PokerStars Was Right to Cut Ties With Nonproducing Affiliates

Posted on October 8, 2014

When news first broke that PokerStars had abruptly terminated the contract of at least one high-profile affiliate, the affiliate industry went on high alert, and as is often the case, the rumors and speculation spun out of control before all the facts were in.

The move created a sudden fear that all affiliates were now on tenuous footing with the new PokerStars, and that the company was trimming its expenditures, and this was just a sign of things to come.

This fear proved to be misplaced, as did the blowback PokerStars received for cutting these affiliates – which is something that has happened numerous times over the years; this just happened to be the first time an affected affiliate became a vocal dissenter.

PokerStars PR man, Michael Josem said cutting ties with certain affiliates who are not performing is something that occurs periodically in his 2+2 post on the matter:

“PokerStars has agreements with thousands of third-party websites (‘affiliates’) to market our services to new players and encourage them to play at PokerStars. PokerStars routinely reviews its agreements with these affiliates to ensure that they are productive for the company. Earlier this week, PokerStars ended the agreements with a very small number of affiliates who were not recruiting many new players, and who were doing little active promotion of our services.”

While I do feel for the affiliates who were affected, they should also realize they have some culpability in the matter, and as you’ll soon see, PokerStars cutting loose this dead weight is something the industry should be excited about.

The false guarantee of lifetime rakeback

I’ve signed up for rakeback deals at many sites over the years and have always been promised “lifetime” rakeback, but I knew this was far from a guarantee, and I was well aware of the terms and conditions that could nullify the contract.

The relationship between site and affiliate is no different.

If an affiliate is not living up to their end of the agreement, and is still receiving payments due to one, two, or even one hundred players they brought to the site many months or years ago, why wouldn’t PokerStars terminate these contracts?

They have been breached and PokerStars has every right to cut ties.

Furthermore, the contracts are very clear. Here is why you should have little sympathy for these affiliates, as part of the agreement the affiliate agreed to do the following:

5.2.         The Affiliate agrees to place the Link(s) or Marketing Codes on its Website(s), to ensure that the Link(s) is properly formatted at all times and that it shall not create any link from its Website(s) to the Site(s) other than the Link(s) without the prior written consent of Rational.

5.3.         The Affiliate shall only be permitted to place banners forming part of the Link(s) on their Website(s) by linking to the banner server made available by Rational for this purpose and by no other means without the prior approval of Rational.

5.4.         The Affiliate agrees to use its best efforts to market and promote the Site(s), in a manner consistent with good business ethics and in good faith towards Rational.

5.5.         The Affiliate undertakes, if the form of Commission that it receives from Rational is based on Revenue Share pursuant to Clause 4.1 above, to generate a minimum of 1 (one) Qualified PS Poker Player for each PS Site which it markets pursuant to this Agreement (for Revenue Share generated from the PS Sites) and 1 (one) Qualified FTP Player for each FTP Site which it markets pursuant to this Agreement (for Revenue Share generated from the FTP Sites) per 90 days.

The termination clauses are just as specific, particularly the following two (bolded) line items:

8.3.         In the event of the occurrence of any of the following:

(i)            a breach by the Affiliate of any clause of this Agreement; or

(ii)           in the reasonable opinion of Rational, you have acted in a manner that undermines the nature of this Agreement; or

(iii)          the Affiliate’s User Account is closed by the Operator for any reason whatsoever.

Rational retains full authority (without prejudice to its other rights or remedies under this Agreement, any other agreement, at law or otherwise) to (i) terminate this Agreement immediately and/or (ii) indefinitely withhold from the Affiliate any Commission accrued to the Affiliate’s benefit directly as a result of the breach.

8.4.         We may terminate this Agreement at any time on 7 days’ written notice.

Any affiliate who thought they could simply sign up a few high volume players and then receive a monthly rakeback stipend until their golden years (maybe will it and pass it on to the kids) was delusional.

If you were not performing to the standards set forth in the agreement you signed with PokerStars why would you be surprised when they terminate the agreement?

EDIT: The next section is only loosely related to the current situation between PokerStars and inactive affiliates, and are the author’s opinions on the current online poker affiliate model.

The following views are not meant to reflect on the recent affiliates PokerStars cut ties with.  

Why bad affiliates have hurt the poker world

So why is this a good thing for poker?

For years, many (not all, but many) affiliates have essentially turned all of their marketing efforts toward players the sites don’t want, instead of finding the new players that they were tasked to do under the original intent of the affiliate / site agreement.  They found a loophole where they were technically doing what they were tasked, but not in the manner or with the desired outcome that was originally agreed upon.

Yes, they were bringing in new players, but these were not the players they were tasked with finding, and in some cases they were current players who were simply bouncing from affiliate to affiliate.

If I was tasked with finding new customers for my local Starbucks I could find coffee drinkers by walking into the Starbucks the next town over, but what poker affiliates were tasked to do by a poker room is find the coffee drinkers who didn’t know they were coffee drinkers yet, and send them to Starbucks.

Read my take on the different online poker affiliate models here: Affiliates and the US poker industry: What model is the right fit?

Quite frankly, some of these affiliates have screwed themselves by doing everything to maximize personal gain without considering how this appears to and affects the sites they are essentially working for.

With few exceptions these types of affiliates have failed at bringing in legitimate new players, as they always reach for the low hanging fruit, and in some cases take the apples straight out of another person’s bag.

Shady behavior has done even more damage

In addition to the affiliates that were simply not performing, and the affiliates who let greed guide their marketing efforts, there are also affiliates that were more than willing to poach players from other affiliates with secret rakeback deals, or convince a current player at a site to reregister in order to get rakeback.

Don’t get me wrong, there are plenty of good affiliates, with a good business plan in place, but there are a lot of rotten apples in the barrel too.

All in all, the poker community should be happy to see affiliates who are cutting corners, violating their contracts, and/or outright cheating disappear from the space. The good affiliates (who bring in the right type of players for the poker ecology) will have no trouble replacing them.

Author’s note: This is not meant as a judgment on the specific affiliates that were dropped recently. I am not aware of the reasons these affiliates breeched their contract.

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Steve Ruddock

Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.

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