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Interested in opening an online casino.. Advice needed

Discussion in 'Casino Industry Discussion' started by Ryan13, Jan 7, 2013.

  1. Ryan13

    Ryan13 Dormant account


    As my topic describes I am looking to open an online casino and then a book. Ill explain who I am before moving into my plan and questions, to hopefully save your time to the best of my ability.

    I own one of the top ranking online marketing firms, and we have businesses in many different markets; From manufacturing to video gaming services.

    Were US based, so as I understand it, we can't take US players. We can incorporate in Costa Rica, process payments in Antigua.

    I don't understand fully which licenses we would need, from who and why. I also don't fully understand the way the software developers operate in this market. It appears that they are more involved then just selling a price of software and also take a % of gross profit? Any clarification and explanation would be greatly appreciated.

    I was thinking Casino first and after that's running efficiently, sportsbook, followed by poker last.

    Financially we can launch this venture in house with no debts or issues with payments. I understand the landscape with fly by night cons and I know from a service standpoint my experiences will be focused on using the legitimacy and transparency as a selling point.

    Any assistance would be greatly appreciated, and in return any advice I can give on the marketing front for your companies look at as compensation.

  2. Seventh777

    Seventh777 RIP Roy

    To be blatantly honest - setting up a Costa Rica based casino that doesn't take US players on-board is financial suicide, the players that could play will stick to Gibraltar, Malta, IoM, UK, Nordic / Scandinavian etc based casino's, my apologies if I seem harsh, but I fail to see where your player base would come from.
  3. Ryan13

    Ryan13 Dormant account

    Thank you for your reply.

    I'm confused why where a casino is legally established would effect player base?

    Could you please explain that, I may be overlooking something.

    We will rank on search engines for all the competitive casino terms, aiming at national markets in Europe, as our broader campaign solidifies us for the overall global rankings.

    That's where our expertise lies; while this is a very high value competitive market, so is adult, so is various industries that we have no issues with maintaining top placements.

    The affiliate systems seem interesting, but I have not researched that yet.

    As it stands I need to understand the licensing and software landscape before I can handle the next two concerns hehe
  4. jetset

    jetset Ueber Meister CAG

    Licensing has become far more complicated in recent times - especially in Europe, where countries have realised the tax revenue possibilitities of regulating and licensing online gambling operators and have developed their own regimes, or sewn up the national market to keep foreign companies out. The issue of compliance with EU principles and the engagement of the European Commission is also something to consider carefully, and I would recommend you do some reading on that.

    Despite assurances that they are there for the player, in my experience most licensing jurisdictions appear to be in it for the money, and display little concern over the welfare of the player and intervening effectively when disputes between operator and player arise. The LGA in Malta springs to mind as an illustration of this cavalier attitude toward the punter. Search on Purple Lounge Poker as just one recent example of how ineffective the licensing authority turned out to be.

    The British market is about to undergo an important internet gambling transformation next year when new laws come into effect making access to the British market conditional on paying UK taxes and taking out a licence - even if the operator already has one from another jurisdiction.

    Costa Rica is famous for being a shell as a licensor, although many operators have made that country their base. Despite years of promises, there is no specific online gambling licence, and operators have data or business bits of paper, which many try to pass off as a real gambling licence. There's a reason Costa Rica is so popular, and it's because there is little practical enforcement. Most experienced players regard "licensing" from that jurisdiction as something of a joke.

    If you're going to get into the operator business, be very careful about which software provider/s you choose. There are literally dozens, but some are way more established, innovative and professional than others and can make both the quality of the gambling you offer your punters and the marketability of your casino better. Experienced players are usually very well informed on these companies, and will often allocate their business accordingly.

    These days providers do not insist on exclusive agreements, and many operators now offer games from several providers. Another big advantage of the major providers is that they have the contacts and the experience to make entry into the market a less arduous process for the prospective operator. They're generally more expensive in terms of royalties, but they provide ace technical services 24/7, businessand compliance advice and regular issues of new, quality games. Going cheap on software is not recommended.

