Sports gambling is a favorite pastime of many people, and for a large part of them, it became an important source of their income. Sporting bets are allowable nearly everywhere including Russia, and this feature differs them from online casinos. Setting up an online sport betting business is a great way to fascinate and attract heaps of gamers and make money without having to pay some related expenses like rent or certain utilities.
The following steps outline a simple and effective strategy for the successful establishment of online bookie service. We hope that these steps will help you in planning your success and provide insights into the industry’s pros and cons.
Understand your business inside out
In plain language, a betting service is a physical or virtual spot that gives its customers an opportunity to bet on results of particular events (like a football match, horse race, or political election).
Each event has several different scenarios with a variety of winning chances. For example, in the Lions against Buffalos match, the probability that the Lions would defeat the Buffalos is 60%, and the likelihood of the opposite scenario (i.e. the Buffalos to beat the Lions) is 30%, while the draw’s probability is only 10%. If we express these probabilities in the form of winning odds, they will relate to each other as 1.67/3.33/10, which excludes the bookmaker’s margin that generally ranges from 10% to 20%.
The sets of these odds are usually called lines. Needless to say that making betting quotes from day to day calls for great analytical skills, and companies are looking for experts who can do that for them. Small and medium-sized businesses cannot afford to hire professionals and have to purchase from large companies entire packages of betting lines. For the desire to have complete lines’ packages small firms pay about $500- $10,000 every month.
Get a license
The legal provision of betting services will be allowable upon the acquisition of a special license. Without it, an online business cannot operate successfully on a legitimate betting market, and requirements of issuing a relevant betting license can be quite challenging. To become eligible, a company in Russia, for example, needs to obtain a bank guarantee for 0.5 billion rubles. It is also required to pay provisions of not less than 15 million rubles every three months to professional sporting organizations.
A majority of betting entities prefer franchise ownership as an easier way to take better control over all aspects of the business. It is a lawful and sound investment decision that guaranties a business owner multiple flexible options including generous financial and operational support. Having sufficient experience in the gaming and betting field is critical to business success; the absence of it might create great difficulties either in getting a license or making a reasonable profit.
Pick up the right software and staff
The development of specialized software for online betting is costly and not economically feasible. This is the reason why many businesses prefer purchasing tested systems developed by special IT companies and customize them for their needs. Franchising partners are usually provided with all business necessities including software applications and systems. For those who run an online business, all operating expenses are much lower because there is no rent to pay or a team of employees to hire – since there is no need to serve physical customers.
Implement a merchant system
Before offering public your services, you need to install a payment system that will ensure secure online transactions through your platform. To gain a competitive advantage over the rivals, you’d be better off assuring your customers that they can easily and safely pocket all their winnings.
Selecting the right system from the mass of available alternatives can be a difficult task, but it is worth your time and effort. Look for a multi-faceted and reliable payment system that could be used with debit and credit cards, Apple and Android apps, bank transfers, and cryptocurrencies. It’s even better to install more than one system - this will give your players a chance to freely choose from a few different options.
Analyze the competition
As mentioned above, an online sporting bookmaker operates by regularly prepared quotes made by its own analysts; otherwise, it purchases lines from other companies. It is usually more successful if the firm deals with trustworthy business associates represented by large bookmaking and analytical companies.
Drawing customer attention and gaining an advantage over competitors is a priority of each recently-established business. In order to enhance their odds, the newly-formed bookmakers are advisable to reduce their margins down to 10%. For standing out from the crowd of other sport betting websites, it would be better to offer public wagering on something a bit more special than regular sort of sports such as mud-wrestling or cockroach races.
You should be prepared to learn as much as you can about how to make sure that the lines you purchase from others would exclude any miscalculations and errors. Staying focused, being creative and consistent in what you are doing, and providing great service to your customers will ensure the success of your new project.
Is it possible to make your startup successful without a solid business plan? It is highly doubtful, as the difference between success and failure depends on good planning skills. An accountant or a professional specializing in business planning can help you in writing an effective business plan. The charges vary and depend on the amount of support required.
The next inevitable expense you will encounter is a payment for a license. The average price of getting a franchise betting license starts from EUR 7,500 (in a year). Next, you should pay for software. The most affordable package of decent software and its installment will cost you about EUR 10,000. Purchasing betting lines will add at least EUR 2,500 (monthly) to the list of your expenses.
Going online saves you from the need to pay rent and a few subjective utilities, and most of your operating expenses will consist of only of a certain percentage applied to your betting income, minor personal costs, and some additional money - for marketing and advertising.
- How lucrative is a sports bookmaking business?
The profitability of this business depends on not only the difference between profits and expenses adjusted for taxes. Bookmakers make money through so-called juice that has to be made regardless of the wagering outcome. The juice is influenced by the diversity between what you risk and what your wagers pay you back, and this is determined by the types of the lines and bets. In other words, the higher your margin is, the more lucrative your business will be. A margin of 10%, for example, will ensure you get anticipated profitability of around 6-8%.
If you develop and apply effective strategies for managing your business risk, this will provide a fertile ground for raising your margin to 15% or even more shortly thereafter establishing your business.
- How does joining a franchise affect my profits?
By joining as a franchise partner, you will take advantage of using continuing support, new technologies, getting new skills, better access to funding, and having much lower financial liability. It is true, that franchising involves upfront payments and ongoing franchise expenses (eg: payment a part of your profits, or fees for software subscription), but the overall expense -benefit ratio is generally very favorable for giving it a go.
- Is it necessary to establish a reserve fund?
Most companies consider their reserve funds as a specific form of their safety net. When a bookmaker doesn’t have enough current assets, it can easily cover its players’ winnings out of its reserve fund. The inability to do so properly and quickly affects your reputation and the trust of your customers. And, as you are well aware, good customer service is vital for business success.
- Does it make sense to limit the size of a bet?
Setting up minimum and maximum limits of bets is an important part a good risk-management practice.
After determining your targeted audience, you should decide how much of a minimum bet you can make for the mass market and how much – for well-off gamblers. As to the limit of maximum bets, it should be based on your budgetary resources as well as the amount of money in your reserve fund (which, as we now know, must be sufficient enough for covering all payoffs. Keep in mind that a failure to establish such limits might greatly increase your risk of financial loss and bring you closer to the business breakdown.