The Higher Administrative Court of the State of Saxony-Anhalt in Germany has upheld the power of the German gambling regulator to ban licensed operators from advertising on affiliate sites that also promote unlicensed firms.
This decision confirms the GGL’s strict stance on affiliate marketing.
Earlier this year, the GGL issued its first ever fine to an undisclosed licensed operator for advertising breaches.
According to the regulator, the operator deliberately advertised its offer on affiliate websites that also promoted unregulated gambling offers.
The GGL said this practice contradicted the advertising provisions outlined in Germany’s State Treaty on Gambling, which aims to ensure player protection by strictly separating legal and illegal offers to drive players towards the regulated market.
Avoiding any association
The Higher Administrative Court determined that affiliates who link to unregulated operators are advertising unregulated websites.
This was incompatible with the goals of the State Treaty on Gambling, the court ruled, adding that the ban was necessary to avoid creating an impression of equality between authorised and unauthorised gambling.
Operators on the whitelist must therefore ensure that their affiliates do not advertise unlicensed sites by avoiding any association with them on their websites.
In addition, the court confirmed other aspects of the law, including the obligation to refer to the “White List,” which directs potential players to legal gambling, and the need to inform players about the risks of addiction, the prohibition of participation by minors, and the availability of independent counselling and therapy options.
The decision is final and cannot be appealed.
XLMedia has inked a new hybrid revenue share partnership with bet365 in North America.
The agreement is in line with XLMedia’s previously stated strategic objective to diversify its revenue streams, it said, and “deepens the commitment both XLMedia and bet365 have made to North American expansion.”
The deal “combines customer acquisition with longer term retention,” and forms the basis of a multi-year partnership agreed by the two companies.
XLMedia added that the agreement will have responsible gambling “at its core,” and that the companies will together drive education and engagement on RG topics through collaborative content.
“We are pleased to expand our global relationship with bet365,” said XLMedia CEO David King.
“In line with the stated strategy, this hybrid agreement is the start of XLMedia building a new, sustainable revenue stream in North America.”
XLMedia’s US background
In 2022, XLMedia generated $46.4m revenue from the US sports betting sector, accounting for 64.2% of the group’s revenue from continuing operations to make it the company’s largest business segment.
Prior to signing its new agreement with bet365, however, XLMedia’s US business worked primarily on cost-per-acquisition (CPA) deals, meaning the business was paid upfront for all newly referred customers but did not take a share of their betting revenue.
By contrast in Europe, the business works mainly on a hybrid model similar to its new agreement with bet365, whereby it receives a smaller upfront CPA alongside a percentage of revenue from each customer’s betting activity.
Through a combination of owned brands and media partnerships, XLMedia has national coverage across all 50 US states, and attracted 11.3 million monthly unique users across its owned and operated brands in Q4 2022 according to data published at the group’s latest capital markets day.
Meanwhile, XLMedia’s media partner websites attracted more than 81 million monthly unique users throughout 2022.
In addition to shifting from a CPA to a hybrid rev share business model, XLMedia’s US strategy includes the development of offerings in new verticals such as DFS, partnering with more US-facing operators and sports-adjacent partners, and expanding its media partnerships and owned and operated brand portfolio across the country.
The group will consider small, targeted acquisitions in order to follow through on that strategy, it said.
Bet365 in the US: slow and steady
Bet365, meanwhile, has so far taken a decidedly cautious approach in US markets.
The brand is currently live in just four states; Colorado, New Jersey, Ohio and Virginia (in addition to the Canadian province of Ontario), and has remained tight-lipped about its expansion strategy in North American markets.
Up against tough competition from major US brands including FanDuel, DraftKings and BetMGM, bet365 is thought to hold just a tiny proportion of market share in each of those states.
A focus on affiliate marketing, where costs are directly related to performance, is likely a significant element of bet365’s strategy in the US, where its competitors, in contrast, have sunk hundreds of millions of dollars into traditional marketing channels in recent years.
More than 50% of Brits and Germans support a complete ban on gambling advertising according to separate surveys on the topic.
A representative survey commissioned by Germany’s drug and addiction commissioner Burkhard Blienert revealed that 57% of respondents are in favour of a general advertising ban on gambling.
The survey results, which were made available to German news organisation Redaktionsnetzwerk Deutschland, also indicate that 66% believe that sponsorship by sports betting firms should be banned in football.
Additionally, 70% of those surveyed would like to see further advertising restrictions for sports betting across both television and online.
Blienert stated that advertising for gambling, alcohol, and tobacco is viewed much more critically today than it was 10 or 15 years ago, and that there have been significant changes in the attitudes of the population.
