To tell the truth, even an academic article can be written about how online casinos work. It is a very comprehensive subject that requires expertise and research. But let’s try to keep it simple and think that you, dear reader, want to establish a new online casino. What do you need to do? Where to start? The first thing you need is a domain name. Try to find a name that is intriguing and “cool”. Once you have made the payment and bought the domain name, you have completed the easiest part of the job, congratulations!
After that, a quite long and costly journey awaits you, and it will require expertise. When online casinos first appeared, things were even more difficult: There was not even a decent electronic payment infrastructure yet. Today, infrastructure services have improved, and their use in websites has become easier, but it is still not a “simple” task. One of the first things you need to do is decide which electronic payment infrastructure you will use for your newly opened casino. Supporting credit cards and bank accounts is no longer enough: You need to support e-wallet solutions and encrypted currencies like Bitcoin. When setting the payment methods, you also need to implement the security systems. You need to get an SSL certificate for your website and organize your database appropriately. Fortunately, in many ways, these jobs are now automated: Almost all infrastructure providers offer scripts and codes that you can use directly. However, you must sign separate contracts for each one and show separate guarantees. In other words, a significant portion of the budget that you allocate for this job will be distinguished for these issues.
Licenses, Audits, Developer Companies – Things That Cost Money
The next step is to have an electronic gambling license. To offer gambling services, you must obtain a license on behalf of the company your casino is affiliated with. There are many institutions that grant these licenses and each has different requirements. You go through a detailed background check, and you are asked to pay a very high annual membership fee for a license/certificate. The license you own will show that your casino is managed in accordance with certain rules and respects customer rights. Likewise, you must have this license in order to be able to serve in different countries. For example, without a UK Gambling Commission license, you cannot accept UK players at your casino. In addition, you need to agree with an audition company to ensure customer confidence. This company will regularly inspect your casino and will publish a report on the fairness of the games you offer.
The most important step that comes up is to choose the games you will present in the casino. For this, you can use one or more developers. Each developer offers games in different numbers and categories. Of course, it is better to choose big companies: You can offer more games, the games will be above a certain quality level, and you can also benefit from that company’s distribution platform. Contrary to the popular belief, games are not stored on casino websites. They are all connected to a central server, which is often controlled by the developer itself. You can determine the rules and the odds of winning, but you do not have access to the source code. Let’s give an example: If you agree with Microgaming, you will also get the right to use the QuickFire platform as well. This platform is not for sale – it is rented. As long as you pay the membership fee, you can present all the games library of Microgaming on your website. All infrastructure services will be provided by Microgaming too. So you do not have to deal with the frustrating backend developing operations that will require a big budget. It is possible to negotiate with more than one distributor and platform at the same time. However, you will need a very large budget to offer games of more than one developer.
You Will Always Make a Profit in the Long Run
So how do you make money after all these investments? There is a reason why online casinos are so popular: They always win in the long haul. Players will begin to deposit money to play games after they become members of the casino. The more members you have, the better. Every game they play has an “RTP” ratio and a “House Edge” value. RTP is an abbreviation of “return to player”. It is a ratio that determines how much the player loses in the long run. House Edge shows how much you will earn as a casino owner. Let’s explain by giving an example:
- If the RTP value of a game is 98%, the player will be able to recover $ 98 of every $ 100 he has invested. This means you get 2% profit from that game, even some of the players win.
- If the House Edge value of any game is 4%, it means that you (the casino owner) will be making the same profit in the long run.
RTP and house edge are like two sides of a coin. It is better for players to have a higher RTP rate. For you, the casino owner, it would be better if the House Edge ratio is high. Each casino game has different RTP / House Edge rates. Here are the most common ones:
|Category||RTP (average)||House Edge (average)|
Note that this table contains average values. For example, it is possible to see an RTP value of 99% in some slot machines. This list is designed to give you a general idea. The results you need to understand from this list are:
- Whatever the game is, the casino will always profit.
- This profit is different for each game category, but it is always there.
In other words, the online casino industry is not a business you can “lose”. In the short run, players get a win, but in the long run, the casino always wins. The more members you have and the more games they play, the better. To profit more, you need to offer more games. The money deposited by players is accumulated in a casino-owned bank account. If a player earns money, the deposit is paid out on this account. However, when you compare the accumulated money and the money paid to the players, the casino is always more advantageous. Moreover, the payments do not happen, but a few days later. So the deposits are used by the casino for at least another 48 hours.
So, What are the Risks?
Well, are there not any risks? If it’s such a profitable business and the casino is always winning in the long run, why are some of them goes bankrupt? We actually gave the answer to this question in the introduction of this article: Operating an online casino is a very, very costly business. If you have a small number of players, it is not possible to make enough profit to cover these costs. Simply put, you won’t be able to earn enough money to pay for the expenses. That’s why each casino organizes a large number of bonus offers and promotions to attract new members. They even deposit “free” money into the accounts of new members to play games, and they match the deposits the players make. The number of online casinos is very high but the number of customers is limited. Advertising and promotional activities are very important for an online casino for this reason.