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How to Start an Online Casino

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Why online casino business is lucrative

It is not a secret that the gambling industry attracts a lot of customers. Its annual revenues amount to billions of dollars each year and the betting venues are always in high demand. Driving by a brick-and-mortar casino, many want to drop by and try their luck.

With the digital age upon us, the online casino business has grown as well. The first online gambling webpages began appearing in the 1990s, with the dawn of the internet. Some have amassed a great reputation and have a long-standing history.

Size and growth of the global online casino market

Since then the online casino business has grown and many new entrepreneurs have begun thinking of starting an online casino. The total net worth of the gambling market worldwide currently stands at a whopping $53.7 billion.

This is a giant figure that analysts are expecting to only increase. That said, owning a land casino can be expensive and burdensome. With players currently wanting to avoid the gambling venue due to the pandemic fears.

As a result, demand has increased for online casinos. Optimove, as an Israeli gambling website provider, has recently reported a threefold increase in visits to their webpages. As online casinos are growing in popularity, starting one up could be a good business venture.

The online gambling industry has expanded greatly over the past decade and analysts and projecting further growth. More people are currently becoming connected to the internet and have money wagering as one of their demands.

Second most popular to sports

The online casino business in Europe has outgrown both web poker and national lotteries. In Europe, currently, only online sportsbooks are in bigger demand. Thus investing in this niche market is bound to generate good returns.

Although sports betting is likely to still maintain a lead in the near future. Note, that a gambling business can both offer its clients casino games and sportsbooks simultaneously. There are reputable providers of such services on the internet. This makes for a complete gaming business that covers both markets – sports and casino games.

An example of companies that offer both services to their clients:

  • 5Dimes
  • Bovada
  • BetNow
  • MyBookie
  • Spin Palace
  • and many others

Different legal systems across jurisdictions

Before opening an online casino an entrepreneur should examine the laws of the countries they are interested in providing their services to.

Gambling laws vary across the world, with certain states taking a soft approach to wagering cash and others outlawing the activity outright. If the focus of the new business will be North America, entrepreneurs should beware that gambling laws in the United States are far more restrictive than in neighboring Canada.

Ensuring good regulatory oversight and basing the online casino business in a sound jurisdiction

Customers are far more likely to visit an internet casino site if the business is regulated and has an official license from a reputable government. Locating an online casino in Africa might scare away internet bettors.

Casino owners should make sure that their business license is trustworthy and reputable. While many developed countries will ban casino owners from registering their business there, nevertheless there exist certain good jurisdictions where a trustworthy license can be obtained. For example:

  • Costa Rica
  • Malta
  • Netherlands Antilles
  • Isle of Man
  • Gibraltar
  • Curacao

Why securing a good license is pivotal

Customers will read internet reviews of the online casino before making their first deposit. Those who want to start an internet casino website should ensure that they get a gaming license from a reputable jurisdiction.

A casino that is located in Costa Rica or Netherlands Antilles and has an official gambling license from the government is likely to be trustworthy.

Customers are more likely to visit such an online casino and deposit their cash on the website. Starting an online casino may be pricy, but an aspiring entrepreneur should refrain from cost-cutting at the expense of their reputation.

How much does it cost to start an online casino?

The aggregate sum

In order to start up an online casino, a minimum of $1.86 million is required. While it may seem like a large sum of money, the number pales in comparison with the funding required to open and operate a brick-and-mortar establishment.

An online casino is not just cheaper in opening up, but also has fewer service costs and generally a lower running budget. The mentioned price tag contains several factors that the gaming business must possess in order to be successful. These include:

  • Financing budget
  • Operating software
  • Securing a payment provider
  • Marketing costs
  • Website design
  • Staff salaries
  • Gaming license

In order to set up a decent casino website, an entrepreneur should ensure that they have purchased all the necessary licenses and paid the due costs.

How long does it take to recoup the investment?

In general, it should not take too long. If a good casino website has been developed and a reputable license was chosen it takes an average of 2 years to recoup the initial investment of around $2 million.

While the price tag may be large, a well-managed gaming business will be profitable and start generating net positive revenue after around 2 years. Here it is important to think long-term and not just focus on the first year.

What games should be included in the online casino

It is important to offer customers a wide range of gambling activities on the webpage. Table games, such as blackjack and roulette, are a must. Further, activities such as poker and baccarat should be included. A variety of slot games must be provided to the customer.

Slots generate an average of 70-80% of casino revenue, so providing a good diversity of slot games is mandatory. Additional activities, such as scratch cards and bingo, will also be helpful.

Online casino software

This is by far the most crucial step in opening up an online casino. Picking the right casino software provider to make sure that a good selection of gaming content is provided. A strong gaming platform that provides a wide variety of activities and is responsive is critical to receiving good acclaim from internet reviews.

