The affiliate agreement is a critical document, and one clause remains a point of debate: negative carryover. This term can dramatically alter an affiliate's earnings, turning a profitable month into a break-even period.
Understanding this mechanism is essential for building a sustainable business, as it directly impacts the risk and reward balance of promoting an operator.
How Negative Balances Impact Commissions
The issue arises when a referred player wins significantly. Affiliate commission is a percentage of Net Gaming Revenue (NGR). If a player's winnings exceed the losses of all other players, the NGR becomes negative.
With a negative carryover policy, this deficit is not wiped clean. It is carried forward, and the affiliate must generate enough positive NGR to clear the debt before earning commission again.
A Practical Example
An affiliate on 30% revenue share earns £1,500 from £5,000 NGR in January. In February, one player wins £10,000 while others lose £2,000, creating -£8,000 NGR.
The affiliate earns nothing and starts March with an £8,000 deficit to overcome before commissions are paid.
The Affiliate-Friendly Alternative
The most sought-after deals have a 'No Negative Carryover' (NNC) policy, where any negative balance is reset to zero monthly. This is seen as a fairer partnership, isolating operator risk from affiliate marketing.
Programmes from operators like Bet365 have been popular for offering NNC, fostering loyalty. Affiliates must always check the small print.
The High-Roller Caveat
Many NNC policies include a 'high-roller' clause. If one player generates a large negative balance, for example over £5,000, they are ring-fenced. Their negative balance is carried over and must be cleared by their future losses alone.
This protects the affiliate's wider commission but means the high-roller generates no income for a period. It is a compromise to manage financial exposure.
The industry is moving towards more balanced terms, but negative carryover remains prevalent. For affiliates, protection comes from due diligence.
Before signing an agreement, scrutinise the terms on negative balances and high-rollers. A clear understanding of these policies is the foundation of a predictable partnership.