News Corp and other media outlets could lose a steady stream of gambling revenue if the federal government takes up a parliamentary inquiry’s call to ban trailing commissions.
Websites that refer people to gambling companies through advertising often get paid a commission from the punter’s subsequent losses. In some cases, this can be around 30% of their net losses.
A parliamentary committee expressed concerns about the affiliate payments in 2011, but the practice has continued without much scrutiny. The value of payments has grown in line with the online gambling industry, which now has an annual turnover of almost $50bn.
Now a new bipartisan inquiry, led by Labor MP Peta Murphy, has recommended “national regulation prohibit commissions being paid to staff or any third party involved in the referral or provision of online gambling to an individual”.
“The committee heard that this practice tends to be detrimental to those experiencing gambling harm,” Murphy said.
Trailing commissions are delivered by gambling companies in different ways. Some are calculated from every losing bet, with a percentage of the loss automatically paid to the affiliate. Others are paid monthly and only once five active gamblers have been referred. PointsBet documents reveal the bookmaker requires affiliates to actively recruit people to gambling.
“Affiliate must use best commercially reasonable efforts to actively and effectively advertise, market and promote PointsBet as widely and aggressively and responsibly as possible in order to maximise the financial benefit to both affiliate and PointsBet,” a PointsBet terms and conditions document said.
Dabble terms and conditions dictate affiliates provide them with data and information that can track the referred customer. Affiliates must also adhere to the bookmakers advertising rules.
News Corp has purchased websites that aggregate sports wagering information and refer punters to bookmakers. These include punters.com.au and racenet.com.au, which have a much higher volume of gambling advertisements than general news sites.
The revenue that trailing commissions generate for these websites is not known, but has previously been reported as substantial. News Corp was contacted for contact but did not respond.
Lauren Levin, a harm reduction campaigner at Financial Counselling Australia, has been documenting the use of affiliate commissions for more than a decade. She said some media companies were “heavily involved” in the practice.
“A business whose entire premise is based on getting trailing commissions of 25-50% of a gambler’s net losses works against consumer protection,” Levin said. “These businesses are incentivised to groom people to lose.
“The commissions are undisclosed and consumers have no awareness that they exist, although disclosure is not the right solution as we know it is a poor form of consumer protection.”
Lauren Gurrieri, an associate professor of marketing at RMIT University, said the payments were “an under the radar technique with perverse incentives that are highly concerning”.
“I think it speaks to a broader issue of gambling companies looking to incentivise different actors to encourage others to participate in gambling, for example we can see this in social media groups or even in friendship circles,” Gurrieri said.
Guardian Australia ran gambling advertisements until last month, when it announced a global ban and argued it was unethical to take money from services that can lead to “addiction and financial ruin”.
When asked about the trailing commissions, the communications minister Michelle Rowland said she was still studying the parliamentary inquiry’s recommendations and engaging with industry.
“This will be done expeditiously,” Rowland said. “I am on the record saying that the status quo is unsustainable, but we will have a comprehensive response in due course.
“Let me be very clear about what this government wants to achieve. We want to fulfill the principal of harm minimisation.”
Pointsbet, Dabble, Betr and the industry peak body, Responsible Wagering Australia, were approached for comment.
