Author: Sebastian Scheplitz
If you work at an online casino, are an avid online casino player, or even just lazily played a few hands of online blackjack one rainy Saturday afternoon, you’ve no doubt pondered how to start an online casino.
You know the fantasy – get a group of nerdy tech-heads together, build an online casino and watch the moolah roll in from a beach somewhere in the Bahamas. Sadly, starting an online casino business isn’t quite that simple, not nowadays anyhow.
With so much competition between casinos, nailing a demographic niche and making your casino stand out from the thousands of online casinos is tough, to say the least.
We’re going to take a close look at exactly how to start an online casino, how much it costs to start an online casino, the cost of gambling licenses, and the importance of iGaming translation and localization.
Online Casino History 101
We’re all familiar with the story of bet365 office starting life in a Portacabin in a Stoke-on-
Trent car park fast-forwarding to today, where Co-founder and CEO Denise Coates is earning around €635,500,000 ($647,000,000) a year.
Sounds easy, right?
Some of the first casinos began their operations from Antigua and Barbuda due to the islands’ Free Trade and Processing Act. The bill gave the islands carte blanche to issue licenses to online casinos and was the acorn that grew into the mighty oak tree of the online casino industry that we know today.
Pioneers of both gaming platforms and online casino games, Microgaming was the first software developer to spot a technological gap in the market and brought quality gaming and the platforms on which to play online casino games to the public.
While it’s tempting to look at the evolution of online casinos through a European lens, a major development in the growth of online casinos came from The Great White North.
In 1996 the Kahnawake Gaming Commission was formed – the first of its kind and 11 years prior to the self-proclaimed UK casino police – the UKGC. With the launch of the Kahnawake Gaming Commission came a flurry of online casinos – some successful, others not.
The very first online casino is believed to be the InterCasino. While up for debate, some claim that Microgaming’s GamingClub going live in late ‘95 was the world’s first virtual casino. Either way, it all started in Canada.
By the end of 1996, there were a total of 15 internet gambling sites online, and by 1997, the industry was worth a didn’t-see-that-coming €/$1 billion.
Sportsbook saw a boom in 2000 almost immediately after Betfair entered the online gambling market. Betfair facilitated player-to-player wagering on sporting outcomes and took a percentage of the bet and pushed sports betting to the top of the online casino industry’s most popular verticals.
Getting Down to Business: How to Start an Online Casino
The basics for starting an online casino business are as follows:
- Obtaining budget estimates
- Getting a gambling license
- Creating your online casino
- Choosing your game catalog
- Selecting payment methods
- Creating a marketing roadmap
- Staffing your online casino
Let’s take a closer look at each of these stages and what you need to achieve them.
Obtaining Budget Estimates
Every wannabe casino operator needs to first settle on their budget. This will vary considerably depending on:
- Site design and navigation
- Office location
- The jurisdiction in which you wish to operate
- Your welcome offer
- The software platform on which you’ll build your online casino
- Unique business model goals
To break down budget estimates to the bare minimum, you’ll need to first consider your gaming license, software choice, staffing, what kind of bonuses you’ll offer, and operational costs.
The general rule of thumb is that 50% of your expenses will be directed towards your marketing efforts to reduce player churn, player acquisition (with which affiliate sites you choose to partner), and player retention. (By the way, all something we can help you with together with our sister agency WeGotGame.)
Getting a Gambling License
With gambling licenses offering new operators a monochrome mix of white, gray, and black, it can be tricky to know which license is correct for your online casino. Here’s a breakdown of the most viable licenses available for casino operators, with pricing.
Curaçao Gambling License
For those looking for a quick, easy, and affordable licensing option, a Curaçao license is your primary choice.
Pricing starts at $16,900 (€16,594.87 at time of publishing) with 0% on taxes and VAT.
A Curaçao license offers operators a ready-to-operate license in one of the oldest iGaming jurisdictions, providing the opportunity to open your virtual doors at breakneck licensing speed without breaking the bank.
Isle of Man Gambling License
The UK offshore gambling hub is also a viable choice of licenses to obtain for your nascent online casino.
While not cheap, coming in at $42,690.38 or €41,942 (per year, excluding a $6,097.42 or €5,985.50 license application cost), this license permits casino owners to establish B2C communications and the data licensing required to register and store player data.
Kahnawake Gambling License
The second cheapest licensing option comes in at CA$35,000 (€26,637) per annum, this will cover operator due diligence checks.
Again, similar to the Curaçao license, you’ll be facing 0% on any applicable taxes.
