Introduction to Online Casinos
Online casinos can be profitable and generate good revenues on the proviso that players register, deposit, and play. It’s not easy getting the money together to set up an online casino. Consortiums, corporations, and significant partnerships routinely pool resources after extensive analysis. If business strategists deem it viable to establish an online casino, you can bet your last dollar that there is money to be made. But what sort of costs are we talking about?
Today, we’re going to focus on something other than a bottom-line figure since costs are constantly changing (especially during inflationary times). Rather than focus on nominal fixed or variable fees, we will provide a broad-based assessment of the fees involved in setting up an online casino. First things first – which licensing and regulatory authority will you be considering?
Several reputable authorities exist, notably the MGA (Malta Gaming Authority), the United Kingdom Gambling Commission (UKGC), the Alderney Gambling Control Commission (AGCC), the Government of Curaçao, and the Government of Gibraltar. Of course, dozens of others worldwide, but these are the big ones. Each one has a specific cost structure according to which they license and regulate online casinos.
While important, licensing and regulation are only some of the fees to bear in mind. Online casino operators need to establish safe and secure gaming facilities. Compliance, responsible gaming conduct, games and software, content marketing, maintenance of operations, advertising, technical expertise, forward and backward integration, mergers and acquisitions and all sorts of other intricacies must be factored into the equation.
Remote Gambling License Fees
A remote gambling licence from the United Kingdom Gambling Commission can cost a pretty penny, and annual maintenance fees must be considered. Then, there’s a tax on profits, so GGR (Gross Gambling Revenue) certainly isn’t your take-home as an online casino operator. The types of games you offer determine the types of clientele you attract.
For example, suppose your online casino offers live roulette, live blackjack, and live baccarat. In that case, you can expect higher-than-average wagers at actual live dealer tables. Compare that to traditional online casino games without casino hosts and established studios – big difference.
You’ll need to pay particular attention to marketing channels in the UK and other European countries. TV advertising is prohibited, so you must turn to Google AdWords and other platforms to promote your product. How do you differentiate your product from the competition? Marketing and advertising budgets need to be established with competent professionals at the helm. These industry aficionados don’t come cheap. But it’s all woven into the fabric of your online casino budget.
Compliance costs will vary depending on the regulatory requirements of the online casino’s jurisdiction. In general, compliance with anti-money laundering (AML) and Know Your Customer (KYC) regulations will be required. These compliance costs can be high, particularly if sophisticated AML/KYC software needs to be purchased or implemented.
Safe and secure gaming (responsible gaming) measures must be implemented to protect players from harmful gaming behaviors. These measures can include self-exclusion tools, deposit limits, and cool-off periods. The cost of implementing these measures will vary depending on the extent and complexity of the online casino operation.
Games and software need to be licensed from third-party providers at between $10,000 and $30,000+ per year for a basic package, including around ten games. Of course, you can always use multi-vendor platforms with agreements in place. Maintenance costs will also need to be considered as servers must be kept running smoothly 24/7/365 at around $1,000 per month for a small set-up consisting of just two servers.
Content marketing is crucial for driving traffic to an online casino website. Expect anywhere from $50k-$100k+ annually. Advertising spending should ideally be between 3% – 5% to increase website traffic – that figure can vary depending on individual needs. More extensive operations with multiple servers can expect maintenance costs to run into tens of thousands+ of dollars per month.
To cut a long story short, establishing an online casino is expensive. That’s why it’s not a decision to be taken lightly. Conduct market research to determine whether the market is saturated and if there is room to offer a differentiated product. Your homework will make a significant impact on your bottom line.