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How to Change the Online Gambling Industry From the Inside: Bet On Better Affiliate Marketing

Would you bet your career on gambling?

After graduating college in 2003, Canadian founder John Wright dived headfirst into the (then young) world of professional internet gambling (often called iGaming). Applying his uncommonly analytical mind to the hobby, he brought in more money than an engineering salary ever could.

John’s fascination with internet gambling led him into the peripheral industries surrounding online casinos; he began making money as an affiliate, running sites drawing traffic to betting websites. To him, it was simply his next, more profitable bet – until he grew unsettled by a slew of bad practices at gambling affiliate sites.

iGaming affiliates are incredibly lucrative businesses because they pocket percentages of every referred gambler’s losses. John noticed this led them to (unintentionally or otherwise) target problem gamblers – those who would blow huge sums of money in one sitting but never return. 

Also, because of their competitiveness, these affiliates jealously guarded their data. There was little consensus on best practices for displaying ads and listing promotions. They were leaking money everywhere – and the problem wasn’t only in iGaming.

John created an app called Statsdrone to help online affiliate sites across industries make better ads, keep their promotions up to date, and get mathematical proof of which affiliate programs yield the highest return.

He also made a deal with himself: If he was to profit from the gambling industry, he would find a way to pay it forward and help problem gamblers.

Today Statsdrone makes about $20,000 in MRR and is poised to move into affiliate networks outside of the gambling industry. John agreed to sit down with me to talk about how he entered the industry, his insights on modern iGaming, and how he uses his earnings to help curb gambling addiction.

Beginner’s Luck

John entered the world of iGaming in the last year of his engineering degree at the University of Toronto. He was extraordinarily good at it and is likely one of the five percent of the population¹ that regularly makes money from gambling. He says it’s because he can always walk away from the table if he doesn’t see amazing odds.

People tend to rationalize emotional decisions with logic. That’s why most people who try to play poker professionally end up failing.

“People tend to rationalize emotional decisions with logic,” says John. “That’s why most people who try to play poker professionally end up failing. You have to wait for these opportunities to happen. You’ll have days where you’ll look at all the different odds and say, ‘There’s nothing here for me.’ If someone asked me to bet on sports at the casino I’d most likely say no. It bothers me to make a bet I can’t take advantage of.”

Playing the odds earned John more money than he could earn with an engineering salary right out of college. It also let him travel and live wherever he wanted. After he graduated, he turned it into his full-time job.

“I owed $40,000 in student loans so I thought, ‘What difference does it make?’ I had the security of an engineering degree if I ever failed.”

But for John, gambling was always more about the challenge than the winnings. He began working with gambling affiliate programs in 2010 – websites advertising for gambling websites. They were making almost as much money as the casinos themselves.

“I figured if casinos could afford to pay players like me that take money from their ecosystem, it went without saying even more money was going to support these growing affiliate enterprises.”

John was right. Gambling affiliates were some of the highest-paid sites in the affiliate industry – but they were incentivized to bring in losing players.

“For every player you refer to a casino, you can make up to forty percent in commission on their losses,” he says. “That means if you have a website and you get someone to click on your link and they lose a thousand dollars playing blackjack every month, you’re now earning $400 per month.”

While they received extremely generous commissions, John saw most gambling affiliate sites were, well, making bad bets. They launched ads hoping to bring in the highest commissions possible (usually problem gamblers) that would never deliver. 

Besides the issues in the gambling industry, John noticed affiliate sites across industries still running ineffective banner advertisements along with a host of other problems:

“I’d see affiliates focus on how much money they made with one program but not on things like Earnings Per Click (EPC). I noticed some would cough up the number one spot on their homepage for a higher commission rate for a product that attracted fewer customers. Others showed outdated promotions. Affiliates were simply leaking money everywhere.”

Ever the analytical mind, John knew he wanted to leave the business-to-customer (B2C) space of online casinos and affiliate websites and focus on business-to-business (B2B). “In B2C you’re against giants,” he says. “B2B has much less competition. I wanted to build a stats tool as a core product that lets affiliates focus on content while the ads run themselves.”

