How Much Does It Cost to Start an Online Casino or Gambling Business
According to the report of Coherent Market Insights, the opening of an online casino is a very promising business idea, since in the next seven years this market will grow by 11.5% per year. However, this is also a very expensive project. From our article you will find out how much it will cost to open an online casino: how much money you need to get a license, create a website, software and game content, connect payment services, advertising and other costs.
Without a legal entity, you will not be able to open the type of bank account you need, obtain a license and enter into partnership agreements with suppliers of software and payment services. It is best to register in the country of registration of the license, as this is usually required by local rules and, if it is an offshore zone, there is usually less taxation.
The table shows the total amount of fiscal payments when opening a company, but the cost of this issue is usually higher, since you will also need to hire a local lawyer to draw. 2up and submit the relevant documents. As a rule, this is an additional 500 - 1000 dollars. In addition, there may be other costs associated with the creation of the company, such as fees for filing an application, registering a trademark, renting an office, equipment and hiring local employees.
Software is the most important element in the management structure of online casinos, the success of your project and its further development directly depends from the functionality, capabilities and reliability. The platform must have a stylish and expensive design. There are many projects which have a bad reputation, so your website should be credible for new visitors. A gambling platform requires at least three classes of programs:
A license can give the right to conduct a gambling business in a certain region, throughout the country or internationally. In addition, such permission may relate to a particular class / group, which indicates a permitted type of activity. For example, in Malta there are 6 classes of gaming licenses:
In addition to the license fee, you will most likely have to pay a certain amount as payment for some additional costs that differ depending on the jurisdiction. So, in Canavec, you need to pay 15 thousand Canadian dollars for technical verification of software, in Antigua and Barbuda - 15 thousand dollars for checking documentation and another 100 thousand dollars for the development of gambling (annually, regardless of income).
Summarizing, we can say that a full license in offshore companies will cost 100-300 thousand dollars, for the European Union - from 300 thousand to 1 million dollars. If this goes beyond your budget, then you can reduce the licensing costs of your casino by choosing a different business model:
The cost of creating a website and a mobile application depends on the development approach:
The best partners are sites that are at the top of the natural search engine results of Google, Baidu, Yahoo, Bing, Ask and Yandex for such key queries as “online casinos”, “best online casinos” and “top online casinos” ". To attract such partners, you will need to offer them fairly large transactions for the distribution of income - from 40 to 60%. This will take up to 80% of the budget of your marketing expenses.
Payments can occur according to one of the following schemes:
In addition, you can also sponsor sports teams and events, if local regulators allow it. But, it is very expensive. For example, in 2012, Chevrolet paid $ 559 million to the Manchester United team for a 7-year sponsorship contract. Of course, you can save a lot by sponsoring small teams or unpopular sports, but this makes no sense - insufficient audience coverage.
In addition, the salaries of managers and intermediaries should also be considered. Sometimes this is a mandatory requirement of regulators. Like on the Isle of Man, where an online casino should have two directors and one official representative.
In Western Europe, Japan, the United States and Canada, the salaries of these 17 specialists and management will be from 500 to 600 thousand dollars a year, without taxes, office rent and staff costs. In Eastern Europe it will be 200-300 thousand dollars a year, in Africa, Latin America and some regions of Asia - 100-150 thousand a year.
In addition to this, you will also need to spend from 5 to 20 thousand dollars to install a dedicated server and place your software on it. In some countries, such as Curacao, such a server needs to be located on the territory of the country and connected to local fiscal platforms so that the state can see online casino transactions. This is necessary for taxes and the fight against terrorist financing and money laundering.
Reserve for payments to players (security deposit, financial security) —the amount you need to put in the bank to guarantee payments to the winners in your casino. This money should be in a special account with a bank, and it should not be used to cover operating expenses, tax payments, dividends and other operations.
Usually this amount is regulated by laws and is set at a certain minimum amount. Minimum size of guarantee deposits: