PokerStars Slashes Affiliate Payments: The Sequel

Remember last fall, when the Amaya Gaming-owned PokerStars announced to its affiliate partners that certain underperformers among them would be trimmed?  Stars is at again, slashing more overhead from its operational move in a removal of lifetime payments made to affiliates in connection with long-running player accounts.

PokerStars LogoNews of the unilateral removal of lifetime legacy payments for affiliates surfaced via e-mails sent to Stars’ affiliate partners at the start of May.  Here’s a sample of one such letter:

Dear [Affiliate name],

As we look towards the future, PokerStars wants to significantly grow the game of poker by introducing the game to new audiences and continue to acquire recreational players. Consequently, we are announcing plans to rebalance the PokerStars affiliate payment program.

Our existing agreement with you requires us to give 14 days’ notice of changes, but in this instance, we will give 30 days’ notice, so these changes will take effect from June 1, 2015.

From June 1, 2015, PokerStars will pay revenue shares to affiliates for only the first two years of activity on a player’s account. This will affect all referrals by affiliates, including retrospectively affecting those players referred prior to 1 June, 2015.

We believe that this change will ensure that the PokerStars affiliate program rewards affiliates who join PokerStars in introducing the game to new audiences, rather than the current program which disproportionately pays affiliates for rake generated by existing players.

Over the last few years, the global online poker industry has changed significantly, and we must change with it. Unfortunately, the realities of today’s marketplace means that fewer and fewer new player acquisitions are coming from affiliate marketing. As a result, we must rebalance the incentives to benefit affiliates who maintain and grow new player acquisition.

We recognise that this will have a significant impact on some affiliates. Consequently, PokerStars is launching a series of new and exciting efforts to drive significant growth in the poker economy. We believe that these efforts provide a great business opportunity for affiliates who choose to join us in growing the poker world.

We have three primary plans for growing poker:

1. Entering new markets;

2. Creating consumer demand and excitement through innovative marketing and promotions that can reach mainstream audiences;

3. Continue to innovate with new and exciting forms of poker that will appeal to wider demographics.

This means that PokerStars will invest more (in terms of both staff time and direct expenditure) in marketing the game of poker to new audiences. Affiliates have an opportunity to support these marketing efforts and benefit from PokerStars’ new investments in growing poker.

The move from lifetime to two-year affiliate payments from the industry’s largest player, particularly in such a manner where the affiliates themselves may have little recourse, may signal the death knell for such “lifetime” revenue-share deals.  Online gambling’s traditional affiliate models have long been blasted as being antiquated and out of touch with market realities, yet few other viable options have surfaced.  A traditional CPA (“cost per action” or “cost per acquisition” model) is one alternative commonly found in the industry, and may receive more play in the future.

PokerStars’ claims for growing poker by entering new markets, creating dazzling new promotions and exciting new games to play all sounds well and good, but at the same time, it rings a bit empty.  Poker is what poker is, and Amaya and all other online-gaming firms remain hamstrung to a certain extent by the whims and accessibilities surrounding the global online market.

In Amaya’s case, in particular, the company remains captive to its long-term plans to reenter the fledgling regulated US market.  The United States was the consumer giant of the industry in the days before 2011’s “Black Friday,” and the company continues to invest heavily in political initiatives and business partnerships which have yet to bear fruit.

As expected, the move from Amaya was met with a fierce outcry from affiliate-based industry boards.  Several have proclaimed that the cutback gives them incentive to promote competitors to the the exclusion of PokerStars, since one of the problems with PokerStars is that the site is so dominant in terms of market share, it’s rather more difficult to find “new” players who need or want to open Stars accounts.

At the least, it appears that in the process of trimming operational overhead, Stars has opened the door to competitors who might want to gain space in the market.

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