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Hi everyone
My first post here. I’m an affiliate wannabe, just in the process of getting a site and learning about the business.
Rewards Affiliates’ Wager share caught my eye particularly, as I much prefer the idea of consistent, reliable income from wagering versus what I imagine to be an otherwise much less predictable business.
But I have a question: how are the payout amounts calculated? All of the figures for the casino’s take looked a little low to me. To check this I had a look at the PriceWaterhouseCooper reports on the Casino Rewards sites. It’s impossible to compare most of the figures, e.g. there is no separate category for ‘blackjack’ on the PWC reports. However, slots is easier as both PWC and the Rewards Affiliates page list this.
What I did was I made a spreadsheet and wrote down every slots figure on the PWC reports for the most recent 15 months shown (March-Jan 2006 and all of 2005; later 2006 months are not yet on the PWC pages.) I did this at every Casino Rewards casino except Phoenician and Aztec, which I assumed to be too recent to have been included in the calculations.
I then took averages for each casino, and overall, for the periods of the last 15 months, and the last 12, 6 and 3 months. I thought this would cover a good range of possible figures that Rewards Affiliates might have used when working out their figures.
What struck me is that there isn’t a single average close to the 3.71% that Rewards say they take from players on slots. Here are the figures:
Average Last 15 Months: 4.35%
Average Last 12 Months: 4.31%
Average Last 6 Months: 4.10%
Average last 3 Months: 4.24%So looking at the last 6 months is closeish to RA’s figure of 3.71, but there’s still quite a big difference – 10% in fact.
This has concerned me quite a bit. I want to promote Casino Rewards casinos over other brands because I really like the idea of wager share. But now I’m concerned that RA may be underpaying with this new method.
It’d be great if I could understand what criteria was used to come up with the figure of 3.71%, and why that is not reflected in the PWC reports over the last 15 months.
BTW, I’m happy to send the spreadsheet to anyone who wants it. I made a screenshot here if you want to see for yourself:
http://img113.imageshack.us/img113/3055/pwcreports8vi.jpg
In the sheet, the first row of figures in each section is the % payout as taken from the PWC reports. The line below is the calculated casino’s profit – i.e. if the payout is 96% the casino profit is 4%. On the right in each section are the 15,12,6,3 month averages and the totals for these are at the top right.
Do let me know if I’ve made a mistake or am missing something obvious! It just seems right now that wager share may be underpaying, at least on slots (as I say it’s impossible to directly compare the other figures with the PWC reports)
A quick update. I noticed a couple of errors in my sheet, I had March and January figures transposed in a few casinos. This didn’t affect the overall averages calculated.
Also, for the sake of completeness, I’ve added Aztec Riches and Phoenician figures too. There are fewer reports here – neither have published data for March or February, and Jan-Mar 2005 is missing for Phoenician and Jan 2005 for Aztec.
Nonetheless I’ve worked out their averages and included this in the overall figures. The new totals are:
Average Last 15 Months: 4.28%
Average Last 12 Months: 4.31%
Average Last 6 Months: 4.11%
Average last 3 Months: 4.19%Very slight move downwards, but still quite far adrift from the 3.71% RA is using.
Here’s what the updated sheet looks like:
http://img66.imageshack.us/img66/6448/pwcreports20wr.jpgHi Howardmoon & all,
Welcome to the affiliate community Howardmoon. I’m sure you’ll do well!
You’ve definitely done as much as you can with the PWC reports as is. The only difference is that the PWC reports aren’t weighted by game type. So to clarify:
let’s say slots was 95, table games were 96, vp was 97, and bj was 98 (just random numbers I’ve picked for the sake of this example):
I’m told the PWC reports are (95+96+97+98)/4
and while the numbers we are using are based on the PWC reports, they are also weighted to by game type. So that means, for example VP (at 97% in this example) might not have made up exactly 25% (1/4) of the bets.
For the sake of argument, say it made up 50% of the bets. So that 97% would carry twice the weight by comparison. So the final margins put forward are weighted to reflect the number of bets we’ve taken on each game type.
Make sense?
Also, Aztec and Phoenician were not factored into this as we did not own them at the time this was calculated.
