How to start a business in the gambling industry
Every year, a host of new operators, investors and affiliates join the growing gambling industry. And why wouldn’t they want to? Gambling is one of the world’s biggest economic success stories – predicted to be worth $525 billion by 2023. What’s more, with the US looking increasingly likely to open its market up to operators, this figure is set to rise significantly further.
Online casinos, sportsbooks, bingo halls and poker rooms are big business and across 2019 we will doubtless see many more new brands cropping up across the gambling world. Let’s look at how they – and you – can hit the ground running and reap all the lucrative benefits this industry can offer
Becoming an online operator
Essentially, there are four steps involved in setting up as an operator in any sector of the gambling industry. These require obtaining professional iGaming software, a gambling license, a merchant account and a dedicated server.
Sure, it takes more than this to make the operation successful – but these are the nuts and bolts of a gambling business and so we’ll start at the very beginning.
There are a number of software providers all looking for your business and it is possible to buy ‘off the shelf’ packages. The companies behind them have streamlined everything into a simple step-by-step process.
The first question to consider is which sector of the industry you want to target: do you want to set up a sportsbook, an online casino, or do you want to look at something a little more specialised – such as poker or bingo? Many of the big-name brands have websites for each of these areas, but for those who are just starting in gambling, the best approach is to focus on one sector before considering whether to branch out.
Once you’ve made a decision, the next step is to consider the software options and the easiest approach is to opt for what is known as ‘white labelling’. Anyone arriving at this stage will have been studying the competition and over time, they will have noticed that many iGaming operators offer identical packages.
This means that two or more bookmakers will have the same prices for certain outcomes in the sporting markets. For casinos, identical choices on slots and other games will be on offer. White labelling is the most cost-effective way to get online. From there, it’s over to site designers to make sure that your brand stands out from the rest of the competition.
You might take inspiration from existing operators who’ve branded themselves in unique and innovative ways. For example, with a fresh and eye-catching design, 777 online casino immediately stands out for its retro theme.
Obtaining a license to trade is the next step in the process and this can be the trickiest part of setting up a gambling business. Sports betting and casino play are heavily regulated and in some areas of the world, the practices are outlawed so this can be a minefield.
Licensing rules are different in certain regions, too: Changes to UK tax laws in 2014 saw a number of operators pull out of the country and anyone operating here needs to show on their website that they are regulated by the relevant authorities. This is such a complex area that we recommend taking legal advice, while the UK Gambling Commission also publishes a full set of criteria in this respect.
In terms of obtaining a merchant account, iGaming software providers can help you with the initial process and at an entry level. It’s simple to accept debit and credit cards as forms of payment, but for more complex payment options such as e-wallets, each provider will need to be approached directly.
Dedicated servers are also relatively easy to set up. Overall, with the exception of the legal licensing processes, establishing a sportsbook or online casino is relatively easy although the costs and time involved do outweigh the option of trading as an affiliate marketer.
Becoming an affiliate
Of course, it’s possible to get involved in the gambling industry without setting up as an operator. Affiliates are part of the lifeblood of this sector and in part, they are responsible for driving traffic to the sportsbook or online casino.
Affiliate marketing is the relationship between three separate parties:
- The merchant – usually an online casino that wants to connect with more customers
- The affiliate – a webmaster responsible for producing content that warms their users up to the idea of buying something on the merchant website, then links them to a relevant page
- The consumer – the user who’s landed on the affiliate website
The affiliate will usually review a product on their website. Within that article they’ll place a link to the merchant’s website – the link could be in the text, within an image, or be an ad banner. Once the user has clicked the link taking them from the affiliate’s article through to the merchant’s website, the merchant will know it’s the affiliate who’s sent them there – because the affiliate link contains their ID or username – and compensate them for any money the consumer spends as a result.
There are lots of upsides with affiliate marketing, but perhaps the most obvious of these is the lack of big investment required to get up and running. For just a few dollars for hosting and a suitable domain name, business owners can be trading in just a few minutes.
Affiliate marketing is a way for bloggers to make money without compromising on their content. After all, they might already have a passion for writing about gaming. It’s only going a step further to link to a merchant’s website – and if done correctly, they could earn a huge amount of extra cash.
Becoming an investor
Some of the world’s biggest firms are listed on the London Stock Exchange and it is possible to buy and sell their shares fairly easily online. Regular stock investors can adopt them as part of their overall trading package, while some may want to focus on the gambling industry which can enjoy its own unique form of peaks and troughs. If you’re considering share trading as an option, it’s obviously advisable to talk to an expert broker in this respect or, at the very least, carry out your own research.
Whether you want to become a gambling affiliate, a casino operator or an investor it up to you – there are varying levels of risk for each option.
Stock trading can be volatile in any industry and gambling is no exception. In contrast, affiliate marketing carries very little risk in terms of financial outlay but it does require a significant investment in time if it is to be carried out successfully. In the middle is the option to set up as an operator which has a mix of time and financial investment.
With revenue and profits at an all-time high – now is the time to be entering the gambling marketplace. All three can be lucrative if carried out correctly, and you have the required level of commitment and dedication to make it a success.