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On the average one might expect there not to be any difference between the revenue share and wager share models. Because with wager share, affiliates are being paid on the basis of a player’s expected losses it might seem logical that whatever short term fluctuations might occur under revenue share, in the end the two should average out.
This, however, is not the case.
Remember that under the old revenue share model RA neither carried over negative balances from month to month nor bundled its casinos. This was a good thing. (And indeed RA rather disingenuously still claims this to be the case on its website.) Under the current wager share structure, however, this no longer occurs. Therein lies this difference.
As such (assuming that RA’s margin percentages are accurate), the wager share is indeed functionally equivalent expectation-wise to a 35% revenue share model, but only if that model both bundled its casinos AND carried over negative balances. (Now this doesn’t mean that one’s earnings pattern would be the same under wager share and under 35% bundle+carryover rev share, but rather that one’s overall expectation would be the same.)
This is why wager share is so much worse for smaller and medium sized affiliates than for very large affiliates. A very large affiliate’s earnings are impacted less by carryover and bundling (and indeed an infinitely large affiliate shouldn’t care whether a program bundled or carried over), because his earnings stream is smoother and less volatile. On the other hand smaller affiliates are more subject to volatility than larger affiliates, which is good for the smaller affiliate in the face of no negative carryovers and no bundling.
Therefore, RA is effectively betting that affiliates will be willing to trade much higher revenue for lower volatility. However, considering the business affiliates are in, I suspect that this will turn out to be an exceptionally bad wager.
There’s no question about it — the change to the wager share model is not a good thing for any but the largest or most risk averse affiliates.
This is the best written explanation of wager share I have read so far.
I also came to your ‘volatility was good with rev share’ idea, but as you say, also non-bundling is an advantage we no longer have.
Some one on this forum also added that the 35% wager share is calculated on ‘profit’, which means, in accounting terms: cash flow – non cash flows
And of course non cash flows can be manipulated (legally).
I’m not sure if it really is based on profit, but even if it’s based on Cash Flow, than there’s still a disadvantage, as cash flow = gross revenue – bonus costs etcetere – operational costs (hiring staff, …)
The operational costs aren’t in the calculation with rev share of course. But again, I can be wrong here?
In short, rev share has 3 advantages compared to wager share:
1. Bundling
2. No negatives carried over
3. Calculated on net revenue instead of cash flow/profit.ganchrow wrote:This is why wager share is so much worse for smaller and medium sized affiliates than for very large affiliates. A very large affiliate’s earnings are impacted less by carryover and bundling (and indeed an infinitely large affiliate shouldn’t care whether a program bundled or carried over), because his earnings stream is smoother and less volatile. On the other hand smaller affiliates are more subject to volatility than larger affiliates, which is good for the smaller affiliate in the face of no negative carryovers and no bundling.Nice post. First let me say I am with you in that wager share is going to be a loser for most affiliates in comparison to rev share so we are on the same page there. But saying that large affiliates shouldn’t care whether a program bundled or carried over is simply wrong. I understand your point, you are saying because he/she has so much money coming in that even if he has a large winner he is still likely to pull down a nice commission which is true. However, it is all relative. The bottom line is a carry over or bundle from a large winner is still money out of the affiliates pocket, large or small and just because he has other players that make up for that large win, doesn’t mean it is not money lost. I suppose it just depends on how you look at it. Saying that larger affiliates shouldn’t care whether a program bundled or carries over is just like saying a millionare shouldn’t care if he loses $100k at the casino, just because he has millions in the bank. But if the same guy only had $500k in the bank, then he would care. So it is all relative imo.
Perhaps I am disecting your post too much, who knows but for me wagershare is pretty cut and dry. For example, this month I have earned $31.92 in casino commissions from RA. The problem is that I don’t know how much was deposited and lost so I don’t know how to guage that $31.92. If I had $500 deposited and lost than I am not doing so hot am I. We can disect it all we want and guess, but unless we can see deposited amounts and money lost amounts in our stats we will never know just how well we are doing on wager share compared to rev share. I think if affiliates started to see only $4.47 give or take earned off a $200 deposit lost, then no one would promote them anymore. I do understand there is a flip side to this, like the guy who deposits $50 and you earn $50 in commissions off that deposit. But I think those flip side situations are going to be far and few between.
I piddle with RA affiliates because I really like Ryan and Renee and I want to keep the door open, although they probably don’t feel the same way lol when they read all my posts about their commission structure. But I am not going to sugarcoat anything just because I like them. The problem I have when they made the change is that we didn’t have the option to stay on rev share with new players, only the existing ones. So I kind of feel rail roaded into a commission structure that I am almost certain will consistantly earn me less money month after month in comparison to Rev share. I don’t subscribe to all the talk that this structure will be better for affiliates. I suppose like you say, if they are willing to trade off the volitality for continuity and less money, then sure it is better for them. If all programs went to this structure I would promote nothing but poker and sports. I will not work for 10-15% of the profits if that.
