I appreciate the background on Casino revenues Dom – I know that you and the Prof are old hands in this field – and have the quaility info to share.
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I don’t disagree that changing terms will simply alienate existing clients.
I don’t disagree that bundling is bad for affiliates revenue.
I’m just saying the 30% with no negative rollover and no bundling is not like getting 30% of the total share – I suspect it’s more like getting 40-50% of total income …
Because when a casino gets a winner it’s simple ZERO income for that segment the affiliate and all other segments keep on paying … yet the casino has to wear that cost.
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A very basic example :
6 casinos with a program – all returning $1000 per month on “average”.
On an average month – they all make about that amount :
– casinos make $6,000
– and pay affiliates $1,800 (30%)
On a month that takes a small hit – one casino loses (say) $1000 :
– casino makes $4,000 ($5000 profit and -$1000 loss)
– but pay affiliates $1,500 (37%)
– bundling agreement would reduce the payment to $1,200
On a month were a casino lakes a large hit – one casino loses (say) $10000
– casino makes a $5000 loss ($5000 profit at other 5 and -$10,000 loss)
– but STILL pay affiliates $1,500 !!
– bundling agreement would be a payment of $0
Next month returns to normal
– Casino makes $6000
– Pays affiliates $1,800
– a negative rollover clause would pay just $300 after working off the -$1500 loss.
So take a scenario where you have a years worth of activity with 7 normal months, 3 one small hit, and 2 giant hit :
Under the no negs no bundle arrangment.
– Casino makes 7 x $6K, 3 x $4K, 2x -$5K = $46K total
– affiliate makes 7 x $1.8K, 3 x 1.5K, 2 x $1.5K = $20.1K
– Share is 43.6%
Under bundling
– affiliate makes 7 x 1.8K, 3×1.2K, 2 x 0 = $16.2K
– Share is 35.2%
A true 30% share of profits (with bundling and negative turnover) of the casinos $46k profit is just $13.8K.
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Hey, I’m not backing the casino groups approach, or saying that retrospective changes are fine … but let’s be honest about the current deals on offer ….
30% unbundled and no negatives is more like 45% annulised share.
30% bundled and no negatives is still more like 35% share
30% bundled and with negs is … 30%