The gaming industry is highly competitive and choosing the correct software provider can mean the difference between obtaining a large client base and going bankrupt. A sound software package that features robust gaming software and provides a great customer experience. The following names constitute leading software providers in the industry:

  • Betsoft
  • Microgaming
  • NetEnt
  • Playtech
  • Rival Gaming

How much will the casino software cost?

best safe bitcoin casinos

When picking Microgaming as the online casino software provider, be expected to pay $250 thousand for the program package. Here the entrepreneur can expect to obtain access to more than 450 different games.

The software solution provided can be a good first start in the gaming market. Best online casinos will operate high-quality software and have nice-looking games displayed on their webpage.

A business owner should beware that the games providers can charge between 10-40% of monthly profit as loyalty bills. However, this process ensures for the casino operator that their customers gain access to the best and newest games made available by the software providers.

One of the cheaper casino software providers is Rival Gaming, whose software package will cost a business owner a more conservative $100 thousand.

Ensuring enough funds to pay out the winnings

Another aspect of casinos is that sometimes a player can hit the jackpot and win. Or be on a solid winning spree and want to cash out in time. Just like with land-based casinos, while many people will leave some cash behind, there will those that have won. Resultantly, it is important to make sure that enough cash is retained to pay out the winnings.

Microgaming requires that the host company has at least between $300 to $500 thousand to pay out the jackpots. Else they will not license their casino platform to the business owner.

Purchasing a good gambling license

In order to operate an online casino a gambling license is required. It is illegal to conduct business without it. Therefore this part is extremely important.

Further, obtaining a license from a reputable jurisdiction and having the casino under governmental regulation will earn trust from the customers and lead to the good critical acclaim of the venture.

The cost of such a license starts at around $130 000, and this is the minimum. Further, the equity capital of at least $115 000 may be required before a license is issued.

Countries like Canada, while allowing their citizens to access the best online casino websites, prohibit web casinos from operating from their territory. Thus obtaining a good license in a sound jurisdiction is a very important part of starting up a new business.

The licensing process may take some time and require all the paperwork to be in order. Many payment system providers will not conduct business with an unlicensed casino. Having the gaming portal’s rights reserved in a recognized jurisdiction will help pave the way towards good revenues.

Last, it is important to verify that the software that the online casino is using is compliant with the laws and regulations of the chosen jurisdiction. Else the license may simply not be issued.

Picking a good bank to handle payments

While there are many online casinos on the internet, in order for the platform to stand out it must be easy for customers to deposit and withdraw cash. There should be a variety of payment methods available to the clients.

And the deposit and withdrawal process should not be cumbersome. Setting up a solid payment system is pivotal. The costs of payment systems can be between $20 and $50 thousand in monthly fees. The following should be included as deposit options:

These payment processing technologies will help bettors deposit and withdraw cash from the gaming service. While credit cards are the most often used payment methods, providing the option of Paypal and bitcoin may be very helpful.

Why digital currencies are important

cryptocurrency

Bitcoin digital currency is relatively new. However, some online gambling establishments have already begun accepting it. Bitcoin allows for fast and anonymous transactions. This way clients can hide their personal details from the casino and ensure that they remain hidden.

A bitcoin casino is an online gaming establishment that operates in digital currency. Although illegal in the US, the appeal of a bitcoin casino is helping this business type proliferate. The speed of transactions, lack of fees, and anonymity are its strong suits. Below is a list of noted bitcoin casinos.

  • Freebitco.in
  • BCLC
  • Satoshibet
  • StrikeSapphire
  • Bitzino
  • SatoshiDice

Allowing clients at least one digital currency as a deposit method can be a good business step.

Marketing the webpage

The online betting market is very competitive so it is important to ensure that the casino shows up nicely in search results. The cost to market the service can be between $20 and $100 thousand. Although, there is an alternative way.

The entrepreneur can use an affiliate system that allows for partnering with other online casinos. Thus the affiliates will both feature and advertise the newly set web establishment. Although the price to pay here is at least 50% of the gross revenue of the business.

Designing the page

People are often judged on how they look. Identical logic can be applied to any online business. It is not enough to simply have a plethora of games on the website. In order for the business to be successful, funds must be invested into website creation.

It must be remembered that the market is very competitive, thus making the webpage stand out is a must. This will cost around $10 thousand but will provide customers with a nice interface and a responsive service.

How do I start my own online casino?

Why business acumen is important

A casino is often seen as a high-risk enterprise. Resultantly when obtaining the necessary funding, banks can charge a higher interest rate. Further, if a person is unsure of where to start, pairing up with a seasoned entrepreneur might be important.

The first thing to do is write a sound business plan. This will allow a person to obtain credit from a financial institution. The business plan should feature a way for both setting up a casino and ensuring that one remains profitable.

Thinking long term

Many game providers often charge monthly fees for their services. While having a good selection of games is very important, understanding that it takes a minimum of 2 years to break even is pivotal. While this article lists some tips that may help one in opening up a web casino, being patient until the revenues become solid is important.

The White Label Solution

This option will greatly help in opening up an online casino. A white label casino begins with choosing a correct provider that will help in everything from software provision to payment processing.

