How the Point of Consumption Tax Changes the Affiliate Marketing Game

From an economic standpoint it’s easy to understand why the UK is imposing a new Point of Consumption Tax (PCT) on online gambling transactions.
By imposing a 15% tax rate on wagers as they’re made, in the UK, they’re doing an end-run around tax-dodging offshore-licensed operators and could be putting an additional £300 million ($500 million USD) in government coffers.
There’s little doubt that the PCT is going to have a big impact on operator earnings and, according to Tom Galani over at CalvinAyre.com, they’ll almost certainly be looking to affiliates to help shoulder the burden.
Galani’s posting, Snake Oil & Widgets: Affiliates – Hear Ye! Secure Your Business Now, lays out some scenarios as to how the PCT will be passed on affiliates, and what they can do avoid them. Here are a few of his points that may help you avoid a PCT-related revenue meltdown.
Know Your Place
Affiliate partners are a vital piece of the igaming sales funnel but they’re not always treated as such.
This unfortunate fact is illustrated time and time again when operators retroactively change the terms and conditions of their affiliate programs. Besides getting these programs blacklisted or labelled as rogues, there isn’t much affiliates can do about this situation.
Even worse, Galani suggests that the PCT will result in a lot more retroactive T&C changes when the PCT kicks in.
Staying Ahead of the PCT Wave
So what recourse do affiliates have for staying ahead of the oncoming PCT wave? (Especially when they know affiliates have almost no negotiating power in these deals.)
Affiliates who want to avoid working with operators who won’t change the rules halfway through the game need to do plenty of research before signing up with a program.
Galani suggests that predicting which programs are trouble is as simple as researching their past history on sites like CAP and Affiliate Guard Dog.
Casino affiliates are also advised to read, and understand, every word in the terms and conditions before signing on the dotted line. Remember, not every affiliate program is willing to pull the rug out from under the people who actually bring them players.
Finally – and this is another piece of advice straight out of Affiliate Marketing 101 – Galani advises affiliates to diversify their portfolios. The potential damage from post PCT fallout is greatly mitigated if you’re promoting a variety of programs.
Advice for Operators
The simple truth is that operators really don’t have to pass PCT damage along to their affiliate partners if they don’t want to. Galani’s advice for these companies is to loosen up a bit and start treating affiliate partners like actual partners.
For starters, he thinks operators should be much more willing to actually negotiate with casino affiliates instead simply saying, “Here’s the deal. Take it, or leave it.”Affiliates should be judged the same way as every other vendor, by their merits.
Whether any operators actually heed Galani’s advice is another question entirely.
Finally
No one knows for certain how the PCT will really impact the UK-facing igaming industry but, as Galani indicates, there’s every chance that affiliates will be shouldering the bulk of the load.