Critics of the online gambling world often put a lot of focus on players losing money when they gamble online. They will often cite huge losses suffered by players. They may even recite the often-heard phrase, “the casino always wins”. What seldom gets a mention is the sheer cost of running an online casino. Many businesses run themselves into the ground, trying to provide a service that ultimately divides the public.

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Running an online casino can be hugely expensive and dangerous business to get involved in. In this article, we’ll look at a few of the expenditures a typical online casino has and look at how they mount up for such a business.

Pay-Outs

Of course, one of the primary expenditures of an online casino which you may be familiar with is player payouts. While casinos are often noted for taking a lot of money from players, they do tend to pay out a fair chunk, too. On top of player payouts, a typical casino will also have to pay its staff (those who run the casino, its website and behind the scenes team, as well as its customer support members).

Setting up an online casino is far more involved than many think, and the level of cost can be frightening. However, for well-run, successful casinos the profits on offer more than justify the costs. Even a $1 million outlay could be easily recouped by a solidly run online casino within a year. Setting up an online casino is far more involved than many think, and the level of cost can be frightening. However, for well-run, successful casinos the profits on offer more than justify the costs. Even a $1 million outlay could be easily recouped by a solidly run online casino within a year. Online casinos should cater for players worldwide. This means having Casino Running Aces multiple banking options that help players find the best method that suits them.

You might not think it, but the money claimed from a casino’s welcome bonuses, deposit deals and other promotions doesn’t just appear out of thin air, either. These must be budgeted and accounted for, too.

Licensing Fees

One of the costliest expenditures for any online casino is a gambling license. Cheaper licenses are available from jurisdictions out of Curacao, for instance. However, most major casinos know that they will need to have UKGC, Maltese or Gibraltar-issued licenses if they wish to be taken seriously. Having these types of gambling licenses is not cheap.

There are other drawbacks with licenses, too. Many European countries prohibit casinos who don’t have a license from their own gambling commissions. In short, a casino may need a UK-issued license to offer services to UK players, a Swedish one to cater to players in Sweden, and a Belgian one for gameplay in Belgium. As you can imagine, each of these licenses is a costly expenditure, and those costs soon mount up. On top of that, gambling regulations in each jurisdiction change frequently, and casinos may need to alter their services (which again costs money) to keep those licenses.

Transaction Costs

Players love it when a casino doesn’t charge a deposit or withdrawal fee. However, just because a casino isn’t charging its players one, doesn’t mean that the casino doesn’t get billed itself. Having a broad array of payment methods available for their players usually means that a casino will likely have to pay transaction fees which are hidden from you and me. In a manner, they are taking the bullet for us here, and often receive no credit for it.

Taxes, Taxes and More Taxes

Unquestionably, the largest chunk of a casino’s expenditure goes on taxes. Some countries have borderline ridiculous taxes, and others are more lenient. Some are based on the types of games offered. It is not uncommon for an online casino to have to pay taxes on revenues in several different counties, too. The more countries an online casino is legally operating in, the more different taxes it pays. As with any business, when an online casino has gone bust or refuses to pay out its players, you can almost always put it down to taxes.

Software and Developers

Online casinos must pay to host casino games. Those sites which feature in-house, proprietary software tend to offer very little in terms of quality games. Nowadays, casinos offer thousands of games, and that is costly. Each software developer wants to be paidfor their games. Casinos with a limited array of games are often on a tight budget and thus cannot afford to carry the wide variety of titles you find at the more successful sites.

Miscellaneous Costs

There are plenty of other costs associated with running an online casino business, too. Advertising costs a lot of money, be it via magazine adverts television commercials or hosts. You didn’t think that Jeetwin Casino got Sunny Leone to promote them for free, did you? On top of that, affiliates and writers want paying for promoting casinos, too. Then there are the costs for servers, domains, security software and much else.

Cheque Please…

Yes, online casinos make millions. But their expenses are considerable, too, often far more than we imagine. Of course, a casino is in business to make money, but like any business, there are considerable costs, and we shouldn’t forget that.