A white label provider basically does the cumbersome and difficult parts of the job for the casino owner. This option solves the difficult issue of finding good games for the platform. Or setting up good customer support service.

This option allows one to set up a turnkey casino, where the vast majority of tasks are handled by professionals. Although in this case some 40-50% of the profit will be paid out monthly as fees. In this case, the casino is essentially being rented from the provider. Just like property can be rented out.

The white label provider will handle all the mundane tasks allowing the entrepreneur to focus on their customers and brand promotion.

This option is ideal for those who are new to the world of the gaming business. Allowing a team of professionals to handle the day-to-day operations of the casino and focusing on acquiring clients, marketing out the online platform, and promotion.

The provider of the service will handle difficult tasks, such as merchant services and software programming. Setting up a white label casino is a powerful business alternative to doing everything in person. Some providers will even offer a self-service gaming option as a way to boost revenue.

Are online casinos profitable?

Why the market will only grow

Globally the gaming sector is huge and is expanding. With a net worth of more than $53 billion, it is an extremely large industry. The online segment of the market is worth some $40 billion, thus constituting a whopping 80% of the total gaming industry.

Analysts are expecting this figure to only grow in the future, as more and more countries around the world legalize online betting. While there are some jurisdictions that have tight laws regarding internet gambling, there is currently a wave of legalization of internet betting happening around the world.

Case of the United States

One country that has taken a much softer approach to internet betting recently is the United States. In America, a controversial and restrictive anti-gambling legislation was repealed in 2018.

Since then, state after state principalities began allowing online gambling sites and betting services in their jurisdictions. Today Americans can start wagering money online just like in many other countries around the globe.

Online betting is starting to get welcomed around the world

As more countries legalize online betting, legal jurisdictions are now trying to lure in potential online casino operators. In Malta, for example, it takes only a few days to license a casino business.

Globally there are over 50 countries that permit setting up an online money wagering site. Picking the right one, with a good set of laws and regulation is important. But online betting has gained far more recognition around the world over the past decade. Further, there have been tax incentives created by certain countries in their effort to attract web betting services.

Is owning a casino profitable?

The mathematics is on the side of the establishment

It is a common motto amongst the betting community that the house always wins. And while there can be big winnings to the player from hitting the jackpot on slots, on average the one-armed bandits pay 90 cents on a dollar.

Thus from every dollar wagered on the machine, the player will receive only 90 cents. This is the expected value of the bet. While the house edge on slots can drop to only a few percent, on penny slots it can be a whopping 20%.

What house edge can be expected on table games?

Similar logic applies to table games, such as roulette or blackjack. On the spinning wheel, the establishment can earn from 2..7% to 5.26%, depending on the type of wheel used.

The lower figure applies to the European roulette while the higher to the American. Casinos located in Vegas will feature the American version of the wheel, which includes a double-zero pocket. This immediately doubles the edge in favor of the house.

In games such as blackjack or baccarat, the edge can start from the low of 1%. Though often it is closer to 2%. Thus for every million dollars wagered on the table, the establishment can expect to receive from 10 to 20 thousand dollars in revenue.

The mathematics behind all casino games favor the house. Thus the expected value of every bet will be negative. Further, the addictive properties of games can result in players continue to come into the establishment to recoup their previous losses.

Legal aspects

The gaming industry is very profitable and operating such an establishment will guarantee a solid stream of revenue for a long time. However, the moral factor of these games has led many governments to impose tight regulations on casinos.

Taxes should be factored in, which may be high in certain jurisdictions. Obtaining a license for a brick-and-mortar casino may not always be easy. Despite the demand for games being high across the world, certain countries have issued outright prohibitions of these venues.

Concluding remarks

While starting up an online casino may be an excellent business proposal, it still requires time and effort. Due diligence must be done to ensure that everything is in order before applying for an official gaming license.

In addition, as some countries place restrictions on internet betting, understanding the different legal systems around the world is pivotal to success. Countries like Canada allow their citizens to place wagers online, but only on websites located offshore. Thus not on Canadian soil. These legal issues must be considered before opening up an internet gaming portal.

In certain countries, such as the United States, legal action may be taken against casino providers that break the law and fail to obtain a valid license. Or provide their services to clients from states where online betting is illegal.

The understanding of legal challenges and thinking long-run is pivotal. While an entrepreneur may be drawn by the expected returns from opening up an online casino, setting some extra cash aside to pay out the jackpot is important. Should a player want to cash out, it is important to allow them to do it in a quick and efficient manner.

There are plenty of online businesses currently operating that provide betting services to their clients. Not all of them are trustworthy. It should be remembered that obtaining a good reputation is important to long-term success.

Preventing users from cashing out on their winnings or having poor customer support can lead to negative reviews on the internet. Having a long-standing and several years of solid performance can bring in a lot of new clients. Aspiring online casino owners should remember that running after a quick profit will not result in a venture that will be there a decade or two from today.

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