    If you can maintain fast pay-outs, truly good customer response and service, and run a professional outfit, there is still space in this market for that sort of operator. Unfortunately the rogues, villains and not-that-good operators tend to outnumber the really good sites.

    If you want to study top operators I would suggest you search on 32Red, Club World and 3Dice, who to my mind tend to stand out.
    9 people like this.
  5. Ryan13

    Ryan13 Dormant account

    Thank you very much, genuinely and truly.

    The high end players seem to be particular as you said to specific software. I was thinking mg or playtech were the two highest regarded from my initial information gathering.

    So licensing seems silly then, which is how it initially sounded. I couldn't logically workout how regulating would work.

    I'm going to look for a legal consult with experience in the online gaming industry this week. Ill report what I learn in regards to pending legislations in developed markets.

  6. jetset

    jetset Ueber Meister CAG

    Never a bad idea to explore your intentions with the right legal people.

    BTW, another source of up-to-date industry information is on this site under the "News" tab on the landing page.

    MGS and Playtech are probably the industry leaders at present, but there are others you could consider as well to ensure you have a broad choice and balance. I'm sure you have already found them.

    RTG, for example is well established, has generally good product, and has a slew of licensees out there; unfortunately a disproportionate number of them appear to be questionable when it comes to dealing with players, which imo detracts somewhat from their reputation.

    BTW in fairness I should add to my previous post by mentioning one licensing jurisdiction that has come a long way in making itself more player-sensitive imo. The Kahnawake Gaming Commission has over the past two years really pulled its socks up and now attends diligently to player complaints, using a highly experienced mediator to investigate and rule on disputes and generally police that jurisdiction's many licensees. Not everyone will agree with this assessment - especially players who have been ruled against - but in my personal experience they are now much improved and respond to players' complaints - not many jurisdictions bother to even do that!
    1 person likes this.
  7. Balthazar

    Balthazar The Governor

    Don't forget NetEnt: right now the demand for this software seems to be high while the number of casinos offering it is considerably low. If you were going to open a MG casino, you'd be going head to head with well established big monsters such as 32Red, it wouldn't be easy. It's always a smart thing to look at the market first IMO. Supply and demand.

    My 2 cents.
  8. dazlazz

    dazlazz Experienced Member

    Hi Ryan,

    The importance of the igaming license is for the following reasons:

    1. Tax implications - some jurisdictions will offer a more favourable tax rate.
    2. Regulatory compliance - dealing with players' complaints.
    3. Players who see an official license will be more likely to initially play on the site - its an initial indicator that the company has passed some form of financial 'checking' by the licensing board.

    Software companies:

    Companies like MG, playtech etc, will generally take a % of gaming revenue - roughly between 15-20% with %s decreasing as revenues increase i.e. tiered bands. Also these companies will ask for an initial 'opening fee'- 20-75k GBP (Net Ent most expensive) / monthly payment fee, off the top of my head around 5kGBP / month. Also they might charge for additional services i.e. if you want a downloaded casino / poker site available in specific languages - handy if you are targetting a specific non english speaking market i.e. Hungary.

    You can also do a white label solution whereby you have another company who has the license and software in place and you just add your website etc and they will relabel their product for you - and if you like, run it for you initially.


    Seeing as the poker base takes longer to build than say casino, I would advise launching both together.

    Hope this helps,


  9. P.V.

    P.V. Senior Member webmeister

    I say save your money and invest elsewhere. The industry is saturated, many ongoing complications and a U.S. facing market that will emerge somewhat in 2013 and continue to grow moving forward.

    Too many big boys are going to be into this at some point and will continue to drive the little guy out of business.

    As always, just my opinion.. :)
    Last edited: Jan 7, 2013
  10. Redbet-Andy

    Redbet-Andy Dormant account - New account: AndyB-MrGreen

    Take a bit of your cash and spend it on flights and a hotel in London for ICE.
    All the answers to all your questions and everyone you need to speak to, all under one roof.

