How online tipsters make a profit when punters lose

Many tipping websites and social media accounts are making a profit when their tips lose, potentially leading to them deliberately giving out bad tips or very long shots in order to increase revenue.

The increase in social media tipping accounts has led to an increase in affiliation programmes with bookmakers, many of which work off a basis that the affiliate – in this case a tipster – receives a percentage of the losses a customer runs up when they join through a link posted by the affiliate.

Tipping accounts on social media, as well as tipping blogs, have seen a huge increase recently, with some of the biggest firms boasting more than half a million followers on Twitter. Many of these accounts will post tips on social media, along with a link to a bookmaker, and will then make a profit off the losses of all of the customers who click the link and sign up. Others will link directly to their own website on which there will be numerous ads for bookmakers, and the same system will apply when a customer clicks on one and signs up.

‘Revenue share’

These percentages can range from anywhere between 20 and 40 per cent. For instance, Paddy Power advertises on the affiliate section of its website that “we’ll convert your players with compelling free bets & device-optimised landing pages, retain them with Money Back Specials, and you’ll receive 25% revenue share”.

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So, in other words, if a customer clicks on a sign-up link on an affiliate’s website and then makes a nett loss of €100 and the affiliate was on a 30 per cent deal, then the affiliate would earn €30. They would then continue to earn indefinitely from the customer’s future losses.

While it is difficult to say that some tipsters are deliberately giving out losing tips (because who can be certain that a tip will lose?), there are plenty of other methods to tempt customers in to bets that will most likely lose. For instance, many accounts will regularly tip long-odds accumulators along with a sign-up link to a bookmaker and a €10 free bet. The customer signs up, places the €10 free bet on the accumulator and then, if they continue to bet with that account, the tipster will profit from a percentage of their losses.

Redirected

As an example, a large tipping firm with just under 600,000 followers on Twitter was recently posting numerous links to a 103/1 accumulator. When the link was clicked it redirected to the company’s website, where the accumulator could be found on a page which showed a total of 17 advertisements for various bookies, all of which were special offers for new customers.

InPlay Man is a tipping service which has 57,400 followers on Twitter. The owner of the account told The Irish Times that he used to work via an affiliate service but stopped for a number of reasons.

“Morally it wasn’t what I was about and although I earned some cash from it, the bad press, the hassle, and tightening regulations just no longer interested me,” he said.

“And despite always being honest with my followers and trying to explain to people what it was about, my personal aim wasn’t to make profit from this, it was to create a community and make betting fun again for people.”

Some tipsters also promote rolling challenge bets which work off the basis that the customer places, for instance, a €10 bet to win €20 and then places that €20 to win €40 and so on, until the challenge is complete when they reach the figure set out by the tipster.

‘Purposely’

InPlay Man says that “those are the tipsters to watch out for. Are they purposely tipping losers to gain profit? You’ll never be able to definitively say that because they will never admit it and it’s just as hard to purposely tip losers as it is winners. But they are lying to people to make a profit, that’s a fact. And they’re preying on the fact that everyone dreams of that €1 bet that they win a million from.

Affiliated or not, there are tipsters out there who give all other tipsters a bad name

“Those ‘challenge/roller’ tipsters will win one of them and there will be people who followed it from beginning to end and won money. But the tipster will immediately put another up. If you won, why not try again? If you weren’t involved, now is the perfect time, right? For the tipsters it’s a win-win situation. Win a challenge and sure, they probably lose money through their links if they’re on a revenue share scheme, but they will have thousands more following when the next one fails. Lose a challenge and the money rolls in regardless.

“Again, though, does that mean all tipsters who do challenges/rollers are bad? Not at all. I even do them from time to time, but when I do they’re a bit of fun. Affiliated or not, there are tipsters out there who give all other tipsters a bad name.”

An employee in a large tipping company told The Irish Times that they stand to make between €70,000 and €90,000 in revenue from customer losses alone each month. They said that the aim is to ensure as much traffic on the site as possible and that, while accumulators nearly always lose, they are the most popular bets because they promise the biggest winnings. While narrow-odds bets usually win, the fact that the odds are so short means very few people bet on them.

Clean slate

However, there is another side to it in that, when a tip wins, the affiliate will have money taken out of their account by the bookmaker. Some bookmakers will wipe the slate clean after a month while others will roll the losses over, meaning that the affiliate has to make that money back up before they start to make a profit.

Joseph Buchdahl is a sports betting analyst and author of Squares & Sharps, Suckers & Sharks: The Science, Psychology & Philosophy of Gambling. He has worked in the affiliate industry since the early 2000s and says that it’s not simply a black-and-white issue of affiliates conning customers to make a profit from their losses.

The reality of this industry is that people can only win if other people lose

Like a lot of affiliates, he includes a disclaimer on his website which informs customers that he is making revenue from a percentage of their losses. Some tipsters will do the same while some will also regularly post a record of their tips to show that they are genuine and do win money for the punter.

“The reality of this industry is that people can only win if other people lose,” Buchdahl says. “You can say an affiliate wants people to lose and if that’s the only way they were going to make money then that’s true. If the affiliate had a moral conscience about doing this then they would presumably not do it. If you take the view that affiliates make money off the parasiting of other people then you have to take that view for the whole of the gambling industry. Because that’s what it is, that’s the nature of it.

“If you accept that and say that’s okay because people want to do it, then you move on from there to say, are people doing things to increase the likelihood of their customers losing by giving out misleading information or giving out information that would encourage the punter to end up becoming a bigger loser without them realising? That for me would then be when it becomes more of a moral issue. What I’d say to a tipster is, if you say you can do it then prove it.

“But does it make a difference? If a punter is going to lose €100 then it’s either €100 to the bookmaker or €70 to the bookmaker and €30 to the affiliate. What’s the difference?”

Mandatory

While there have been calls for affiliate programmes to be banned, Buchdahl believes that the better solution is for it to be made mandatory that an affiliate tells their customers that the revenue earned from the website comes from losses of customers referred to bookmakers through the site. He also says that tipsters should have to make it clear that their tips are advisory only and that there will be a high probability that such advice will be loss-making in the long run. That way, the customer can make their own mind up.

I'm upfront with people, I have a little disclaimer on the website saying I earn revenue from your losses

“Not enough people are willing to tell the story that the sports betting industry is actually a really hard thing to succeed in,” he says.

“I’m upfront with people, I have a little disclaimer on the website saying I earn revenue from your losses and that’s how this thing works. And the reason I can do that is because almost everyone will not have the skills to beat the bookmaker in the long run and that’s how you will lose and I will win.

“You could say isn’t this a bit hypocritical. You’re offering winning tips and yet you’re making profit off people’s losses in the long run. And I’d probably say that yes, you’re right, and the reason I am doing that is because I know that, in the main, a lot of people will end up doing silly things and betting things that aren’t positive expectation or they start chasing losses and so on and so forth, and that’s what then turns their profits into losses. I’m not naive enough to know that even if people start out being lucky they will end up being unlucky and that’s just the reality of it. Should I have a conscience about that? Maybe I should, I don’t know.”

The Irish Times contacted six of the biggest online bookmakers for comment on their use of affiliate programmes in which profits are made from a customer’s losses. Betway responded to say that they would not be commenting on the issue while Paddy Power Betfair, Ladbrokes Coral, Bet365, William Hill and SkyBet did not respond.

– This article is part of a new series of consumer-based sports stories. If you have any queries, stories or issues regarding travel, tickets, sport on television or anything else you can email rcroke@irishtimes.com or via Twitter @Ruaidhri_Croke.