Online gambling has always been one of the most lucrative and desirable areas to explore for business owners regardless of whether they have experience in the field. In order to open a successful online casino that will benefit an owner and bring pleasure to customers, one needs to follow the proper sequence of steps paying serious attention to all details. As an online casino software provider, SoftSwiss is glad to share its experience to help future online casino owners avoid common mistakes that may impede business launch, inflate budget or even close the business down.

Step 1. Preparation

a) Legal issues

Online gambling is subject to licensing, thus an essential thing is to think about choosing the jurisdiction and obtaining a license. There are two main venues where it can be done: offshore countries and the European Union countries. Each has its pros and cons – budget, time, reputation. Usually, it takes from a couple of months to a year to obtain a gaming license, for example, 6 months in Malta.

The next step after choosing the jurisdiction is to register a legal entity – a gaming company, opening a bank account, and making agreements with payment system providers which will make the legal and financial infrastructure complete.

As an alternative to this method, there is a white label solution scheme which means leasing of software together with the gaming license and financial infrastructure from a software provider and operating your casino under your own brand but with the ready-to-use infrastructure. Such a scheme protects from excessive legal and banking bothers but involves additional costs.

b) Software

Running An Online Casino Game

As soon as all legal issues are investigated separately or simultaneously, it is time to choose a professional online casino software provider. While searching the market it is wise to evaluate the price and quality balance. Besides the attractive design and a set of popular games, a quality product shall also include a reliable gaming platform that allows for effective management of casino business and includes the following components:

• CMS
• Player management system
• Bonus and promotions management system
• Game management system
• Payment system management interface
• Cashier system
• Reporting engine
• Support of different roles for administrators
• Affiliate management system
• Anti-fraud system
• Retention email system

The regular software and game updates, hosting, and technical support shall also be part of the provider’s package. Professional suppliers always take the responsibility for the full technical support of the after-launch product operation.

The software package that includes all of the above components might be on the upper edge in terms of costs, but the financial investments are worth it because as a result, you get a reliable partner ready to support you during the whole project life cycle. Be aware of the fact that buying a cheaper solution might result in double spending in the future.

c) Marketing planning

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An effective marketing strategy is a key point to online casino success. At this stage, it is strategically correct to make a rigid competitor’s research. First of all, it will provide you with a full picture of the market: who the leaders are, what strategies they use, what return on investment they get, etc. Thus, knowing the game rules allows creating a unique offer that customers won’t be able to decline. Using the method of benchmarking plays perfect for the good of online casino success, and what is more important, it is free. Plan your marketing strategy by adopting the best practices of promotion, advertising, and brand development.

If a company starting an online casino is operating a land-based gaming business, it is crucial to bring the existing clients to play in Internet-casino by offering attractive bonuses and thus developing loyalty and respect to the website. Any know-how are always welcome but be aware of wrong calculated ideas from the mathematical point of view.

The next move is to contact internet marketing companies or individuals specializing in online gambling: SEO agencies, email marketing companies, media resources providing casino overviews, etc. This will help define the best offers on the market and choose the right partners before the website is ready to launch.
At this stage, it is also time to think about your future bonus policy and affiliate marketing strategy, as well as check if the selected software provides the appropriate technical opportunities.

d) Budgeting

Once the costs for legal issues, software and marketing are defined, it’s time to plan your budget. The best option for startup companies is to set the budget at least for the first year of operation, whereas for experienced companies who are entering the igaming market, the budget shall be defined for as long as possible. Don’t plan your budget after setting up the online casino website, plan it before. If you are a startup-company you have to understand that your costs will be higher. Your goal is to earn trust of players from the beginning. Existing land-based brands already have trust.

Below there is an approximate expenses separation a future casino owner shall have in mind while developing a detailed budget within a business plan.