John knew if he were to stretch himself further he would need a cofounder, someone he could rely on and trust. He roped in his former landlord and friend of ten years, Darrel Hellyer, a recently retired corporate trade marketer.

“Digital looks at corporate as slow, but we have many of the same issues like HR and teams.”

Some might see it strange that a tech founder would look for a corporate cofounder as part of the founding team. John thinks corporate experience helps a lot on the operations side. “Digital looks at corporate as slow, but we have many of the same issues like HR and teams. It’s nice to have people from different backgrounds in leadership.”

Learning to Be an Effective Salesman

John launched the first version of Statsdrone in 2018. It was little more than an affiliate earnings tracker. He almost immediately needed to switch developers because the one he’d hired repeatedly missed deadlines. John believes he lost $250,000 from that one contract. “I have a tech background but that doesn’t mean I can’t make mistakes,” he says.

But John was passionate about Statsdrone and wanted to push on regardless of setbacks. He enlisted one of the developers working on his affiliate sites to manage all of his projects.

The Statsdrone team grabs dinner together after an event.

However, once Statsdrone was completed, sales were still a bottleneck. John initially reached out to friends from the industry but didn’t receive the rave reception he expected.

“I thought it would be a walk in the park. Some friends took six months to respond and I received every type of rejection you can think of. I needed a way to have an answer to every question before they asked it.”

Through steady trial and error, John found the best answer to sales was video demos through the video creation service, Loom, and its competitor, Telloe. “I send leads a short video of myself using the tool for their website. I can see how many times they watch it, any buttons they click, and everything else. It’s been the most profound marketing activity I’ve done.”

With a more complete product in the pipeline and a successful sales strategy, partners flocked to his service. As of my interview, John was expecting to burst past his benchmark of $20,000 MRR in a matter of months.

Using Gambling to Help Gamblers

While John owes his career to iGaming, he understands that most people perceive the industry and its affiliates as unethical if not downright predatory. He reasoned it was better if someone like him stepped into the industry and used the money for good.

I hoped there would be some opportunity in the future for me to give back.

“When I got involved with gambling affiliates, my ethical logic was that ‘Yes, I’ll be indirectly making money off players but I don’t want to become heartless.’ I hoped there would be some opportunity in the future for me to give back.”

John got his first opportunity to pay it back fifteen years into his career. He coached a friend, Duncan Garvie, who runs a service helping gamblers file complaints against corrupt casinos called thepogg.com, in search engine optimization and design.

“Over the past ten years my friend has helped gamblers recover eight million dollars from casinos,” he says. “Many problem gamblers will ask casinos not to contact them so they aren’t tempted to gamble. These people are highly targeted by casinos. If they ever go in and win anything, the casino will say that because they are on a no-contact list, they don’t get a payout.”

John has also helped with and donated substantially to Duncan’s charity and nonprofit betblocker.org. It’s a free gambling site blocking tool that can be installed on any device with an internet connection.

“The problem with paid casino blocker apps is that you need to pay to use them – and problem gamblers are often low on money,” he says. “Imagine you’re on the verge of losing your house but you need to pay more money for an app to help you stop gambling. Even if you do pay, they’ll usually limit how many devices you can use the app on. Betblocker requires no registration and no payments and you can put it on as many devices as you want.”

Today John says he hasn’t gambled in twelve years. He’s already made the greatest bet a founder can make: a bootstrapped startup in an underserved niche.

Resources:

How Often Do Gamblers Really Win? – WSJ


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Andrew Gazdecki
Andrew Gazdeckihttps://acquire.com
Andrew is an award-winning serial entrepreneur with three exits. He’s the founder and CEO of MicroAcquire, the world’s most founder-friendly startup marketplace, and its rebellious child, Bootstrappers, which gives voice to the entrepreneurial underdog. When not building businesses, he writes for Forbes, Entrepreneur, and now, Bootstrappers.

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