Bonuses: Are Affiliates the Losers?

[dendrite]

Do casino programs retain affiliates working capital (earned cash) using bonus credits that are not actual money?

I'm not sure if this has been discussed before, but I think it may be quite an important issue.

Hopefully, I can explain it clearly, but lets see...

The issue concerns programs that give players bonus credits and then instantly subtracts this amount from the affiliate net win. The thing that puzzles me about this, is that the bonus is not real money. It is has not been drawn from a bank account, has cost the casino nothing, has not been deposited by the player and earns no interest for anyone. Yes, it can get converted to real money, but as it stands, unless it is withdrawn, a bonus is a non-cash item

It strikes me, that whilst the bonus is not real money, it is (surprisingly) treated as if it is real money for the affiliate - it gets subtracted from their real-money earnings


Affiliates are treated differently from players and the program itself
- For the casino it has no negative value, as it has not been cashed out, they are not losing or earning any interest payments on a bonus. It does not yet exist as real money.

- For the player, it is the same. It is not real money as it can't be cashed out, the player did not deposit it, and they can not earn any interest on it.

- For the affiliate, the money is subtracted and affects the affiliate net win immediately, so is treated as if it is real money. It counter-balances, real earned cash they have made from other players during the month. So, for the affiliate, they lose out on working capital


Is it relevant?
Now, it may not sound like much, but if you had say, 20 programs, each keeping withholding of $1000 of your real money, then that is $20,000 that you could have in your bank account, that could be earning you money via interest payments or you could be using it to improve your business.

Now, imagine that they have 100 affiliates like that - it would equate to $2m of cash being withheld from affiliate accounts under the guise that the bonuses are real money.


Personally, I think bonus credits should only be treated as if they were real money, once they become cashable


Rival Casinos
It's worth noting that (most) Rival Casinos do not do this. It seems that with Rival, when there is a real money deposit, you get your percentage of that deposit credited to your Affiliate Net Win (ANW), irrespective of any credits given as bonuses. Only when the player cashes out and the bonus becomes real money, do you then have those earnings subtracted from your affiliate net win.



Is this something that should be taken into account by AGD when assessing a program?

Is there a terminology for this, like 'Withholds Bonus Credits as if Real Cash' Just as we have the 'Negative Rollover' terminology

[Guard Dog]

That is an excellent post! As soon as I saw this, I thought..... We should have a 'Nomination System' for Best Post of the month or something like that.

You are right that Rival does not do this. RTG (and especially Gambling Wages) do this all the time and it generally reduces affiliate commissions to nothing month after month.

I believe it is just a way to steal commissions, you are right. Now - how do we deal with this from an AGD perspective?

It is a tougher call than we might think. If the terms and conditions are friendly - that is our main criteria for certification. Cases where programs are stealing commissions, though, are just as predatory as a bad term in my opinion.

I would certainly entertain thoughts on how to implement a system whereby we can evaluate programs based upon their commissions. If a program used bonuses to devalue players (from a commission standpoint) - we should certainly warn affiliates.

[dendrite]

Thanks for the compliment, I'm just hoping other people reading the post get the gist of what I'm saying as I do think it is important

I wonder if it would be useful to actively highlight and acknowledge those fair casinos that do not subtract bonus credits from earnings, rather than chastise those that do?

Perhaps it would be possible to create an AGD list of casinos that don't take the bonuses from Affiliate Net Win until they are cashed out?

I think people would look at the list and preferentially sign up and promote casinos on the list over those not on the list - I certainly would and it would create a strong incentive for casinos to think about changing their ways.

I imagine that any decent RTGs on the list would become very popular with affiliates, very quickly!

The list would need to be highly visible, though, perhaps in a 'sticky' on the forum?

[Guard Dog]

Perhaps it would be possible to create an AGD list of casinos that don't take the bonuses from Affiliate Net Win until they are cashed out?

I think people would look at the list and preferentially sign up and promote casinos on the list over those not on the list - I certainly would and it would create a strong incentive for casinos to think about changing their ways. I can imagine any RTGs on the list would become very popular with affiliates.

There IS something coming down the pipe (probably a couple months out). It is under a different domain, though, but will be joined with AGD from a casino perspective. It is not far from the AGD concept, so there will be no 'stepping on toes' in the industry. I had to leave it 'hush hush', but I've been burned before by leaking an idea out too soon

The list would need to be highly visible, though, perhaps in a 'sticky' on the forum?