The SPD politician emphasised the need for a serious debate in politics about how much advertising for alcohol, tobacco, and gambling is acceptable and desirable.
Similar findings in the UK
Meanwhile, similar results were found in surveys conducted in the UK.
According to a poll of 1,009 adults conducted by Survation and published in the Guardian, 52% of respondents supported a ban on all gambling advertising, promotion and sponsorship.
Moreover, nearly two-thirds wanted new limits on online stakes, while 68% of respondents thought under-18s should not be exposed to gambling advertising.
In addition, 64% supported affordability checks for those wanting to bet more than £100 month, and 60% saw gambling as a danger to family life.
GwL Strategy Director @WillProchaska said:
“This poll displays the strength of public sentiment on gambling advertising.
“If gambling reforms fail to significantly restrict gambling advertising, they’ll be woefully out of step with a public that expects action.”
— Gambling with Lives (@GambleWithLives) April 23, 2023
Premier League clubs recently voted to remove gambling companies from the fronts of football shirts, although campaigners have argued this doesn’t go far enough.
A recent YouGov poll of 1,000 football fans found that 77% supported the ban on gambling front-of-shirt deals.
However, 56% would like to see the ban extended to advertising on pitch-side hoardings, and 42% want betting firms permanently removed from shirt sleeves.
Gambling brands and logos will still be allowed to appear on shirts after the 2026/27 season, but not on the front of shirts.
The majority of fans also believe that gambling companies should be barred from sponsoring leagues or cup competitions. Sky Bet is the current title sponsor of the three-tiered, 72-club English Football League (EFL).
The same poll revealed that fans see gambling sponsors as less appropriate than alcohol or crypto sponsors.
Three-quarters, or 77%, of fans describe betting companies as inappropriate sponsors for football teams.
UK ministers are expected to reject a blanket ban on gambling advertising in a white paper that is rumoured to be published this week.
Advertising opponents are hoping that the white paper will include measures such as a statutory levy on gambling firms to fund research and treatment for addicts, as well as setting maximum stakes for online slots games, according to the Guardian.
The Betting and Gaming Council (BGC) has meanwhile pledged an additional £110m of funding over four years for research, education, and treatment services to tackle gambling harm, with a spokesperson endorsing mandatory contributions as long as funds are distributed effectively and independently.
“We strongly support the gambling review, but any changes introduced by the Government must not drive gamblers towards the growing unsafe, unregulated black market online, where billions of pounds are being staked,” the spokesperson said.
Black market concerns
Gambling and sports betting experts in both Germany and the UK have expressed their concerns about the potential consequences of imposing marketing restrictions and advertising bans.
They argue that such measures could inadvertently drive consumers towards unregulated and illegal gambling activities, creating a thriving black market.
Luka Andric, CEO of the German Sports Betting Association (DSWV), recently highlighted this issue, stating that “advertising is used to guide all those who are already interested in sports betting towards the state-controlled, and thus safe, market”.
The trend to prohibit gambling advertising is gaining momentum across Europe.
The Netherlands and Belgium have also approved bans that will be rolled out over the coming years.
In addition, other countries such as Ireland, Romania and more recently, Estonia, are also considering implementing similar advertising restrictions.
Starting from 1 July 2023, iGaming operators in the Netherlands will be prohibited from advertising on TV, radio, and in public spaces, both indoor and outdoor.
The ban will also apply to sports sponsorships from July 2025.
The new law specifically targets advertising for online games of chance. The purpose of the ban is to protect young people under 24 and other vulnerable groups from gambling-related harm.
Dutch Minister for Legal Protection Franc Weerwind first proposed the ban in July 2022.
The ban was originally scheduled to be implemented from 1 January 2023, but was delayed by several months due to the time required to process public consultation responses on the changes.
Rise in gambling ads after market launch
The Ministry of Justice and Security stressed the decision was made to ban above-the-line marketing of games of chance due to a significant increase in gambling advertising after the opening of the regulated market in October 2021.
The government said studies it has conducted have since proved that the risk of addiction is higher in online gambling than in land-based variants due to several factors, such as the lack of direct contact between the player and the provider and the immediate availability of the games.
Transitional period for sport sponsorships
Sports sponsorship agreements, including the sponsorship of athletes and teams, as well as clubs, competitions, shirts, and other materials, will have a transitional period of two years.
The government acknowledged that “a ban on sponsorship has far-reaching financial implications for sport”.
For this reason, clubs are given more time to fulfil existing agreements and to look for new commercial partners.
Existing agreements for all other forms of sponsorship, including TV programmes and events, will have a one-year transitional period.
