Preface
Growth of the web gambling segment
Gambling has always been a favorite pass time for many individuals around the world. With the recent growth of the internet and the digital sector, it is no surprise that businessmen have become interested in starting an online casino. The costs of running an online casino pale in comparison with land-based casinos. While the gambling business model may still work similarly, the license required to start an online casino is cheaper. Plus the staff costs are lower.
Entering the casino business by launching a brick-and-mortar establishment can cost more than $1 billion. On the other hand, what is the cost to launch an online casino? In most cases, just under $2 million. The online gambling market has grown tremendously over the past decade. This article will describe how to own an online casino. Owning an internet gaming portal can be both cheaper and easier than managing a land casino. And there are many successful websites that provide casino services to their clients.
The inbuilt mathematical advantage
What makes the casino industry lucrative is the house edge. That is, from each game offered at the casino, the establishment makes at least 1% profit of the monies wagered. This inbuilt mathematical advantage, also known as the house edge, leads to the overall profitability of the gambling business. While in most games the edge can vary from between 1% to 5%, on penny slots it can be as high as 20%. Thus from each dollar wagered the house makes 20 cents in profit.
This advantage also applies to online casinos and can make sure that the business will always remain profitable in the long term. Further, casino games have addictive properties and many can become hooked. As a result, customers will keep logging back onto the casino website in order to try their luck again or chase their previous losses.
A high-risk business venture
Online casinos are nevertheless considered a risky business. While it can take 2 years for the venture to break even, the gambling business nevertheless is considered high risk. Sometimes players can hit a big jackpot and the casino is required to pay out the winnings. At other times, there might be changes in the laws and regulations governing online casinos. A businessman may need to know that when starting an online casino they will be charged a higher interest rate by the bank.
Further, many online casinos are located offshore. Their licenses come from developing countries and there have been cases of fraud committed by them. Further, some online casinos have also been implicated in money laundering. As both are highly illegal, there is a premium charged by banks on online gambling. If a person wants to start an online casino, they must beware of risks and problems associated with the online casino business.
Hard-to-predict earnings
In the casino business, the house will have an advantage over its players. Thus the revenue comes from people losing money on casino games. However, sometimes the client can win. In this case, the casino must pay out the winnings to the lucky customer. The biggest jackpot ever paid out was a staggering $40 million, won in a land-based casino.
As all the games are games of luck and chance, the earnings are governed by laws of probability. While the built-in statistical advantage is on the casino’s side, funds must be set aside to pay out the winnings. The mathematics of gambling relies on statistical probabilities, and it can take time for the money to come in to cover all the costs.
Online gaming is governed by the same statistical laws as traditional games. Hence, while the revenues can be estimated and extrapolated into the future, the owner of the casino website can never be 100% certain. In the casino business, the revenue comes from clients losing their money playing casino games. And the winnings are paid out of previous losses. Both are governed by laws of chance.
Continuous changes in legislation
Laws regarding online gambling change all the time. While certain jurisdictions may take a soft approach towards online casinos, others may prohibit them. Here it can be possible to exploit the regulatory arbitrage between various jurisdictions. Thus taking advantage of the different legal systems across countries. However, in order to provide high-quality online gambling services to clients, obtaining a gambling license from a sound legal jurisdiction is of paramount importance.
An online casino business owner should therefore lookout for changes in laws regarding online gambling around the world. To make sure that their license provider has not raised taxes or taken other steps against their enterprise. The nature of the legal system can be very capricious, and sometimes governments simply rob the online casino business of their customers.
How much does it cost to start an online casino?
The aggregate cost of starting an online casino website
To start an online casino website requires quite a lot of money. At the minimum, at least $1.87 million have to be invested. While there may be cheaper options for a casino site, such as launching a bitcoin casino, these may be unconventional and extremely new. While the betting market has grown much over the past decade, these are the average costs of launching the best online gaming service that has a lot to offer:
- A good software solution from top providers: from $250 thousand
- A sound gaming license from a welcoming jurisdiction: $125 thousand
- Marketing the gaming website: $600 thousand
- Reserves to pay out the winnings: $500 thousand
- Payment processing to offer fast services: $240 thousand
- Costs to pay the employees: $150 thousand per year
- Website development: $3000 at the minimum
Development of the gaming business and getting a required license
In order to start, at least one sound gaming license from a recognized jurisdiction is required. Places such as the Isle of Man or Malta allow many gaming sites to operate from there. The online casino must be both trustworthy and receive a legal license allowing it to operate. Certain countries prohibit online gambling outright, while countries such as Canada allow their citizens to game at an online casino provided that the server is housed offshore. Popular online casinos available in Canada have their servers located off Canadian territory.
