How to Start an Online Gambling Business: Key Points to Consider

Delving Industry Trends

Before entering the market, you need to be aware of gambling industry trends to understand what challenges the business may face in the coming years and what type of expertise you would need when choosing a partner.

1. Mobile Gambling: Remote playing, loyalty points, additional deposit options, multiplayer gaming options, and other features will continue to outweigh the scales towards mobile gaming against the desktop.
2. Live Casino (Dealer) Games: Live dealer games, such as live blackjack, roulette, Baccarat, and poker, are thriving. Live-streaming and interactive gameplay constantly improve, making it a significant growth area. Currently, it is estimated that around 30% of all casino gameplay is a live casino.
3. Esports Betting: Major esports tournaments draw massive viewership, and the betting market around them is expected to grow. Current annual growth rate projections (CAGR 2023-2027) is 9.54%
4. VR and AR: While still in the experimental stage for most operators, VR and AR technologies hold great potential. They can create highly immersive and engaging gambling experiences like virtual casinos or interactive slot games.
5. AI: AI boosts player behavior analysis, fraud detection, and personalized marketing. AI-driven CRM chatbots and customer support systems also improve the overall customer experience.
6. Global Expansion: With the gradual legalization of online gambling in various countries, many operators are looking to expand into new markets. Emerging markets offer substantial growth opportunities, especially in Asia and South America.

Identifying target audiences and their preferences

By examining these aspects, you can tailor your online gambling business to resonate with your target market’s unique characteristics and needs. To gain deeper insights into your target audience, we recommend examining the following:

• Player Demographics: Average age and gender distribution of your potential players.
• Economic Factors: The local GDP (Gross Domestic Product) and GDP per person reflect the financial capacity of your target market.
• Technological Landscape: Mobile connectivity and internet penetration rates indicate the accessibility of online gambling platforms.
• Financial Preferences: Favored payment methods, wide cryptocurrency offerings, and high acceptance rates in the region.
• Cultural Context: The cultural background, encompassing aspects like sports preferences, attitudes toward gambling or betting, and the general openness or conservatism of the local population.
• Gaming content: The specific gaming providers & content relevant to the specific markets targeted, as well as the inclinations of your prospective players.

Providing competitive analysis

The global online gambling market was valued at USD 63.53 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 11.7% from 2023 to 2030. The growing internet penetration and rise in the use of mobile phones among users for playing online games is increasing the demand for online gambling. For instance, in 2023, internet penetration in Europe was 97.3% of the total population. As for Latin America, the fourth-largest regional online market in terms of users worldwide, internet penetration is 68.8% on average.

The more operators and providers there are in a region, the higher the competition. Here is a checklist of information you may need about your competitors:

📝 Market Share

📝 Range of Products and Services

📝 User Experience

📝 Pricing and Promotions

📝 Regulatory Compliance

📝 Customer Feedback and Reviews

📝 Marketing and Advertising

📝 Technology Provider & Integrations

📝 Geographic Presence

📝 SWOT Analysis

📝 Partnerships and Acquisitions

Business Planning

A business plan is necessary for operations, license application, and attracting investors. A clear, well-thought-out strategy can help secure an investment. We recommend including the following elements:

Executive Summary with mission and vision 

Briefly summarize your entire business plan, stressing the most critical points. Clearly define your company’s purpose, outlining your unique selling points (USPs) and what your project aims to achieve in the online gambling industry. Describe your long-term vision for the business. Where do you see this project fitting within the market landscape, and what values will guide you? Detail the nature of your online gambling business, including the type of services (casino, sports betting, poker, etc.) you’ll offer.

Market Analysis

Conduct comprehensive market research to gain deep insights into industry trends, your specific target audience, and the competitive landscape. This section allows you to incorporate the demographic and preference data previously mentioned. Addressing potential risks within the online gambling sector and detailing strategies to mitigate them effectively is essential.

Organization Size and Management

Describe the structure of your company, including the management team, their roles, and relevant experience. You should also provide information on the stakeholders and other key personnel and outline expectations for staff size and potential expansion. 

