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Why Minimum Activity Quotas are Bad for Players, Affiliates and the Industry

As with Terms and Conditions for players, over time Terms and Conditions for affiliates have tended towards weaker more restrictive terms. That’s not entirely surprising – the online gambling industry is still in its formative era and what seemed sustainable out of the starting gate has to be recalibrated to ensure that the business model remains sustainable, especially as more and more jurisdictions introduce their own licensing and taxation rules.

While most Affiliate Terms and Conditions have little to no impact on players, there’s one affiliate term that’s becoming more and more prevalent amongst affiliate programs that is likely to have a significant detrimental impact on affiliate behaviour and as such hurt players: the Minimum Activity Quota.

Minimum Activity Quotas are terms that insist that the affiliate maintains a certain level of referred players every month. If the affiliate fails to maintain the stipulated (or sometimes ambiguous) activity levels, the program has the right to terminate the affiliate’s account.

The problem for affiliates with these types of terms is that is that affiliates in general do not receive full payment for their traffic at the point of registration. Instead the affiliate is normally paid a percentage of any revenue that the operator generates from the referred player’s activity over the lifetime of the player’s activity with the operator. Where the operator closes an affiliate’s account they no longer have to provide the affiliate their due percentage on the players that the affiliate previously referred.

On the surface these terms seem reasonable. Looked at from the operator’s perspective, if the program is going to continue to pay fees long after the player was referred, they want to see continued traffic.

The problems with these terms only occur when viewed from the affiliate - and player - perspective.

Any responsible affiliate wants to ensure that the partners they work with treat players fairly and continue to maintain a socially responsible reputation. As has been demonstrated time and time again, just because a program has a positive reputation now, this is no guarantee of what will come in the future.

Likewise, affiliates represent the first point of contact with operators for many players, so players want affiliates to show them operators that are going to treat them fairly.

And this is where the problems arise. Let’s give a general example. Our hero, Affiliate Responsible, chooses to work with Program Reputable but they carry a Minimum Activity Quota. That doesn’t seem like a problem right now because Program Reputable has such a solid reputation.

Program Reputable have lived up to their name for a good length of time and Affiliate Responsible has sent several hundreds of players their way - ensuring that the players that they have already referred generate substantial revenue for Affiliate Responsible every month. Things are changing however and Program Reputable are no longer paying players on time and seem to be coming up with strange justifications for refusing to pay numerous winners.

Affiliate Responsible wants to disassociate them self from Program Reputable, but is now faced with a dilemma: If they stop promoting Program Reputable as a result of their poor treatment of players then they will no longer send traffic their way and they will find themselves subject to the Minimum Activity Quota put in place by Program Reputable. This means that Program Reputable can close Affiliate Responsible’s account and stop paying for all of the players that Affiliate Responsible has already referred. The Minimum Activity Quota forces Affiliate Responsible to choose between receiving the full value of their historic referrals and doing the right thing: pulling promotion of Program Reputable.

In an industry where so many will do the wrong thing without incentive, constructing terms that actively create moral dilemma situations is, at the least, irresponsible business practice and is of no benefit to affiliates, and perhaps more importantly, players. Minimum Activity Quotas are constructed with greed at their core and with the intention of providing operators leverage to strong arm affiliates into continued promotion regardless of how the operator behaves.

These terms mean that affiliates are far less likely to do the right thing and stop working with miscreant programs, continuing to send players through to programs that aren’t good for them ultimately. In this situation the operator has already damaged their own reputation and by continuing to send players to an operator engaged in bad practice, the affiliate damages their own reputation sometimes beyond repair. In an industry where consumer confidence is far from high, this flawed ecosystem becomes damaging to all enclosed in it and therefore undermines what little confidence there is in the industry.