As one might expect, in a city that never sleeps, gambling is big business in New York. Since the launch of sportsbooks in January 2022, The rapid rise of an empire and surpasses all other jurisdictions. However, with further analysis, the situation surrounding the nature of the industry becomes more complex and the picture is not as rosy as it once was.
New York is known for its high tax environment, which has had a significant negative impact on operator profits. With the Empire State’s 51 percent tax on gambling operators and New York’s strict rules against deductions for promotions, it doesn’t provide as much of a lucrative environment for gambling operators to turn a profit. But how do these restrictions affect affiliates?
How Affiliates Work
If one digs into the revenue share agreement, it’s easy to see that this is where the affiliates make decent profits. This is especially true for bigger, more established names.take NoDeposit365, focusing on no deposit bonusesFor example, its team of experts was on the scene long before demand for online gambling exploded. While the secret to their success is the inclusion of a secret ingredient, the foundations of their past and present achievements are far from neuroscience.
The affiliate business model works in that one party, such as an online gambling operator, pays a percentage of the profits to another party (the affiliate) for the services provided. In New York, however, the revenue generated by gambling operators after heavy taxes is generally low. Depending on how the alliance arrangement is made, this could have some advantages, especially if the alliance is profiting from cost-per-acquisition (CPA) deals.
Understand the cost of each acquisition transaction
In the case of established CPA transactions, affiliates will receive a flat rate when a customer engages in an agreed action (such as signing a contract with a gambling operator, placing a wager or, in most cases, making a deposit).
While under normal circumstances a revenue share would be more lucrative than a CPA deal, especially in the long run, this is not the case in an environment like New York State.
Here, even though a pre-tax income-sharing arrangement works well for the affiliate, it’s likely to be paid out only after taxes are deducted, making everything less attractive.
So it is understandable why affiliates would choose to do CPA deals when working with casino operators in New York. Obviously, they’re getting a lot more financially than if they signed a revenue share agreement.
Alliance Industry Perspectives
Leaders in the affiliate marketing space agree that working with New York-based operators for CPA deals is in their favor. For example, BestOdds co-founder Will Armitage expressed a positive attitude, saying his company unwittingly profited from what he called the “unique Empire State landscape.”
Armitage went on to explain that, unlike more established competitors, startup affiliates typically do CPA deals until they prove their worth to the business. However, the unique environment provided by New York serves these branches well.
Generally speaking, for whether CPA deals or revenue share models are bestArmitage said it depends on the stickiness and quality of the traffic the affiliates channel the way casino operators do.
New York’s online gambling industry is still in its infancy, and despite BestOdds’ short-term success in the Empire State, Armitage said it has yet to reconsider how it does business in other states.
He also acknowledged that, as a start-up affiliate, BestOdds does not have the same negotiating power as a more established affiliate and, as such, is bound to be able to drive revenue share deals everywhere, which has always been their goal despite the difficulties of applying for revenue share in the eastern states. This is required in terms of licenses.
The Future of New York Affiliates
It’s still early in the game, and only time will tell if the revenue-sharing deal will be more attractive to the New York branch. So, for now, it’s likely that the larger affiliates will steer clear of a busy football season. Veteran affiliates that have successfully negotiated revenue-sharing models will want gamblers to return to casino operators in large numbers during the NFL season.
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