In snapping
up the RotoGrinders business, Better Collective
has augmented its existing US-facing offering and
placed itself right at the heart of the battle for the
US sports betting customer.
The RotoGrinders sites:
• rotogrinders.com
• pocketfives.com
• sportshandle.com
• usbets.com
• pennbets.com
Table 1: Acquisitions in the affiliate space, Jan-Jun 2018
Date Acquirer Target Market focus Initial price Total w/ earnout
Jan-18 XL Media Good Game Finland €7m €15m
Jan-18 Cherry/Game Lounge Slot Tracker Scandinavia €1m €1.2m
Jan-18 Catena Media Dreamworx Germany €9.5m
Feb-18 Meta Gambling Afiliados Gaming Latin America Unknown
Mar-18 1st Leads Bingoport.co.uk UK £2m £2.4m
Mar-18 Catena Media BonusSeeker.com US/New jersey $6.5m $16m
Mar-18 Gambling.com Group Bookies.com UK £2m £6.5m
Apr-18 Better Collective Xpertan/Xpert Denmark UD UD
Apr-18 Cherry/Game Lounge TodaysWeb SEO specialist SEK14m
Apr-18 Catena Media BrokerDeal.deGermany - financial services €1.2m €3.6m
Apr-18 Catena Media ParisSportifs.com France €8.2m €13.7m
Apr-18 Catena Media gg.co.uk UK £2m
Apr-18 XL Media WhichBingo UK
May-18 Racing Post Apsley Group UK UD UD
May-18 Raketech Casinofeber.se Sweden UD UD
May-18 Net Gaming Webwiser Germany €2.29m €3.5m
Jun-18 Raketech Shogun Media Scandinavia Unknown Unknown
Jun-18 Catena Media ASAP Italia Italy €12.5m €22m
Source: Company releases
Part 2: M&A update
iGaming Business • Affiliate Monitor • August 2019 11
$21m for 60% of the RotoGrinders business, with
the remaining 40% to be bought between 2022-
24 at a multiple of between five- and 10-times
EBITDA. The company said the valuation will be
determined by the future growth and profitability
of RotoGrinders and Better Collective’s other
business in the US.
Still SwedenAmong the remaining acquisitions, the ones
that stick out are again Better Collective with its
Ribacka deal at the end of last year, and the much
more recent deal from Net Gaming Europe for the
BettingGuide.se business.
Most obviously with the Ribacka deal, which
saw Better Collective lay out an initial €15m
with a further possible €15m dependent on
the subsequent trading performance, it shows
a degree of faith in the potential in Sweden
ahead of launch. Indeed, the deal made the
point about the long-term view of the Swedish
market much more than the comments from the
various operators and affiliates about the revenue
performance in the regulated space since January.
The slowing pace of M&AIn a comment about the recent paucity of
transactions in the affiliate space, the analysts at
Redeye noted that many of Better Collective’s
competitors “have paused their acquisition
expansion strategies due to financials limitations”.
The spate of M&A was largely funded by bank
debt and bond issuance and, particularly with
Catena Media, highly rated shares. Indeed, an
In the US Better Collective is up against some
familiar competitors. Catena Media has previously
established a strong presence in the US via
the acquisition of the NJplay assets back in
December 2016 (when the Supreme Court
decision on PASPA was but a pipe dream).
Catena Media US-facing sites:
• PlayUSA
• PlayNJ
• LegalSportsReport.com
• OnlinePokerReport.com
• NJgamblingsites.com
• Bonusseeker.com
• PlayPicks.com
• TheLines.com
The pair are now talking up the prospects of
what the expanded regulated US sports betting
market might mean for their businesses. Catena
Media said it was “happy” with what its US
business achieved in the first quarter, albeit the
delays in the US roll-out meant the company had
abandoned its 2020 EBITDA target. Suggesting
that the “talk of new states has now turned to
action”, the company said it was likely that US
revenues would double in the second half of 2019
(though it failed to say what its US earnings were
in the first quarter).
