What are the costs of launching an Online Casino?
Wishing to emulate the success of major operators, many investors decide to join the iGaming industry in hopes of launching their own, online casino. Sometimes, their business model often relies on the basic strategy of how much players will win and lose. Consequently, most of the new casinos that launch collapse during their first year. In this article, we will consider all the major pitfalls associated with launching a new provider into the already crowded market and find the answers to how much it will cost to launch an online casino.
Before the Launch
The main expenses that must be covered before the grand launch are the following:
- Registration fees (about €15,000 including two software providers, depending on where in the world you plan to roll out);
- The development of a unique template and theme (about €5,000);
- Fees for each software provider that supplies the essential framework for the games, such as poker by the developers at evenbetgaming.com. While other popular casino games such as slots have been developed by NetEnt or Microgaming, to name a few of the major players in the industry.
- A reserve that the owner will use to cover player winnings (from €5,000 to €10,000).
After the Launch
It’s clear that there are a lot of costs associated with launching a casino, so be sure to carefully check your business plan and include the following expenses:
1. Royalty for the “White Label”
The franchise owner will charge a monthly payment based on your performance, but with a minimum threshold. Typically, you will pay around 6-9% of your total income, but not less than €3,000. So, even in the case of negative results (players win more than lose), you will have to pay a minimum royalty amount.
2. Royalties for Software Developers
The creators of games are probably in the most advantageous position in this market as they receive between 10-20% of the players’ fees.
3. Payment Systems
This is probably the most important point in the business plan. It is important to consider that payment systems like Skrill or Neteller charge a small fee of 3-4% for depositing money and 1-2% for payments. Making a deposit from bank cards will cost around 3% of the amount.
4. Payments to Affiliates
The average charge for white label partners is 50% of the income. So, if your players came by the affiliate link and lose €100, then the affiliate will receive 50% of €100, 3-4% will be charged by Skrill, 20% will be paid to the developers of slots.
These payments include the basics like customer support, making various promotions campaigns, finding affiliate partners, etc. You will also have to pay an affiliate manager to run their side of the partnership with the operators themselves.
As you can see, there are many pitfalls and nuances in the opening of a new casino that you need to know in advance. However, due to the availability of the Internet and the growing popularity of gambling games, this business sector is still really profitable. According to the modest calculations by industry experts, around 30% of the casino’s income is a figure you should hope to profit after paying all the associated fees. That is why all the risks are definitely worth the result. Good luck!
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