Investment plan and financial projections

If your model requires additional investment, detail the amount required and how you’ll use the funds. Also, provide financial forecasts, which should cover your business’s first three to five years. For instance, our iGaming Launch solution with an end-to-end iGaming platform offers a precise business plan with phased investments, transparent financial costs, and safe exit options. 

Licensing

Choosing a licensing jurisdiction is crucial when starting an online gambling business. Different jurisdictions worldwide offer online gambling licenses with unique reach and scope, and their requirements vary. A gambling license for your online casino offers several benefits, such as opening bank accounts, a seal of approval for the safety of players' funds, and being fully compliant with local and regional regulations.

When selecting a licensing jurisdiction, consider factors like your experience level, the types of games you wish to offer, the associated costs, and the duration of the licensing process. Some operators might opt for jurisdictions like Curaçao with a broader reach. Other operators might pick the Malta Gaming Authority (MGA) master license or apply for local licenses.

Consider the costs involved, including application, license, renewal fees, and taxes, as these can significantly impact your budget. Licensing processes can be complex, involving thorough background checks and extensive paperwork. The timeframe for acquiring a license can also differ, with Curaçao offering a faster six-week process and Malta requiring up to six months.

Popular licensing jurisdictions, with advantages and characteristics, include Curaçao, Malta, Alderney, the Isle of Man, and Gibraltar.

Selecting a Software Partner

Software constitutes a pivotal and multifaceted element within the online gambling sector. It serves as the cornerstone of online casinos and betting platforms, delivering players a seamless and secure gaming experience.

Choosing the right gambling software partner is paramount. When navigating this decision-making process, prioritize experience, reliability, and the ability to adhere to regulatory requirements. Opt for software providers with a comprehensive and high-quality game portfolio, including popular games, a configurable lobby, and live dealer options. Additionally, a flexible API for swift integrations plays a pivotal role.

Evaluate the scalability and flexibility of the software to accommodate future growth and technological advancements. Assess the following parameters:

• Uptime
• Average spin speed
• Wallet transactions per second
• Bets placed per minute
• Settlement processing capabilities
• Regulatory compliance
• Services offered
• Latency

Furthermore, consider the provider's track record in delivering secure and fair gaming experiences bolstered by certifications from reputable testing agencies such as GLI, ISO, and others.

Some providers offer a modular platform structure, enabling clients to select the modules that best align with their business model. This is how the modular structure looks like in GR8 Tech's example:

Addressing Security Challenges

One of the primary challenges contributing to financial losses for online casino operators is the persistent threat of fraud, bonus abuse, and security vulnerabilities. The iGaming industry continuously evolves alongside technological advancements, mirroring the escalating skills of scammers and hackers. Ensuring your software provider adequately fortifies their platform and integrates AI-driven tools for bonus and fraud prevention is imperative. To counter contemporary threats within the online casino sector, your software provider should offer the following components:

• Jackpot hunting detection
• Real-time bonus abuse detection
• A smart personal player limitations system
• AI-driven behavioral prediction patterns
• Dynamic player segmentation
• Anti-money laundering system
• Real-time alerting

While AI tools are invaluable, it's essential to consider user-friendly interfaces for your employees. The software should be simple, with user-friendly UI/UX ensuring a steep learning curve and smooth operations.

Establishing Your Own Online Casino: Key Considerations

When creating an online casino, several pivotal aspects demand attention to tailor a successful online casino platform. Here are key points to guide you:

Game Selection: A diverse array of games is paramount, encompassing popular slots, classic table games like blackjack and roulette, live dealer games, and emerging categories such as virtual sports and esports betting. Forge partnerships with software providers that have long-standing reputations in the industry. These partnerships ensure access to the industry's best content and offer favorable terms established over years of cooperation.

Integration Process: Close collaboration with chosen providers is vital to ensure a seamless integration that enhances the overall user experience. Integration should span game interfaces, payment systems, CRM, responsible gambling, and other components. A robust and flexible partner has all these integrations in play, laying the foundation for effortless scalability and the seamless addition of new games in the future.

