Online casino

How much does it cost to start an online casino?

Online casinos have grown in popularity over the past few decades. Since the pandemic, the advantages of a casino website as opposed to a physical casino have become apparent. If you want to get into this lucrative business, you can start your own online casino. How much start-up funds and recurring costs should you expect before you put this plan into action?

Options for starting an online casino business

When you want to start your own casino business, you can choose between two options: physical or online casinos. In recent years, casino websites have become more and more successful. They are easy to access from the comfort of the player’s home and offer attractive bonuses, such as current promotions on King Billy. These advantages are excellent reasons to aim for an online casino rather than a land-based casino.

You can start this process on your own or work with specialized B2B (business to business) services that have the expertise to help you get started.

Costs of an online casino

Financing an online casino is not limited to seed capital for registration and licenses. Here are the most important cost factors to keep in mind:

Registration of a legal person

Most countries expect you to register your business as a legal entity. Without this registration, most partners, such as payment services and software providers, will not work with you. The cost of this process depends on the location.

  • It can range from $0 (Gibraltar or Curaçao) to $3,000 (Costa Rica).

Generally, you will need a lawyer or notary to process the documents. This will cost you additional fees of up to $1,000. Be sure to check if the country has any additional costs associated with setting up a business, such as trademark registration.

game software

When you run an online casino, most of your services are based on the software you offer to your customers. There are several types of software to which this applies, from software that helps you manage the website, its accounts and its games, to the game software itself.

If customers have problems with the software or there is a lack of variety, they won’t stay. The functionality, reliability, and features of the software are important, that’s why you shouldn’t go for the cheapest options.

Many software developers work on casino games and software that helps you manage the website. If you want to use them, you have to pay for the licenses. Several types of fees may apply here. You may have to pay the price of the software itself, commissions and royalties from your monthly profit.

  • You will also need to provide around $200,000 to $300,000 to cover big payouts when players win.

Royalties can be 15-40% of your profits. Single games can cost between $200 and $5,000 per game, depending on the developer. It’s best to buy games in bulk as they tend to be cheaper that way. Gaming platform management software can cost you between $10,000 and $500,000 with commissions between 15% and 60%.

  • Expect a price tag of around $250,000+ for the full software package.

Legislation

Many countries that have legalized online gambling have strict gambling laws and regulations. To offer your service there, you will need to apply for a gaming license. The price depends on where your business is registered and what license you are applying for.

  • It can cost you between $3,000 (Gibraltar) and $200,000 (Antigua and Barbuda) per year for the license.

Some countries have additional tax costs on top of this.

Staff

Remember that your online casino is not fully automated. You will need to hire staff, such as customer service, to keep the website running and its users happy. A typical number of staff for a functioning online casino is a team of eight people.

  • That leaves you with around $200,000 a year in payments and co.

Marketing

Without customers, you won’t make money. This is why payment for marketing strategies should be included in your seed capital from the start. You can advertise using Google, invest in SEO, or choose affiliate marketing.

  • Budget your marketing costs to around $50,000 per month if you want to work with affiliate websites. They generate significant traffic.

Payment services

You have to pay for setting up payment services like PayPal. It is recommended to obtain a variety of different services, so that each user finds his favorite option. You can acquire them individually or use a payment processor that combines them automatically.

  • A single service will expect you to fund them with around $50,000 while the payment processor costs you $420,000 per year.

Website

You will need to hire someone to design and code your website, as well as cover the costs of servers and any type of connected service to keep the site secure and operational.

  • A professionally built casino website starts at around $3,000, but will likely cost you more for the best outcome.

What is the total cost of an online casino business?

Opening an online casino business is not just a matter of finding the initial capital to fund the business. You have to acquire licenses, invest in marketing and optimize the quality of your service to find and retain new customers and differentiate your casino from the competition.

Often, you won’t be able to find the best solutions on your own. To create a great business plan, you may need to rely on expert advice such as tax advisors and lawyers. Before you break even, you may need to have enough funds to cover these costs and pay your customers’ prices in the meantime.

  • The most successful online casinos break even after the first two years. Before that, the total cost of opening an online casino business ranges from $1.5 to $2 million.

Funding your online casino site

Venture capitalists are generally looking for projects in which they can invest. If you are looking for financing, contact these companies and offshore companies to find investors. If you do, make sure you have a rock-solid business plan on hand to make your business look worthwhile.

Conclusion

There are many factors to consider when considering opening an online casino. If you do not calculate correctly, you risk quickly putting yourself out of business. Benefits will not be realized in the first few years, and some costs are easily overlooked or underestimated.

Keep in mind that before you even break even, you’ll have to pay your staff, prize money, and other running costs. With all of these prices in mind, opening an online casino will cost you around $1.5-2 million. Venture capitalists might be willing to fund you.