Malta Gambling License
The most legitimate and accessible, the Malta Gambling license costs €25,000 per year with an application fee of €2,300.
If you’re aiming to attract European players (with Nordic players front and center of most operators’ minds), then the Malta gambling license is the gambling seal for you and covers every EU member country.
Creating Your Online Casino
How your casino looks is imperative in creating an unforgettable gaming experience. Here, it’s time to do some serious competitor research and find your niche or a brand that will attract players.
A design-centered casino equals a player experience that will make or break your online casino. The aim is to produce a site that maximizes player engagement through the implementation of the very best in UI (user interface) and UX (user experience). This involves both front-end and back-end development.
The three main choices for creating an online casino are:
- A white-label casino
- A turnkey solution
- A self-service software solution
Depending on your business goals, each choice offers its own share of advantages and disadvantages. White-label options are fast and efficient and the best choice for customization in the shortest timeframe.
Turnkey platforms are even more customizable with less of an off-the-shelf feel to the site, while self-service software solutions open up a whole can of iGaming worms.
It’s sensible to opt for a white label or turnkey solution for creating your online casino.
Choosing Your Game Catalogue
Alright, you know you need Starburst and Book of Dead. But what about the thousands of other slot titles, not to mention table games?
Here’s why a white-label or turnkey casino is your best choice for obtaining a game catalog without having to hand curate it. Many solutions offer a package of over 13,000 game titles from the top game providers on the planet.
Of course, this will also include a sportsbook solution with many software providers covering up to 90% of all live events.
Selecting Payment Methods
Your choices when choosing which payment methods to accept will include:
- Pay by phone
- Pay by post
- Credit cards
- Debit cards
- Wire transfers
Crypto casinos are one of the most attractive to players as they offer privacy and security but are highly volatile in nature. Most casinos offer players the opportunity to deposit and withdraw to each payment option.
Creating a Marketing Roadmap
Marketing doesn’t have to be a customer journey of predictable email and SMS send-outs with free spins on Starburst at the heart of your player retention strategy.
Marketing will also involve creating an affiliate network, creating platform-specific bonus mechanics, customer retention techniques, and an acquisition master plan (Which WeGotGame can help you with).
Finding players for your online casino works in a very different way to most e-commerce ventures, in that online casinos gain the vast majority of players through third-party sites.
Here, it’s crucial to create a comprehensive affiliate network that matches both your brand and player expectations.
Staffing Your Online Casino
While – in theory – an online casino could be operated by a single person, the truth is that you’d have to be a Swiss Army Knife of an individual with a brain the size of Brazil.
At the most minimal end of the HR scale, you’ll require experts in the following fields:
- Admin team
- Legal advisor
- Financial expert
- Marketing department (with CRM at its core)
- Affiliate department
- Customer support
- IT department
How Much Will My Online Casino Make?
While household names such as bet365, William Hill, Leo Vegas, and 888 Casino earn millions in net profit annually, ma and pa-style casino operations are often seen to struggle in an already crowded market.
The list of big-name casinos such as the providers above highlights the profitability of online casino business opportunities. As a small fish in a huge iGaming pond, it can be an uphill struggle to get noticed digitally. But as you know, even the smallest salmon can make it back up the streams.
The current trend is for new online casinos to attract a loyal band of players with high wagering tendencies, a solid marketing database, and established branding with the acquisition as the aim. The bigger names are snapping up smaller casinos and operating them under their established business structures.
So, in answer to the question ‘How much will my casino make?’ – there is, unfortunately, no single answer. Again, similar to asking yourself, ‘How much does it cost to start an online casino?’ – there’s no single answer.
It all depends on your business goals and how you approach achieving them.
With the permeation of reliable wifi expanding globally, this is but one factor of online casinos seeing more players sign up and become loyal to an online casino brand.
The online casino industry seems to be expanding exponentially, with operators now expanding into the metaverse. This certainly seems to be the future of online gambling – if not the internet as a whole.
Keep in mind that you’ll need as much technical ability as you do tech agility in the ever-shifting nature of e-commerce and online casinos. It certainly seems that blockchain-based casinos are the future – so your payments system needs to be able to accept deposits that include the most popular cryptocurrencies.
The online casino world is changing and your business needs to keep up!
How did you like Sebastian Scheplitz’s blog post “Get Rich or Cry Tryin’: An Intro to Starting an Online Casino”? Let us know in the comments if you have anything to add, have another content idea for iGaming blog posts, or just want to say “hello.” 🙂