Better Collective also, obviously, struck a
positive tone when it announced its RotoGrinders
acquisition, and said it was “preparing for the
next states to open”. The bolstered US capability
certainly came at a price; Better Collective paid
Table 2: Acquisitions in the affiliate space, Jun18-Jun19
Date Acquirer Target Market focus Initial price Total w/ earnout
Dec-18 Better Collective Ribacka Sweden €15m €15m
Mar-19 Natural Intelligence Sidelines US sports UNK UNK
May-19 Better Collective RotoGrinders US sports $21m
Jun-19 Raketech CasinoFever.ca Canada UNK UNK
Jun-19 Net Gaming Europe BettingGuide.se Sweden UNK UNK
Jul-19 Net Gaming Europe BettingOnline.co.uk UK £1.6m £0.6m
Source: Company releases
Part 2: M&A update
iGaming Business • Affiliate Monitor • August 2019 12
important element of the deals Catena has done
have been shares-based, particularly when it comes
to earnouts. Hence the share price slide has come
at an inopportune moment and its attractiveness to
potential targets has been diminished.
Of course, the other reading of the M&A lull is
that the low-hanging fruit has been snapped up.
According to this analysis, the larger listed affiliate
entities no longer see the same benefits from
adding acquired assets as was the case a few
years ago. This would seem to be the case with
Catena, which has suggested recently that it has
been closing sites acquired in recent years.
But the Redeye analysts are not convinced.
“We believe it has made too many acquisitions to
be able to handle them in a constructive fashion,”
they wrote. “Its low organic growth is evidence
of this, and only 50% of its revenues comes from
revenue-share agreements.”
A smaller poolCatena Media is merely the most obvious
example of a company that has gorged itself on
acquisitions in recent years but others have joined
the fray with equal enthusiasm, if not quite the
same appetite.
One obvious consequence of the M&A splurge
in recent years – and a partial explanation for the
relative slowdown in activity in recent months – is
that the more obvious targets have all now been
snapped up.
“Many of the choice opportunities have
been picked off already,” says Charles Gillespie,
chief executive at Gambling.com Group. “The
bigger deals that do happen make sense as the
corporate affiliates now need to do bigger M&A
than ever to continue to move the needle and
hit growth targets. What used to be big is now
considered small.”
One company which has been active in the
past year is Raketech, which has made three
deals in the past 18 months (the most recent deal,
casinoFever.ca in Canada, Shogun Media a year
ago and casinoFeber.se in May last year).
“We will continue to look for companies that
complement our current business,” says Scott
Collins, head of communications and corporate
responsibility at Raketech. “We are experienced
in the process, know what we want and do not
want to rush into anything without finding the
right fit; the right people behind the company
and on fair terms.”
For Collins there are three factors which play into the M&A slowdown:
• There are few remaining high-quality
companies out there willing to sell;
• Prices are too high. The higher competition
increases the price expected by sellers.
Also, past acquisitions might have been too
expensive, and as the current expectations are
based on past overestimated multiples, we are
seeing greatly inflated prices. As such, fewer
buyers are willing to pay high prices;
• The bigger affiliates are now listed companies
and have an added responsibility to make sure
an acquisition will be able to deliver long-term
results. Buyers are therefore more cautious
when evaluating potential M&A targets.
Another company which has also recently been
making acquisitions in the space is Net Gaming
Europe and its chief executive Marcus Teilman
says there are “some qualitative prospects
out there still and we will continue to see new,
innovative ones popping up”.
The entrepreneurial nature of the affiliate space
means it is never static. New sites are cropping
up all the time, enticing new players with newer,
potentially more mobile-based offerings. And
with an obvious pathway through to a potential
sale, it seems unlikely this will be a river that will
necessarily dry up any time soon, regardless of
the regulatory backdrop for gambling.
Part 3: A look ahead
iGaming Business • Affiliate Monitor • August 2019 13
The vibrancy of the entire affiliate space
is worthy of note. A point to make about
the affiliate market is that we tend to hear
about what is happening within the sector from
the top end. By their nature, the listed players
tend to be the larger organisations.
Of course, there are, as mentioned earlier
in this report, some notable big names which
are privately held and therefore less willing to
participate in the wider debate. It means that
what we hear about what is going on in the
affiliate sector is necessarily skewed to the views
of the larger players while the long tail of affiliates
gets somewhat sidelined.