Furthermore, advertising for so-called less risky games of chance, such as lotteries, will not be allowed between 6am and 7pm.
Ads for high-risk games of chance, meanwhile, can only be broadcast after 9pm. This includes promotions for retail and online sports betting, as well as land-based casinos and slot machine halls.
Online advertising guidance
While targeted online advertising is still allowed, several new conditions have been established.
Companies that display gambling adverts must allow users to opt out of seeing them.
Moreover, companies will be required to ensure that people vulnerable to gambling addiction do not see their adverts.
They must also prove that at least 95% of their advertising reaches people who are over 24.
The same rules apply to social media, video-on-demand and direct mail campaigns.
Peter-Paul de Goeij, the managing director of the Netherlands Online Gambling Association (NOGA), supports the decision to protect young adults and vulnerable groups. However, he emphasised the importance of advertising in directing players towards licensed providers in the Netherlands.
According to him, advertising enables consumers to better distinguish between licensed and unlicensed providers because they recognise brands from advertisements and sponsorships.
He is concerned that the advertising ban may lead to an increase in players choosing unlicensed providers who do not provide adequate player protection measures.
Sweden’s Riksdag has voted down a proposal to adopt stricter advertising rules while giving the green light for the introduction of supplier licences.
Swedish parliamentarians followed the suggestions of the Committee on Cultural Affairs and partly rejected proposed amendments to the country’s gambling laws.
The updated regulations were initially proposed by the country’s previous government led by the Sweden Democrats party.
The Riksdag did not approve a motion that advocated for “special moderation” in gambling ads, which would have subjected gambling ads to the same standards that are already in place for alcohol advertising in Sweden.
Sweden’s advertising restrictions for alcohol are among the strictest in the world. Advertisers must pay attention to the medium, content and design of their marketing material, including elements such as typography and layout.
The Swedish parliament, however, decided that the current advertising requirement, which simply calls for “moderation”, fully serves the purpose.
Moreover, the Committee on Cultural Affairs had argued that the rule was an attempt to implement a risk classification through the back door.
In addition, the Committee considered it too early to implement changes in the field of marketing highlighting that the “practice has just been established”.
The approval of the B2B licensing regime was considered a mere formality as the Swedish Gambling Authority (SGA) had already announced that the application process will open on 1 March 2023, with the new regime now proposed to enter into force on 1 July 2023.
Thus far, only operators require a licence to operate in Sweden’s regulated online gambling market, which means they are also responsible for the compliance breaches of their service providers as there is no code of conduct for suppliers.
Moreover, the new regime is expected to clamp down on B2B suppliers who provide their products to unlicensed operators which target consumers in Sweden without being bound by the regulatory framework.
The Riksdag also rejected a proposal to terminate the agreement between Sweden and Finland on slot machines on ferries operating between the two countries.
The Committee had said that the current agreement works well, and since the government did not propose any new legislation to replace the agreement, it should not be terminated.
The proposed ban on broadcast gambling ads in the Netherlands will most likely not go into effect on 1 January 2023 as originally planned.
In July, the Dutch Minister for Legal Protection Franc Weerwind submitted a proposal which, if approved, would prohibit operators from advertising products via television, radio and in public spaces, both indoor and outdoor.
The blog Gaming in Holland now reported that last Thursday (6 October) Weerwind had informed the Permanent Committee for Justice and Security of the Dutch Lower House that the proposed ban would be delayed by several months.
One reason for the delay was that the Ministry is still processing the responses to the public consultation on the proposed rule change.
Only once this process is concluded, the Council of State can offer its advice on the new rules, the blog reports.
The Council of State is a constitutionally established advisory body in the Netherlands that consists of members of the royal family and Crown-appointed members generally having political, commercial, diplomatic or military experience.
The Council of State was founded in 1531, making it one of the world’s oldest still-functioning state organisations, and to this day must be consulted by the cabinet on proposed legislation before a law is submitted to parliament.
Gaming in Holland reports that the Council of State may also find that the proposed rule change requires new primary legislation rather than a simpler and quicker change in secondary legislation as originally planned.
Moreover, should the Council of State reject the proposal, this would most likely also affect the timeline for the introduction of additional gambling advertising restrictions.
The original proposal suggested that the ban would extend to event sponsorships from 1 January 2024 and to sports sponsorship from 1 January 2025.
Minister Weerwind also indicated that due to technical, legal and privacy considerations, the government would not seek to introduce cross-operator deposit limits for the time being.
Instead, each licensed online operator would be required to introduce an as yet unspecified maximum deposit limit for each individual player.