Lobby Configuration: Once you’ve integrated thousands of games from premier industry providers, focus on enhancing player engagement. Ensure your gambling software provider possesses the flexibility and expertise to set up the casino lobby tailored to each player’s preferences. Moreover, the lobby configuration should facilitate easy customization, allowing you to create, configure, and group the gaming content as per player preferences. For instance, GR8 Tech’s AI models help to personalize content tailored to market popularity and players’ past actions. 

Promotions and Incentives: Set up your promotions and segments according to your target market. New releases, exclusive games, and themed promotions are used to captivate and retain players. In contrast, jackpot games can serve as an acquisition tool for creating excitement about potential big wins. For operators with both a casino and a sportsbook vertical, intertwine your promotional activities and offer special promotions that cater to diverse player groups.

Monitoring and Adaptation: Following integration, meticulously oversee game performance on your platform. Monitor key metrics, including Gross Gaming Revenue, Net Gaming Revenue, NGR-to-deposits ratio, bets-to-deposits ratio, conversion rate, player lifetime value, churn rate, bounce rate, website depth-level, dwell time, cost per acquisition, and average revenue per user. Utilize this data to fine-tune your game selection strategy, introducing new titles or adjusting the prominence of existing ones in line with player preferences and market trends.

Payment Processing Excellence

Secure and efficient payment processing is a cornerstone of any online gambling business, and its importance cannot be overstated. It directly impacts the trust and satisfaction of your players, regulatory compliance, and the overall success of your platform.

Expanding into new markets leans heavily upon securing the appropriate Payment Service Providers (PSPs). Opting for well-established PSPs allows players to gain gaming experience while avoiding potential payment-related complications.

When selecting a PSP, it is crucial to ascertain its availability in diverse markets to ensure a seamless transaction processing experience. Additionally, consider a range of payment methods, compliance with regulatory standards, transaction processing speed, and robust security measures.

Shaping your brand vision

As an operator in the gambling industry, your primary goals are attracting new players and retaining your existing customer base. Numerous strategies have proven effective in achieving these objectives. Let's explore these key points:

Affiliate Marketing: Affiliate marketing is a common and effective strategy for online casinos to attract new players. Affiliates, including bloggers, streamers, casino portals, review sites, and influencers, create content that generates traffic to the casino. This performance-based marketing approach allows casinos to pay for successful conversions and reach diverse audiences through various affiliate types. In the iGaming industry, several affiliate partnership models are common:

• Revenue Share: Operators pay affiliates a percentage of the profits from players directed to their online gambling sites.
• Cost Per Acquisition (CPA): Operators compensate affiliates for each player they refer who makes a deposit and starts playing.
• Hybrid Model: The hybrid deal is a mix of Revenue Share and CPA, which combines a fixed commission on a player's initial deposit with a percentage of the casino's profits, offering a balanced approach that may involve trading off reward size for flexibility.
• Fixed Fee: This monetization model involves partners receiving a fixed payment for promoting a casino upfront, even before sending any traffic.

Bonuses: Bonuses play a significant role in player acquisition and retention. They attract players with welcome, deposit, reload bonuses, and free spins and bets. However, it's crucial to establish clear and transparent terms and conditions for these bonuses. Wagering requirements, commonly called rollovers, stipulate that players must wager their initial deposit and bonus several times before withdrawing. 

Bonuses may also have withdrawal limits. Wagering requirements and withdrawal limits exist to combat bonus abuse and fraudulent activities. Many players attempt to exploit bonuses by withdrawing bonus funds without genuinely risking them. Multiple accounts are sometimes created to take advantage of one-time offers like welcome bonuses. 

To provide an effective and risk-free bonus system, we offer a bonus module that enables the creation and customization of bonuses based on a player's behavior, history, and preferences. It also facilitates the establishment of VIP and loyalty programs to reward dedicated players. 

While bonuses are enticing, additional retention strategies are necessary.