This has particular relevance to the debate about
affiliates and regulated gambling markets. As
hinted at earlier in this report, with the exception
of the US, the focus of the larger affiliates on
regulated markets arguably makes less sense for
the affiliates than it does for the operators.
While there are undoubtedly benefits to
working within regulated markets, for affiliates
at least they might be somewhat oversold. Such
is the view of some affiliates working below the
listed level, such as Feda Mecan, a long-standing
affiliate expert who works with Kafe Rocks.
“I think in many cases there was simply a very
blind bet on regulated markets and an unprepared
Part 3: A look ahead
one,” he says. “No one really investigated the
regulation (or) how the regulation would look.
Of course, it makes sense to stick to regulated
markets, but they are, and will be, tricky. Super
affiliates and all other affiliates simply need to be
more than a one-trick-bonus-listing-pony.”
The oft-heard phrase when it comes to the
debate around regulated jurisdictions, whether
on the operator or affiliate side, is the return to
grey markets. This is clearly a loaded phrase; to
call it a return would presume that operators and
affiliates left in the first place. This obviously isn’t
necessarily the case.
But what we can say is that a refocusing
has become the order of the day with some
elements of the affiliate sector. While for some
in more open and well-regulated jurisdictions,
the prospects of being able to generate business
outside of the regulated regime are very slim
(the UK, Denmark, increasingly Spain and over
time Sweden), the more protracted regulatory
timelines or less-than-perfect regulatory
structures in countries such as the Netherlands,
Germany and Poland make potentially fertile
ground for affiliates.
“I think there could be a pivot back toward grey
markets in general but particularly for smaller
affiliates,” says Gillespie at Gambling.com Group.
I think there could be a pivot back toward grey markets in general but particularly for smaller affiliatesCharles Gillespie, Gambling.com Group
Part 3: A look ahead
iGaming Business • Affiliate Monitor • August 2019 14
“Everyone has been pivoting toward the regulated
markets for years, but the reality is not as rosy
as many expected. To hit their goals, I could see
many companies in the sector reconsidering their
priorities and more heavily targeting markets
which are ‘pre-regulation.’”
The smaller affiliates are very focused on
bringing in leads, and this might be detrimental
when it comes to issues of compliance, suggests
Collins at Raketech.
“For smaller affiliates, whose main focus is to
generate as many leads as possible, compliance
may not be on top of their agenda,” he says.
“These companies will have a harder time
operating in strictly regulated markets and may
therefore choose to focus more on non-regulated
markets with less restrictions.”
However, depending on the operator, the
affiliate and the nature of the relationship
between the two, this might be unsustainable in
the medium to long term.
“It is becoming increasingly important for
affiliates to maintain an image as a trusted
marketing channel that takes compliance seriously,”
he says. “Bigger gambling operators are starting to
roll out compliance rules that need to be followed
regardless of the region, so there is less room for
affiliates to avoid having to follow guidelines.”
According to this analysis, operators who have
the ultimate responsibility for the management
of their brand in multiple territories will only be
interested in working with “trustworthy” affiliates
that will, as Collins suggests, “do the right thing”.
“Therefore, the smaller affiliates who do not
comply with the rules laid out by legislators and
operators will not last long in regulated markets.”
But it might be a different story in some
unregulated territories. Mecan makes the point
that with the bigger affiliates “running down the
same (regulated market) channels”, it leaves behind
something of a vacuum in the greyer markets.
“A big run to the regulated markets by the big
affiliates is the ideal situation for some under-the-
radar small and mid-sized affiliates,” he says. “The
methods most of the smaller affiliates use are still
fine in a lot of unregulated markets and they have
a way easier time flying under the radar.”
A movable feastA longer-term issue for the industry is the rise
of mobile and what that might mean for the
affiliate sector. Mobile in gambling is not a new
phenomenon, of course, but particularly with the
advent of newer regulated states in the US there
is evidence that, if mobile is available, then the
consumer will find their choice of betting app
In the US there is evidence that, if mobile is available, then the consumer will find their choice of betting app without reference to their desktop
A big run to the regulated markets by the big affiliates is the ideal situation for some under-the-radar small and mid-sized affiliatesFeda Mecan, Kafe Rocks
Part 3: A look ahead
iGaming Business • Affiliate Monitor • August 2019 15
without reference to their desktop.
