Fintan Costello, Managing Director at BonusFinder, spoke to SBC America about the differences between the US and European affiliate industries, BonusFinder’s expansion and whether the black market will drive regulation of online casinos in states that still do not allow it.
SBC Americas: How does the US affiliate sector differ to the European one?
Fintan Costello: The main thing is the regulation and licensing. With the country broken down into states with their own rules and regulation it creates a fragmented legal environment. Eighteen states have now regulated sports betting but only five of them allow online casino. So as an affiliate, you need a state by state strategy and you also need to ensure you have a license where it is required. Each state has its own documentation requirements with some demanding very extensive amounts of paperwork.
On top of this, the number of licensed operators per state vary massively. At the time of writing, one online operator is live in Illinois, versus 10+ operators in New Jersey. When you compare this to say the UK where there are hundreds of licensed operators, it’s a big difference.
SBC Americas: How are affiliates faring in the US market where there are fairly new and licensing regimes are in place? Are they as profitable/popular as in Europe?
Fintan Costello: The US affiliate market is dominated by a small number of very large operators that have done a fantastic job buying up key assets and cementing their position in the market place. With still a fairly low number of states licensed, the market is still relatively small which makes it difficult for the small to medium sized affiliates to gain foothold.
SBC Americas: You are now operating in six states, which market are you most impressed with and why?
Fintan Costello: We see New Jersey as the lighthouse market in the US. NJ has a large number of licensed operators, a full range of products available and it was the first state to license. We can see that online and offline gambling grow the pie and aren’t cannibalising each other which is a sign of a healthy market.
SBC Americas: In Europe, affiliates are not required to be licensed, but they are in most American states. From your experience in both continents, do you believe regulation should be implemented everywhere?
Fintan Costello: I’m pro-licensing of affiliates and realistically when we look at the way things are shaping up in some European countries such as the UK and Sweden, it’s easy to see this becoming more normal outside of the US as well.
SBC Americas: If so, what would it achieve and what gap would it fill? And would the sector change at all as a result?
Fintan Costello: Requiring affiliates to operate under a clear licensing regime will help in a number of areas. The key thing is that it removes the ambiguity of law interpretations by operator compliance managers who all have very different requirements even in the same market. Licensing will also help with things like banking which clarifies the position of affiliates in the gambling space.
SBC Americas: BonusFinder has conducted research around the size of the unlicensed online casino market which is sizeable, do you think the black market will drive regulation of online casinos in states that still do not allow it?
Fintan Costello: The size of the black market will be one of the factors that a state will consider when passing further legislation including benefits to the land-based casinos, employment, tax revenue and most importantly, player protection.
Recent research that we carried out showed that searches for unlicensed, offshore online casino brands have risen by 42% in the last 12 months with volumes for the largest black market site up to five times higher than for the term ‘online casino’.
Using Google Trends data between May 2019 and May 2020, we found that searches for the generic term ‘online casino’ climbed by 149% in the last year and 37% in the first six months of 2020. This is proof that the demand for online casino is there and state regulators should embrace this development and regulate to ensure the protection of its citizens.