The negative carryovers – interesting issue.
How heavily they impact an affiliate depends on the size of the player base. Of course the casino has the largest player base and can absorb it the easiest. It hits affiliates most heavily.
If you have a big winner as affiliate, you can end up in the hole for months. That may mean no money to pay the rent, food, etc. The best you can do is to try to generate some immediate income by removing the program until it works itself out of the hole, so the new players you send will put some money in your pocket immediately elsewhere.
That in turn hurts the casino. So, most have opted to avoid carryovers.
Negative carryovers can cause affs to quit alltogether, many just simply cannot afford to continue to work on something that won’t pay for several months. And you just never know which small affiliate will be the king of the mountain some day.
The decision is also based on just plain open market competition. Why should one promote a place that has negative carryovers when there are lots of places that don’t?
One solution that used to be a lot more prevalent is “fencing”. That involves removing the winner from the aff account until the $$ are played back, and then returning him/her to the aff account. The casino gets to recover the loss while the aff is not affected. If you must do carryovers, do consider that.