In other words, one of the main routes for
affiliate traffic is effectively bypassed. “This is
again something that was lurking around the
corner for a long time,” says Mecan. “Mobile… will
make the life of many affiliates a bit trickier.”
But still evolution will mean that new
opportunities arise even as others bemoan a
passing business environment. “What is more of
a concern is how some companies are dealing
with mobile tracking and when some of them
try to trick the players around our lead,” Mecan
points out.
“But, you know ,‘history doesn’t repeat itself
but it often rhymes’ and we were always dealing
with issues as an industry. At the end, if you look
into details, most of the complaints from affiliates
(and operators) can be translated to: ‘oh no, we
need to evolve and change, but we loved the
good old times.’”
Such might be the conclusion when it comes to
the vexed issue of gambling advertising. As noted
earlier in this report, Italy’s ban on advertising has
left the affiliate sector wondering to what extent
affiliate marketing is – or isn’t – affected.
Collins points out that any attack on the
advertising of gambling is never good news,
suggesting a censoriousness on the part of the
Advertising restrictions might benefit affiliates, as it could potentially increase our share of advertising spendScott Collins, Raketech
The Italian test case
The test case for what advertising restrictions
might mean for the affiliate sector will be
Italy where, to put it politely, the situation is
about as clear as mud. Simone Cabib is the
chief executive of affiliate aggregator AffilROI,
which works largely in the Italian market. He
says that the lack of clarity is leaving affiliates
“suspicious” and many are taking a wait-and-
see attitude.
“The Italian authority failed in explaining
in a clear way its practical implications, and
there even was a later correction to the initial
regulation proposal,” he says. “Most of the
local operators’ legal offices – bookmakers and
major affiliates – are trying to figure a practical
interpretation of the new law. Rumours are
running wild, and the result is that from one
side affiliates don’t want to take chances in
putting efforts in new projects (or even in
existing ones), and from the other some of the
bookmakers are not opening new affiliation
accounts or even closing some low-performing
ones, until the situation will be clear.”
But as with the threat of advertising
restrictions elsewhere, Cabib is keen to view the
upside for the current situation. “Basically we
believe that in the long run the new regulation
will be a positive thing for affiliate marketing,”
he says. “The fact that other channels of
acquisition will be very limited, will make some
operators leave the market from one side, but
those who will remain in the game will probably
invest more in legal channels. We strongly
believe that affiliation, made in the right and
regulation-compliant way, will benefit from the
new situation.”
Part 3: A look ahead
iGaming Business • Affiliate Monitor • August 2019 16
authorities in any particular jurisdiction that can
bring no good.
“Attacks on gambling advertising aren’t good
news for the igaming industry as a whole,” he
says. “Strict advertising restrictions may lead to
a less competitive industry, with fewer operators,
and players will ultimately lose out as there are
fewer innovative products to choose from. These
attacks also shed a negative light on the industry,
turning gaming into a taboo subject rather than
an entertainment industry that is enjoyed by most
people in moderation.”
However, the effect of bans around above-
the-line advertising are muted at worst and in
a more positive scenario might actually leave
affiliates in a decent position to take advantage
of the restrictions as operators seek alternative
routes to market.
“Advertising restrictions might benefit
affiliates, as it could potentially increase our
share of advertising spend,” says Collins. “In an
We believe that in the long run the new [Italian] regulation will be a positive thing for affiliate marketingSimone Cabib, AffilROI
environment where other advertising options
have been strictly restricted, affiliate media
products that deliver high-quality content would
come out on top.”
Gillespie agrees: “Not only is only good for
affiliates, it is a double-win for affiliates,” he
says. “The fact that operators have fewer viable
channels but the same marketing budget simply
means they have to spend cash somewhere else.
“In comparison to TV, radio and outdoor, people
visiting an affiliate site are actively seeking out
the site at that time,” he adds. “They are not being
hit out of the blue with a gambling ad. The other
win is less of a chance of additional blowback and
over-regulation. The cutback in advertising will
ease the pressure on the sector generally from
the regulators and politicians.”
With regulators generally seeing affiliates as a
benign form of advertising – or frankly not even
considering the sector in the first place – it means
blanket bans are unlikely.
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