The following countries provide a hospitable environment to the online casino market:
- Costa Rica
- Antilles
- Malta
- Curacao
- Isle of Man
- Gibraltar
Obtaining an online gaming license from the above jurisdictions can make the casino much easier to run. These countries provide a favorable climate to those starting the online casino business. Having rights reserved in these countries can greatly help jump-start a casino.
Obtaining professionally built casino software
Good and well-built online casino software from top casino software providers can lead to a good customer flow. The casino software must be responsive and provide at least several hundred games to the customers. These should include activities such as:
- blackjack
- baccarat
- roulette
- poker
- keno
- scratch cards
- slots
Some casino software providers can feature several variations of table games, such as roulette or poker, and a great variety of slots. Slots are important as casinos make a lion’s portion of their revenue from these games. To start a business one may need to find a professional software provider. While a cheap software provider can only charge a meager $10 thousand, costs can skyrocket to $500 thousand from a good software provider. The casino site in this case will feature many games and activities, designed in a professional manner.
There can also be monthly fees associated with the gaming software providers, going from 10 to 60% of the revenue. The more one pays for the online casino software, the better quality of games will they obtain from the software providers. Good software can help the betting portal stand aside from others. Software that is responsive and bug-free can greatly improve user experience. Further, picking sound software can help build a more professional site and bring in more clients.
Marketing expenses and getting players interested to pick the page
Marketing is important to get players interested in the website. First, in the gambling market, online casino advertisements are banned from search engines such as Google and Yahoo. Thus it can be important to pick a good affiliate. These will place ads on the internet linking to the casino webpage. Sometimes they might take up to 50% of the revenue, but help maintain high web traffic and expand the player base. Marketing can both help to get new clients and retain the client base in the long term.
Although marketing may seem like a large expense at first, if an owner wants their venue to break even within 2 years, it becomes important to invest in it. Good marketing can lead to much higher visitor flow onto the webpage and help obtain brand popularity.
Payment methods and customer support
Customer retention is important and clients need to be provided with technical support 24/7. Should a client start having a problem with the webpage, the company must provide round-the-clock assistance to them. Further, picking a good payment processor is paramount. Bettors may want to deposit funds with credit cards and withdraw their winnings into their bank account. The payment to and fro must be done quickly and efficiently.
If there is a need to wait for the payment to be processed, clients might choose a different online casino. While digital currencies, such as bitcoin, are not mandatory, setting a bitcoin casino can be lighter on the costs and quicker. Some of the best online casinos open to the public have quick payment processing schemes and 24/7 customer support. One may need to start a gaming business with a good understanding of these nuances.
Providing solid customer support can both increase player satisfaction and allow for higher client retention rates in the future.
Development of a White Label solution as a possible alternative
A white label casino allows one to set up a gaming venue delegating a whole range of features to a professional provider. These include such services as software development, payment, and support. This allows a businessman to set up a turnkey casino without the need to get bogged down in details. As a result, the turnkey casino manager can focus on customer retention, marketing, game provision, and other necessary features.
White label products basically are provided by a third party, with the owner simply rebranding the service as their own. Even though a white label casino provider can take a lion’s share of the revenue, the ease with which a turnkey casino can be set up and customized more than makes up for it. The cost of setting up a white-label casino can start at just $50 thousand. This makes for a much more preferable business alternative.
Can you really win money on online casinos?
Think of an online casino the same as a land-based establishment
Land casinos are profitable because players lose money there. However, there is a chance to win. Gambling venues wouldn’t be in business for so long if no one would ever walk out with big winnings. For example, on slots the biggest jackpot ever paid out was a staggering $39.7 million. Games such as roulette or blackjack can give some nice payouts too if sound risk management is involved and the bettor understands the game well. Should a person take one step inside a casino, they are showered with gaming opportunities.
Online casinos are no different, and their providers offer a plethora of activities in exchange for time and money spent. Some of the best web portals have jackpots in the range of several million dollars. Although hitting one is extremely unlikely, there is still a chance to win. While it is important to choose the right website on the market, the providers will pay out the winnings just like in brick-and-mortar gambling venues. The sites have been set up for this purpose.
