How much would it cost to open an online casino business

Many people have thought about starting an online business and these stores can range from selling clothing and shoes to perfume or jewellery. There are online stores for literally every business plan you can think of!

As with every business set up there must be a business plan in order to succeed at the plan. Opening an online casino is no different in that before you start there are several things to consider.

Possibly the first thing to ask is how much would it cost to open an online casino business, so let’s have a look at some of the things that will influence the amount you would need.

Software

 The gaming package you should invest in needs to contain over 400 different games. This should include slots and several variations of them. You should include games such as roulette, baccarat, blackjack, keno, scratch cards and at least one type of poker. The software should include specials such as new casino bonuses and free deals.

Depending on the amount you agree to pay back in royalty fees the price of this package can vary greatly. Royalty fees can run anywhere between 15% – 40% of your monthly profit.

Most gaming packages also require you to show that you have in excess of $300,000 to cover players who cash out their winnings. While this sounds like a lot of money, remember that if a customer hits the jackpot, they may win anything up to $200,000 and sometimes even more.

While there are some packages which will only set you back around $100,000, the average price is between $200,000 and $300,000.

Jurisdiction

There are several countries where gambling is still illegal and the server you buy your package from must not be housed in any of these countries. If they are you will be likely be prosecuted by the country.

Popular countries include Malta, Curacao, Isle of Man, Gibraltar, Costa Rica and Antilles in the Netherlands.

You will need a gaming license which can set you back $75,000 per year. You will also pay 3% tax on the casino profits.

The website

For your online casino site to work well it needs to be professionally built. If you manage to knock up a site at the weekend, you can expect it to fail miserably. A professionally built casino website will set you back anywhere from $3,000 or more. Plan on spending more than this, though as these are very complicated sites to build and take many hours to do.

Staff for the casino

You may think that for an online casino there is no staff, and you would be wrong. For a casino site to work efficiently and smoothly you will need anything between 8-10 staff members. Staff need to be available 24 hours each day to answer customers questions.

You will need to employ an Affiliate Manager to manage the website as well as a Manager who specialises in customer retention. Most casino sites will have at least three IT specialists.

Cost of the staff can run around $250,000 per year. If you are situated in a country where the cost of living is cheaper you may pay less than this.

Marketing the casino

 A top affiliate website which brings in high amounts of traffic can set you back around $100,000 per month. Affiliates to strive for are the ones listed as ‘top affiliates’ which you will find at the top of the search engine. Unfortunately, top affiliates also need to be paid and you may end up paying them up to50% of your revenue.

You should budget for starting up at $50.000 per month for affiliates. There are some ad services such as Google Adwords which are slightly less to use, and it is a good idea to take advantage of them.

Paying the players

 If your site uses Neteller, Skrill, Paypal, Visa and Mastercard to accept deposits then you will need to fund these with a significant amount of money. Most of them will require over $50,000 with some such as Neteller asking for $100,000 before you start.

It is common for a start-up casino site to hire an outsourced payment processor to pay out winnings as they are more efficient and quicker than you may be. This service will cost you between $20,000 – $50,000 per month.

So, what’s the breakdown of starting an online casino business?

  • Software package – $250,000 and up
  • License – $125,000 more or less depending on the country
  • Website – $3,000 and up
  • Payment processor per year – $240,000
  • Staff – $150,000 or more
  • Reserve fund – $500,000
  • Marketing and Affiliate payments – $600,000

Total cost of online casino business $1,868,000 (or more)

So, with this figure in mind, how long does it take before you break even? Most successful online casino sites will break even after the first two years.

Funding your online casino site

If you require funding, you should do your own research and make sure you do it very thoroughly. There are several venture capitalist firms who will consider funding an online casino site. There are also several offshore companies who may be interested in backing you.

Whichever way you choose to go, you should make sure you have researched the company well and that you have drawn up a complete business plan for yourself.

To sum up

Opening an online casino business is not something to be taken lightly. There is a serious amount of money to be laid out and the risks in the first two years until you break even are very great. Make sure that you do your homework and know the risks before you even start your business.

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