I agree that it should be a very visible concept. Part of the new restructure of AGD will help us with this. That, also, will take some time but is already under development.

[bonustreak]

Very good post indeed!

[bonusgeek]

Yea the rtg bonus system as far as affiliates are concerned is a complete bullshitter. I was really surprised to learn this was the way things worked in this industry once I understood what was going on. I just didn't understand how this could be an acceptable way to do business when the fantasy money never leaves the casinos door, yet we are conveniently paying $400 in real money out of our own pocket for every $1000 given out.

I want my players to be treated nicely and to feel appreciated which is normally done with bonuses, but why should we have our bottom line cut by 25% while the casinos bottom line doesn't change? I know of a couple of affiliates that's have had over $5 Mil in deposits across all the rtg programs they promote over the past few years. How much in genuine commissions do you think he/she has been shorted because of all the bonuses given out that never got played? Enought to buy a condo in the islands?

The whole bonus system at rtg is really flawed and I am pretty sure our bottom line would increase significantly if RTG would adopt a new and more fair way to tally bonuses with affiliates. I bet in certain circumstances it makes a 40% commission look like 25% or 30% give or take which is actually a 25% reduction from the affiliates bottom line. They are making money coming and going on the backend while the affiliate is left with a pocket full of fools gold.

That being said I remember reading something recently about some rtg program flushing these bonuses, then I think there was a question with does the affiliate get reimbursed for the 35% of the bonus he/she had already paid. I just can't remember who it was or where I read and I forgot to follow up on it, but I would definitely like to learn more if I read that right. This is the way it ought to work, have the bonus expire after a certain amount of time and when that happens the affiliate gets reimbursed on the 35% of the bogus horse shit they already paid. Most of these bonuses are non cashable with teh exception of mainstreet brands, so this is the only fair way to do it imo.

Actually this now has me even more pissed off after realizing that most of these bonuses given are non cashable. Why should an affiliate ever pay a % of a non cashable bonus, someone answer me that!!!

[dominique]

I assume you are talking about RTG?

[dendrite]

I'm only signed up to a couple of RTGs, so have no idea whether it applies to the group as a whole. Do all of the RTG casinos do this, or are there any out there that don't?

Vegas Technology groups like Casino Coins takes also seem to factor promotions into the net win calculation well before a player cashes out and it becoming real money. Would that be right?

Paying a share of the bonus when the players cash-out is reasonable, imo, but until that stage it is not a tangible asset, it is not real money and should not be taken from affiliates

Does slotocash do this too? Their calculations appear different from other Rivals

How about Top Game casinos?

[Vladi]

Yes I posted about this on a Gambling Wages thread a long time ago. Dodgy casinos, dodgy affiliate program. They also run Slots of Vegas and The Virtual Casino using various different affiliate programs. But its the same dodgy group.

Let me see, here it is...
Gambling Wages Terms and Conditions - Under Review

AFAIK all RTGs use the same system which counts bonuses as a player win before they have been cleared. However some do not give out free chip codes like candy, and some clear out the unused chips monthly (Earn United used to do it, but recently switched to Playtech).

The other thing which kills you is when the casino gives out a free bonus chip with a maximum withdrawal limit, say $200. The player plays and hits a big win for $2000 and you are sitting at -2200, even though the player can only withdraw 200. Now if that amount sits there over the end of month and subtracts from your other earnings for that month, then you had better be paid commission on the amount when it is written off the next month otherwise you have just been ripped off.

Good RTG programs include Mainstreet, CWC, C-Planet and iNetBet (poor commission rates at iNetBet though).

Tip for young players - use this fact when negotiating with these programs for a higher rev share. I'd say its worth at least another 5-10%. Or seriously consider a cpa with the ones that hand out free chips galore.

IMO bonuses should be irrelevant as far as calculation of commission goes until the player has met the wagering requirements which qualifies the bonus to be withdrawn (i.e. it has been converted into cash). And yes this means that if it is a non-cashable bonus, then it should never affect commission because it can never be withdrawn. Otherwise the casino can just hand out a bunch of bonuses with ridiculous conditions that the players will never meet which just nullifies your commission. Gambling Wages calls this 'manager credits'.

[Renee]

This might be a side note since MGS hasn't been mentioned here yet, but I think you may need to consider that even though a bonus is a non cash item, Microgaming operators pay royalties on any bonus money given to a player whether it's played or not. So there IS a cost involved for MGS groups in giving bonuses. Something to consider.