Another point worth noting is that these margins change slightly as people play, so our plan is to review them every quarter to update them appropriately. They could go up or down … just depends on the games … but it will be 35% of our margin/profit.
Moreover, you can compare this to other programs of a similar nature in the industry and I think you will find us more than competitive. For example, FA pays 0.9% (at least the last time I checked) on slots compared to our 1.3%.
Thanks for replying so quick, Ryan.
I must confess I don’t really understand the weighting. The PWC reports give a % payout for slots. Surely this is simply taken by seeing the total amount wagered on slots, and then the total amount returned to the player.
Why would your figure for slots not be calculated in just the same way? I don’t understand why it matters if slots makes up 25%, or 95% of all the bets you receive – all the matters is how much you make from slots, and thus how much you pay us when our players play them.
I expect my players to be 90% slots players, so this number is quite important for me. I do understand that your program is competitive compared to other wager shares, it just seems to me that it can’t be that competitive compared to normal rev share.
PWC says you make an average of 4.1%-4.35% from slots (depending which time period you look at), but you’re paying out 1.3% which is around 30% of the real margin, not the 35% you advertise and which is available via rev share deals.
I certainly would not touch FA’s wager share system – 0.9% is ridiculous. But they do offer an alternative rev share deal which can pay up to 60%. With RA I don’t get a choice it seems, which makes the whole system seem less competitive.
Anyway I apologise for giving you a hard time on this. I do like your scheme and am considering it still. I really like the idea of ‘theoretical’, and If I felt I truly was getting 35% of the real margin then I would jump at it. 30% is ok, but it does put me on the fence a little and means I will probably give equal prominence to some rev share deals from which I can hope to make more than 30% long term.
ahhh, I see what you are getting at. Same principle just at a more micro level.
Take captain cooks casino for feb 06. For slots you’ve got it listed at: 2.46% margin. So if that month had 2million bets placed on slots on that casino, and the other months on average had 500k bets placed on slots on that casino … you can see that 2.46% will have 4 times greater weight than the other months.
clear as mud?
I know that so far I would have made a bit more $$$ sending my players to another MGS casino
With slots, it seems that unless the slots player gets a huge win and doesn’t cash out – your screwed. But, feel free to enlighten me.Ok, now I am not that great with math, but I do know slots.
You still have a huge variance among slots types, it’s impossble to lump them together like that. If the player chooses one of the type slots that have lots of small payouts they will be wagering a lot more. Fortunately the really fun slots most people are playing these days do offer lots of smaller wins to keep the player playing a lot longer. Slots are beginning to be geared towards entertainment value rather than click to win machines. And that makes people wager smaller amounts (or larger ones as they become more seasoned) many, many times over which is great for this system. Every win they have, they play back because of the small size of the win. When people have one large win, they are much more likely to cash out and go buy that new TV or whatever.
I do not have a big winner playing it back so far this month, but the stats seem right on target.
How well you do with this depends on what type of players you send. If they wager a long time you do well. On this system you want to market entertainment value.
Hi All,
What Dominique is refering to is hit frequency. Here’s a some info from the Winning at the Slots ebook.
“Video slots have a much higher hit frequency than reel-spinning slots. On video Wheel of Fortune, for example, the hit frequency exceeds 50 percent. The player wins something on more than 50 percent of all spins. That’s more than triple, and in some cases quadruple, the hit frequency you’ll find on reel-spinners.”
“However, on reel-spinners, like Red, White, and Blue and Five Times Pay and Ten Times Pay nearly all wins are for more than the wager.
“As a general rule the higher the lowest reward on the paytable, the lower the hit frequency. ” This is for land-based slots but the microgamming casino engine appears to be similar.
However, if you have few rmp’s you’ll need a significant amount of $$$ churned through with this wager model to come close to earning the same amount that the old model paid in the real world. It will benefit some affiliates that have a large amount of betting players or a player that wagers large.
From my data, most rmps deposit maybe a $100 or $200, lose it and quit. I’d bet that most of the sites promoting casinos have few rmps and this is the reason CR/RA switched over.
It’s like the land-based casino penny slots, they make the patrons feel like their winning when their really not.