    You must register/login in order to see the link.
    2 people like this.
  11. dionysus

    dionysus can turn wine into water CAG MM

    I'm always excited at the prospect of a new casino coming. There's a few great ones out there (hi Andy, lol) but a whack of shit ones too. Just lean from the mistakes of the others, Lord knows there's enough. Great support and timely payouts will go a LONG way
    1 person likes this.
  12. IanO

    IanO Regular Human

    Great advice from Andy. Get yourself to London this year. You'll learn more about this industry over a few pints at the conference parties than you would with months of online research. It will also give you the chance for some face-time with the big software providers and this can really help later on.

    I would also recommend a big ol healthy dose of realism. A lot of people go at this thinking 'Well the odds are in the casinos favour... how could I fail?''... it is a LOT more expensive to run an online casino than you might think, and I have watched sites with a superb offering and service still fail in this market. The overheads can be phenomenal.

    The third tip I'll give you is finding the right staff. That's VITAL. You will need to surround yourself with experience as it sounds like your own is limited. If you cut corners in your hiring policy this will be directly reflected in your bottom line.

    I hope that helps for starters. If you wish to pick my brain s'more feel free to PM me.

    6 people like this.
  13. chuchu59

    chuchu59 gambling addict CAG PABnonaccred

    I think this sums it all up.
  14. Casinomeister

    Casinomeister Forum Cheermeister Staff Member

    As mentioned already, you should check out the ICE in London next month. Attendance is free and it's the largest exhibition - everyone you ought to meet will be there.

    Also, if you check out our ratings page, it will give you a good idea on what aspects of a casino operation are important (licensing jurisdictions, software, etc...). These scores are related to years of player input (and of course my humble opinion :D) and the higher the score, the more player friendly the casino becomes. And this is truly what it's all about - serving players' needs.

    You're up against a lot of competition, and in order to stand out you need to be able to offer something that the other casinos can't. Something unique - something original that guarantees success.

    You may want to consider becoming an affiliate instead. I would recommend attending the You must register/login in order to see the link. (right after the ICE). It's about marketing - but there are loads of operators and affiliates there that can give you some good advice.

    Lastly, it's a small industry and you'll find that professional relationships are a driving force. Networking and meeting folks face to face is priceless. Those who are successful have familiar faces (in most cases). And speaking of London, there is the Meister Meeting at Waxy O'Conners (Leicester Square) on Tuesday 5 February from 5pm to 8pm. This is open to all members of the forum - many of us will be there - be there or be square. :D
    1 person likes this.
  15. Simmo!

    Simmo! Moderator

    Just to add an opinion on licensing jurisdiction, as an experienced player, I would never sign up to play at acsino with a licence in Costa Rica or Antigua (Netherlands Antilles) unless they had years of stability and reputation already racked up. It says to me the casino has been done on the cheap.

    As for games, Microgaming, Playtech, Net Ent, IGT, WMS, Novomatic/Greentube or Aristocrat - those are the providers and platforms that say "professional" although as pointed out above, you put yourself in direct competition with other operators. The best casinos for me have a hybrid product with games from each of those mentioned above.

    Finally, customer service is what makes or breaks. You basically have two choices as an operator is how I see it: offer lots of free money and go for the freebie mentality or offer fast cashouts and good, knowledgable and friendly service. I can't think of anyone that does both - Club World is closest but even they have trade-offs like reverse times and maximum weekly cashouts (which puts off big punters).

    The latter is more expensive but I would suggest it will get you more valuable players. The former is the cheap and easy option and wil probably get a larger base of less valuable players but in turn, that may increase your management, support and processing overheads, not to mention disputes and freebie abuse issues. I'd imagine in the long run the ROI is similar but you'd need incredibly effective management to make a good reputation from the former method - in my opinion.

