It is undeniable that the Internet is taking over the traditional media: news articles are published online, photos are shared on social media, not kept in family albums, and tickets to concerts can be bought through the computer, forget the lines. The entertainment industry is evolving as well, and we are not only talking about streaming services rivaling the television. And we at Maxpay are here to look at the situation more in-depth.
The first online gambling sites emerged in the middle of the 1990s, but have become more common in recent years. In 2019, the global online gambling market was estimated to be $53,7 billion worth with Europe as the biggest market accumulating $22 billion. It is expected that in the next 7 years this industry’s global CAGR will be 11,5%, that’s $127,3 billion by 2027.
Casinos are the second most popular form of online gambling in Europe, accounting for 32% of the market share in 2018. Online casinos were only surpassed by online sports betting (42,5%) but had left lotteries (12,6%) and internet poker (5%) far behind.
Sounds reassuring, but does having an online casino is more promising and secure than the offline one? You see, there are benefits for both internet casinos’ owners and their clients.
The former don’t have to buy or rent space for the real-life casino, the number of employees is significantly smaller, no worries about utility tax or potential robbers. And the customers don’t need to visit another country or drive for hours to get to a casino – they can visit one from the comfort of their homes any time they want. And considering that right now most of the countries are under quarantine due to COVID-19 pandemic, opening an online gambling service seems like a much better idea. For instance, an Israeli firm Optimove reported a whopping 225% increase of people who started playing online poker for the first time, after the pandemic struck. Also, consider that even after the lockdown is over, many people will be cautious about visiting land-based casinos, prioritizing safety.
How much money do you need to open an online casino?
Now, if you are determined to start an online casino, you first need to figure out how much does it cost. Let’s see what you’ll need to acquire:
License. The amount you will spend on a license depends on a country you get it in. You will need to spend around €115 thousand for an application and monthly fees, and that’s a pretty inexpensive option. Also, some jurisdictions require that you have a share capital minimum of €100 thousand. And don’t you forget about taxes.
Website. The prices for developing a website are extremely diverse as well, ranging from €2,7 thousand to over €10 thousand, as you will need a highly functional site that’s able to host lots of visitors at the same time.
Software. The more games and slots you’ve got – the better, but it comes at a cost. And if you want the games to be unique, you will need to buy a development package, prices are ranging from €100 000 to €500 000.
Marketing. Advertainment is vital, and online casinos are spending millions on it each year. As for the newcomers, we recommend you pay at least €600 to €800 thousand in marketing expenses in the first year.
In total, you will need to spend from 1 to 1,5 million euros to open an online casino. But keep in mind that if your strategy is well thought out the spendings will pay off.
How to start an online casino?
So, what do you need to know and do to open an online casino:
First and foremost, set your plans and strategy straight. To open an online casino, you need to figure out a lot of aspects, such as: what will your website look like and what unique features and games will it have, which countries would you like to target, will you need the help of industry experts or SEO-managers to promote your business, etc. If you took care of the planning, you can proceed with the next step.
Choose a gaming software provider. There are plenty of services with a variety of features, so make sure you are not going with the first one you find. The provider must be proven reliable, as well as have customizable software solutions, so you can make your casino look and feel the way you want to.
The selection of available games and slots may vary, some providers develop games themselves, while others offer packages of games from different developers. Either way, the more gaming options you choose – the better, as clients’ preferences differ. Be determined, ask questions, and test services before signing a contract with a software provider.
Get an online gambling license. Having a license is vital to your business, even though the process of obtaining one may be time-consuming. Operating an online casino without a license is illegal. Moreover, most banks and payment service providers will not agree to work with a non-licensed gambling business.
To get a license you first need to choose a country – a gambling jurisdiction – to acquire it from. There are still a lot of places where online casinos are not legalized, but every region has at least one country where you can get your license. For instance, in Europe, you can obtain one under the jurisdiction of Malta, Montenegro, the Isle of Man, Britain, Gibraltar, and others.
Remember that every country has its own set of rules and requirements for online casinos, thus a business owner should choose a jurisdiction with the best possibilities for their company. And also, don’t forget the taxes that also differ locally.
To get a license, you will need to gather all the required documents and make sure that your gaming software provider and site are compliant with the country’s regulations.
Choose a bank or payment gateway service provider to accept money from your clients. It would be better if a PSP supports multiple payment methods, as more people from different countries will be able to use your services.
Note that online gambling and casinos are classified as high-risk businesses, meaning that your company has greater chances to face chargebacks. Because of that, banks usually charge these types of business higher service fees to ensure the merchants are better protected from fraud. For instance, our payment gateway service provider, which is well-experienced in dealing with high-risk companies. Maxpay is partnered with an anti-fraud platform called Covery, which significantly minimizes the number of fraudulent transactions. We also offer chargeback representation services, meaning that we can process our client’s chargeback and give dispute recommendations.
And lastly, keep in mind that just opening an online casino is not enough for it to be successful – you need to have an impeccable and long-term PR and SEO strategies and be ready to encourage your most dedicated clients, as well as come up with new ideas for games and challenges. In the end, following these tips and rules might make your business highly profitable.