These are just thoughts I have on the wagershare model and are based only on what my gut is telling me. For everyone elses sake I really hope my gut is drunk or something.
Bonusgeek wrote:But saying that large affiliates shouldn’t care whether a program bundled or carried over is simply wrong. I understand your point, you are saying because he/she has so much money coming in that even if he has a large winner he is still likely to pull down a nice commission which is true. However, it is all relative. The bottom line is a carry over or bundle from a large winner is still money out of the affiliates pocket, large or small and just because he has other players that make up for that large win, doesn’t mean it is not money lost. I suppose it just depends on how you look at it. Saying that larger affiliates shouldn’t care whether a program bundled or carries over is just like saying a millionare shouldn’t care if he loses $100k at the casino, just because he has millions in the bank. But if the same guy only had $500k in the bank, then he would care. So it is all relative imo.This is actually a bit academic. When I referred to a “very large” affiliate this was supposed to represent a theoretical statistical construct and was not intended to imply that any “real-life” “very large affiliate” would in reality be strictly indifferent. Rather this is only true in the limiting case of an affiliate with infinitely many arbitrarily small players.One way to put it would be that as the number of an affiliate’s players playing at each constituent RA casino jointly approach infinity, then (as long as no individual player’s share of total bets is also approaching infinity) the affiliate’s earnings volatility at each casino approaches zero and consequently the affiliate’s preferences for no negative balance carryover and no bundling approach indifference.
In real terms, this means that the larger an affiliate becomes the less important carryover and bundling consequently become.
Bonusgeek wrote:Perhaps I am disecting your post too much, who knows but for me wagershare is pretty cut and dry.I agree. It is cur and dry. Exceptionally risk averse affiliates would prefer it (if any such affiliates do in fact exist.) Most reasonably risk-tolerant affiliates will hate it, and a few of the larger risk-tolerant affiliates will probably think it’s not all that much worse.Bonusgeek wrote:These are just thoughts I have on the wagershare model and are based only on what my gut is telling me. For everyone elses sake I really hope my gut is drunk or something.Unfortunately in this case what your gut to be telling you happens to be in keeping with the constituent economics.Can anyone that doesn’t talk like a professor at Yale interpret that last post from Ganchrow for me.
Bonusgeek wrote:Can anyone that doesn’t talk like a professor at Yale interpret that last post from Ganchrow for me.
Too funny
Just read slowly. 
casinoreports wrote:Some one on this forum also added that the 35% wager share is calculated on ‘profit’, which means, in accounting terms: cash flow – non cash flowsAnd of course non cash flows can be manipulated (legally).
I’m not sure if it really is based on profit, but even if it’s based on Cash Flow, than there’s still a disadvantage, as cash flow = gross revenue – bonus costs etcetere – operational costs (hiring staff, …)
The operational costs aren’t in the calculation with rev share of course. But again, I can be wrong here?
B]3[/B]. Calculated on net revenue instead of cash flow/profit.We really have no idea if RA is allocating any fraction of operating expenses to individual affiliates, but reading through the program description on the RA website it does not appear that they’re using anything other than gross revenue in their calculations. Still we can’t really be 100% certain how RA is arriving at their margin figures.
That said, even if their calculations are completely accurate, that doesn’t change the fact that for the reasons already stated their 35% “wager” model is substantially worse than a 35% bundle and carryover free rev share model.
Bonusgeek wrote:Can anyone that doesn’t talk like a professor at Yale interpret that last post from Ganchrow for me.Well I did say it was an academic point — consider it a digression into the underlying economics of the considerably less than aptly named “True 35% Wager” plan.The important point is that despite RA’s protestations to the contrary, the wager share plan will be much worse for most affiliates than would rev share.
For lack of a better way to articulate without sounding 100% less intelligent than ganchrow. I would like to say that I agree that wagershare is much worse in terms of real profit, particularly in the long run. Additionaly, it is unacceptable, IMHO, that affiliates cannot view deposit amounts. There is no variable to compare the control with. This is why everyone is getting out their calculators and banging their heads. There is a huge part of the equation missing.
I am adverse to risk taking with my income.
I am even more adverse to bundling and negative carryovers both on principle and in practicality.
I think I understand your point, but haven’t noticed that effect on my earnings – maybe “yet”, the system is young.
I wonder how you interpret what happens when you have a whale enter, play a lot, win a lot, and play most of it back in one month.
How do the systems compare in such a case?