Making good use of bonuses and promotions
While the mathematics of gambling will always be on the site of the casino, many gambling webpages try to lure in customers by providing them with certain bonuses and promotions. Like free spins on a roulette wheel or on slots. Or deposit and cash bonuses. Making sound use of these is important if one want s to win money playing online. Some of the best betting venues provide generous bonus opportunities to their clients.
These promotions and bonus features can even give a smart player an edge, allowing them to win money online. Even though making use of these bonuses can require a gambler to play online for some time, betting providers often feature activities such as slots with small payouts. By picking such a game a player can bypass the play-through requirements and make use of the bonus credits that they have acquired. One step towards making a profit from betting online is to get acquainted with the webpage and the activities offered.
Risk and time management
The rules applying to online betting venues are identical to those of land casinos. Spending too much time is a step towards losing cash. Trying to chase losses or bet with larger-than-usual amounts of money can result in gambling addiction. The marketing specialists of the best betting websites want players to spend as much time as possible on the website. Punters should understand this.
In order to win cash, a player should make the best of what the betting service has to offer. Further, they should limit their losses and walk away with the winnings when on a good streak. The main thing is to be set towards receiving enjoyment and not becoming wealthy. The best casinos on the market today will pay out the winnings to their clients. Picking a good website and gambling responsibly is pivotal to success.
Playing the system
Should the internet casino feature a bookmaker, punters can use matched betting to make a guaranteed profit. Here the bettor will place a bet on team A winning, and then place an opposite, or a lay bet, on team B winning on a betting exchange. Matched betting works by taking advantage of the marketing offer s given by the gambling services providers. These can include free bets on sign-up and other promotions.
With matched betting, a player will use a free bet provided to them and place an opposite bet on the betting exchange. Matched betting can be used to generate a risk-free and guaranteed profit by taking advantage of a bonus offer or a promotion given by the bookmaker upon sign up.
Is online casino legal in Philippines?
Does the law allow it?
In the Philippines, people can spend time and play at online casinos, provided that they are housed offshore. This means not on the territory of the Philippines. The legal system of the country permits its citizens to enjoy their time playing games provided that the websites have offshore and not domestic licenses. Thus the gambling climate in the country is conducive to online betting.
Further, the federal laws of the country permit online betting. The governing body of online betting in the Philippines is known as PAGCOR and it oversees the betting and gambling market in the country. Thus there are many gambling providers that can offer their services to the Philippino player. The country maintains an open approach to the betting market, with its legal system being similar to Canada’s.
Why online gambling is popular in the Philippines.
The country has not yet become as developed as the Western world. Many of its provinces are still rural. Resultantly, online betting is one of the only forms of entertainment available to their inhabitants. Activities such as betting on sportsbooks, playing poker, taking part in lotteries, and trying luck on online casinos are extremely popular in the country.
The revenue that PAGCOR makes annually from the betting market in the country is in excess of $1.6 billion and is set to only grow in the future. With money wagering being a favorite pass time of many citizens of the country, the legal system reflects this. The choice of betting options provided to the Philippino player remains large and additional gambling opportunities are set to be permitted in the future.
Concluding remarks
The growing popularity of web betting
Many aspiring businessmen would like to enter the gambling market. The possibilities of steady cash inflow from the losses incurred, the relative ease and cheapness of starting up a web company compared to a brick-and-mortar establishment, and the prestige of owning an online casino. All these factors have brought in additional capital to the internet betting industry.
As information technology improves in the future, online casinos are going to become even more realistic. Many present-day services promise to offer a Vegas-like experience to their users. The online casino market has only grown in size over the past several decades. And while previously a gambler had to visit a brick-and-mortar casino to try their luck, nothing has become easier than simply logging onto the site and placing a few bets
Laws are changing
Further, the laws and regulations around the world have become lighter and more hospitable towards the online gambling business. While previously jurisdictions such as the United States prohibited online casinos, today the laws are changing. All across the world, more and more countries are opening their doors towards internet casinos, with a greater number of portals becoming registered each year. The growing popularity of betting online is being reflected in the changing legal environment around the world.
New technological improvements
New software developments, such as the bitcoin digital currency, allow for anonymous and instantaneous transactions. While only a handful of betting portals today accept digital currency, in the future the number of bitcoin casinos is set to grow. The possibility of wagering cash with the digital currency and remaining anonymous is extremely appealing to the betting community. The evolution of technology will help the gambling market develop new ways to attract bettors.
