- This topic is empty.
-
Posts
-
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.
sigh.gifI 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.
==================
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 $1,200On 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 $0Next 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.
==================
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%If you factor in the jackpot fees and admin fees and assorted other fees that are deducted before the 30% comes into play, your calculations are way off.
You also don’t understand that the casino makes pretty much the same all the time. The payout rate is the same pretty much. There are no large fluctuations. They do not take large hits. The jackpots are prepaid by both the casinos and affiliates. The casino gets paid by all players, not just the ones affiliates bring. Different programs represent different percentages of casino business, and it varies widely, but I doubt any are more than 45% of the business, and most are way lower.
Of course casino expenses vary from software to software, since the casinos pay various amounts of royalties and in turn get varying services. I am not sure how each software handles jackpots, I do know affiliates are already paying their dues on these most places everytime a player of theirs spins a jackpot game.
Casinos do not pay 30% of what they make, they deduct all kinds of things before figuring the percentage. Including fees for pending large wins. And many programs only pay 20% to 25% anyway.
And to be honest, I just can’t follow your math, it makes no sense to me. You are basing them on casinos having large fluctuations of $ made per unit played, and that is not so. It’s not like sports.
TheGooner wrote:A true 30% share of profits (with bundling and negative turnover) of the casinos $46k profit is just $13.8K.When I run those numbers they do make sense Paul, but only if you assume the big losses are coming out of the total profit to the casino, and you simply cannot count money paid to a big winner by the software provider as a loss against the profit to the casino. So I think you can take those 2 big $10K loss months and just add that $20K to the casinos bottom line for the year, and your numbers are going to be way different. This also raises the question for me how many winners are paid from a jackpot fund from the software provider, yet affiliates are hit with the loss. Does this ever happen?
We’ve had it good, but the squeeze is on.
There have been a few signs that this group is taking a bit of strain.
If you don’t like it. Go somewhere else.
We can complain all we want, but we are operating in a very volatile market.
Had this happened a year ago, outcry would have been justified. Now I am not so sure.
justred wrote:We’ve had it good, but the squeeze is on.There have been a few signs that this group is taking a bit of strain.
If you don’t like it. Go somewhere else.
We can complain all we want, but we are operating in a very volatile market.
Had this happened a year ago, outcry would have been justified. Now I am not so sure.
I agree with every point you made, red. Volatile market. Go somewhere else if the terms are dissatisfactory. Last year outcry justified – not so sure now. Kudos to you.
Hi again folks,
I still think the point missed here is the overall numbers. Casinos have the player base to absorb these losses. ……. hell , they’re expected.
on the other hand, ….. an aff taking such a loss has no such large numbers to absorb the loss.
Dominique wrote:You also don’t understand that the casino makes pretty much the same all the time. The payout rate is the same pretty much. There are no large fluctuations. They do not take large hits.And to be honest, I just can’t follow your math, it makes no sense to me. You are basing them on casinos having large fluctuations of $ made per unit played, and that is not so. It’s not like sports.
If that was the case that “the payout rate is the same” and all casinos make cash all the time then you would NOT need to worry about no negatives clauses or bundling clauses?
What is the fuss about then ?
:lookarounOf course we know that’s not the case – and I’ve read your own posts plenty of times on the drawbacks of bundling and negatives being rolled over … to the point of saying that you drop anyone who does this.
I assumed that was because you found it affected your bottom line and that casinos do lose from time to time. Wasn’t it?
Quote:I still think the point missed here is the overall numbers. Casinos have the player base to absorb these losses. ……. hell , they’re expected.on the other hand, ….. an aff taking such a loss has no such large numbers to absorb the loss.
I understand that – and the answer has to be to diversify into multiple areas and multiple groups.
Being an affiliate these days is almost like investing in the stock market – taking different mediums like sports, poker, casino, bingo, backgammon all from different groups in order to get best returns.
Indeed diversifying into non-gambling is also prudent – but finding a market that is as lucrative is the stumbling block … (let me know if you do)
:tounge2:If that was the case that “the payout rate is the same” and all casinos make cash all the time then you would NOT need to worry about no negatives clauses or bundling clauses?
again ….. I say thats because the numbers are great enough to absorb the wins .. where as the aff has no such ablility.
as for diversifying …… that’s what I thought I was doing by having a company that didn’t bundle.