I am not a big casino affiliate but I have had a few players under my account. From what I have seen most players don’t keep playing for along time. It seems they deposit once or twice and move on. Under the revenue share I was making good money and under this new model I am making 2-3 dollars. It seems like if you have players that play frequently over a long period of time (which from my experience is not the average player) or a large number of players then your earnings won’t take much of a hit. With smaller numbers of players (aka. Most Affiliates) this is not the best revenue model. I just really wish smaller and medium size affiliates could have the option to keep the old model for new players.
ganchrow wrote:Remember that under the old revenue share model RA neither carried over negative balances from month to month nor bundled its casinos. This was a good thing. (And indeed RA rather disingenuously still claims this to be the case on its website.) Under the current wager share structure, however, this no longer occurs. Therein lies this difference.Hi All,
There are implicit benefits to both models … that is, both have pros and cons … you guys are all very good at pointing out the benefits of the RevShare model because you’ve got experience with it. However, there are also implicit benefits of the wager model.
Let’s discuss the no negative carry forward for a moment. The real benefit to affiliate is that they might ‘get lucky’ and somebody wins the casino’s money at the end of the month … the month ticks over – the affiliates negative balance is zeroed – and the affiliate sits back hoping that player dumps the casino’s money back into the casino early in the following month so the affiliate can earn some free money.
So, on the RevShare model you only get this benefit over a very short period of the month if these few variables line up for you. Let’s consider the wager model. It doesn’t matter when the aforementioned scenario happens on the wager model. It could be at the start of the month, at the beginning of the month, or yes, even the end … and what happens? The player wins … and just keeps playing that money. More Play = More Wager = More Commission to the affiliate.
Next, no bundling … certainly a benefit in the RevShare scenario … but that’s because you have to worry about going negative because the model is based on net win. Another implicit benefit of the wager model is that you can’t go backwards/negative … so you don’t need to even worry about bundling to protect yourself. It’s not a factor.
Anyway, all that said … we do have a couple months of data under our belt now and the model costs more. That is, the affiliate payments are higher so far (yes, excluding mergers, etc). So our affiliates are earning more dollars with this model … so far.
If I can lend any insight from “behind the scenes”, I would say that these past few months have shown us a couple of things.
1. Having the critical mass helps keep things level. I’m not talking about being a ‘super affiliate’ … but more than a handful of players make the model behave consistently. If you’re just getting started you may be subject to relative extremes until you get some more players in there. That is, if your 1 player wins & plays back, you will be shocked at the earnings. Conversely, if the player only places a single bet, it will look a bit painful. While neither is the norm they obviously can happen and with very few number of players it would be impossible not to think something strange was happening.
2. On the whole it depends on the ‘type’ of players you send. I put type in quotes because this is a very loose definition of a player type. What I’m getting at is do your players like to play or not? This may sound like a silly question because “hey, they’re at an online casino, obviously they like to play!” … but it seems affiliates who have loyal players or communities send players that simply wager more because, as common sense would dictate, they like to play more than the next person.
Enough rambling, but as you all know, the bottom line is: push it if it works for you.
One way that may help people imagine this is if they are players at all. Imagine you have a slot player who deposits $100, and loses it. Under the old model you earn $35. Under the new model, for you to earn $35 that slot play would have to give about $2700 worth of action for you to make $35. $2700 on that $100 deposit. When you play does your $100 last that long?
It would be very easy for them to show you how much your players are depositing, but it would also show you very quickly what a bad deal this is. That is why you are not seeing deposit amounts under the new model.
casinoreports wrote:Some one on this forum also added that the 35% wager share is calculated on ‘profit’, which means, in accounting terms: cash flow – non cash flowsAnd of course non cash flows can be manipulated (legally).
I’m not sure if it really is based on profit, but even if it’s based on Cash Flow, than there’s still a disadvantage, as cash flow = gross revenue – bonus costs etcetere – operational costs (hiring staff, …)
This post is a bit surprising to me. It appears we are still missing some fundamentals on this (no offence to anybody, I’m just surprised).
The wager model is based on the amount wagered and has nothing to do with profit, cash flow, gross revenue, bonuses or any associated costs.
So whether they take $10 FREE and wager it, or deposit millions and play ’til it’s gone … the affiliate earnings would be based only on the amount wagered.
Everyone who has been in this business for any amount of time knows that one earns the most money from only a handful of players. Big players.
That holds true in rev share, but it holds even more true in this model. A whale who wins and plays it back makes you twice as much here, first you get paid for him/her wagering in order to win, then you get paid for them losing it back. The fact that they win in the interim would wipe you out and make you start over in rev share, but here is is irrelevant and you just keep adding revenue.
Yes, having lots of small players who enjoy the entertainment value keeps you earning in months when you do not land a big player. But it is not where your major income is at, with either model.
A single winning whale in this model can offset a lot of average or below average months.
