Confirming weeks of speculation, DraftKings has altered its policy for affiliate marketing sites.
Once billed as “The Best Affiliate Program in Fantasy Sports,” the new terms will significantly reduce the outflow of funds to partners who refer new users to DraftKings and continue the company’s trend of belt-tightening procedures.
[Editorial disclosure: DailyFantasyTalk.com is a DraftKings affiliate partner.]
Closely mirroring recent changes to its refer-a-friend policy, DraftKings’ new affiliate program institutes an array of changes, including placing a cap of $1,000 on how much an affiliate partner can earn per referral per month and aging out players on whom affiliates can earn commission after two years.
It rewards a 40 percent commission on referrals for the first 30 days after an initial deposit, and 25 percent thereafter. Affiliates that fail to refer at least two new players within any 30-day period will have that rate dropped to 15 percent.
Perhaps most damaging of all for affiliate partners:
Further, if the Affiliate fails to acquire a minimum of fifty (50) New Money Players in a sixth (sic) (6) month period, DraftKings reserves the right to immediately terminate this Agreement without notice.
The changes are bound to be unpopular with partner sites, but among industry observers, they were not unexpected. PokerStars made similar changes to its affiliate program and VIP rewards last year, and the general consensus seems to be that with last fall’s marketing blitz, DraftKings outstripped what affiliate partners can offer.
In an “Ask Me Anything” session on Reddit in October, high-volume player Cory Albertson pointed out how much revenue sites may be losing through these deals.
The affiliate model is flawed in that it handcuffs the sites in how much rake they get to see. It’s not necessarily the case that RotoGrinders deserves to get 35% rake forever when someone clicks their link. They deserve some money and have been great for DFS but when so much money is flowing to affiliates it in some ways prevents sites from developing better VIP rewards which are badly needed in DFS right now.
Now, with ongoing legal battles across the country and annual regulatory and licensing fees possibly on the horizon in many states, daily fantasy operators are entering a period of relative austerity, at least compared to the free-spending days of Sept. 2015.
DraftKings recently withdrew from its exclusive marketing deal with ESPN and moved out of its 23,500 square foot penthouse offices in Manhattan. Meanwhile, industry co-leader FanDuel has been hit with two rounds of layoffs already in 2016.