Loyalty and VIP Programs: Rewarding players for their long-term commitment to your brand is an excellent way to maintain their loyalty. Many casinos implement loyalty programs that benefit and reward players who invest significant time and money on their sites. VIP programs, on the other hand, cater to high-stakes players who make frequent deposits and large bets. These tiered loyalty programs offer higher rewards (gifts, event tickets, etc.) and privileges as players advance through program levels.

Gamification: Most casual players actively seek distinctive gaming experiences, and operators aspire to fulfill this demand by immersing players in a dynamic and gamified journey. For instance, GR8 Casino employs gamification tools such as quests, achievements, tournaments, sticker books, and an array of retention mechanisms. Incorporating these features increases lifetime value (LTV) and net gaming revenue (NGR), often surpassing the 10% mark.

Customer Service: Online casino operators require highly responsive support teams available 24/7, proficient in handling common customer complaints. To be a successful operator, your customer support staff should be multilingual, have excellent product knowledge, have active and upcoming promotions, and provide feedback from the players. 

Once you've pinpointed the VIP user segment, the next step is establishing a dedicated customer support team tailored to their needs, providing exclusive offers to reward these loyal players.

The final checklist of 10 steps to start a gambling business

We tried to hit on the critical points for the launch. Still, it’s impossible to fit all the processes and nuances into one article. To get a more in-depth understanding of the scope of work for a new operator, we gathered 10 steps to guide you through the process:

Step 1: Market Research and Planning

Conduct in-depth market research, analyze industry trends, identify your target audience, and assess your competitors. Utilize this data to produce an accurate business plan, including your mission, vision, goals, and financial projections.

Step 2: Legal and Regulatory Compliance

Dive into researching gambling laws and gambling regulations in your target jurisdictions. Obtain the necessary licenses and permits to ensure compliance with legal requirements.

Step 3: Business Setup

Choose a legal business structure that aligns with your business goals and determine the most suitable jurisdiction, considering regulatory frameworks, tax implications, and operational requirements.

Step 4: Financing

Calculate your initial startup costs and create a budget—secure funding through investments, loans, or other financing options to cover these expenses.

Step 5: Software Partnership

Select a reliable sportsbook and casino software provider with a robust and reliable tech stack and agree on future steps and timelines of delivery. What’s promised is often not delivered or lacks many features and elements. This can destroy the business unless the partner is open and willing to work with the operator to rectify these shortcomings. Proper due diligence is necessary to avoid situations where an operator is stuck in the provider's implementation funnel for months, sometimes even a year. 

Step 6: Gambling Website and Mobile Application Development

Collaborate with your software provider to create a gambling website and, if strategically decided, an Android and iOS native app. Most providers offer a mobile responsive web page, which is not an app—make sure you know the difference and what your provider will deliver. Additional steps need to be taken to have your mobile app in Google Play or App Store. 

Step 7: Marketing Strategy

It is vital to analyze behavior data and effectively target potential players. Your marketing strategy should also contain search engine optimization (SEO) planning, traditional advertising, social media marketing (SMM), pay-per-click (PPC) advertising, display ads, player reviews, bonuses, and affiliate marketing as a primary method for acquiring new players.

Step 8: Customer Support

Build your customer support team by offering various support channels. Emphasize responsible gambling assistance, clear communication, efficient complaint handling procedures, robust data security, and ongoing employee training.

Step 9: Testing and Quality Assurance

Even though all efforts by your software provider might be taken to test and scrutinize the new online gambling site, thoroughly test all aspects of your online gambling platform, including translations, game launches, and payment flows. Ensure website responsiveness and resolve any technical glitches.

Step 10: Ongoing Operations

Be ready to update the platform, provide 24/7 customer support, optimize payment processing, execute marketing campaigns, ensure player retention, analyze player data, stay compliant with regulations, and safeguard player data. Also, operations include adhering to local regulations, implementing responsible gambling measures, protecting player data, reporting to regulatory authorities, training employees, and handling player feedback. 

🔎 What aspect of starting an iGaming business interests you the most? Drop a comment below, and we'll cover this topic in future posts. ⬇️⬇️⬇️