    The vast majority of highly-regarded casinos do customer service well and don't mess around with stalling tactics on cashouts. Their bonuses are generally modest or poor. A lot of casinos try to simply distinguish themselves by offering more "free money" (tied up in red tape of course) than anyone else which I see as just lazy, short-term thinking. Consequently you just end up with a load of operators all offering similar things and all vying for the same freebie hunters who wander round foraging for bonuses. It needs more than that if you want to build up a good reputation and have that do the work for you.

    Whichever method (and I am sure you are more than aware of this from your other businesses but it's worth stating bearing in mind the the 'Us vs Them' concept that cash gambling generates) you need to manage expectations properly or the forums will fill up with dissatisfied punters. This is one main reason why those that go the "fantastical bonus" route get bashed more on the forums because what the punter gets is rarely as good as it was made to sound.

    Final thought: what this industry needs is a casino that can prove you can do well and build a good reputation without a signup bonus. One or two have come close (Bodog and one or two casinos with post-wagering bonuses) but no-one's managed to be innovative enough to find an alternative. If someone can find a way to make that work, it could change the indutsry (for the better!).
    3 people like this.
  16. bigjohn

    bigjohn Meister Member MM PABnoaccred

    The rise of 3 Dice

    I recently read here on the forum when 3 Dice first showed up (I can't find again, still kinda green, link anybody?). It was a great read and showed very well from the players side what is expected and considered. It covered licensing questions, games selection, appearance of the interface, and customer service. This was probably quite a bit after they got the idea at first but it showed how to introduce an operation that would rise to be IMO one of the most successful and worldwide sought after places to play.
  17. jetset

    jetset Ueber Meister CAG

    Another important advantage of delivering timely pay-outs and superior customer service that probably includes value-added and genuine loyalty programs is that it tends to produce better customer retention in the long run, helping to balance the usually fairly limited attention span of casual visitors attracted only by short term incentives.
  18. DavidEC

    DavidEC Dormant account

    Hi Simmo,

    Would this not be in line with the social gaming trend currently exploding? In that casual/social players are motivated to play for a variety of reasons, beyond the financial incentive which attracts a lot of casino regulars?

    I think we will see something of this kind coming, however I seriously doubt the integrity of both the companies like Zynga who create the games and the most common platforms like Facebook.

    I also think that this is something that is slowly being recognised as not just an opportunity to gain a competitive advantage and offer a unique product, but it will soon become a must-have strategy for the majority of reputable casino operators. By soon, I mean in the next decade or so ;)

    I might be completely off-base here, but it is definitely an interesting topic.


  19. Simmo!

    Simmo! Moderator

    Interesting observation David...hadn't thought of that aspect. I've yet to be convinced that social platforms are the right place for real-money gambling. It could prove to have advantages as you point out - or it could go the other way and force casinos to offer bigger bonuses to counteract the footfall disadvantage. Will be interesting to see.
  20. DavidEC

    DavidEC Dormant account

    Agreed. As with the rakeback wars you see in online poker, unless there is a unified movement from casino operators, then a "who can offer the biggest bonus" war would likely begin.

    I think my biggest concern in regards to the social media movement is player protection. You only needed to browse the web for 1 minute to understand that there really is some incredibly ignorant and unaware individuals out there, which sadly make prime targets for the dodgy outfits.

    I read a thread on here a couple of days ago about the RTP being different for play money and real money, as well as being an adaptive slot. (Really interesting read btw) Thinking of social media; what % of casual players would even think of checking something like that out? When the scandal occurs, as it will, it is the casinos who have demonstrated consistent integrity that will rise from the ashes of their unscrupulous competition.

    At least I hope so anyway. It is often harder and more costly to offer truly excellent service and the guys that do should definitely get the recognition they deserve.

    Apologies for off-topic btw!

    Edit - Imagine the nightmare to come from trying to regulate social gaming...dear lord :eek2:
    Last edited: Jan 10, 2013

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