At the pre-launch stage, the biggest budget share shall be devoted to software setup in order to provide future users with a quality product. But after the launch, it is vitally important to address half the funds to casino marketing and promotion.

Step 2. Launch

The time frame for an online casino launch depends on both, business owner and software provider. Usually, it takes up to 3 months for the provider to set up the software. It includes website design, platform, and games set up, custom settings, and possible individual features. The business owner may speed up the process of launch by providing regular feedback to all questions that designers and programmers might have. Any issue can be resolved if discussed in time.

Besides, the business owner shall timely address the issues discussed above:

• Obtaining a gaming license;
• Opening a corporate bank account and merchant account;
• Making agreements with payment system providers.

Setting legal and financial infrastructure is the task that only the business owner can accomplish. In SoftSwiss we provide consulting services (best options, contacts, etc.) on such points but we can’t guarantee success as the whole responsibility lies on the business owner. You will have to collect a bunch of documents for lawyers and banks like certified passport copy, utility bill copy, certificate of non-criminal records…

Step 3. Marketing

The secret of the most popular and successful online casino success and popularity is not about the top-notch design or billions of games included. The best online casinos are simply designed and contain 500 games on average at the beginning. The secret is in responsible marketing strategy implemented on all stages of the project. The online casino market is an extremely competitive one: first, it is very hard to break into it, and then it is even harder to take a firm stand. Thus, a company has only one chance to win a fierce race among competitors. Below is a list of points that are vital for any online casino that is planning to be prosperous.

• Positioning – Gather professional marketing team and develop strategic and tactical development phases, announce your goals (business, company, brand), and mission. Determine what niche you would like to step in, how you are different from the competitors, what unique features your casino has, and what steps you are going to make further.

Use only quality games from trusted game providers. You can start your casino with a limited number of game providers, with a focus on games based on HTML 5 technology. This technology allows users to enjoy rich graphics games and enhance the overall experience of playing casino games on mobile devices. At SoftSwiss, among our own high-quality HTML5 games we offer game content from well-known providers, such as Amatic Industries, Microgaming, NetEnt, and we are sure about their quality.

• Prelaunch advertising campaign – Announce your casino, inspire your potential customers to wait for its launch; use all possible methods: online advertising, presentations, publications, etc.

• Online casino promotion after launch – Use SEO, online advertising, banner networks. Everything will work in such a competitive market.

• Client attraction and retention campaign – Establish an efficient support service or 24h call-center which your customers can address at any time. Take care of your clients by making navigation through the website: create “How to” sections or FAQs, write manuals on how to play the games, provide demo versions, make everything clear and understandable.
Develop a bonus system, make auctions and entertain and reward your customers all the time.
Remember! Only business owners can establish the right content on the page. The software provider should give you the possibility to work with the content, but not create the content.

•Implement affiliate networks – Develop contacts with partners which will be an impetus to online casino development.

Additional Step 4. Bitcoin casino

Forward-looking online casino software providers offer Bitcoin as an alternative payment system for their solutions. Online casino owners all over the world appreciated such advantages of Bitcoin casino as significant savings on license application costs and monthly fees, increased customer loyalty, fast payment processing and many more.

As an acknowledged Bitcoin casino expert, SoftSwiss would like to recommend all potential Bitcoin casino owners to get a clear understanding of the cryptocurrency, research the peculiarities of Bitcoin gambling, and learn how transactions work by making a couple of bets at an existing casino. Understanding the core of the payment system is essential in business, moreover, it will help to build a strong marketing campaign and further manage the Bitcoin casino. Contact SoftSwiss for professional advice on Bitcoin casino launch.

Managing an online casino is hard work but with all legal and financial issues resolved in a timely manner, quality software chosen, and a strong marketing strategy in place, it can be successful. The demand for online casinos will increase – specialists predict 40% growth of this market segment in the nearest year. Following all the steps described above will help a newly made online casino to develop sustainably and outweigh the competition. Good luck!

Also, learn how to start an online casino with SoftSwiss.