Before the days of the internet, if an average Joe walked into a bank looking for a loan with a business plan for a new casino in their briefcase, they probably would have been laughed out of the door. For the best part of a century, the most successful and competitive casinos in the world were born out of extreme wealth, either funded by aristocracy in places like Monaco, or developed from pension funds and multi-million dollar bonds over water in the US. Getting enough cash together to build a casino that competes with an MGM Grand or Caesar’s Palace was left to the ultra-rich businessmen and corporations, and certainly not to people with a bit of capital who fancied competing with the big guys.
The internet, of course, changed hundreds of industries and has influenced how we do business globally, with one of the side-effects of hyper-connectivity being the ability to do business even with a tiny amount of start-up capital. People like Jeff Bezos, Elon Musk and Sergey Brin / Larry Page went from virtually nothing to billionaire status thanks to a lower reliance on traditional investors, who would have been the ones at the bank laughing them away. These new digital opportunities also created opportunities for new companies to try and topple the monopoly that the world’s biggest casino operators had on the gambling industry.
Casino gaming before the emergence of online casinos back in the late 1990s was severely limited. In the UK, you’d likely need to travel to a licensed casino, of which there weren’t that many, or even book a holiday to somewhere like Las Vegas or Macau to get the full, over-the-top gambling experience. When online gambling caught on, however, you could easily enjoy full games of blackjack, roulette, and poker without needing to leave the house. Mobile phones and tablets took this even further, and now internet-based gambling makes up more than a third of all gambling revenue in the UK.
The beauty of an online casino is that it is much easier to create one and maintain one than a land-based casino. To run a land-based casino, colossal amounts of cash are needed to buy land, build a gigantic building, decorate it and fill it with machines, then pay staff costs, utility bills, and probably swathes of profit to a local authority who is more than happy to tax a money-spinner like a casino. By going digital, a lot of these costs can be avoided, but there’s still plenty of traps that await wannabe tycoons.
Despite an online-only operation requiring way less money than a land-based casino, more cash will be required than other start-up opportunities when it comes to operating a digital casino. Depending on the expected size of the online casino, profit forecasts and capabilities of the owner, this figure will differ considerably but will be a considerable amount no matter what the expected outcome is.
Physical casinos often need to spend a lot of money on interior décor, machines, and tables. Having a ‘gaming floor’ that is attractive enough to bring customers to your website rather than that of a trusted brand is likely to be the biggest challenge that faces new online casinos. A lot of money is often spent on web development, purchasing of existing gaming software like virtual slot machines, and creating table games with user interfaces that come close to the real thing.
Running your new online casino
Once you’ve built an online casino website that can compete with competitors with web development budgets often in the millions, you’ll need an army of webmasters, developers, technicians, support staff and even accountants, HR, and general managers depending on the scope of the business. At the start, you may be able to manage operations with a couple of staff members, but as your casino’s popularity increases, so will the strain on your employees. Payroll is one of the biggest outgoings for both land-based casinos and virtual ones, so you’ll need to address this right from the start.
Then there’s the licensing, and tax. In the UK, gambling is heavily regulated and all gambling outlets no matter how big or small must go through a rigorous application process that investigates all plans, funding and expected operating procedures in an incredible amount of depth and detail. This process can take months and even years for larger operations, and once you’ve received full licensing, then you’ll need to continue spending money to ensure that you are operating within the rules and adhering to laws around problem gambling and ethical gambling business operations.
If your business is registered in the UK, then you can expect to pay a large amount of profit to HMRC. Casinos, in particular, don’t get an easy break when it comes to corporation tax and gaming duty, and they will often be in the highest percentage bracket of all. This heavy taxation can be mitigated slightly by registering the casino business offshore in a location such as Gibraltar, but all other licensing costs will still apply if the casino service will be offered in the UK.
Expect a lot of planning and licensing if you want to join a strictly-regulated industry
One of the biggest problems that physical casinos experience is the fact that customers have a lot of choices. It’s likely the main reason why many casinos invest large amounts of money in décor, themes, and unique experiences, with everything from spas and swimming pools all the way to live shows deployed to try and make them stand apart from the casino across the street, especially in places like Vegas. In the online world, this problem is increased tenfold, thanks to the lack of physical space to wow guests with.
This is where offering something unique or at least a little different will help your venture to stand out. One way to do this is to take some inspiration from well-established names in the industry, just look at the way 888 online casino have spent plenty of time and money perfecting their online gaming floor. They also include additional features that have helped to create an experience that is more like visiting a real casino.
Their Live Casino offering broadcasts live casino dealers directly to the player, regardless of what device it is they are playing on. This level of interaction and innovation is exactly what new businesses will be going up against, and real outside-of-box thinking is required to get customers both excited about what you’re offering, and less likely to go and try a different website if they end up bored or uninspired.
The advantages of online
Online casinos do have some major advantages over land-based casinos. As well as vastly reduced overheads, online operations can divert from revenue to player attraction, which often takes the shape of offers and freebies. From free introductory bets to get new customers registered or show off a new casino feature, to loyalty schemes that reward regular players, online casinos are competing with and taking market share off physical casinos by giving the player both better offers and in some cases, better odds. Having more profit to play with means that more players can be attracted, and online casinos will always have this advantage over their land-based counterparts.