Exactley what slot player said, for the small affiliates the wagershare model hurts because the players there isn’t enough money getting churned through the machines for lack of betting players. For big affiliates like Dom, it won’t really make a difference they come out on top probly every month because they have so many players betting. But when you only have a handful of players and they play a high variance game they could easily lose there $100-$200 in a matter of minutes, and the affiliate makes 2-3$ when on rev. share they would have gotten 30-60$ Rewards affiliates isn’t forcing anyone work for them I personally don’t push them hardly at all anymore. I’m in love with FA’s purchase share that is the best earnings model out there in my honest opinion. It offers nothing but benefits really, there isn’t really a downside to it at all.
What I don’t understand;
How come that small affiliates are hurt while bigger ones aren’t? I mean, you can be unlucky with a few players having a ‘betting pattern’ which does better on rev share, but if you say that wager share gives the same average payout, than it’s simply equally good for ALL affiliates, no?
(Or perhaps even better, because it seems to me like wager share has less variance in payouts and payouts can only grow – you sleep better.)
What insight do I miss?
Hi casinoreports,
Suppose a player deposited and lost $250 under the rev share, it would have paid the affiliate $87.50 or 35% of the $250. With the wager share suppose the same player deposited the $250, tracked all their hits so in the end they churned a $1000 worth of money through the slot, the affiliate will get paid 1.3% of the $1000 or $13.00
(I don’t believe it but supposedly with wager share a $10 deposit can work out to be about $269.23 churned through the slot depending on the size and number of bets mades. This could easily be figured out by looking at any slot’s paytable. This number has to be either ideal or bogus.)
According to these numbers, for every $10 played of our $250 we’d churn $269.23 through the slot or 25 x $269.23 for $6730.75 total churned through the slot. Our take is 1.3 % of $6730.75 or $87.4975. (the formula is simple, money churned through or total bets made can only be equal to the initial deposit plus the sum of total wins or hits)
Unless it’s changed, in order to get a payment from RA the affiliate must earn $200 so you can see at making $87.50 vs. $13 how long it will take to reach the $200, this is why it benefits RA. Alternately, how many times will a player deposit $250 and churn $6730.75 through the slot from it? Anyone know?
I’d bet RA has more affiliate member sites with a just a few rmps than affiliate member sites with many rmps. Only RA can provide this data.
On some of the land-based slots you can tap the door and it will print out an audit slip which shows just how much cash the slot took in, how much was wagered and how much was cashed out. I’m sure the online slots have a similar audit slip.
Theoretically the wager model will pay more, but only if you have many players or a few wagering large amounts. What an affiliate really wants is a player to make some decent hits and then wager it all back.
I’ve had some of the games like Harvey’s up in the high tens of thousands of credits won in play mode, (supposedly the payout % is the same as in real money mode) however had it been real money I would have cashed it out and not churned it back through.
Thank you Slotplayer.
I gave all of this a taught yesterday and a read yesterday (too much time away from a paper…) and I now see two things why a x% wager share is less than a x% rev share:
1. With rev share, the ‘no negative carried over’ can actually make you a lot of money. When -2000 is whiped out you in fact get a gift of 2000, which will never occur with wager share. When you hit the ‘good side of variance’ so that you have 2000 more in a month than ‘average’, than you nicely keep the money.
2. I read above in this thread about wager share being calculated on profit = revenue – operating costs. I don’t know which accounting standards RA uses but ‘profit’ is such a tricky concept. In a simple non tax situation:
Revenue
– Cash costs
Cash Flow
– Non-cash costs (eg deprecations)
profitSeems to me: rev share is calculated on revenue (and in fact your x% is even higher because of the gift with ‘no negative carried over’ once in a while), while Wager share is calculated on profit= very wrong because depreciations etcetera can easily be faked. Maybe I’m wrong, I hope so, the least I would expect is to have wager share calculated on cash flow.
@Some one of RA: is it right that Wager share is calculated on profits and not on cash flow or revenue? Could you get me a copy of or a link to the audit report you use for your calculations? (can’t find the link on the site) Thanks
Also with your argumentation slotplayer, I less love the 35% Wager share deal at RA than I used to do. I could be wrong somewhere though…
