Are you an up-and-coming online entrepreneur who looks for new ways to make money? Do you look for ways to invest your newfound fortune after investing in Bitcoin? Or you just prefer to spend your precious time and money only in industries with the highest margin?
In this case, you may be interested in making a business in the online casino industry. It’s one of the fastest-growing fields in 2021, and who wouldn’t want to make a business in an industry where the house always wins?
If you’re thinking about making this decision, here are some quick facts about the online casinos as a business model that may make or break your willingness to be a part of it.
Judging from the market size of the industry, investing in it sure seems like a good idea. The global gambling market is worth $440 billion, with the US being responsible for a quarter of it. Even though online gambling is only a slice of this financial pie, it’s a slice that keeps increasing throughout the years. In 2021, the online gambling industry is worth over $40 billion and is projected to reach a market size of $70 billion in five years.
While individual local markets are not as lucrative on their own, there’s a huge incentive to invest in them. Starting an online casino in, say, Indonesia, instead of an established market like Australia gives you the advantage over the competition and may turn in a larger profit.
For any entrepreneur who wants to grow in a particular industry, it’s important not only to understand how big it is but where it’s headed. Here’s what trends define the online gambling industry in 2021.
In online gambling, most customers use their mobile phones to play games. Since the number of people who own a phone almost quadrupled in the past eight years, casinos now have a much larger base to work with.
Most of those new mobile phone owners live in developing countries and use the smartphone as the only device to access the internet. Looking for countries with a positive growth of GDP and a good smartphone ownership penetration rate may be the key to founding a successful online casino business.
Speaking of new markets, they tend to open each year. In 2020 and 2021, the Netherlands, Ukraine, Uzbekistan, and one of the Indian states opened up for business. They are now offering land-based and online casino licenses as well as licenses for sports betting.
What this means for businesses is that they don’t need to stay in the gray area of operating in these countries under a Maltese license. The odds are, even more countries will be open for business in the years to come.
The rapid growth of the market attracts software developers. Now, there are more options for renting games for your casino than ever before. This doesn’t just mean you have the opportunity to diversify your arsenal of games. You also have a chance to find an up-and-coming developer and rent gams for a relatively low price instead of paying tens of thousands of dollars to the top dogs.
It may be obvious, but all online businesses are booming under the lockdowns instituted in most countries. The online casino industry had a record estimated CAGR of 12% this year. Since we’re not seeing the lockdowns lifted in any meaningful way in the coming months, the trend may continue. Even more so, if the disease does turn out to be a seasonal one.
This could mean that the demographic that frequents land-based casinos, 45 years of age and older, may gradually transfer to online gambling, contributing to the industry’s growth.
One trend that is going to disappoint any entrepreneur weighing their chances in the industry is that they’re not the first to jump on the bandwagon. The number of casinos is growing fast. For instance, ten new Neteller casinos in Australia were opened just last year. So remember you’re going against tough competition in this business.
It’s a common misconception that in casinos, the customer always loses. The reality is, people lose some and win some. On average, they will get back anywhere from 90% to 98% of their losses depending on the game they’re playing.
You can learn more about that statistic by looking up the RTP (return to player) of any particular game you wish to include. This is an approximation of what percentage players will win back in the long run. The opposite of that is the house edge, the inherent advantage that the casino holds over the player. In blackjack, it’s only 1.8%. In most slots, it’s anywhere between 5% and 2%. In Keno, it’s 25%.
Does that mean you’ll be getting exactly 5% of the money spent on your platform? Not really. There are big wins and big losses happening every day, so you may end up with more than expected in profits or lose money when a player wins a jackpot.
Now that you know about the benefits of working in this industry, let’s get to the costs associated with running the business. Creating and running a website won’t take up too much money. You can expect to pay upwards of $5,000 for a decent website that won’t require updates for years to come. Your hosting provider should be able to handle big loads of customers, but it’s fine to start with a cheaper plan at first.
The license fee is a recurring payment, but not as hefty either. You’ll pay anyway between $5,000 and $15,000 for a year in most countries. If you look into countries with lower GDP, you may find even lower prices.
The casino software is a much bigger retainer. The way this industry works is you have to lease games from the developer instead of hosting them on your server. Depending on the developer, you will pay anywhere from $5,000 to $50,000 for a license. You can pay less if you decide to pay up in royalties, but this may mean slashing your monthly cash flow in two.
If you’re thinking of starting a casino business on a budget, forget it. Most respectable developers require you to demonstrate having at least half a million in your account — in case a player wins a jackpot and you need to pay up on the spot.
Apart from that, the biggest monthly expense is going to be marketing. No matter what approach you choose — SEO, paid advertising, affiliate marketing — all of them will be extremely expensive because this industry is highly competitive.
Different experts put the estimates of a typical marketing budget at $20,000 to $80,000 per month depending on your methods. Receiving any meaningful traffic from Google search will take up to a year of work, depending on the location you’re marketing in.
While we’re not going to give advice on whether you should or you shouldn’t start a business like that, one thing is clear. The online casino business is a gamble. One where you’d have to bet at least a million dollars for a chance to succeed.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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