Online gambling regulation in the United States is likely to happen soon. And when that happens, as the Baltimore Sun’s Jay Hancock points out, the taxes from the poker sites that are under fire now “will help pay the salaries of [those] who have been persecuting them.”
But the laws haven’t changed yet. And until they do, how can affiliates in the U.S. — or wherever they may be — protect themselves from dealing with operators who are potentially a legal risk?
Understanding the risks
That’s the question we posed to Lawrence G. Walters, Esq. of Walters Law Group. His site, GameAttorneys.com, gets more than a million and a half hits a month, and he’s recognized as a global authority on gaming law.
“So far, affiliates have been largely left alone by the feds,” Walters told CasinoAffiliatePrograms.com. But he added that if “if you’re in the United States, and you’re an affiliate marketer, you’re under an obligation to conform your activity to the requirements of U.S. law.”
That holds true regardless of where the activity occurs, Walters stresses. So, to make sure your business is on sound legal ground, you’ll want to make sure you’re not partnering with any operators whose future legal problems might implicate you. Just because you’re not specifically involved in any crimes they may commit (or be accused of committing), that doesn’t necessarily mean you’re protected under the law.
What can you do?
Based on Walters’ assessment of affiliate legal risk, there are four main approaches for affiliates dealing with a potentially at-risk operator, in varying degrees.
1. Drop the operator. The most obvious and most secure answer is also the most painful. If you have a pretty good idea that a specific operator is of particular legal risk, you should immediately end your relationship.
2. Change the commission structure. If course, if you’re making a lot of commission on that operator, you’re not going to want to drop that business, even if it is a bit risky. Another (but admittedly less secure) tactic that may help reduce your legal risk is to adjust your commission model.
Walters emphasizes that the revenue share model is “more dangerous” than others, and that a flat fee would be the ideal scenario, because it suggests less of a partnership and more of a simple business transaction.
3. Double-check that license. There are operators that claim to be licensed, but aren’t. Don’t put yourself at risk by failing to check up on that potential danger. Research on companies is easy to find. It’s very easy, for example, to find authentic licensing data for companies like Sportingbet and 888. If it’s hard to get a clear idea of whether an operator is licensed, consider it a dangerous omen.
4. Check with a gambling lawyer. Gambling law interpretations vary so much because prosecutions for this activity haven’t occurred in the United States. So if you have specific reason to suggest an operator is at risk in the U.S. or any other jurisdiction, and you’re worried about the financial or legal penalties of that association, your best bet is to contact a legal expert. These problems are best handled on a case-by-case basis, says Walter.
What now?
“Affiliates should do some soul searching,” Walters says. As in many other types of legitimate business, there are legal risks that shouldn’t be ignored. If any or all of your operator partners prove to be too risky for you to confidently conduct business with them, it may be time to cut them out of your business plan, as painful as that may be.
But fear not — maybe it’s just time to try a new online gaming vertical. More info on how to do just that is coming soon to the CAP blog.