Bad news for affiliates that promote the largest daily fantasy sports site. On Wednesday, DraftKings sent affiliates a notice that affiliate terms will be undergoing significant changes. Among the modifications to the program include new minimum activity requirements and new revenue share rates. The changes are scheduled to go into effect on March 1st, 2016.
A Summary of DraftKings Affiliate Program Changes
The new changes are broad-based and will not only affect how much affiliates earn when promoting DraftKings but also how affiliates can promote DraftKings going forward.
Revenue Share Changes — Affiliates will now be paid 40% revenue share for the first 30 days and 25% revenue share after the first 30 days.
Commission Limits — DraftKings affiliate commissions are now subject to a maximum of $1,000 per month per new player. In addition, affiliates will only receive commission on the first two years of activity from the players they refer, starting from the date of the first deposit.
Minimum Payout — Affiliates will now need $75 or more in their affiliate account to withdraw their balance. The previous limit was $50. Balances will roll over to the following month if an affiliate does not meet these terms.
Activity Limits — In what is likely to be one of the most controversial changes, affiliates now run the risk of losing previous referrals if they don’t meet minimum requirements outlined by DraftKings. Specifically, a DraftKings affiliate must refer at least 2 new depositing players every 30 days. Failing to do so will mean that an affiliate’s revenue share will be dropped down to 15%.
In addition to this 30 day requirement, DraftKings is also requiring affiliates to refer fifty new depositors over a six month period. Failing to meet these new depositor thresholds would give DraftKings the right to terminate your affiliate account.
Promo Codes — Going forward, DraftKings will no longer allow promo codes and all existing promo codes will be deactivated on March 1st. Affiliates will need to use links and/or creatives found in their DraftKings affiliate account.
Promotion of DraftKings Sign-up Bonus — DraftKings will continue to offer a 100% match bonus to players. Unfortunately, affiliates will no longer be able to promote the offer on their blogs and websites. Affiliates instead are encouraged to promote a free contest entry with a first deposit. Any affiliate caught promoting the offer after March 1st could “jeopardize” the status of their affiliate account.
Reasons for DraftKings Affiliate Changes
It’s no secret that DraftKings and other daily fantasy sports sites have been put under extreme pressure over the last few months. They find themselves in a much different spot than they could have imagined 6 months ago. This time a year ago, there seemed to be no end to the exponential growth the industry was experiencing and investors were more than eager to get in on the action.
Fast forward a few months, and the industry was undergone incredible scrutiny in the wake of the DFS leak scandal. Major partnerships have fractured, dozens of states are looking to regulate — or worse, ban — and growth has stalled.
As a result of these changes, DraftKings are clearly looking to cut acquisition costs, something that is easier to do as the industry leader. Many players who are fans of DFS already are familiar with DraftKings. They have likely made the calculated decision that they can focus on the performing affiliates while essentially leaving out the smaller guys, who may now be forced to use the refer-a-friend a program, if they choose to promote DraftKings at all. The changes will undoubtedly upset many affiliates who could feel betrayed by a lack of loyalty to those affiliates that have spent marketing dollars to attract these players.
It’s a change that affiliates in the online poker industry are all too familiar with. As that industry has retracted from the highs of the late 2000s and early 2010s, poker rooms have looked to cut costs by making changes to affiliate programs. Some had seen affiliates as outliving their initial usefulness when they were instrumental in educating players about their rooms and games. PokerStars, which like FanDuel and DraftKings, has held a dominate position in the online industry and has also generally been considered to be unfriendly to affiliates.
The DraftKings affiliate changes will likely have many affiliates looking to alternatives to fill in their revenue gaps. Whether that will hurt DraftKings remains to be seen. FanDuel and medium-tiered sites could benefit from the extra attention they receive from affiliates. However, PokerStars taught us that a superior product with large liquidity could negate any negative impact that could come from diminished affiliate promotion.