Thinking Of Starting an online casino, advice required

[steveoracle]

I want to get into the online casino industry. I'm thinking of getting a licence with futurebet. What should I know and who else should i consider?

Steve

 

[greedygirl]

I recently responded to a similar question, over at WOL:

Omega--I have a hunch that you may be a bit naive in your approach to diving into this industry.

To truly understand your options, I would suggest attending some of the major conferences--GIGSE in Montreal is just a few weeks away, and is the most relevant to this industry. At GIGSE, you can meet with the vast majority of software companies and get a better feel for what you are in for, including backend issues, payment processing, marketing, staffing, etc.

If you are imagining dropping a small bit of cash and amassing your fortune, this is not the business to be in--those days are gone. This is a highly competitive business with more hurdles to overcome than most.

How much you'll need to spend on marketing/advertising to successfully launch a new gambling property is astronomical, particularly in the early days. My off-the-top-of-my-head guess is somewhere in the neighborhood of $250,000 for a mid-scale launch--and this would only cover perhaps a month or so of exposure.

Obviously, this is no small undertaking and you have to be prepared to sink considerable amounts of cash into the business and hold your breath for several months before realizing a profit. Like I said before, this is a tough business to be in--it's certainly not for the faint-hearted.

If you're SERIOUS about getting into this industry by opening your own gaming property, Futurebet should not even be on your list of considerations. They have a terrible history where both players and operators are concerned. Further, I can't fathom you'd get the sort of volume of players (even if you have huge marketing dollars behind you) necessary to make a reasonable living. Futurebet, of course, will tell you otherwise in their sales shpiel. Don't believe it--its just not gonna happen.

To be honest, unless you have the sort of cash to get in with either WagerLogic or Microgaming (I'm not certain MGS is even taking on new licensees, currently), I wouldn't even consider starting up.

If you want the best reason not to get involved in this industry, just have a look around this and other forums. Have a look at all of the complaints (fairly or unfairly made)...look at the sort of promo and bonus abuse which exists--do you really want to jump into this fray?

Please think this through carefully and speak with as many operators, software providers, cash processors, marketers and players as possible, before making any decisions. Like I said previously--this industry is NOT for the faint-hearted.

 

[eek]

How do you become a millionaire?

First you become a billionaire then you open an internet casino.

 

[jetset]

Good advice, GG, to which I would add that online casino operators have the additional burden of being continuously besieged by every type of syndicated and individual fraud assault you can think of...and some that you can't. Then there are the legal minefields that have to be navigated from time to time. It is indeed a tough business that requires constant vigilance and significant investment if you are truly to succeed.

If I had the right sort of financial resources to start an online casino and do it right...I would probably opt for a different line of business!!!

 

[webber286]

Jetset and GG are right on the money. In case you need more than 2 opinions on the topic, I'll add in another.

You need to know that going into this industry means you are competing with over 2000 other sites that are offering online gambling. If you are capable of bringing in the masses to your site to sign up (ie: big marketing dollars), then you have the challenge of player retention. To be effective at this you need real people answering phone calls 24/7 that can resolve a player's problems quickly and effectively. You also need quality player promotions and some sort of loyalty program. You also need to provide quick payouts and be prepared for the possibility of a player hitting it big early on, which requires cash reserves. If you aren't solid with this, then you will amass a bad reputation and all of the money you spent bringing in the players will quickly erode away.

One last bit of advice, be prepared to spend quite a long time building up the business before it ever becomes profitable. This isn't a build it and they will come scenario, nothing on the web is anymore. You have to build it, support it, market it and market it some more, then many months, maybe even years down the road you can make some money.

 

[tim5ny]

Maybe you should open an ice-cream shoppe instead.

 

[zizacon]

Lets say you could avoid the marketing costs. What then, you pay for the license and webhost. It shouldn't be to expensive. If starting in a small scale you could probalbly solve the support yourself by e-mail. Start small, keep the customers, become bigger. Ofcourse to compete with the large ones yours must be uniqe or special in some way. But if the costs aren't that great you could afford starting small.

 

[jetset]

You're talking about an intensely competitive business here, and one where fortune plays a role. Using your scenario, what happens when a player hits a big win and you have to pay him from the sort of slender cash flow and operating budget you seem to be suggesting here?

This happens. I know of several cases where a number of wins as *low* as $15K over a short space of time have seriously dented the business plans of the underfunded, and have resulted in others folding the tents and disappearing, leaving players unpaid. The industry doesn't need any more of that nonsense.

With the sort of hand-to-mouth budget you seem to have in mind it will also be extremely difficult to build a business in today's environment - please read GG's post again - it has a lot of good sense in it in this regard.

Then you have the question of software, where cheap planning gives you sub-standard gaming capability.

Trying to start an honest online casino operation on a shoestring these days is imo taking a short term view that has a high chance of failure. And that has unfortunate consequences for not only you, but a bunch of people involved with you that starts with the players who use your facilities.

 

[webber286]

Only providing email as a means of support will surely not endear you to your players. When someone has a problem, that means money is involved, and immediacy of support is key to retaining that player. The major online casinos all have 24/7 toll free support to handle these issues.

Also remember that the "build it and they will come" concept went out at the turn of the century. You MUST have a marketing budget to have any chance of attracting online gamblers. Your best bet to attact players without marketing dollars is to offer huge bonus incentives, which will result in attracting many bonus abusers (see other threads), and those players are simply looking for the next bonus and can actually loose you money. It becomes a downward spiral while you are fighting the attrition battle.

One more point to think about is who is the predator and who is the prey in your scenario. Chargebacks are a real threat to this business, and there are people out there who make it a practice of bilking online casinos. They will deposit money, play, cash out if they win, chargeback if they loose. In either case the casino looses. With a smaller operation, you become more susceptible to these types.