Affiliates Liability in the Online Gaming Industry – By Tal Ron

by Jenae Reid on October 3, 2017

Online gaming continues its explosive growth, free of any territorial borders. The close relationship between operators and affiliates stands as one of the industry’s essential pillars, which needs to be preserved in order to avoid failure.FeedFront issue 40 cover

Gaming regulators are using creative measures to enforce local regulation by blacklisting operators; penalizing players; ISP blocking; payment blocking, and affiliate blocking measures.

Gaming platform providers have even been asked to monitor traffic and block unlicensed gaming operators.

The real issue is whether an affiliate can be held liable if a dishonest merchant is sued by a customer, who was directed to the merchant from an affiliate website?  The answer is affirmative.

In a suit filed by the FTC, an affiliate marketing company was held liable for its use of websites, which displayed deceptive marketing content related to weight loss products. This liability was determined even though the affiliate wasn’t responsible for the creation of the content.

It may seem absurd to regulate affiliates seeing as they don’t handle wagers, process payments, nor hold player deposits. All affiliates do is market online, which could be seen as the same role held by TV commercials or billboards.

However, in the regulator’s eyes, affiliates are incentivized to act in a manner that could kill positive consumer perception, without having much liability in doing so.

How can affiliates reduce their liability?  First, affiliates and merchants must conduct due diligence when choosing marketing partners.

Second, affiliates are encouraged to add a simple and clear disclaimer on their website, which includes a Compensation Disclosure and Limitation of Liability.

Finally, it is crucial for affiliates and operators to get ongoing professional legal advice relating to any regulatory requirements.

Indeed, the main challenges affecting the gaming industry are regulatory challenges which have fragmented the iGaming world, creating multiple licensing regimes and local series of requirements adopted in each jurisdiction.

Nevada was the first US jurisdiction to require the licensing of affiliates, while other jurisdictions such as: Italy, UK, Spain, and Romania, have already placed liability for black market operations on software platform providers.

 

Tal Itzhak Ron is CEO and Chairman of Tal Ron, Drihem and Co. Law Firm

This article appeared in issue 40 of FeedFront Magazine, which was published in October 2017. https://issuu.com/affiliatesummit/docs/feedfront-40

 

 

Comments on this entry are closed.