Love ya G: but gotta disagree with you on this one. . ….. still doesn’t mean I don’t look forward to buying you a drink of these days
bb1webs wrote:as for diversifying …… that’s what I thought I was doing by having a company that didn’t bundle.That’s like saying I was diversifying on my mining stock market pick because the company I chose ran three seperate mines … surely one had to be profitable …
Losses on the other two mines have to be paid for somehow … so it’s much better to have three companies.
:laugh:Look – the money side was just an exercise – my point was affiliates do get a bigger slice of the cake under the current deal (hence the complaints about reduced income) – and with no bundling there are occasions when the casino / affiliate program loses out.
The easy money cashflow has dried up right now – and it appears that many businesses (programs and affiliates) have not planned well for possible lean times … so eventually those costs will be relocated to the affiliate in some shape or form.
:huh:Bundling going forward is not unfair in itself (even though it will hurt our bottom lines in reduced revenue) … as long as retrospective changes don’t occur and this should be on new customers only.
But this situation does just underlines the importance of having many irons in the fire … and not specialising too hard in one group just because they do not bundle right now.
:Nod:Fergie wrote:Last year outcry justified – not so sure now.Justified only if it’s retroactive. Regardless of the situation, a supplier shouldn’t renege on an existing deal/contract after they have received their part of the transaction without consent from the other parties to the contract. But we don’t know that that’s the case here yet.
Simmo! wrote:Justified only if it’s retroactive. Regardless of the situation, a supplier shouldn’t renege on an existing deal/contract after they have received their part of the transaction without consent from the other parties to the contract. But we don’t know that that’s the case here yet.Agreed.
Gooner, you are still missing the point. Forget your experience with sports. I stated it in one of my previous posts as well as I could.
Over the entire player base, the payout rate remains the same. Jackpots are previously paid for by both operators and affiliates communally. The Software company manages the money in most cases.
Each affiliate has a minute fraction of this base, and this fraction will also remain the same payout rate – if distributed over many years. The affiliate is subject to ruin on any particular month or several in a row because s/he doesn’t have the entire player base to reflect the payout rate and even earnings out. You catch one of the winners, you are wiped out. Nothing to balance it.
If you have each casino calculate profits as the independent unit it is, the affiliate ends up being able to absorb the blows easier as only one property at a time is affected. If you bundle, all income across the board is wiped out.
What is happening right now is that the player base for both casinos and affiliates alike has shrunk. The casinos are not happy because they want to continue to run the joint as usual, without reducing expenses. So the perfect way is to have the affiliates absorb the present losses for one of the properties applied to all the different properties at once. This frees up extra money on a monthly basis as profits are not paid out.
I hope this is clearer, I don’t know how to explain it any better.
Simmo! wrote:Justified only if it’s retroactive. Regardless of the situation, a supplier shouldn’t renege on an existing deal/contract after they have received their part of the transaction without consent from the other parties to the contract. But we don’t know that that’s the case here yet.Agreed.
We should all summarily drop a group if they do that.
Dominique wrote:Agreed.
What is happening right now is that the player base for both casinos and affiliates alike has shrunk. The casinos are not happy because they want to continue to run the joint as usual, without reducing expenses. So the perfect way is to have the affiliates absorb the present losses for one of the properties applied to all the different properties at once. This frees up extra money on a monthly basis as profits are not paid out.
Not so sure if I agree with that. Most casinos are taking a bit of pain, and I can name at least four groups that have laid off people and are taking big steps to reduce costs and I would say this is probably the case with most. I have friends who have lost their business (and a very good one it was) because of this.
I think to say that we are absorbing the losses is taking it a bit far.
I am not defending VA. All I am saying os that we cant; expect things to continue merrily as if nothing has changed.
I am not defending VA. All I am saying os that we cant; expect things to continue merrily as if nothing has changed.
There is no denying that BUT we cannot let changes that are retroactive become the norm either, what good would that do us affiliates that are still left struggling to stay alive? IF we allow 1 program to do this(If they are retro) then others will be soon to follow that is a given.
I can understand cost cutting and changes as long as they apply to new affiliates signing up.
bonustreak wrote:I can understand cost cutting and changes as long as they apply to new affiliates signing up.I can too, but I would add that the more that do this, or go to negetaive carryover, the more those casinos who continue the policy of seperate reporting and zeroising commissions will benefit from increased exposure.
Realistically, most of us are running businesses too, and it is simple common business sense to go with good casinos (first and foremost) who offer the best incentives.
