The Massachusetts Gaming Commission unanimously voted Thursday to temporarily waive a restriction on sports betting affiliate marketers. As a result, licensed sports betting operators will be permitted to enter into agreements leading into the March 10 launch of mobile wagering in the state.
The MGC voted 5-0 to provide a waiver in reference to language in 205 Code of Massachusetts Regulation 256 that barred financial arrangements between sportsbooks and affiliate marketing companies. While the commission did not remove the language, it approved a waiver.
With that waiver, sports betting operators can pay affiliates via a Cost Per Acquisition (CPA) model and a revenue sharing model.
The regulatory body met three times this week to discuss and vote on the issue. It ultimately decided to allow affiliates to market sports betting apps in Massachusetts rather than risk allowing unregulated messaging and advertising to rule the internet search results.
The MGC voted to permit CPA and revenue share arrangements until April 14. At that time, the commission may take action to make it permanent. However, a higher degree of licensure will be required for revenue sharing agreements.
Massachusetts will launch online sports betting at 10 a.m. ET on March 10. Six apps will go live that day.
CPA vs. revenue share deals
Under revenue share arrangements, a sportsbook, such as DraftKings Massachusetts Sportsbook, pays a marketing affiliate a share of the revenue from each customer the affiliate delivers to them. Under CPA, the sportsbook only pays a one-time finders fee for each new registered customer. This fee is sometimes referred to as a “bounty.”
Chairperson Cathy Judd-Stein expressed her concern over revenue sharing earlier this week.
“The inherent motive to get people to join and earn (under) rev sharing is counteractive to our responsible gaming efforts,” Stein said.
A few of the commissioners explained that they felt a sports betting market with affiliate marketers was preferable to one without.
“I’m comfortable (providing a waiver to allow affiliates) because someone is going to fill the space,” commissioner Jordan Maynard said in the MGC meeting on Wednesday. “And we should be regulating this.”
Commissioner Eileen O’Brien agreed, but stopped short of welcoming affiliates without first establishing new regulations in the future. She voted to approve a waiver. But she reiterated that she did not want to see the restrictive language removed from state gaming code yet.
“There is a place for those marketers,” O’Brien said. “But it’s a much bigger discussion than just striking the language.”
MGC focused on preserving responsible gambling
At the heart of the debate on affiliate marketing and online advertising of sports betting was the MGC’s concern for responsible gaming. The state requires sports betting license holders to include responsible gaming messaging and access to resources.
But, the original regulatory language from the MGC was modeled after the most conservative policies in the country. The vote to remove restrictions on such activity by Massachusetts regulators is a nod to the realities of how a successful market performs.
“This is how the industry works — it’s industry standard,” said commissioner Nakisha Skinner, referring to the reliance on affiliates to gather customers and get out responsible messaging on sports betting.
O’Brien said, “My job isn’t to make the affiliates money. It’s to protect the consumers in the Commonwealth. We have operators split on whether affiliate marketing is disruptive or helpful.”
She urged the commission to restrict a waiver to affecting the CPA only. She was the lone nay vote approving revenue sharing. The MGC voted 5-0 to approve CPA deals.
The commission also passed a new regulation that classifies advertisers such as affiliate marketers as vendors. The new regulation treats affiliates in a similar manner as other vendors under Massachusetts gaming code.
Under the new advertising regulations, affiliates must be registered. They may also upgrade to a licensed stature as a “sports wagering vendor,” or potentially be required to do so. The MGC has hinted that it may at a later time require sports wagering vendors to license if they want to partake in revenue sharing.
Mobile sports betting apps will go live on March 10. They will launch at 10 a.m. ET. Sportsbooks will be offering Massachusetts sports betting bonuses as the market opens.