A Philly company passes on sports betting boom – WHYY

Lots of sports broadcasters and media companies have what are called affiliate relationships with betting companies or sportsbooks. Can you summarize what an affiliate relationship is?

[In an affiliate relationship] media companies essentially receive a finders fee for every customer they can send to those sportsbooks. If you were to come to a website, click on an ad, make a deposit at DraftKings or FanDuel that website would probably receive several hundred dollars in an affiliate fee.

There are also relationships where that website would continue to earn money based on the amount of money that you wagered and lost over time up until two, three, four years down the road. And so those are more revenue share agreements.

Can you give a sense of what type of revenue a company like yours could generate from an affiliate deal?

I think if we really pulled out all the stops it could be in the millions of dollars a year. I would expect it to be.

So youre running a successful small business but still a small business and there is this carrot dangling. And you all turned it down. Youve said this isnt a puritanical thing. You dont have a moral aversion to gambling. So why did your company decide not to pursue an affiliate relationship?

In order to really blow this out and really do this in a way that maximized our return we would be banking on you and our users losing money. And it didnt feel like it aligned us well with what the interests of our users were. I dont begrudge other people. Weve been pretty fortunate that weve been profitable and continue to be profitable. So its not a pressing need for us at this point. [That] made it a relatively easy decision.

All types of businesses [WHYY] included have traditional advertising. And basically youre asking people to spend money on something else. Yet, this does feel somewhat different. But I cant quite put my finger on how.

Id say its subtle. I dont know that I have a good answer for you. Part of it might be the certainty with which you know there will be losses. In a traditional advertising situation hopefully the person youre advertising [to] is [getting] a useful service or a useful product. The customer will get something in return.

You can completely make the argument that sports betting is entertainment and so its no different than going to the movies. But there is this certainty given the way sports betting is set up that most bettors are going to lose money long term. Theres also an addiction argument.

So all of these things conspired together to push us in this direction.

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A Philly company passes on sports betting boom - WHYY